judgement:
Appeal No.193 of 1958.
Appeal by special leave from the judgment and decree dated October 3, 1955, of the High Court of Judicature, Madhya Bharat, Indore, in Civil First Appeal No. 58 of 1952.
C. B. Aggarwala and Bhagwan Das Jain, for the appellant.
Radhey Lal Aggarwal and A. G. Ratnaparkhi, for respondent No. 1. 1961.
March 29.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave from the judgment of the High Court of Madhya Bharat.
A suit was filed by firm Messrs. Harishchandra Dwarkadas (hereinafter called the respondent) against the appellant firm Messrs. Murlidhar Chiranjilal and one Babulal.
The case of the respondent was that a contract had been entered into between the appellant and the respondent through Babulal for sale of certain canvas at Re. I per yard.
The delivery was to be made through railway receipt for Calcutta f. o. r. Kanpur.
The cost of transport from Kanpur to Calcutta and the labour charges in that connection were to be borne by the respondent.
It was also agreed that the railway receipt would be delivered on August 5, 1947.
The appellant however failed to 655 deliver the railway receipt and informed the respondent on August 8, 1947, that as booking from Kanpur to Calcutta was closed the contract had become impossible of performance; consequently the appellant cancelled the contract and returned the advance that had been received.
The respondent did not accept that the contract had become impossible of performance and informed the appellant that it had committed a breach of the contract and was thus liable in damages.
After further exchange of notices between the parties, the present suit was filed in November, 1947.
Written statements were filed both by the appellant and Babulal.
The contention of Babulal was that the contract had become incapable of performance and was therefore rightly rescinded.
Further Babulal contended that he was not in any case liable to pay any damages.
The appellant on the other hand denied all knowledge of the contract and did not admit that it was liable to pay any damages.
Certain other pleas were raised by the appellant with which we are however not concerned in the present appeal.
Three main questions arose for determination on the pleadings of the parties.
The first was whether Babulal had acted as agent of the appellant in the matter of this contract; the second was whether the contract had become impossible of performance because the booking of goods from Kanpur to Calcutta was stopped; and the last was whether the respondent was entitled to damages at the rate claimed by it.
The trial court held that Babulal had acted as the agent of the appellant in the matter of the contract and the appellant was therefore bound by it.
It further hold that the contract had become impossible of performance.
Lastly it hold that it was the respondent 's duty when the appellant had failed to perform the contract to buy the goods in Kanpur and the respondent had failed to prove the rate prevalent in Kanpur on the date of the breach (namely, August 5, 1947) and therefore was not entitled to any damages.
On this view the suit was dismissed.
The respondent went in appeal to the High Court 656 and the two main questions that arose there were about the impossibility of the performance of the contract and the liability of the appellant for damages.
The High Court held that the contract had not become impossible of performance as it had not been proved that the booking between Kanpur and Calcutta was closed at the relevant time.
It further held that the respondent was entitled to damages on the basis of the rate prevalent in Calcutta on the date of breach and after making certain deductions decreed the suit for Rs. 16,946.
Thereupon there was an application by the appellant for a certificate to appeal to this Court, which was rejected.
This was followed by an application to this Court for special leave which was granted; and that is how the matter has come up before us.
The same two questions which were in dispute before the High Court have been raised before us on behalf of the appellant.
We think it unnecessary to decide whether the contract had become impossible of performance, as we have come to the conclusion that the appeal must succeed on the other point raised on behalf of the appellant.
The necessary facts in that connection are these: The contract was to be performed by delivery of railway receipt f. o. r. Kanpur by the appellant to the respondent on August 5, 1947.
This was not done and therefore there was undoubtedly a breach of the contract on that date.
The question therefore that arises is whether the respondent has proved the damages which it claims to be entitled to for the breach.
The respondent 's evidence on this point was that it proved the rate of coloured canvas in Calcutta on or about the date of the breach.
This rate was Rs. 1 8 3 per yard and the respondent claimed that it was therefore entitled to damages at the rate of Re. 0 8 3 per yard, as the contract rate settled between the parties was R.s. 1 per yard, The quantum of damages in a case of this kind has to be determined under section 73 of the Contract Act, No. IX of 1872.
The relevant part of it is as follows: 657 "When a contract has been broken, the party who suffers by such breach is entitled to receive, from the party who has broken the contract, compensation for any loss or damage caused to him thereby, which naturally arose in the usual course of things from such breach, or which the parties knew, when they made the contract, to be likely to result from the breach of it. " Explanation In estimating the loss or damage arising from a breach of contract, the means which existed of remedying the inconvenience caused by the non performance of the contract must be taken into account.
" The contention on behalf of the appellant is that the contract was for delivery f. o. r. Kanpur and the respondent had therefore to prove the rate of plain (not coloured) canvas at Kanpur on or about the date of breach to be entitled to any damages at all.
The respondent admittedly has not proved the rate of such canvas prevalent in Kanpur on or about the date of breach and therefore it was not entitled to any damages at all, for there is no measure for arriving at the quantum of damages on the record in this case.
Where goods are available in the market, it is the difference between the market price on the date of the breach and the contract price which is the measure of damages.
The appellant therefore contends that as it is not the case of the respondent that similar canvas was not available in the market at Kanpur on or about the (late of breach, it was the duty of the respondent to buy the canvas in Kanpur and rail it for Calcutta and if it suffered any damage because of the rise in price over the contract price on that account it would be entitled to such damages.
But it has failed to prove the rate of similar canvas in Kanpur on the relevant date.
There is thus no way in which it can be found that the respondent suffered any damage by the breach of this contract.
The two principles on which damages in such cases are calculated are well settled.
The first is that, as far as possible, he who has proved a breach of a bargain .
83 658 to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed; but this principle is qualified by a second, which imposes on a plaintiff the duty of taking all reasonable step" to mitigate the loss consequent on the breach, and debars him from claiming any part of the damage which is due to his neglect to take such steps: (British Westinghouse Electric and Manufacturing Company Limited vs Underground Electric Railways Company of London (1)).
These two principles also follow from the law as laid down in section 73 read with the Explanation thereof If therefore the contract was to be performed at Kanpur it was the respondent 's duty to buy the goods in Kanpur and rail them to Calcutta on the date of the breach and if it suffered any damage thereby because of the rise in price on the date of the breach as compared to the contract price, it would be entitled to be reimbursed for the loss.
Even if the respondent did not actually buy them in the market at Kanpur on the date of breach it would be entitled to damages on proof of the rate for similar canvas prevalent in Kanpur on the date of breach, if that rate was above the contracted rate resulting in loss to it.
Bat the respondent did not make any attempt to prove the rate for similar canvas prevalent in Kanpur on the date of breach.
Therefore it would obviously be not entitled to any damages at all, for on this state of the evidence it could not be said that any damage naturally arose in the usual course of things.
But the learned counsel for the respondent relies on that part of section 73 which says that dam ages may be measured by what the parties knew when they made the contract to be likely to result from the breach of it.
It is contended that the contract clearly showed that the goods were to be transported to and sold in Calcutta and therefore it was the price in Calcutta which would have to be taken into account in arriving at the measure of damages for the parties knew when they made the contract that the goods were to be sold in Calcutta.
Reliance in this connection is placed on (1) 689.
659 two cases, the first of which is Re. R. and H. Hall Ltd. and W. H. Pim (Junior) & Co. 's Arbitration (1).
In that case it was held that damages recoverable ' by the buyers should not be limited merely to the difference between the contract price and the market price on the date of breach but should include both the buyers ' own loss of profit on the resale and the damages for which they would be liable for their breach of the contract of resale, because such damages must reason ably be supposed to have been in the contemplation of the parties at the time the contract was made since the contract itself expressly provided for are sale before delivery, and because the parties knew that it was not unlikely that such resale would occur. 'That was a case where the seller sold unspecified cargo of Australian wheat at a fixed price.
The contract provided that notice of appropriation to the contract of a specific cargo in a specific ship should be given within a specified time and also contained express provisions as to what should be done in various circumstances if the cargo should be resold one or more times before delivery.
That was thus a case of a special type in which both buyers and seller knew at the time the contract was made that there was an even chance that the buyers could resell the cargo before delivery and not retain it themselves.
The second case on which reliance was placed is Victoria Laundry (Windsor) Ltd. vs Newman Industries Ltd, (2).
That was a case of a boiler being sold to a laundry and it was held that damages for loss of profit were recoverable if it was apparent to the defendant as reasonable persons that the delay in delivery was liable to lead to such loss to the plaintiffs.
These two cases exemplify that provision of section 73 of the Contract Act, which provides that the measure of damages in certain circumstances may be what the parties knew when they made the contract to be likely to result from the breach of it.
But they are cases of a special type; in one case the parties knew that goods purchased were likely to be resold before delivery and therefore any loss by the breach of contract eventually (1) (2) 660 may include loss that may have been suffered by the buyers because of the failure to honour the intermediate contract of resale made by them; in the other the goods were purchased by the party for his own business for a particular purpose which the sellers were expected to know and if any loss resulted from the delay in the supply the sellers would be liable for that loss also, if they had knowledge that such loss was likely to result.
The question is whether the present is a case like these two cases at all.
It is urged on behalf of the respondent that the seller knew that the goods were to be sent to Calcutta; therefore it should be presumed to know that the goods would be sold in Calcutta and any loss of profit to the buyer resulting from the difference between the rate in Calcutta on the date of the breach and the contract rate would be the measure of damages.
Now there is no dispute that the buyer had purchased canvas in this case for resale; but we cannot infer from the mere fact that the goods were to be booked for Calcutta that the seller knew that the goods were for resale in Calcutta only.
As a matter of fact it cannot be denied that it was open to the buyer in this case to sell the railway receipt as soon at it was received in Kanpnr and there can be no inference from the mere fact that the goods were to be sent to Calcutta that they were meant only for sale in Calcutta.
It was open to the buyer to sell them any where it liked.
Therefore this is not a case where it can be said that the parties knew when they made the contract that the goods were meant for sale in Calcutta alone and thus the difference between the price in Calcutta at the date of the breach and the contract price would be the measure of damages as the likely result from the breach.
The contract was for delivery for Kanpur and was an ordinary contract in which it was open to the buyer to sell the goods where it liked.
We may in this connection refer to the following observations in Chao and others vs British Traders and Shippers Ltd. (1), which are, apposite to the facts of the present case: (1) ,797.
661 "It is true that the defendants knew that the plaintiffs were merchants and, therefore, had bought for resale, but every one who sells to a merchant knows that he has bought for are sale, and it does not, as I understand it, make any difference to the ordinary measure of damages where there is a market.
What is contemplated is that the merchant buys for are sale, but, if the goods are not delivered to him, he will go out into the market and buy similar goods and honour his contract in that way.
If the market has fallen he has not suffered any damage, if the market has risen the measure of damages is the difference in the market price.
" In these circumstances this is not a case where it can be said that the parties when they made the contract knew that the likely result of breach would be that the buyer would not be able to make profit in Calcutta.
This is a simple case of purchase of goods for resale anywhere and therefore the measure of damages has to be calculated as they would naturally arise in the usual course of things from such breach.
That means that the respondent had to prove the market rate at Kanpur on the date of breach for similar goods and that would fix the amount of damages, in case that rate had gone above the contract rate on the (late of breach.
We are therefore of opinion that this is not a case of the special type to which the words "which the parties knew, when they made the contract, to be likely to result from the breach of it" appearing in section 73 of the Contract Act apply.
This is ,in ordinary case of contract between traders which is covered by the words "which naturally arose in the usual course of things from such breach" appearing in section 73.
As the respondent had failed to prove the rate for similar canvas in Kanpur on the date of breach it is not entitled to any damages in the circumstances.
The appeal is therefore allowed, the decree of the High Court set aside and of the trial court restored with costs to the appellant throughout.

summary:
The appellant entered into a contract with the respondent for the sale of certain canvas at Re. 1 per yard under which the delivery was to be made through railway receipt for Calcutta for Kanpur.
The cost of transport from Kanpur to Calcutta and the labour charges in that connection were to be borne by the respondent and it was agreed that the railway receipt would be delivered on August 5, 1947.
The appellant was unable to deliver the railway receipt on the due date because booking from Kanpur to Calcutta was closed, and, therefore, cancelled the contract.
The respondent instituted a suit for the recovery of damages for the breach of the contract and claimed that as the seller knew that the goods were to be sent to Calcutta and must therefore be presumed to know that the goods would be sold in Calcutta, any loss of profit to the buyer resulting from the difference between the rate in Calcutta on the date of the breach and the contract rate would be the measure of damages.
Held: (1) that it is well settled that the two principles relating to compensation for loss or damage caused by breach of contract as laid down in section 73 Of the , read with the Explanation thereof, are (i) that, as far as possible, he who has proved a breach of a bargain to supply what he contracted to get is to be placed, as far as money can do it, in as good a situation as if the contract had been performed, but (ii) that there is a duty on him of taking all reasonable steps to mitigate the loss consequent on the breach and debars him from claiming any part of the damage which is due to his neglect to take such steps.
British Westinghouse Electric and Manufacturing Company, Limited vs Underground Electric Railway Company of London, , relied on.
(2) that the contract in the present case was for delivery for.
Kanpur in which it was open to the buyer to sell the goods where it liked, and no inference could be drawn from the mere fact that goods were to be booked for Calcutta that the seller knew that the goods were for resale in Calcutta only.
The contract was therefore not of the special type to which the words "which the parties knew, when they made the contract, 654 to be likely to result from the breach of it" appearing in section 73 of the , would apply, but an ordinary contract, for which the measure of damages would be such as "naturally arose in the usual course of things from such breach" within the meaning of that section.
The damages would be the difference between the market price in Kanpur on the date of breach and the contract price.
But as the respondent bad failed to prove the rate for similar canvas in Kanpur on the date of breach, it was not entitled to any damages as there was no measure for arriving at the quantum.
Chao and others vs British Traders and Shippers Ltd., , relied on.
Re. R and H. Hall Ltd. and W.P. Pim (junior) & Co. 's Arbi tration, and Victoria Laundry (Winsdsor) Ltd.v.
Newman Industries Ltd., , distinguished.


judgement:
No. 139 of 1957.
Petition under article 32 of the Constitution of India for enforcement of Fundamental rights.
R. V. section Mani, for the petitioner.
689 C. K. Daphtary, Solicitor General of India, B. Sen and R. H. Dhebar, for respondent No. 2. 1961.
March 30.
The Judgment of the Court was delivered by WANCHOO, J.
This petition challenges the constitutionality of a provision in the Constitution (Application to Jammu and Kashmir) Order, 1954 (hereinafter called the Order), made by the President under article 370(1) of the Constitution.
The case of the petitioner is that he is registered as an elector in the Parliamentary Constituency of Delhi.
As such he has a right to stand for election from any Parliamentary constituency in India.
Six seats are allotted to the State of Jammu and Kashmir in the House of the People (Lok Sabha).
Ordinarily, the election to these seats should have been by direct election from the territorial constituencies in the States as provided by article 81(l); but the President modified that Article in so far as it relates to the State of Jammu and Kashmir by Para.
5(c) of the Order in these words: "Article 81 shall apply subject to the modification that the representatives of the State in the House of the People ,hall be appointed by the President on the recommendation of the Legislature of the State." The petitioner contends that the President had exceeded his powers when he made this modification, for he thereby substituted direct election to the House of the People by nomination which he could not do.
This, it is said, was alteration in article 81 as applied to the State of Jammu and Kashmir and was not justified as a modification under article 370(l).
He therefore prays that the modification made may be declared unconstitutional and a writ of quo warranto be issued against the persons nominated to the House of the People on the recommendation of the Legislature of the State of Jammu and Kashmir prohibiting them from acting as members of Parliament.
Apart from the question whether the petitioner has any fundamental right to maintain this petition under 87 690 article 32, we are of opinion that there is no force in it.
The relevant part of article 370 with which we are concerned is in these words: "Notwithstanding anything in this Constitu tion, . . . . . . . (d) such of the other provisions of this Constitution shall apply in relation to that State (i.e., the State of Jammu and Kashmir) subject to such exceptions and modifications as the President may by order specify.
" Article 370 clearly recognises the special position of the State of Jammu and Kashmir and that is why the President is given the power to apply the provisions of the Constitution to that State subject to such exceptions and modifications as the President may by order specify.
The President thus has power to say by order that certain provisions of the Constitution will be excepted from application to the State of Jammu and Kashmir and 'on such order being made those provisions would not apply to that State.
Besides this power of making exceptions by which certain provisions of the Constitution were not to apply to that State the President is also given the power to apply the provisions of the Constitution with such modifications as he thinks fit to make.
The contention on behalf of the petitioner is that the modification envisaged in article 370(l) did not mean amendment of the Constitution for the purpose of application to that State and would not certainly include such amendment as would make a radical alteration in the provisions of the Constitution.
In this connection he relies on the observations of Kania, C.J., and Mahajan, J., in In re The (1).
Kania, C.J., after dealing with the meaning of the word " modify" seems to have held that the word "modify" as used in the context in which he was speaking only implied alteration without radical transformation.
Mhajan, J., also said that the word "modification" Use in the context before him did not involve "any material or substantial alteration".
The petitioner therefore urges (1) ; 691 that as the Order substituted direct election by nomination there has been a radical alteration in article 81 by the President in its application to the State of Jammu and Kashmir and therefore is not justified by the word 'modification" used in article 370(l) and the President had exceeded his power under that Article in making this radical alteration.
Before we consider what the word "modification" means in the context of article 370(l), let us see what the President has actually done in the matter of modification of article 81.
The modification prescribes that the six seats in the House of the People from the State of Jammu and Kashmir would be filled by nomination by the President on the recommendation of the Legislature of that State.
Now in form the seats will be filled by nomination by the President; but in reality what the modification provides is indirect election in place of direct election to these seats in the House of the People.
The modification lays down that the President will nominate members to these six seats on the recommendation of the Legislature of the State.
The President must therefore nominate only those who have been recommended by the Legislature of the State, which is elected on adult suffrage.
Now the only way the Legislature can make a recommendation for this purpose is by voting.
Therefore, in effect the modification made by the President is that the six seats to the House of the People from the State of Jammu and Kashmir will be filled by indirect election and not by direct election.
The element of election still remains in the matter of filling these seats, though it has been made indirect.
In these circumstances it may not be possible to say that there has been a radical alteration in article 81 by the modification effected by the Order.
But even assuming that the introduction of indirect election by this modification is a radical alteration of the provisions of article 81(l), the question still remains whether such a modification is justified by the word "modification" as used in article 370(1).
We are here dealing with the provision of a Constitution which cannot be interpreted in any narrow or pedantic sense 692 The question that came for consideration in In re Delhi Laws Act case( ') was with respect to the power of delegation to a subordinate authority in making subordinate legislation.
It was in that context that the observations were made that the intention of the law there under consideration when it used the word "modification" was that the Central Government would extend certain laws to Part C States without any radical alteration in them.
But in the present case we have to find out the meaning Of the word "modification" used in article 370(l) in the context of the Constitution.
As we have said already the object behind enacting article 370(l) was to recognise the special position of the State of Jammu and Kashmir and to provide for that special position by giving power to the President to apply the provisions of the Constitution to that State with such exceptions and modifications as the President might by order specify.
We have already pointed out that the power to make exceptions implies that the President can provide that a particular provision of the Constitution would not apply to that State.
If therefore the power is given to the President to efface in effect any provision of the Constitution altogether in its application to the State of Jammu and Kashmir, it seems that when he is also given the power to make modifications that power should be considered in its widest possible amplitude.
If be could efface a particular provision of the Constitution altogether in its application to the State of Jammu and Kashmir, we see no reason to think that the Constitution did not intend that he should have the power to amend a particular provision in its application to the State of Jammu and Kashmir.
It seems to us that when the Constitution used the word "modification" in article 370(l) the intention was that the President would have the power to amend the provisions of the Constitution if he so thought fit in their application to the State of Jammu and Kashmir.
In the Oxford English Dictionary (Vol.
VI) the word 'modify" means inter alia "to make partial changes in; to change (as object) in 693 respect of some of its qualities; to alter or vary without radical transformation".
Similarly the word "modification" means "the action of making changes in an object without altering its essential nature or character; the state of being thus changed; partial alteration".
Stress is being placed on the meaning "to alter or vary without radical transformation" on behalf of the petitioner; but that is not the only meaning of the words "modify" or "modification".
The word "modify" also means "to make partial changes in" and "modification" means "partial alteration".
If therefore the President changed the method of direct election to indirect election he was in essence making a partial change or partial alteration in article 81 and therefore the modification made in the present case would be even within the dictionary meaning of that word.
But, in law, the word "modify" has even a wider meaning.
In "Words and Phrases" by Roland Burrows, the primary meaning of the word "modify" is given as "to limit" or "restrict" but it also means " 'to vary" and may even mean to "extend" or "enlarge".
Thus in law the word "modify" may just mean "vary", i.e., amend; and when article 370(l) says that the President may apply the provisions of the Constitution to the State of Jammu and Kashmir with such modifications as he may by order specify it means that he may vary (i.e., amend) the provisions of the Constitution in its application to the State of Jammu and Kashmir.
We are therefore of opinion that in the context of the Constitution we must give the widest effect to the meaning of the word 'modification" used in article 370(l) and in that sense it includes an amendment.
There is no reason to limit the word "modifications" as used in article 370(1) only to such modifications as do not make any "radical transformation".
We are therefore of opinion that the President had the power to make the modification which he did in article 81 of the Constitution.
The petition therefore fails and is hereby dismissed with costs.
Petition dismissed.

dataset_name: IN-Abs

summary:
Six seats are allotted to the State of Jammu and Kashmir in the House of People (Lok Sabha) and election to those seats should ordinarily have been by direct election under article 81(1) of the Constitution but the President modified that Article under article 370(1) by Para.
5(c) of the Constitution (Application to Jammu and Kashmir) Order, 1954, to the effect that "the representatives of the State in the House of People shall be appointed by the President on the recommendations of the Legislature of the State".
The petitioner who claimed to be a registered elector and as such eligible for election from any Parliamentary constituency in India contended that the President had exceeded his powers when he made this modification for he thereby substituted direct election to the House of People by nomination which he could not do, and that the said modi fication amounted to radical alteration in article 81 and was not justified under article 370(1).
Held, that the word "modification" used in article 370(I) must be given the widest meaning in the context of the Consti tution and in that sense it includes an amendment and it cannot be limited to such modifications as do not make any "radical transformation".
The modification lays down that the President will make the nomination on the recommendation of the State Legislature which can do so only by voting, and in effect it provides that the seats will be filled by indirect election and not direct election.
The element of election being thus still present there was no radical alteration in article 81 and the President had the power to make the modification which he did.
In re ; , , distinguished.


judgement:
145 and 149 to 158 of 1959.
Writ Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
Sardar Bahadur, for the petitioners.
C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and T. M. Sen, for the respondents.
March 30.
The Judgment of the Court was delivered by WANCHOO, J.
These eleven petitions raise a common point and will be disposed of together.
The brief facts necessary for present purposes are these.
The petitioners are dealers in motor spirit in Hyderabad.
In 1949 the Hyderabad Sales of Motor Spirit Taxation Regulation, No. XXIV of 1358 Fasli (hereinafter called the Regulation) was passed and the petitioners were registered as retail dealers of petroleum products under the Regulation.
In 1957 the petitioners and others filed writ petitions in the High Court of Andhra Pradesh questioning the validity of the Regulation.
There was also a prayer for stay of the levy and collection of the tax and the High Court ordered that all further proceedings in the matter of levy, demand and collection of tax including cancellation of registration certificate and threatened attachment of property and the launching of criminal proceedings in pursuance of the Regulation be stayed.
The petitioners allege that on this stay being granted by the High Court, they thought that section 3 of the Regulation was suspended during the period of stay and therefore they stopped collecting the tax from consumers.
While these petitions were pending in the High Court, the Madras Sales of Motor Spirit Taxation (Andhra Pradesh Extension and Amendment) Act, No. V of 1958 (hereinafter called the Act), was passed by which 696 the Madras Sales of Motor Spirit Taxation Act, No. VI of 1939 was applied to Andhra Pradesh with some modifications and the Regulation was repealed.
This Act, like the Regulation, had provisions for registration of dealers and in consequence fresh registration certificates were issued to the petitioners as well as to all other dealers in the State.
In August 1958 the petitions challenging the validity of the Regulation were dismissed.
In September 1958 notice& were issued to the petitioners informing them that they had failed to submit returns showing sales of motor spirit from March 1957 to March 1958 and they were required to submit returns within seven days, failing which best judgment assessments would be made under the relevant provision of the Regulation.
The petitioners made repre sentations against this order and their main case was that they had not collected any tax from consumers during this period and it would therefore be harsh to demand tax from them in the circumstances.
Thereupon it is said that best judgment ' assessments were made against the petitioners and they were required to pay the tax, though liberty to pay in installments was granted to them for this purpose.
As however the petitioners failed to deposit the tax even in installments, the registration certificate of one of the petitioners was cancelled and other petitioners were threatened with cancellation of their registration certificates about October 1959.
Consequently, the present petitions were filed soon after challenging the provisions of the Act relating to cancellation of registration certificates on the ground that such cancellation was not a reasonable restriction on the fundamental rights of the petitioners to carry on business under article 19 (1) (g) of the Constitution.
The petitioners therefore pray for a declaration that sub sections
(1) and (6) of section 4 of the Act and r. 14 purported to be framed thereunder are ultra vires as being violative of article 19 (1) (g) of the Constitution and for consequential orders against the respondents, namely, the State of Andhra Pradesh and its officers, from enforcing the said provisions.
The petitions have been opposed by the respondents 697 and their case is that the provisions in question are reasonable restrictions on the right guaranteed under article 19 (1) (g) and are therefore perfectly valid and constitutional.
The respondents also say that the allegation of the petitioners that they did not collect the tax during the period of the stay orders from consumers is false.
In order to decide the constitutionality of the provisions which have been challenged it is necessary to look into the purpose and object of the Act in which those provisions appear.
The Act was passed in order to levy and collect tax on retail sales of motor spirit in the interest of the general revenues of the State.
Section 2 of the Act is the definition section.
Section 3 is the charging section and provides the rates at which the tax is to be levied on all retail sales of motor spirit.
Section 4 (1) which is being challenged is in these terms: "No person shall, after the commencement of this Act, carry on business in motor spirit as an importer or as a wholesale or retail dealer at any place in the State unless he has been registered as such under this Act.
" Sub sections (2) and (3) make certain ancillary provisions and sub section
(4) is in these terms: "Registration may be made subject to such conditions, if any, as may be prescribed including in the case of an applicant for registration as a retail dealer, the making of such deposit or the furnishing of such security as the registering authority may consider necessary to ensure the due payment of the tax which may from time to time be payable by him." Sub section (5) is unnecessary for our purpose, and sub section
(6) is in these terms: "Any registration under sub section (1) may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed.
" It is not necessary to refer to other sections which make various provisions necessary for the enforcement of the Act till we come to section 26 which gives power to 88 698 the State Government to make rules to carry out the purposes of the Act.
Rule 14 which has been attacked has been made under the power conferred under section 26 and it is not being disputed that if the main provisions contained in section 4 are constitutional, the rule is within the ambit of the Act and the rule making power of the State Government.
It will be clear from this analysis of the impugned provisions of the Act that the purpose and object of the Act is to levy and collect tax for purposes of the general revenues of the State and the liability for payment is placed under section 3 upon the person effecting the sale.
He is required by section 5 of the Act to keep books of account in the prescribed form and to submit to the Commercial Officer and to such other officers as may be prescribed, a I return in such form, 'containing such particulars and at such intervals, as may be prescribed.
Along with the return, under section 6 he is required to pay the amount of tax due in respect of the motor spirit sold by him in retail during the preceding month according to the return.
In order therefore that the State may have a check on the person from whom the tax is due section 4(l) provides for registration of dealers who carry on the business in motor spirit.
Without such registration it would be impossible for the State to know the persons who are selling motor spirit and from whom the tax is due.
The provision therefore under section 4(l) for registration of dealers is an eminently reasonable provision in order to carry out the object of the Act, namely, the levy and collection of this tax for purposes of the State.
It is really no restriction on carrying on business in motor spirit; any one who carries on such business is free to do so and all that he has to do is to ask for registration, which he will get subject to the provisions of sub section
That sub section has not been challenged in these petitions and therefore we proceed on the assumption that it is constitutional.
It follows therefore that all that anyone who wants to carry on business in motor spirit has to do is to ask for registration which he will get under the rules, and the purpose behind registration is that those on whom the liability to pay tax 699 that it may realise the tax from them.
The challenge therefore to the constitutionality of section 4(1) must fail.
Then we turn to sub section
(6), which provides that any registration under sub section
(1) may be suspended or cancelled by such authority, for such reasons, and in such manner, as may be prescribed.
The main attack of the petitioners is on this sub section.
They contend that this sub section authorises the State to cancel a registration.
The effect of such cancellation read with sub section
(1) is that a person whose registration is cancelled cannot carry on business in motor spirit as he was doing before the cancellation.
It is said that cancellation results in the total extinction of the business of the person whose registration is cancelled and thus the provision as to cancellation is an unreasonable restriction on the fundamental right to carry on business.
There is no doubt that if a registration is cancelled under sub section
(6) it will not be possible for the person whose registration is so cancelled to carry on his business in motor spirit.
Rule 14 provides conditions under which the registration may be cancelled and we are in the present case concerned with two of them, namely, where the holder of at.
registration certificate (a) fails to pay the tax or any other amount payable under the Act and (b) fraudulently evades the payment of the tax.
The reasonableness of this provision as to cancellation of registration certificate has to be judged in the background of what we have already said about the purpose of the levy and its liability on the seller.
It is true that there are other provisions in the law for realisation of public dues from those who default in making payments; but generally speaking cancellation of registration in cases like these is one more method of compelling payment of tax which is due to the State.
Collection of revenue is necessary in order that the administration of the State may go on smoothly in the interest of the general public.
The State has therefore armed itself with one more coercive method in order to realise the tax in such cases.
It is true 700 that cancellation of registration may result in a dealer being unable to carry on the business, but the same result may even follow from the application of other coercive processes for realisation of dues from a trader, for his assets may be sold off to pay the arrears of tax and lie may thereafter be not in a position to carry on the business at all.
Therefore the provision for cancellation of registration for failure to pay the tax or for fraudulently evading the payment of it is an additional coercive process which is expected to be immediately effective and enables the State to realise its revenues which are necessary for carrying on the administration in the interest of the general public.
The fact that in some cases restrictions may result in the extinction of the business of a dealer would not by itself make the provision as to cancellation of registration an unreasonable restriction on the fundamental right guaranteed by article 19(1)(g).
We may in this connection refer to Narendra Kumar vs The Union of India (1), where it was held that: "the word 'restriction ' in articles 19(5) and 19(6) of the Constitution includes cases of 'prohibition ' also; that where a restriction reaches the stage of total restraint of rights special care has to be taken by the Court to see that the test of reasonableness is satisfied by considering the question in the background of the facts and circumstances under which the order was made, taking into account the nature of the evil that was sought to be remedied by such law, the ratio of the harm caused to individual citizens by the proposed remedy, the beneficial effect reasonably expected to result to the general public, and whether the restraint caused by the law was more than was necessary in the interests of the general public.
" Applying these tests we are of opinion that the cancellation of registration will be justified even though it results in the extinction of business as such cancellation is in respect of a tax meant for the general revenues of the State to carry on the administration in the interest of the general public.
(1) ; 701 Besides, there is another consideration to which we may advert in the end, though even otherwise the cancellation is justified.
Though there is no provision in the Act or the Rules specifically authorising the seller to pass on the tax to the consumer, what actually happens is that the seller includes the tax in the price and thus passes it oil to the consumer.
Then in his turn the seller pays the tax to the State.
In effect by thus passing on the tax to the consumer through the price, the dealer has already collected the tax.
Therefore the compulsion of payment which arises because of the provision for cancellation of registration is under the circumstances justified and there is no reason why he should fail to pay it to the State or evade payment thereof fraudulently.
The fault for failure to pay the tax or fraudulent evasion in payment thereof lies in the circumstances entirely on the dealer and he cannot be heard to complain that cancellation of registration in such a case is a disproportionate restriction on the right to carry on business which cannot be justified in the interests of the general public.
Under the circumstances we are of opinion that the ratio of Narendra Kumar 's case (1) applies fully to the present case and the provision contained in sub section
(6) of section 4 is a reasonable restriction within the meaning of article 19(6) of the Constitution.
The petitions therefore fail and are hereby dismissed with costs; there will be one set of hearing costs only.
Petitions dismissed.

summary:
The Madras Sales of Motor Spirit Taxation Act (Mad. VI of 1939) was made applicable to the, State of Andhra Pradesh by the Madras Sales of Motor Spirit Taxation (Andhra Pradesh Extension and Amendment) Act (Andhra Pradesh V of 1958).
The purpose and object of the Act was to levy and collect tax on retail sales of motor spirit and the liability for payment was placed upon the person effecting the sale.
In order that the State may know the persons from whom tax was due section 4(1) provided for registration of dealers and section 4(6) provided for the suspension of such registration in the event of some contraventions.
All that any one who wanted to carry on business had to do was to ask for registration which he would get under the rules.
The petitioners who were dealers in motor spirit in Hyderabad filed writ petition challenging the provisions of the said section 4 Of sub sections (1) and (6) on the ground that such registration and cancellation were not reasonable restrictions on the fundamental rights of the petitioners to carry on business under article 19(1)(g) of the Constitution particularly as the cancellation of registration resulted in the total extinction of the business and was an unreasonable restriction and prayed that sub sections
(1) and (4) Of section 4 Of the Act and r. 14 framed under section 26 of the Act be declared ultra vires.
Held, that the provisions of section 4(1) of the Act were consti tutional.
Registration of dealers under section 4(1)was an eminently reasonable provision in order to carry out the object of the Act, the purpose behind the registration being that those on whom the liability to pay tax under section 3 of the Act lay, were known to the State, so that it could realise the tax from them.
The provision Of section 4(6) for cancellation of registration for failure to pay the tax or for fraudulently evading the payment of it was an additional coercive process which was expected to be immediately effective and enabled the State to realise its revenue.
The fact that in some cases restriction might result in the extinction of the business of a dealer would not by itself 695 make the provision as to cancellation of registration an un reasonable restriction on the fundamental right guaranteed by article 19(1)(g) of the Constitution.
Narendra Kumar vs The Union of India, ; , referred to.


judgement:
Appeal No.180 of 1959.
Appeal from the judgment and order dated June 30, 1955 of the former Nagpur High Court in Misc.
First Appeal No. 162 of 1949.
80 634 N. C. Chatterjee and B. P. Maheshwari, for the appellant.
G. C. Mathur, for the respondents.
March 29.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This appeal, by certificate under articles 132(l) and 133(l)(c) of the Constitution, has been filed against an order of the High Court at Nagpur dated June 30, 1955.
Though the facts necessary to decide the appeal lie within a comparatively narrow compass, the case itself has had a long and somewhat unique history.
In July, 1922, the Municipal Committee, Khandwa, resolved to impose a tax on the trade of ginning and pressing cotton by means of steam, or mechanical process, and after sundry procedure, a notification was published on November 25, 1922 in the Central Provinces and Berar Gazette, imposing the tax.
Certain traders including the appellant, affected by the tax, filed suits seeking injunction against the Municipal Committee on the ground that the tax was invalid and illegal.
Meanwhile, the Municipal Committee had served notices on the present appellant, and demanded and recovered the tax for 1923 24.
The appellant then filed a second suit for refund of the tax paid by her on the ground that the imposition of the tax was illegal and ultra vires.
The suits had varying fortunes in the Courts in India, till they reached the Privy Council.
The Judicial Committee by its first decision remitted the cases for additional evidence, while the appeals were kept pending.
The decision of the Judicial Committee is reported in Radhakrishan Jaikishan vs Khandwa Municipal Committee (1).
After the additional evidence was received, the Judicial Committee pronounced its decision, which is reported in Badhakishan Jaikishan vs Municipal Committee, Khandwa (9).
The Judicial Committee held that the tax was not validly imposed by the Municipal Committee, and reversing the decree of the Judicial Commissioner, decreed the suits.
(1) (1933) L.R. 611 A. 125.
(2) 635 The Provincial Legislature then passed the Khandwa Ginning and Pressing Cotton Tax Validating Act 8 of 1938, validating, the tax.
The Act contained only one operative section, which read as follows: "2.
Notwithstanding anything contained in the Central Provinces Municipal Act, 1903, or the Central Province Municipalities Act, 1922, or any decree or order of a civil court, the tax on the trade of ginning and pressing cotton by means of steam or mechanical process within the limits of the Khandwa municipality which was imposed by Notification No. 2639 1298 VIII, dated the 21st November, 1922, shall be deemed to have been legally imposed from the date of its imposition to the date on which this Act comes into force.
Explanation.
All decrees or orders of a civil court directing a refund of the tax already recovered by the committee of the said municipality or restraining the committee from recovering the tax shall be deemed to have no legal effect.
" The appellant had, in the meanwhile, applied for the execution of the decrees, and the Validating Act was pleaded in bar.
This plea was upheld by the executing Court, but the High Court at Nagpur, on appeal, rejected it and ordered the executions to proceed.
The decision of the High Court is reported in Firm Radhakishan vs Municipal Committee, Khandwa (1).
The reason given by the High Court was that the Explanation, though not the operative part of the Validating Act, conflicted with 0.
45 R. 15 of the Code of Civil Procedure, and that the assent of the Governor General had not been obtained, as required by is.
107(2) of the Government of India Act, 1935.
Meantime, the Provincial Legislature had been dissolved, and the Governor had assumed all the powers of the Provincial Legislature under section 93 of the Government of India Act,.
The Governor, with the assent of the Governor General enacted the second Validating Act intituled the Khandwa Municipality (Validation of Tax) Act, 1941,(16 of 1941), which received the assent of the Governor Genera I on June (1) (1940) N.L.J. 638.
636 30, 1941, and was published in the C. P. and Berar Gazette on July 11, 1941.
That Act, omitting parts not relevant here, read as follows: "2.
The tax the imposition of which purported to be sanctioned in the Notification of the Local Government (Ministry of Local Self Government) No. 2639 1298 VIII, dated the 21st November 1922, shall be, and shall be deemed always to have been, validly recoverable by the Municipal Committee of Khandwa in respect of the period from the 21st November 1922 to the 31st March 1938 (both dates inclusive).
Where the net sum recovered from any person before the commencement of this Act on account of the said tax is less than the aggregate of the sum recoverable from such person, the balance shall be payable to the said Municipal Committee on demand made at any time after the commencement of this Act and, if not paid within fifteen days from the date of the demand, shall be recoverable by any method available under the Central Provinces Municipalities Act,, 1922, for the recovery of a tax imposed thereunder or by such other method as the Provincial Government may by rule prescribe.
For the purposes of section 3 the net sum recovered from any person means the aggregate sum recovered from such person less any sum refunded to him and less so much of the amount of any decree or order for the payment of money executed by him against the said Municipal Committee as represents an amount previously paid by him on account of the said tax.
Nothing in this Act shall preclude the execution against the said Municipal Committee of any decree or order for the payment of money arising out of a payment on account of the said tax but upon the execution of such decree or order so much of the amount thereof as represents a sum previously paid on account of the said tax shall be payable to and recoverable by the said Municipal Committee in accordance with section 3. 6.
The Khandwa Ginning and Pressing Cotton Tax Validating Act, 1938, is hereby repealed.
" 637 The Provincial Government framed a rule, which, shortly stated, provided for the recovery of the IV amount by way of execution application made to the very Court, which executed the decree.
The Municipal Committee deposited the decretal amount in Court, which was withdrawn by the appellant on furnishing security.
On August 7, 1947, the Municipal Committee filed its application under the rule for execution of the decree.
Objections were raised by the appellant, but were disallowed, and the Municipal Committee realised the amount of the tax from the surety.
The appellant had raised many objections, but we are concerned with one only, viz., that the Act was ultra vires the Provincial Legislature and consequently the Governor, being repugnant to a. 142 A, which was introduced in the Government of India Act, 1935, and which imposed a limit of Rs. 50 on taxes on professions, trades and callings after March 31, 1939.
On November 16,1949, an appeal was taken by the present appellant to the High Court at Nagpur.
This appeal was heard by Sinha, C. J., and Mudholkar, J. (as they then were).
Mudholkar, J. held that by the second Validating Act which was passed after March 31, 1939, the limit of Rs. 50 per annum imposed by the second sub section of section 142 A was exceeded, 'and that the Act was thus ultra vires, the Governor.
Sinha C., J., was of the contrary opinion.
The case was then laid before Deo, J., who agreed with Sinha, C. J., and the appeal was dismissed.
The appellant then obtained the certificate, and filed this appeal.
Section 142 A of the Government of India Act, 1935, is as follows: "142 A. (1) Notwithstanding anything in section one hundred of this Act, no Provincial Law relating to taxes for the benefit of a Province or of a municipality, district board, local board or other local authority therein in respect of professions, trades," callings or employments shall be invalid on the ground that it relates to a tax on income.
(2) The total amount payable in respect of any 638 one person to the Province or to any one municipality, district board, local board, or other local authority in the Province by way of taxes on professions, trades, callings, and employments shall not, after the thirty first day of March nineteen hundred and thirty nine, exceed fifty rupees per annum: Provided that if in the financial year ending with that date there was in force in the case of any Province or any such municipality, board or authority a tax on professions, trades, callings, or employments the rate, or the maximum rate, of which exceeded fifty rupees per annum, the preceding provisions of this sub section shall, unless for the time being provision to the contrary is made by a law of the Federal Legislature, have effect in relation to that Province, municipality, board or authority as if for the reference to fifty rupees per annum there were substituted a reference to the rate or maximum rate, or such lower rate, if any, (being a rate greater than fifty rupees per annum) as may for the time being be fixed by a law of the Federal Legislature; and any law of the Federal Legislature made for any of the purposes of this proviso may be made either generally or in relation to any specified Provinces, municipalities, boards or authorities.
(3) The fact that the Provincial Legislature has power to make laws as aforesaid with respect to taxes on professions, trades, callings and employments, shall not be construed as limiting, in relation to professions, trades, callings and employments, the generality of the entry in the Federal Legislative List relating to taxes on income." Simultaneously with the introduction of section 142 A, Entry No. 46 in the Provincial Legislative List, which had till then stood as "Taxes on professions, trades, callings and employments" was amended by the addition of the words "subject, however, to the provisions of section 142 A of this Act".
The impugned Act was passed by the Governor under section 90 of the Government of India Act, 1935.
Under sub section
(3) of that section, it had the same force and 639 effect and was subject to disallowance in the same manner as an Act of the Provincial Legislature assent led to by the Governor.
The impugned Act was enacted with the concurrence and assent of the Governor General and thus complied with all the formalities required for such enactment.
The powers of the Provincial Legislatures under the Legislative Lists have been the subject of numerous decisions by the Federal Court and also by this Court.
It has been pointed out that these powers are as large and plenary as those of Parliament itself.
These powers, it has been held, include within themselves the power to make retrospective laws; and as pointed out by Gwyer, C.J. in The United Provinces vs Atiqa Begum (1), the burden of proving that Indian Legislatures "were subject to a strange and unusual prohibition against retrospective legislation lay upon those who asserted it".
This has not been asserted in this case, as, indeed, it could not be, after the decision of the case cited by us.
In the case before the Allahabad High Court, out of which the appeal before the Federal Court had arisen [sub nom Mst.
Atiqa Begum vs U. P. (2)], it was held that retrospective legislation was not possible in view of the provisions of section 292 of the Government of India Act, 1935, which continued all law in force in British India immediately before the commencement of Part III of the Act, until altered or repealed or amended by a competent Legislature or other competent authority.
This view was not accepted by the Federal Court, which held that section 292 of the Act did not prevent Legislatures in India from giving retrospective effect to measures passed by them.
There have been numerous occasions on which retrospective laws were passed, which were upheld by the Federal Court and also by this Court.
It is not necessary to cite instances, but we refer only to the decision in M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh (3), where this Court approved the dictum of the Federal Court.
Retrospective legislation being thus open to the (1) (2) A.I.R. (1940) All. 272.
(3) ; 640 Provincial Legislatures, the Act of the Governor had the same force.
Retrospective laws, it has been held, can validate an Act, which contains some defect in its enactment.
Examples of Validating Acts which rendered inoperative, decrees or orders of the Court or alternatively made them valid and effective, are many.
In Atiqa Begum 's case (1), the power of validating defective laws was held to be ancillary and subsidiary to the powers conferred by the Entries and to be included in those powers.
Later, the Federal Court in Piare Dusadh,v.
King Emperor (2) considered the matter fully, and held that the powers of the Governor General which were conterminous with those of the Central Legislature included the power of validation.
The same can be said of the Provincial Legislatures and also of the Governor acting as a Legislature.
The only question thus is whether the power to pass a retrospective and validating law was taken away by the enactment of section 142 A and the amendment of the Entry in the Government of India Act.
It is on this point that the difference in the High Court arose.
The amendment of the Entry is of no special significance, because it only subjects the otherwise plenary powers to the provisions of section 142 A. Apart from the implications arising from that section, the supremacy of the Legislature to pass retrospective and validating laws was unaffected.
We have thus to see what section 142 A enacted and to what extent it trenched upon the powers of the Provincial Legislature and the Governor.
Mr. N. C. Chatterjee, in arguing the case, adopted the line of reasoning of the minority view in the High Court.
He pointed out that a. 142 A was enacted to achieve three purposes.
The first was that it removed doubts whether the charge of tax on professions, etc., would be regarded as income tax.
The second was that it put a limit upon the powers of the Provincial Legislature to enact a law imposing a tax in excess of rupees fifty after March 31, 1939;and thirdly it preserved only existing valid laws already in force, which imposed a tax in excess of the amount indicated.
He (1) (2) 641 contended that the second sub section and the proviso covered the entire field, and a law passed after March 31, 1939, could not freshly impose a tax in excess of the limit and this was such a law.
Under the scheme of the Government of India Act, 1935, income tax, though a Central levy, was, under section 138 (1), distributable among the Provinces and for which an elaborate scheme prepared by Sir Otto Niemyer was accepted and embodied in the Government of India (Distribution of Revenues) Order in Council, 1936.
The Centre could levy a surcharge for federal purposes.
Taxes on trades, professions and callings, which were taxes already leviable by the Provinces under Schedule 11 of the Rules made by the Governor General in Council under .s. 80A(3)(a) of the Government of India Act, were also included in the Provincial Legislative List as a source of revenue for the Provinces.
It was, however, felt that these taxes might come into clash with tax on income in the Federal List, and also if unlimited in amount, might become a second tax on income to be levied by the Provinces.
It was to remove these contingencies that section 142 A was enacted.
Sub section (1) provided I ,hat, a tax on professions, etc., would not be invalid on the ground that it related to a tax on income.
Sub section (3) was a counterpart of sub section
(1), and provided that the, generality of the Entry in the Federal Legislative List relating to taxes on income would not be construed as in any way limited by the power of the Provincial Legislature to levy a tax on professions, etc.
The fields of the two taxes were thus demarcated.
No other implication arises from these two sub sections.
It was also apprehended that under the (guise of taxes on professions, etc., the Provincial Legislatures might start their own scheme of a tax on income, thus subjecting incomes from professions etc., to an additional tax of the nature of income tax.
A limit was therefore placed upon the amount which could be collected by way of tax on professions, etc., and that limit, was Rs. 50 per annum per person.
The, second 642 sub section achieved this result.
It was, however, realised that the tax being an old tax, there were laws under which the limit of Rs. 50 was already exceeded in relation to a Province, municipality, board or like authority, and the imposition of such a limit might displace their budgets after March 31, 1939.
A proviso was, therefore, added to the second sub section that if in the financial year ending with the thirty first day of March, nineteen hundred and thirty nine there was in force in the case of any Province, etc., a tax on professions, trades, callings or employments the rate or the maximum rate of which exceeded Rs. 50 per annum, the provisions of the second sub section shall have effect, (unless for the time being provision to the contrary was made by a law of the Federal Legislature) as if instead of Rs. 50 per annum there was substituted a reference to the rate or maximum rate exceeding Rs. 50.
Where no such law was passed by the Federal Legislature, the tax even in excess of Rs. 50 continued to be valid.
There can be no doubt that if a law was passed after the amendment and sought to impose taxes on professions etc., for any period after March 31, 1939, it had to conform to the limit prescribed by section 142A (2).
The prohibition in the second sub section operated to circumscribe the legislative power by putting a date line after which a tax in excess of Rs. 50 per annum per person for a period after the date line could not be collect id unless it came within the proviso.
But neither sub section
(2) nor the proviso speaks of a period prior to March 31, 1939.
The sub section speaks only of "the total amount payable. after the thirty first day of March, nineteen hundred and thirty.
nine".
These words are important.
They create a limit on the amount leviable as tax for a period after that date.
But if a law was passed validating another which imposed a tax for a period prior to the date indicated, it would be taxing professions etc., in excess of Rs. 50 not after March 31, 1939, but before it.
Neither the Entry nor the section either directly or indirectly prohibited this, nor did they create any limit for the prior period.
The Validating Act, though 643 passed in 1941, can be read only as affecting a period for which there was no limit.
If the sub section said that tax shall not be payable in excess of Rs. 50 without indicating the period or date, the argument would have some support, but it puts in a date, and the operation of the prohibition is confined to a period after that date.
The Validating Act, being thus completely within the powers of the Governor, could remove retrospectively the defect in the ' earlier Act.
Though it reimposed the tax from the date of the earlier Act, it took care to impose the tax for a period ending with March 31, 1938.
The impugned Act did not need the support of the proviso, because it did not fall within the ban of the second sub section.
In our opinion, the Validating Act of 1941 was within the powers of the Governor, and was a valid piece of legislation.
The appeal fails, and is dismissed with costs.
Appeal dismissed.

summary:
In 1922, the Municipal Committee, Khandwa imposed a tax on the trade of ginning and pressing cotton by means of steam or mechanical process.
Certain suits were filed challenging the validity of the tax and ultimately in 1937, the Privy Council held that the tax had not been validly imposed.
In 1941, the Governor enacted the Khandwa Municipality (Validation of Tax) Act, 1941, which sought to validate the tax imposed in 1922.
In the meantime, section I42 A was introduced in the Government of India Act, 1935, sub section
(2) Of which provided that the 'total amount payable in respect of any one person by way of taxes on professions, trades, callings and employments shall not, after March 31, 1939, exceed Rs. 50 per annum '.
The appellant contended that the validating Act was hit by section 142 A(2) and to the extent that it imposed a tax above Rs. 50 per person per annum it was invalid.
Held, that the Validating Act was not hit by section I42 A (2) Government of India Act, 1935.
The powers of the Indian Legislatures included a power to pass retrospective and validating laws.
Section 142 A(2) which put a limit on the amount of tax did not affect laws relating to a period prior to March 31, 1939, but affected only those relating to periods after that date.
It circumscribed the legislative power by putting a date line after which a tax in excess of Rs. 50 for a period after the dateline could not be collected unless it came within the proviso.
The Validating Act imposed the tax in excess of Rs. 5o not after March 31, 1939, but before it.
The United Provinces vs Atiqa Begum, and Piare Dusadh vs King Emperor, [1944] F.C .
R. 61, referred to.


judgement:
Appeals Nos. 25 and 26 of 1958.
Appeals from the judgments and orders dated August 7, 1956, of the Allahabad High Court in Special Appeals Nos. 151 and 152 of 1955.
C. B. Agarwala, A. N. Goyal and Mohan Lal Agarwala, for the appellant.
Gopi Nath Dikshit and C. P. Lal, for the respondents.
March 30.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
These two appeals arise out Gajen, of two writ petitions filed by the appellant Raja Harish Chandra Raj Singh against the respondents the Deputy Land Acquisition Officer and another in the Allahabad High Court and they were based on the same facts and asked for the same relief.
Both of them raise a short common question of limitation the decision of which would depend upon the determination of the scope and effect of the provisions of the proviso to section 18 of the Land Acquisition Act I of 1894 (hereafter called the Act).
Since the facts in both the appeals are substantially the same we would refer to the facts in Civil Appeal No. 25 of 1958.
The decision in this appeal would govern the decision of the other appeal, Civil Appeal No. 26 of 1958.
The appellant Raja Harish Chandra Raj Singh was the proprietor of a village Beljuri in the District of Nainital.
It appears that proceedings for compulsory acquisition of land including the said village for a public purpose were commenced by respondent 2, the State of Uttar Pradesh; notifications under sections 4 and 6 of the Act were issued in that behalf, and the 678 provisions of section 17 were also made applicable.
Accordingly, after the notice under section 9(1) of the Act was published possession of land was taken by the Collector on March 19, 1960.
Thereupon the appellant filed his claim to compensation for the land acquired in accordance with section 9(2), and proceedings were held by the Deputy Land Acquisition Officer, respondent 1, for determining the amount of compensation.
It appears that in these proceedings an award was made, signed and filed in his office by respondent I on March 25, 1951.
No notice of this award was, however, given to the appellant as required by section 12(2) and it was only on or about January 13, 1953 that he received information about the making of the said award.
The appellant then filed an application on February 24, 1953 under a. 18 requiring that the matter be referred for the determination of the Court, as, according to the appellant, the compensation amount determined by respondent I was quite inadequate.
Respondent I took the view that the application thus made by the appellant was beyond time under the proviso to section 18 and so he rejected it.
The appellant then filed a writ petition in the Allahabad High Court on December 21,1953 in which he claimed appropriate reliefs in respect of the order passed by respondent I on his application made under a. 18.
This petition was heard by Mehrotra, J. and was allowed.
The learned Judge directed respondent 1 to consider the application made by the appellant on the merits and deal with it in accordance with law.
He held that in dealing with the said application respondent 1 should treat the application as filed in time.
Against this decision the respondents preferred an appeal to a Division Bench of the said High Court.
Mootham, C. J. and Chaturvedi, J., who heard this appeal took the view that the application filed by the appellant under section 18 of the Act was barred by time, and so they allowed the appeal, set aside the order passed by Mehrotra, J. and dismissed the writ petition filed by the appellant.
The appellant then moved for and obtained a certificate from the said High Court and it is with this certificate that he has come to this 670 Court in the present appeal; and so the short question which the appellant raises for our decision is whether the application filed by him under section 18 of the Act( was in time or not.
Before proceeding to construe the material provisions of section 18 it is necessary to refer very briefly to, some other sections of the Act which are relevant in( order to appreciate the background of the scheme in relation to land acquisition proceedings.
Section 4 deals with the publication of the preliminary notification and prescribes the powers of the appropriate officers.
Whenever it appears to the appropriate Government that land in any locality is needed for any public purpose a notification to that effect shall be published in the official gazette and a public notice of its substance shall be given at convenient places in the said locality; that is the effect of section 4(1).
Sec tion 4(2) deals with the powers of the appropriate authorities.
Section 5 A provides for the hearing of objections filed by persons interested in any land which has been notified under section 4(1).
After the objections are thus considered a declaration that land is required for a public purpose follows under section 6(1).
Section 6(2) provides for the publication of the said declaration; and section 6(3) makes the declaration conclusive evidence that the land is needed for a public purpose.
Section 9 requires the Collector to give public notice in the manner specified stating that the Government intend to take possession of the land and calling for claim,% to compensation in respect of all interests in such land.
Section 9(2) prescribes the particulars of such notice, and section 9(3) an 4) provide for the manner of serving such notice.
Section II deals with the enquiry and provides for the making of the award by the Collector.
Section 12(l) then lays down that the award when made by the Collector shall be filed in his office, and shall, except as otherwise provided, be final and conclusive evidence as between the Collector and the persons interested whether they have respectively appeared before the Collector or not, of the true area and value of the land, and the apportionment of the compensation 680 among the persons interested.
Section 12(2) is important.
It makes it obligatory on the Collector to give immediate notice of his award to such of the persons interested as are not present personally or by their representatives when the award is made.
It is common ground that no such notice was given by respondent 1 to the appellant.
That briefly is the scheme of the relevant provisions of Part II of the, Act which deals with acquisition.
Part III which deals with reference to Court and procedure thereon opens with section 18.
Section 18(1) provides that any person interested who has not accepted the award may, by written application to the Collector, require that the matter be referred by him for determination of the Court, inter alia, whether the amount of compensation is adequate or not.
It is under this provision that the appellant made an application from which the present appeal arises.
Section 18(2) requires that the application shall state the grounds on which objection to the award is taken.
These grounds have been stated by the appellant in his application.
The proviso to section 18 deals with the question of limitation.
It prescribes that every such application shall be made (a) if the person making it was present or represented before the Collector at the time when he made his award within six weeks from the date of the Collector 's award; (b) in other cases within six weeks of the receipt of the notice from the Collector under section 12(2), or within six months from the date of the Collector 's award whichever shall first expire.
The appellant 's case falls under the latter part of el.
(b) of the proviso.
It has been held by the Allahabad High Court that since the application made by the appellant before respondent I was made beyond six months from the date of the award in question it was beyond time.
The view taken by the High Court proceeds on the literal construction of the relevant clause.
As we have already seen the award was signed and delivered in his office by respondent 1 on March 25, 1951 and the application by the appellant was made under section 18 on February 24, 1953.
It has been held that the effect of the relevant 681 clause is that the application made by the appellant is plainly beyond the six months permitted by the said clause and so respondent I was right in rejecting it as barred by time.
The question which arises for our decision is whether this literal and mechanical way of construing the relevant clause is justified in A law.
It is obvious that the effect of this construction is that if a person does not know about the making of the award and is himself not to blame for not knowing about the award his right to make an application under section 18 may in many cases be rendered ineffective.
If the effect of the relevant provision unambiguously is as held by the High Court the unfortunate consequence which may flow from it may not have a material or a decisive bearing.
If, on the other hand, it is possible reasonably to construe the said provision so as to avoid such a consequence it would be legitimate for the Court to do so.
We must therefore enquire whether the relevant provision is capable of the construction for which the appellant contends, and that naturally raises the question as to what is the meaning of the expression "the day of the Collector 's award".
In dealing with this question it is relevant to bear in mind the legal character of the award made by the Collector under section 12.
In a sense it is a decision of the Collector reached by him after holding an enquiry as prescribed by the Act.
It is a decision, inter alia, in respect of the amount of compensation which should be paid to the person interested in the property acquired; but legally the award cannot be treated as a decision; it is in law an offer or tender of the compensation determined by the Collector to the owner of the property under acquisition.
If the owner accepts the offer no further proceeding is required to be taken; the amount is paid and compensation proceedings are concluded.
If, however, the owner does not accept the offer section 18 gives him the statutory,, right of having the question determined by Court, and ' it is the amount of compensation which the Court may determine that would bind both the owner and 86 682 the Collector.
In that case it is on the amount thus determined judicially that the acquisition proceedings would be concluded.
It is because of this nature of the award that the award can be appropriately described as a tender or offer made by the Collector on behalf of the Government to the owner of the property for his acceptance.
In Ezra vs The Secretary of State (1).
It has been held that "the meaning to be attached to the word "award" under section 11 and its nature and effect must be arrived at not from the mere use of the same expression in both instances but from the examination of the provisions of the law relating to the Collector 's proceedings culminating in the award.
The considerations to which we have referred satisfy us that the Collector acts in the matter of the enquiry and the valuation of the land only as an agent of the Government and not as a judicial officer; and that consequently, although the Government is bound by his proceedings, the persons interested are not concluded by his finding regarding the value of the land or the compensation to be awarded.
" Then the High Court has added that such tender once made is binding on the Government and the Government cannot require that the value fixed by its own officer acting on its behalf should be open to question at its own instance before the Civil Court.
The said case was taken before the Privy Council in Ezra vs Secretary of State for India (2 ), and their Lordships have expressly approved of the observations made by the High Court to which we have just referred.
Therefore; if the award made by the Collector is in law no more than an offer made on behalf of the Government to, the owner of the property then the making of the award as properly understood must involve the communication of the offer to the party concerned.
That is the normal requirement under the contract law and its applicability to cases of award made under the Act cannot be reasonably excluded.
Thus considered the date of the award cannot be determined solely by reference to the time when the award is signed by the Collector or delivered by him in his office; it must (1) Cal.
36, 86.
(2) Cal.
683 involve the consideration of the question as to when it was known to the party concerned either actually or constructively.
If that be the true position then the literal and mechanical construction of the words "the date of the award" occurring in the relevant section would not be appropriate.
There is yet another point which leads to the same conclusion.
If the award is treated as an administrative decision taken by the Collector in the matter of the valuation of the property sought to be acquired it is clear that the said decision ultimately affects the ' rights of the owner of the property and in that sense, like all decisions which affect persons, it is essentially fair and just that the said decision should be communicated to the said party.
The knowledge of the party affected by such a decision, either actual or constructive, 'is an essential element which must be satisfied before the decision can be brought into force.
Thus considered the making of the award cannot consist merely in the physical act of writing the award or signing it or even filing it in the office of the Collector; it must involve the communication of the said award to the party concerned either actually or constructively.
If the award is pronounced in the presence of the party whose rights are affected by it can be said to be made when pronounced.
If the date for the pronouncement of the award is communicated to the party and it is accordingly pronounced on the date previously announced the award is said to be communicated to the said party even if the said party is not actually present on the date of its pronouncement.
Similarly if without notice of the date of its pronouncement an award is pronounced and a party is not present the award can be said to be made when it is communicated to the party later.
The knowledge of the party affected by the award, either actual or constructive, being an essential requirement of fair play and natural justice the expression "the date of the award" used in the proviso must mean the date when the award is either communicated to the party or is known by him either actually or constructively.
In our opinion, therefore, it would be unreasonable to 684 construe the words "from the date of the Collector 's award" used in the proviso to section 18 in a literal or mechanical way.
In this connection it is material to recall the fact that under section 12(2) it is obligatory on the Collector to give immediate notice of the award to the persons interested a,, are not present personally or by their representatives when the award is made.
This requirement itself postulates the necessity of the communication of the award to the party concerned.
The Legislature recognised that the making of the award under section 11 followed by its filing under section 12(1) would not meet the requirements of justice before bringing the award into force.
It thought that the communication of the award to the party concerned was also necessary, and so by the use of the mandatory words an obligation is placed on the Collector to communicate the award immediately to the person concerned.
It is significant that the section requires the Collector to give notice of the award immediately after making it.
This provision lends support to the view which we have taken about the construction of the expression "from the date of the Collector 's award" in the proviso to section 18.
It is because communication of the order is regarded by the Legislature as necessary that section 12(2) has imposed an obligation on the Collector and if the relevant clause in the proviso is read in the light of this statutory requirement it tends to show that the literal and mechanical construction of the said clause would be wholly inappropriate.
It would indeed be a very curious result that the failure of the Collector to discharge his obligation under section 12(2) should directly tend to make ineffective the right of the party to make an application under section 18, and this result could not possibly have been intended by the legislature.
It may now be convenient to refer to some judicial decisions bearing on this point.
In Magdonald vs The Secretary of State, for India in Council (1) Rattigan and Shah Din, JJ.
held that under the proviso to section 18 until an award is announced or communicated to the parties concerned it cannot be said to be legally made.
(1) (1005) 4 Ind. C. 914.
685 An award under the Act, it was observed in the judgment, is in the nature of a tender and obviously no tender can be made unless it is brought to the( , knowledge of the person to whom it is made.
The learned Judges observed that this proposition seemed to them to be self evident.
The same view has been expressed by the Oudh Judicial Commissioner in Hari Das Pal vs The Municipal Board, Lucknow (1).
On the other hand, in Jehangir Bomanji vs G. D. Gaikwad (2) the Bombay High Court has taken the view that the element of notice is only an essential ingredient of the first part of cl.
(b) of the proviso to s.18 which prescribes the period of limitation as six weeks from the date of the receipt of the notice from the Collector, not of the second part which prescribes the maximum period of six months from the date of the Collector 's award in absolute terms.
According to that decision, as far as the limitation under the latter part is concerned it runs from the date of the award and the date of the award has nothing whatever to (lo with the notice which the Collector has to give under section 12(2).
In our opinion this decision is based on a misconstruction of the relevant clause in the proviso to section 18.
The same comment falls to be made in regard to the decision of the Kerala High Court in State of Travancore Cochin vs Narayani Amma Ponnamma (3).
It may, however, be pertinent to point out that the Bombay High Court has taken a somewhat different view in dealing with the effect of the provision as to limitation prescribed by section 33A(2) of the Indian Income tax Act.
This provision prescribes limitation for an application by an assessee for the revision of the specified class of orders, and it says that such an application should be made within one year from the date of the order.
It is significant that while provid ing for a similar period of limitation section 33(1) specifically lays down that the limitation of sixty days therein prescribed is to be calculated from the date on which the order in question is communicated to the (1) (1914) 22 Ind. C. 652.
(2) A.I.R. 1954 Bom.
419, (3) A.I.R. (1958) Kerala 272.
686 assessee.
In other words, in prescribing limitation section 33(1) expressly provides for the commencement of the period from the date of the communication of the order, whereas section 33A(2) does not refer to any such communication; and naturally the argument was that communication was irrelevant under section 33A(2) and limitation would commence as from 'the making of the order without reference to its communication.
This argument was rejected by the Bombay High Court and it was hold that it would be a reasonable interpretation to hold that the making of the order implies notice of the said order, either actual or constructive, to the party affected by it.
It would not be easy to reconcile this decision and particularly the reasons given in its support with the decision of the same High Court in the case of Jehangir Bomanji (1).
The relevant clause under section 33A(2) of the Indian Income tax Act has also been similarly construed by the Madras High Court in O.A.O.A.M. Muthia Chettiar vs The Commissioner of Income tax, Madras (2).
"If a person is given a right to resort to a remedy to get rid of an adverse order within a prescribed time", observed Rajamannar, C.J., "limitation should not be computed from a date earlier than that on which the party aggrieved actually knew of the order or had an opportunity of knowing the order, and therefore must be presumed to have the knowledge of the order".
In other words the Madras High Court has taken the view that the omission to use the words "from the date of communication" in section 33A(2) does not mean that limitation can start to run against a party even before the party either knew or should have known about the said order.
In our opinion this conclusion is obviously right.
A similar question arose before the Madras High Court in Annamalai Chetti vs Col. J. G. Cloete(3).
Section 25 of the Madras Boundary Act XXVIII of 1860 limited the time within which a suit may be brought to set side the decision of the settlement officer to two months from the date of the award, and (1) A.I.R 1954 Bom.
(2) I.L.R. (3) Mad.
687 so the question arose as to when the time would begin to run.
The High Court held that the time can begin to run only from the date on which the decision is communicated to the parties.
"If there was any decision at all in the sense of the Act", says the judgment, "it could not date earlier than the date of the communication of it to the parties; otherwise they might, be barred of their right, of appeal without any knowledge of the decision having been passed".
Adopting the same principle a, similar construction has been placed by the Madras High Court in K. V. E. Swaminathan alias Chidambaram Pillai vs Letchmanan Chettiar (1).
On the limitation provisions contained in sections 73(1) and 77(l) of the Indian Registration Act XVI of 1908.
It was held that in a case where an order was not passed in the presence of the parties or after notice to them of the date when the order would be passed the expression "within thirty days after the making of the order" used in the said sections means within thirty days after the date on which the communication of the order reached the parties affected by it.
These decisions show that where the rights of a person are affected by any order and limitation is prescribed for the enforcement of the remedy by the person aggrieved against the said order by reference to the making of the said order, the making of the order must mean either actual or constructive communication of the said order to the party concerned.
Therefore, we are satisfied that the High Court of Allahabad was in error in coming to the conclusion that the application made by the appellant in the present proceedings was barred under the proviso to section 18 of the Act.
In the result we allow the appeal, set aside the orders passed by Mootham, C. J. and Chaturvedi, J., and restore those of Mehrotra, J.
In the circumstances of this case there would be no order as to costs.
Appeal allowed.
(1) Mad 491.

summary:
Certain lands belonging to the appellant were compulsorily acquired.
The Collector made an award with respect to the amount of compensation, signed and filed it in his office as required by section 12(1) Land Acquisition Act on March 19, 1950.
But no notice of the award, as required by section 12(2), was given to the appellant.
The appellant came to know of the award on or about January 13, 1953, and on February 24, 1953, he filed an application under section 18 requiring that the matter be referred for the determination of the Court.
The proviso to section 18 prescribes that in cases where a person was not present or represented at the time of the making of the award the application under section 18 shall be made within six weeks of the receipt of the notice from the Collector under section 12(2), or "within six months from the date of the award", whichever shall expire first.
The appellant 's application was dismissed as time barred on the ground that it was made beyond six months of the date of the award.
Held, that the application made by the appellant under section 18 of the Act was not beyond time.
The award of the Collector was not a decision but an offer of compensation on behalf of the Government to the owner of the property and it was not effective until it was communicated to the owner.
The making of the award did not consist merely in the physical act of writing the award or signing it or filing it in the office of the Collector; it also involved the communication of the award to the owner either actually or constructively.
Consequently, the expression "the date of the award" in the proviso to section 18 meant the date when the award was communicated to the owner or is known by him either actually or constructively.
The application in the present case was made within six months of the date when the appellants came to know of the award and was within the period prescribed.
Ezra vs The Secretary of State, Cal.
36 and Ezra vs Secretary of State for India, Cal, 605, applied.
Magdonald vs The Secretary of State for India in Council, (1905) 4 Ind.
C. 914 and Hari Das Pal vs The Municipal Board, Lucknow, (1914) 22 Ind. C. 652, approved.
677 Jahangir Bemanji vs G. D. Gaikwad, A.I.R. 1954 Bom.
419 and State of Travancore Cochin vs Narayani Amma Ponnamma, A.I.R. 1958 Kerala 272, disapproved.
O. A. O. A. M. Muthia Chettiar vs The Commissioner of Income tax, Madras, I.L.R. , Annamalai Chetti vs Col.
T. G. The Cloeta, Mad. 189.
and E. V. E. Swaminathan.
The Alias Chidambaram Pillai vs Letchmanan Chettiar, (1930) I.L.R.Acqu , referred to.