judgement:
Appeal No. 1013 of 1963.
Appeal from the judgment dated November 9, 1960, of the Madhya Pradesh High Court in Civil Miscellaneous Appeal No. 40 of 1955.
A. V. Viswanatha Sastri and Rameshwar Nath, for the appel lant.
B. Sen, Balwan Singh Johar and 1.
N. Shroff, for the respondents.
The Judgment of the Court was delivered by Subba Rao J.
This appeal by certificate preferred against the order of the High Court of Madhya Pradesh, Indore Bench, raises the question whether an item of Rs. 42,63,090 14 7 should have been allowed as a trading loss in computing the profits of the appellant company under section 3 of the Indore Industrial Tax Rules, 1927.
The facts may be briefly stated.
The appellant, Indore Malwa United Mills Ltd., is a public limited company incorporated and registered under the Indore Companies Act, 1914.
Since the incorporation it has been carrying on business of manufacturing cloth.
Under the Memorandum of Association of the said company, for the purpose of the textile business it was authorized to raise or borrow money from time to time and to invest its funds, inter alia, in loans to others.
For the purpose of carrying on the business, the appellant company originally appointed M/s. Karimbhai Ibrahim & Co. Ltd. as its Managing Agents.
On June 8, 1926, the Board of Directors of the appellant company passed a resolution to the following effect : "Resolved that Surplus Fund of the company be invested with the agents in current account with the company at the same rate of interest viz., 6%.
" On November 28, 1929, the appellant company entered into an agreement with M/s. Karimbhai Ibrahim & Sons Ltd. where under they were appointed as the Managing Agents of the appellant company in place of M/s. Karimhai Ibrahim & Co. Ltd. 561 On July 19, 1932, the Board of Directors reaffirmed the resolution of June 8, 1926.
Pursuant to the power conferred on the Managing Agents under the said agency agreement and the said resolution, Karimbhai Ibrahim & Sons Ltd. borrowed large sums of money from outsiders, entered them in the appellant company 's accounts and invested large sums with themselves "in current account with the company" in terms of the said resolution and utilised the same for their own purposes.
Before the Annual General Body Meeting they used to bring large amounts into the accounts of the company and show that they had paid off their debts.
After satisfying the General Body they would again withdraw large sums for their purposes. 'Me General Body was also aware of the loans and indeed it approved the said transactions.
In the year 1933 the Managing Agency company went into liquidation.
For the assessment year 1941, the appellant company submitted its return of income and claimed thereunder a deduction, among other items, a sum of Rs. 49,13,316 under the head of bad debt and trading loss written off in the profits and loss account of the appellant company we are only concerned in this appeal with this item and, therefore, it is not necessary to notice any other particulars of the assessment. 'Me Assessing Authority allowed only Rs. 6,41,913 2 0 as bad debt and disallowed the amount due from Karimbhai lbrahim & Sons Ltd. on the ground that the said borrowings were not made for the purpose of the business of the company.
On appeal the Appellate Authority also took the same view.
On further appeal, the High Court confirmed the finding of the Appellate Authority on the ground that the losses incurred by the company were really dehars the business of the company, though they might involve fraudulent conduct of the Managing Agents.
Hence the present appeal.
Mr. A. V. Viswanatha Sastri, learned counsel for the appel lant, contended that the employment of the Managing Agents was incidental to the carrying on of the appellant 's business, that, as the Managing Agents had the power to borrow funds for the appellant company and invest the surplus in loans to themselves the loss caused by such investment was also incidental to the carrying on of the appellant 's business and, therefore, the said loss was deductible in arriving at the trading profits of the appel lant company.
Mr. Sen, learned counsel for the respondents, raised before us two contentions, namely, (1) the assessment in question was made under the Indore Industrial Tax Rules, 1927, that under 562 the said Rules tax was payable only in respect of the profits or gains of any cotton mill industry and that profits or loss pertaining to the money lending activity of the appellant company could not possibly be subject to tax or deduction under the said Rules; and (2) the debt due by the Managing Agents was not a trading debt inasmuch as the Managing Agents borrowed moneys not necessary for the business of the appellant company and lent to themselves the said amount and, therefore, it was a loss incurred by the appellant dehors the business of the company.
The first question raised by Mr. Sen is based upon the dis tinction between the Indore Industrial Tax Rules and the corresponding, provisions of the Indian Income tax Act.
It is said that the Indore Industrial Tax Rules are only concerned with the cotton mill industry and the tax payable thereunder is in respect of the said industry, while under the Income tax Act the tax is payable in respect of the income of the business of the assessee.
But a perusal of the proceedings during all the stages does not disclose that any such argument was advanced at any time.
Assuming that the contention was correct, if it had been raised before, the assessee might have been in a position,to establish by relevant evidence that the particular amount borrowed by the Managing Agents was from and out of the amounts borrowed for the purpose of the said industry.
We cannot allow a question which at its best is a mixed question of fact and law to be raised for the first time before us.
We do not propose to express our opinion on the same one way or other.
We shall proceed with the appeal on the basis that for the purpose of deducting trading losses in computing trading profits there is no difference between the Income tax Act and the relevant Indore Industrial Tax Rules.
The only question, therefore, is whether the loss claimed in the present case was a trading loss which is deductible in computing the profits of the company.
The relevant principle of law has been laid down by this Court in Badridas Daga vs Commissioner of Income tax(1).
There, after considering the relevant decisions on the subject, this Court laid down the following test : "The result is that when a claim is made for a deduction for which there is no specific provision in section 10(2), whether it is admissible or not will depend on whether, having regard to accepted commercial practice and trading principles, it can be said to arise out of the carrying on of the business and to be incidental (1) (1959] S.C.R. 690, 695.
563 to it.
If that is established, then the deduction must be allowed, provided of course there is no prohibition against it, express or implied, in the Act.
" Where an agent employed by the appellant for the purpose of carrying on his business in exercise of the powers conferred on him operated on the bank accounts, withdrew moneys from it and used them for discharging his personal debts, this Court in the said decision found no difficulty in holding that the amount misappropriated and found irrecoverable was an allowable deduction under the Income tax Act.
The only difference between that case and the present one is that the Agent misappropriated the amount in, that case, whereas in the present case the Managing Agents in exercise.
of the powers conferred by the appellant borrowed the moneys, but failed to return the same.
If embezzlement of moneys entrusted to an agent is incidental to a business, by the same token moneys legally utilized by the agent must more appropriately be incidental to the business.
In a recent decision in The Commissioner of Income tax, U.P. vs M/s. Nainital Bank Ltd. (1) this Court held that an amount lost to the bank by dacoity was a loss incidental to the business of banking.
There, in the course of the business large amounts were, kept in the bank premises, and this Court held that the risk of loss by dacoity was incidental to a banking business.
If that be so, the fact that the Managing Agents brought into the company 's till larger amounts than the company 's business demanded at a particular point of time would not make the borrowings or the lending of money to themselves any the less incidental to the sanctioned business operations.
The question is not whether the Managing Agents committed a fraud on the company, but whether the amounts 'borrowed were the funds of the company.
If the creditors had filed a suit against the company, could it have resisted the suit on the ground that the Managing Agents had no power to borrow the amounts for the reason that at the time they borrowed, the amounts were in excess of the requirements of the business ? Decidedly not.
There would not have been any defence to such a suit.
After the borrowing the money became the company 's money.
That apart, there was no question of fraud in this case, for the profit and loss account and the balance sheet placed before the General Body Meeting of the Company every year brought to its notice the total amount the company borrowed through the Managing Agents and the General Body approved of it.
The only fraud, (1) ; 564 if any, consisted in the practice followed by the Managing Agents in bringing into the accounts of the company the entire amount lent to them in order to satisfy the shareholders that nothing was going wrong.
The next step is the borrowing of money by the Managing Agents from the company.
Under the memorandum of associa tion as well as under the express power conferred by the said resolution, the company, through the Managing Agents, could invest its funds by way of loans.
If there was no mishap the Managing Agents would have paid the entire amount and if they did not, the company could have recovered the entire amount from them. 'Me result, therefore, was that both the borrowing by the Managing Agents on behalf of the company from third parties and the lending to themselves created legal obligations.
They were obligations created in the course of the business.
The money lent would be a debit item in the accounts of the company in accordance with the accepted commercial practice and if the amount was realized it would be a credit item.
Both would be proper items of accounts for ascertaining the profit and loss of the company.
If the debt became irrecoverable, it would be a bad debt.
We, therefore, find no difficulty in holding that the said debt which had become irrecoverable was a trading loss deductible in computing the profit of the appellant company in the assessment year.
It was a loss incidental to the appellant 's business and is certainly sanctioned by commercial practice and trading principles.
We, therefore, hold that the High Court went wrong in holding that the said amount represented loss incurred by the appellant dehors its business.
In the result, the appeal is allowed.
The appellant will have its costs here and in the High Court.
Appeal allowed.

dataset_name: IN-Abs

summary:
The appellant company which carried on the business of manufacturing textiles was allowed by its Memorandum of Association to borrow money for the purpose of its business and to invest it inter alia in loans to others.
Its Board of Directors passed a resolution to the effect that the company would invest its surplus funds in current account with the Managing Agents on interest.
The Managing Agents borrowed large sums from outsiders, entered the borrowings in the books of the company and invested large sum with themselves in current account.
Before the Annual General Meeting they would bring back the money into the company 's accounts to satisfy the General Body that they had paid off their debts, and afterwards would again withdraw large sums for their own purposes.
In 1933 the Managing Agents ' company went into liquidation and it large debt was due from them to the company.
In 1941 the debt having been found to be irrecoverable, the appellant company claimed it as a bad debt and trading loss for the purpose of computing its income under the Indore Industrial Tax Rules, 1927, the provisions of which, in this regard, were similar to those of the Indian Income tax Act, 1922.
The assessing authority did not allow the claim, nor did the Appellate Authority.
The High Court also held that the losses incurred by the company were really dehors the business of the company.
The company thereupon appealed to the Supreme Court.
It was contended on behalf of the appellant that the employment of the Managing Agents was incidental to the carrying on of the appellant 's business, that,as the Managing Agents had the power to borrow funds for the company and invest the surplus in loans to themselves, the loss such investment was also incidental to the carrying on the appellant 's business, and therefore the said loss was deductible in arriving at the, trading profits of the company.
HELD: The appeal must be allowed.
The Managing Agents had borrowed the money from outsiders and invested it with themselves in accordance with the company 's resolution.
The money borrowed from outsiders became part of the funds of the company, and the creditors could have sued the company for it.
Similarly the company could have sued the Managing Agents for the sums invested with them.
Both the borrowing by the company and the investment with the Managing Agents created legal obligations.
Appropriate entries were made in the company 's accounts in accordance with commercial practice.
The amounts invested with the Managing Agents were entered as debts which became bad debts on becoming irrecoverable.
In the circumstances the loss arising from the bad debts was incidental to the appellant 's business, 560 and deductible in computing the profits of the appellant company for the ,assessment year in question.
[563 F H; 564 B E].
Badridas Daga vs Commissioner of Income tax, [1959] S.C.R. 690 and Commissioner of Income tax, U.P. vs M/s. Nainital Bank Ltd., ;


judgement:
Civil Appeals Nos, 823 826 of 1962.
Appeals by special leave from the order dated March 7, 1962, of the Central Government Labour Court at Delhi in L.C.A. Nos.
246 to 249 of 1962.
M.C. Setalvad, N.V. Phadke, J.P. Thacker, O.C. Mathur, Ravinder Narain and J.B. Dadachanji, for the appellants.
A.V. Viswanatha Sastri, M.K. Ramamurthi, R.K. Garg, D.P. Singh and S.C. Agarwal, for the respondents.
April 19.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
This group of several ' appeals has been placed together for final disposal, because the appeals included m the group raise a common question of law m regard to the construction of section 33C(2) of the In.
(No. 14 of 1947) (hereinafter called the Act).
We propose to deal with this.
point m Civil Appeals Nos.
823 to 826 of 1962 which have been preferred by the appellant, the Central Bank of India Ltd, against the respondents, its employees and in accordance with our decision on the said point the other appeals, included in this group would be dealt with on the merits.
Civil Appeals 823 to 826 of 1962 arise out of applications made by four respondents under 143 section 33C(2) of the Act.
The case for each one of the respondents was that besides attending to his routine duties as clerk, he had been operating the adding machine provided for use in the clearing department of the Branch during the period mentioned in the list annexed to the petition and it was alleged that as such, he was entitled to the payment of Rs. 10/ per 'month as special allowance for operating the adding machine as provided for under paragraph 164(b)(1) of the Sastry Award.
On this basis, each one of the respondents made his respective claim for the amount covered by the said allowance payable to him during the period specified in the calculations. 'The appellant disputed the respondent 's claims.
It urged three preliminary objections against the competence of the applications.
According to it, the respondents could claim only non monetary benefits under the Award that were capable of computation and so, section 33G(2)was inapplicable to their claim.
It was also contended that without a reference made by the Central Government, the applications were not maintainable, and it was pleaded that since the applications involved a question of the interpretation of the Sastry Award, they were outside the purview of section 33C(2).
On the merits, the appellant 's case was that the special allowance claimed by the respondents was payable only to the Comptists and could not be claimed by the respondents on the ground that they were operating adding machines.
In support of this contention, the appellant alleged that a certain amount of manipulative skill is required for the handling of a Comptometer since the operater has to execute a series of somewhat complex operations in quick succession before he can arrive at a result. 'the art of operating a comptometer has to be learnt over several months, but the work of operating the adding machine needs no special training and does not require even the skill which a typist has to show.
That= is why, according to the appellant, 144 no special allowance could be claimed by the respondents under paragraph 164(b)(1) of the Sastry Award.
The Central Government Labour Court before which these applications were made by the respondents over ruled the preliminary objections raised by the appellant and on the merits, found that the respondents were entitled to claim the special allowance under the relevent clause of the Sastry Award.
That is how the applications made by the respondents were allowed and the respective amounts claimed by them were ordered to be paid by the appellant.
It is against this order that the appellant has come to this Court by special leave.
The principal contention which has been urged before us by the appellant is one of jurisdiction.
It is argued t.hat the Labour Court has exceeded its jurisdiction m entertaining the applications made by the respondents because the claims made by respondents in their respective applications are outside the scope of section 33C(2) of the Act.
In dealing with this point, it is necessary to read section 33C: "(1) Where any money is due to a workman from an employer under a settlement or an award or under the provisions of Chapter VA, the workman may without prejudice to any other mode of recovery, make an application to the appropriate Government for the recovery ' of the money due to him, and if the appropriate Government is satisfied that any money is so due, it shall issue a certificate for that amount to the Collector who shall proceed to recover the same ' in the same manner as an arrear of land revenue.
(2) Where any workman is entitled to receive from the employer any benefit which is 145 capable of being computed in terms of ,money.
, the amount at which such benefit should be computed may, subject to any rules that may be made under this Act, be determined by such Labour Court as may be specified in this behalf by the appropriate Government, and the amount so determined may be recovered as provided for in sub section (1).
(3) For the purposes of computing the money value of a benefit, the Labour Court may, if it so thinks fit, appoint a commissioner who shall, after taking such evidence as may be necessary, submit a report to the Labour Court and the Labour Court shall determine the amount after considering the report of the Commissioner and other circumstances of the case.
" It is common ground that section 33C(1) provides for a kind of execution proceedings and it contemplates that if money is due to a workman under a settlement or an award, or under the provisions of Chapter VA, the workman is not compelled to take resort to the ordinary course of execution in the Civil Court, but may adopt a summary procedure prescribed by this sub section.
I This sub section postulates that a specific amount is due to the workman and the same has not been paid to him.
If the appropriate Government is satisfied that the money is so due, then it is required to issue a certificate for the said amount to the Collector and that leads to the recovery of the said amount in the same manner as an arrear of land revenue.
The scope and effect of s.33C(1) are ,not in dispute before us.
There is also no dispute that the word "benefit" used in section 33C(2) is not confined merely to monetary benefit which could be converted in terms of 146 money, but that it takes in all kinds of benefits which may be monetary as well as non monetary if the workman is entitled to them, and in sUCh a case, the workman is given the remedy of moving the appropriate Labour Court with a request that the said benefits be computed or calculated in terms of money.
Once such computation or 'calculation is made under section 33C(2)the amount so determined has to be recovered as provided for in sub s.(1).
In other words, having provided for the determination of the amount due to the workman in cases falling under subs.
(2), the legislature has clearly prescribed that for recovering the said amount, the workman has to revert to his remedy under sub section
Sub section (3) empowers the Labour Court to appoint a Commissioner for the purposes of computing the money value of the benefit, and it lays down that if so appointed, the Commissioner shall take such evidence as may be necessary and submit report i to the Labour Court.
The Labour Court is then required to proceed to determine the amount in the light of the. report, submitted by the Commissioner and other circumstances of the case.
This means that proceedings taken under sub section
(2) maybe determined by the Labour Court itself or,in a suitable case, may be determined by it after receiving a report submitted by the Commissioner appointed in that behalf.
It is clear that if for computing in terms of money the value of the benefit claimed by the workman, an enquiry is required to be held and evidence has to be taken, the Labour Court may do that itself or may delegate that work to a COmmissioner appointed by it.
This position must be taken to be well settled after the decision of this Court in the Punjab National Bank Ltd. V.K.L. Kharbanda (1).
The question which arises for our decision is, however, slightly different.
It is urged by the appellant that sub section (2)can be invoked by a workman Who (1) 1962 (1) L.L.J.284 147 is entitled to receive from the employer the benefit there specified, but the right of the workman to receive the benefit has to be admitted and could not be a matter of dispute between the parties in cases which fall under sub section
The argument is, if there is a dispute about the workman 's right to claim the benefit, that has to be adjudicated upon not under sub section
(2), but by other appropriate proceedings permissible under the Act, and since in the present appeals, the appellant disputed the respondent 's right to 'claim the special allowance, the Labour Court had no jurisdiction to deal with their claim.
In other words, the contention is that the opening words of sub section
(2) postulate the existence of and admitted right vesting in a workman and do not cover cases where the said right is disputed.
On the other hand, the respondents contend that sub section
(2) is broad enough:I to take in all cases where a workman claims some benefit and wants the said benefit to be computed in terms of money.
If in resisting the said claim, the employer ,makes several defences, all those defences will have to be tried by the Labour Court under sub section
On this argument all questions arising between the workmen and their employers in respect of the benefit which they claim t6 be computed in terms of money would fall within the scope of sub section
Before dealing with the question of construction thus raised by the parties in the present proceedings it would be material.
to refer briefly to the legislative history of this provision.
The Act, as it was originally passed, made relevant provisions on the broad basis that industrial disputes should be adjudicated upon between trade Unions or representatives of labour on the one hand and the workmen 's employers on the other.
That is why section 10 (1) which deals with the reference of disputes to Boards Courts or Tribunals, has been interpreted by this 148 Court to mean the disputes which are referable under section 10(1) should be disputes which are raised by 'the trade Unions to which the workmen belong or by the representatives of workmen acting in such a representative character.
It was, however, realised that in denying to the individual employees a speedy remedy to enforce their existing rights, the Act had failed to 'give due protection to them.
If an individual employee does not seek to raise an industrial dispute in the sense that he does not want any change in the .terms and conditions of service, but wants only to :implement or enforce his existing rights, it should not be necessary for him to have to take recourse to the remedy prescribed by section 10(1) of the Act; that was the criticism made against the omission of the Act to provide for speedy enforcement of individual workman 's existing rights.
In order to meet this criticism, an amendment was made by the Legislature in 1059 by section 20 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (No. 48 of 1950).
Section 20 of this Act provided for recovery of money due from an employer under an award or decision.
This provision filled up the lacuna which was discovered, because even after an award was made individual workmen were not given a speedy remedy to implement or execute the said award, and so s.20 purported to supply that remedy.
Section 20( 1 ) provided that if money was due under an award or decision of an industrial tribunal, it may be recovered as arrears of land revenue or as a public demand by the appropriate Government on an application made to it by the person entitled to the said money.
Section 20(2) then dealt with the cages where any workman was entitled to receive from the, employer any benefit under an award or decision of an industrial tribunal which is capable of being computed in terms of money, and it provided that the amount at which the said benefit could be computed may be determined.
subject to the rules framed in that behalf, by that industrial tribunal and the amount so determined may be recovered 149 as provided for in sub section
In other words, the provisions of s.20 (2) roughly correspond to the provisions of s.33C(2) of the Act.
There are, however, two points of distinction.
Section 20(2) was confined to the benefits claimable by workmen under an award or decision of an Industrial tribunal; and the application to be made in that behalf had to be filed before the industrial tribunal which made the said award or decision.
These two limitations have not been introduced in section 33C(2).
Section 20(3) corresponds to s.33C:(3).
It would thus be noticed that section 20 of this Act provides a speedy remedy to individual workmen to execute their rights under awards or decisions of industrial tribunals.
Incidentally, we may add that section 34 of this Act made a special provision for adjudication as to whether conditions of service had been changed during the pendency of industrial proceedings at the instance of an individual workman and for that purpose inserted in the Act s.33A.
Act 48 of 1950 by which s.20 was enacted came into force on May 20, 1950.
In 1953, the Legislature took a further step b? providing for additional rights to the workmen by adding Chapter VA to the Act, and passed an Amending Act No. 43 of 1953.
Chapter VA deals with the workmen 's claims in cases of lay off and retrenchment.
Section 25(1) which was enacted in this Chapter provided for the machinery to recover moneys due from the employers under this Chapter.
It laid down, inter aria, that any: money due from an employer.
under the provisions of Chapter VA may be recovered in the same manner as an arrear of land revenue or as a public demand by the appropriate: Government on an application made to it by the workman entitled to the said money.
This was of course, without prejudice to the workman 's right to adopt:any other mode of recovery.
This provision shows, that having created additional rights in the workmen in respect of lay off and retrenchment the 150 legislature took the precaution of prescribing a speedy remedy for recovering the.
said amounts from their.
employers.
This Amending Act came into force on December 23, 1953.
About three years later, the legislature passed the Industrial Disputes (Amendment and Miscellaneous Provisions) Act, 1956 (No. 36 of 1956).
This Act repealed the Industrial Disputes (Appellate Tribunal) Act No. 48 of 1950, section 25.I in Chapter VA and inserted section 33C(1), (9) and (3) and section 36A in the Act.
The result of these modifications is that the recovery provisions are now contained in section 33C and an additional provision is made by section 36A which deals with cases where doubt or difficulty may arise in the interpretation of any provision of an award or settlement.
This Act came into force on August 28, 1956.
In order to make the narration of the legislative background of section 33C complete, we may refer to the fact that by the Amendment ACt No. 18 of 1957, two more provisions were added to Chapter VA which are numbered as section 25FF and section 25FFF.
This Act came into force on June 6, 1957.
The legislative history to which we have just referred clearly indicates that having provided broadly for the investigation and settlement of industrial disputes on the basis of collective bargaining, the legislature recognised that individual workmen should be given a speedy remedy to enforce their existing individual rights, and so, inserted section 33 A in the Act in 1950 and added section 33 C in 1956.
These two provisions illustrate the cases in which individual workmen can enforce their rights without having to take recourse to section 10(1) of the Act, or without having to depend upon their Union to espouse their cause.
Therefore, in construing section 33 C we have to bear in mind two relevant considerations.
The construction 151 should not be so broad as to bring within the scope of section 33 C cases which would fall under section 10(1).
Where industrial disputes arise between employees acting collectively and their employers, they must be adjudicated upon in the manner prescribed by the Act, as for instance, by reference under s, 10(1).
These disputes cannot be brought within the purview of section 33C.
Similarly, having regard to the fact that the policy of the Legislature in enacting section 33C is to provide a speedy remedy to the individual workmen to enforce or execute their existing rights, it would not be reasonable to exclude from the scope of this section cases of existing rights which are sought to be implemented by individual workmen.
In other words, though in determining the scope of section 33C we must take care not to exclude cases which legitimately fall within its purview, we must also bear in mind that cases which, fall under section 10(1) of the Act for instance cannot be brought within the scope of section 34C.
Let us then revert to the words used in section 33C(2) in order to decide what would be its true scope and effect on a fair and reasonable construction.
When sub section
(2) refers to any workman entitled to receive from the employer any benefit there specified, does it mean that he must be a workman whose right to receive the said benefit is not disputed by the employer? According to the appellant, the scope of subs.
(2) is similar to that of sub section
(1) and it is pointed out that just as under sub section
(1) any disputed question about the workmen 's right to receive the money due under an award cannot be adjudicated upon by the appropriate Government, so under sub s.(2) if a dispute is raised about the workmen 's right to receive the benefit in question, that cannot be determined by the Labour Court.
The only point which the Labour Court can determine is one in relation to the computation of the benefit in terms of money.
We arc not impressed by this argument.
In our opinion, on a fair and reasonable construction 152 of sub section
(2)it is clear that if a workman 's right ' to receive the benefit is disputed.
that may have to be determined by the Labour Court.
Before proceeding to compute the benefit in terms of money the Labour Court inevitably has to deal with the question as to whether the workman has a right to receive that benefit.
If the said right is not disputed, nothing more needs to be done and the Labour Court can proceed to compute the value of the benefit in terms of money; but if the said right is disputed, the Labour Court must deal with that question and decide whether the workman has the right to receive the benefit as alleged by him and it is only if the Labour Court answers this point in favour of the workman that the next question of making necessary computation can arise.
It seems to us that the opening clause of subs.
(2)does not admit of the construction for which the appellant contends unless we add some words in that clause.
The Clause "Where any workman is entitled to receive from the employer any benefit" does ' not mean "where such workman is admittedly, or admitted to be, entitled to receive such benefit." The appellant 's construction would necessarily introduce the addition of ' the words "admittedly, or admitted to be" in that clause, and that clearly is not permissible.
Besides, it seems to us that if the appellants construction is accepted, it would necessarily mean that it would be at the option of the employer to allow the workman to avail himself of the remedy provided by sub section
(2), because he has merely to raise an objection on 'the ground that the right claimed by the workman is not admitted to oust the jurisdiction of the Labour Court to entertain the workman 's application.
The claim under section 33 C (9,) clearly postulates that the determination of the question about computing the benefit in terms of money may, in some cases.
have to be preceded by an enquiry into the existence of the right and such an enquiry must be held to be incidental to the main determination 153 which has been assigned to the Labour Court by sub section
As Maxwell has observed "where an Act confers a jurisdiction, it impliedly also grants the power of doing all such acts, or employing such means, as are essentially necessary to its execution(1).
,, We must accordingly hold that section 33C (2) takes within its purview cases of workmen who claimed that the benefit to which they are entitled should be computed in terms of money, even though the right to the benefit on which their claim is based is disputed by their employers incidentally, it may be relevant to add that it would be somewhat odd that under sub section
(3), the Labour Court should have been authorised to delegate the work of computing the money value of the benefit to the Commissioner if the determination of the said question was the only task assigned to the Labour Court under sub section
On the other hand, sub section
3 becomes intelligible if it is held that what can be assigned to the Commissioner includes only a part of the assignment of the Labour Court under sub section (2).
It is, however, urged that in dealing with the question about the existence of a right set up by the workman, the Labour Court would necessarily have to interpret the award or settlement on which the right is based, and that cannot be within its jurisdiction under section 33C (2), because interpretation of awards or settlements has been specifically and expressly provided for by section 36A.
We have already noticed that section 36A has also been added by the Amending Act No. 36 of 1956 along with section 33C, and the appellant 's argument is that the legislature introduced the two sections together and thereby indicated that questions of interpretation fall within section 36A and,therefore, outside section 33C (2).
There is no force in.
this contention.
Section 36A. merely provides for the interpretation of any provision of an award or settlement where any difficulty or doubt arises as (1) Maxwell on Interpretation of Statutes p.350.
154 to the said interpretation.
Generally, this power is invoked when the employer and his employees are not agreed as to the interpretation of any award or settlement, and the appropriate Government is satisfied that a defect or doubt has arisen in regard to any provision in the award or settlement.
Sometimes, cases may arise where the awards or settlements are obscure, ambiguous or otherwise present difficulty in construction.
It is in such cases that section 3CA can be invoked by the parties by moving the appropriate Government to make the necessary reference under it.
Experience showed that where awards or settlements were defective in the manner just indicated, there was no remedy available to the parties to have their doubts or difficulties resolved and that remedy is now provided by section 36A.
But the scope of section 36A .is different from the scope of section 33C (2), because section 36A is not concerned with the implemention or execution of the award at all, whereas that is the sole purpose of section 33C (2).
Whereas section 33C(2) deals with cases of implementation of individual rights of workmen falling under its provisions, section 36A deals merely with a question of interpretation of the award where a .dispute arises in that behalf between the workmen and the employer and the appropriate Government is satisfied that the dispute deserves to be resolved by reference under section 36A.
Besides, there can be no doubt that when the Labour Court is given the power to allow an individual workman to execute or implement his` existing individual rights, it is virtually exercising execution powers in some cases, and it is well settled that it is open to the Executing Court to interpret the decree for the purpose of execution.
It is, of course, true that the executing Court cannot go behind the decree, nor can it add to or subtract from the provision of the decree.
These limitations apply also to the Labour Court; but like the executing Court, the 155 Labour Court would also be competent to interpret the award or settlement on which a workman bases his claim under section 33C (2).
Therefore, we feel no difficulty in holding that for the purpose of making the necessary determination under section 33C (2),it would, in appropriate cases, be open to the Labour Court to interpret the award or settlement on which the workman 's right rests.
We have already noticed that in enacting section 33C the legislature has deliberately omitted some words which occurred in section 20 (94 of the Industrial Disputes (Appellate Tribunal) Act, 1950.
It is remarkable that similar words of limitation have been used in section 33C (1) because section 33 C (1) deals with cases where any money is due under a settlement or an award or under the provisions of Chapter VA.
It is thus .clear that claims made under section 33C (1), by itself can be only claims referable to the settlement, award, or the relevant provisions of Chapter VA.
These words of limitations are not to be found in section 33C (2) and to that extent, the scope of section 33C (9.) is undoubtedly wider than that of section 33C (1).
It is true that even in respect of the larger class. of cases which fail under section 33C (2), after the determination is made by the Labour Court the execution goes back again to section 33C (1).
That is why section 33C (2) expressely provides that the amount so determined may be recovered as provided for in sub section (1).
It is .unnecessary in the present appeals either to state exhaustively or even to indicate broadly what other categories of claims can fall under section 33C (2).
There is no doubt that the three categories of claims mentioned in section 33C (1) fall under section 33C (2) and in that sense, section 33C (2) can itself be deemed to be a kind of.
execution proceeding; .but it is possible that Claims not based on settlements, awards or made under the provisions of Chapter V A, may also be competent under section 33C (2) and that may illustrate its wider scope.
We would, however, like to indicate 156 some of the claims which would not fall under section 33C (2), because they formed the subject matter of the appeals which have been grouped together for our decision along with the appeals with which we are dealing at present.
If an employee is dismissed or demoted and it is his case that the dismissal or demotion is wrongful, it would not be open to him to make a claim for the recovery of his salary or wages under section 33G (2).
His demotion or dismissal may give rise to an industrial dispute which may be appropriately tried, but once it is shown that the employer has dismissed or demoted him, a claim that the dismissal Or demotion is unlawful and.
therefore, the employee continues to be the workman of the employer and is entitled to the benefits due to him under a preexisting contract, cannot be made under section 33 C (2).
If a settlement has been, duly reached between the employer and his employees and it fails under section 18 (9.) or C3) of the Act and is governed by s.(19) 2 it would not be open to an employee, notwithstanding the said settlement, to claim the benefit as though the said settlement had come to an end.
If the settlement exists and continues to be operative no claim can be made under section 33C(2) inconsistent with the said settlement.
If the settlement is intended to be terminated, proper steps may have to be taken in that behalf and a dispute that may be arise thereafter may to be dealt with according.
to the, other procedure prescribed by the Act.
Thus, our conclusion is that the scope of section 33G (2)is wider than section 33G (1) and cannot be wholly assimilated with it, though for obvious reasons, we do not propose to decide or indicate what additional cases would fall under section 33G (2) which may not fall under section 33G (1).
In this connection, we may incidentally state that the observations made by this Court in the case of Punjab National Bank Ltd (1), that section 33C is a provision in the nature of execution should not be interpreted to mean that the scope of section 33G (2) is exactly the same as section 33G (1) (page 238).
(1) 1962 (1) L.L.J.234.
157 It now remains to refer to some decisions which are relevant.
In M/s. Kasturi and Sons (Private)Lid vs Shri N. Salivateeswaran (1), where this Court was considering the question about the scope and effect of section 17 of the Working Journalists (Condition of Service) and Miscellaneous Provisions Act, 1955,(No.
45 of 1955), reference was made to the fact that the, procedure prescribed by the said section 17 was different from the procedure prescribed by section 33C (2), and it was observed that under the latter provision where an employee makes a claim for some money, an enquiry into the claim is contemplated by the Labour Court, and it is only after the Labour Court has decided the matter that the decision becomes enforceable under section 33C (1) by summary procedure.
No such enquiry was contemplated by the said section 17.
In Shri Ambica Mills Co. Ltd. vs Shri S.B. Bhatt (2), section 15 of the (No. 4 of 1936) fell to be construed, and it was held that under the said section, when the authority exercises its jurisdiction which is made exclusive by section 22, it has necessarily to consider various questions incidental to the claims falling thereunder, and it was added that although it would be inexpedient to lay down any hard and fast rule for determining the scope of such questions, care should be taken not to unduly extend or curtail its jurisdiction As we have already indicated.
we have adopted the same approach in interpreting section 33C (2).
The respondents relied on the decision of the Bombay High Court in M/s. Sawa tram Ramprasad Mills Co. Ltd., Akola vs Baliram (3).
In support of the very broad construction which they seek to place on the provisions of section 33C (2).
In that case, the High Court was dealing with a claim made under Chapter VA of the Act, (1) ; (2) ; (3) 158 and there can be.
no doubt that such a claim together with .all a question incidental 'to its decision can be properly determined under section 33C (2).
In reaching its conclusion, the High Court has no doubt made certain broad and general observations in regard to the scope of the jurisdiction conferred on the Labour Court under section 33G (2).
Those observations are in the nature of obiter dicta and in so far as they may be inconsistent with our present decision, they should be held to be not justified by the terms of section 33C (2).
In the result, the preliminary point raised by the appellant that the Labour Court had no jurisdiction to entertain the respondents ' applications fails and must be rejected.
That takes us to the merits of the respondents ' claim.
We have already seen that the main basis on which the respondents have claimed the special allowance under paragraph 164 (b) (1) of the Sastry Award is that they have been operating upon the adding machines provided by the appellant for use in its clearing department.
The appellant, however has contended that the special allowance can be claimed only by Comptists, and since the respondents had not even claimed that they are Comptists, their applications should be rejected.
For deciding this dispute.
it is necessary to refer to the relevant provisions of the Sastry Award as they were modified by the decision of the Labour Appellate Tribunal.
Chapter X of the Sastry Award deals with the problem of special allowances.
In paragraph 161 of this Chapter, the Sastry Tribunal observed that there were certain posts even in the clerical and subordinate grades for which an incumbent requires special qualifications or skill for the efficient discharge of his duties, and so, it thought that an extra payment in such cases is necessary by way of recognition of and compensation for this special skill or responsibility.
In paragraph 162, the Tribunal examined three alternatives suggested for 159 its acceptance for making a provision for some special payment, and .it ultimately decided that a special allowance should be paid to those categories of employees who, by their special qualifications or skill, deserve recognition '.
In paragraph 163, the Tribunal observed that the special allowance which it was about to prescribe was the minimum and i.t was open to the banks to pay higher allowance if they thought necessary to do so.
Then followed paragraph 164 in which it specified 10 categories fit for special allowances.
The first of these categories was Graduates and the claim of this category of employees was dealt with by the Tribunal in paragraph 164(a).
Paragraph 164(b) deals with the remaining 9 categories and the Comptists are the first in these 9 categories.
The Tribunal provided that the Comptists should receive Rs. 10/ p.m. as special allowance in cases of all the four classes of banks A,B,C and D.
It is on this provision that the respondents rely in support of their claim.
When the Sastry Award went before the Labour Appellate Tribunal, the Labour Appellate Tribunal dealt with this question in paragraph 140 of its decision.
The Tribunal observed that during the course of the hearing it became clear that the nomenclature by which.
particular categories of employees are described differed from bank to bank, and so, in order to avoid disputes between banks and their employees as to whether a particular category of employees is entitled to a special allowance under the ' Award or not the, Tribunal asked the banks to supply it with statements of different names given to the categories of employees for whom special allowances have been 'provided by the Sastry Award.
Accordingly, some of the banks supplied the necessary information.
The Tribunal then set out eight of the categories the equivalents of which had been supplied in the statements of the banks.
As against 160 the Comptists, Statement No. B 247 which had been supplied by the Imperial Bank of India, showed that the nomenclature adopted by the said Bank in respect of the said category was adding machine operators, Addressographers.
Having set out these equivalents,1.
the Tribunal took the precaution of adding that the equivalents set out by it were helpful, but did not exhaust the subject, and so, in the absence of data, it had to be left to the banks to pay the appropriate allowances having regard to the duties and responsibilities of a post.
That is how the matter ended.
In the present proceedings, the respondents seem to base their case on the sole basis that they are .operating the adding machines and can, therefore, be treated as adding machine operators, and they argued that since adding machine operators were equated in the statement of the Imperial Bank of India with Comptists, they must be held to be Comptists for the purpose of paragraph 164 (b) (1) of the Sastry Award and thus entitled to the special allowance of Rs. 10/ .
In fact, in allowing the respondents ' claim the Tribunal seems to have accepted this contention, for it has observed that according to the decision of the Labour appellate Tribunal, the adding machine operators must be held to be in the same category as Comptists.
In other words, the Tribunal appears to have taken the view that since the Imperial Bank of India described the employees who did the work of Comptists as adding machine operators, it followed that whenever any bank employee was operating on the adding machine for howsoever small a period it may be, he must be held to be a Comptists and as such entitled to the special allowance.
our opinion, this is clearly erroneous.
It is true that the Imperial Bank of India adopted the nomenclature of adding machine operators for its Comptists and that may presumably be for the reason.
that at the relevant time, its Comptists were 161 doing the work of adding machine operators and Ad dressographers; so that it made no difference whether the bank called them Comptists or adding machine operators or Addressographers, all the three types of work being entrusted to one category of employees; but however that may be, the nomenclature adopted by the Imperial Bank of India cannot be said to be binding on the other banks which did not adopt it, and so, it is obviously erroneous to hold that the equivalent adopted by the Imperial Bank of India must be taken to have been adopted by all the other banks.
Indeed, the Award recently made by Mr. Justice Desai who was appointed the National Industrial Tribunal in the Bank Disputes clearly brings out the distinction between Comptists on the one hand, and adding machine operators, addressographers and photostat machine operators on the other in paragraphs 5. 242 and 5. 265.
In the present appeals, no evidence was led on behalf of the respondents.
The appellant, however, examined its officer Mr. Shivodkar.
This witness stated that an adding machine can be operated by a clerk with half an hour 's practice.
It only does additions mechanically.
Operating a comptometer, however, involves complicated calculations and in order to handle it efficiently, the employee has to take three months training and practising.
He added that about two hours ' work is put on the adding machine by the several respondents, but it is included in their normal working hours.
There has been some discussion at the Bar in the present appeals as to the nature of the work which is done on the comptometer and on the adding machine, but there can be no doubt that compared to the comptometer, the adding machine is a simple mechanism and for operating on it, not much experience or technical training is required; in fact, it may not even require that amount of skill and efficiency which is expected of a typist and it is significant that a claim made 162 by the typists for special allowance was rejected by the Sastry Tribunal.
That shows how the respondents ' claim for special allowance as Comptists solely on the ground that they can be described as adding machine operators, cannot be sustained.
Therefore, the sole basis on which the respondents ' claim has been allowed by the Labour Court is unsound, and so the order passed by it cannot be affirmed.
It has, however, been urged before us by the respondents that they should be given an opportunity to substantiate their claims on the merits.
It is argued that they were advised that the equivalent supplied by the Imperial Bank of India by itself furnished a firm basis for their claims, and so, no other allegations were made by them in the present proceedings and no evidence was led by them to prove the nature of the work done by them and the e for which they do the special kind of work to justify the claim for special allowance.
On the other hand, the appellant has strenuously contended that the delay made by the respondents in making the present applications speaks for itself, and so, no indulgence should be shown to the respondents for remanding the present cases to the Labour Court once it is found that the basis on which the claim has been allowed is not justified in law.
It is true that though the Sastry ward was passed in 1953 and the Labour Appellate Tribunal 's decision was pronounced in 1954 and it became final on October 21, 1955, the respondents did not make their claims until 1962.
We have had occasion in the past to emphasise the fact that industrial adjudication should not encourage unduly belated claims; but on the other hand, no limitation is prescribed for an application under section 33C(2) and it would, on the whole, not be right for us to refuse an opportunity to the respondents to prove their case only on the ground that they moved the Labour Court after considerable delay.
We would, therefore, 163 set aside the order passed by the Labour Court and remand the proceedings to that Court with a direction that it should allow the parties to amend their pleadings if they so desire and to lead evidence in support of their respective cases.
It may be open to the respondents to prove that they are doing the work which may be properly described as the work of Comptists.
In that connection, it may also be open to them incidentally to show that the work which was being done in the Imperial Bank of India by the adding machine operators who were shown as equivalents of the Comptists at the relevant time is being done by them in the appellant 's branches.
If the Labour Court is satisfied that the work done by the respondents can be reasonably treated as the work of Comptists as properly understood in the banking industry, then it should proceed to determine the respondents ' claim on that basis.
We have already referred to the fact that the Labour Appellate Tribunal made it perfectly clear that the particular nomenclature was not decisive and that what mattered in these cases was the nature of the duties and responsibilities of a post.
If the nature of the duties and responsibilities of the posts held by the respondents legitimately Justify the conclusion that they are comptists, then the special allowance can be claimed by them.
It is in the light of these observations that the Labour Court should proceed to deal with these cases after remand.
If the parties want to amend their pleadings, they should move the Labour Court in that behalf within a fortnight after the receipt of the record in that Court.
Then the Labour Court should fix an early date for taking evidence and should deal with these matters as expeditiously as possible.
The result is, the appeals are allowed, the orders passed by the Labour Court are set aside and the matters sent back to that Court for disposal in 164 accordance with law.
There would be no order as to costs.
Appeals allowed.
Cases remanded.

summary:
Applications were made by four respondent under s.33C(2) of the , contending that besides attending to their routine duty as clerks, they had been operating the adding machine provided for use in the clearing department of the appellant Bank during the period mentioned in the list annexed to the petitions and hence each of them was entitled to the payment of Rs. 10/ p m, as special allowance for operating the adding machine as provided for in para 164(b)(1) of the Sastry Award.
The appellant Bank raised certain objections but these were rejected by the Labour Court which held that the respondents were entitled to the amounts claimed 141 by them, and the same were ordered to be paid.
The appellants came to this Court by special leave.
The contentions raised in this court were that section 33C(2) did not apply in the present case and the Labour Court had exceeded its jurisdiction in entertaining the applications made by respondents as claims made by them were outside the scope of s, 33(3(2) which postulated the existence of an admitted right in a workman and did not cover cases where the said right was disputed.
Moreover, special allowance could be claimed only by comptists and as the respondents had not even claimed that they were comptists, their applications should have been rejected.
Held that section 33C(2) takes within its purview cases of workmen who claim that the benefit to which they are entitled should be computed in term of money, even though the right to the benefit on which their claim is based is disputed by their employers.
For the purpose of making the necessary determination under section 33C(2), it is open to the Labour Court to interpret the award or settlement on which the workman 's right rests.
There is a distinction between section 33C(2) and L 36A. Whereas section 33C(2) 'deals with cases of implementation of individual rights of workmen falling under its provisions, section 36A deals merely with a question of interpretation of the award where a dispute arises in that behalf between the workmen and the employer and the appropriate Government is satisfied that the dispute deserves to be resolved by reference under section 36A.
The scope of section 33G(2) is wider than that of section 33G(1).
Claims made under section 33C(1) can be only those claims which are referrable to settlement, award or the relevant provisions of Chapter V A, but those limitations are not to be found in section 33C(2).
Three categories of claims mentioned in section 33C(1) fall.
under section 33C(2)and in that sense section 33C(2) can itself be deemed to be a kind of execution proceeding, but it is possible that claims not based on settlements, awards or made under the provisions of Chapter V A may also be competent under section 33C (2).
Held that respondents ' claim for special allowance as camptists solely on the ground that they could be described as adding machine operators could not be sustained.
No period of limitation is provided for an application under section 33C(2).
142 Punjab National Bank Ltd. vs
K.L. Kharbanda, (1962) 1 L.L.J. 234, M/s. Kasturi and Sons (P) Led.
vs Shri N. Saliva teeswaranb ; , Shri Ambica Mills Co. Ltd. vs Shri S B. Bhatt; , and M/s. Sawatrum Ramprasad Mills Co. Ltd, Akola vs Baliram, (1962) 65 Born.
L.R. 91, referred to.


judgement:
Appeal No. 182 of 1964.
Appeal by special leave from the judgment and order dated April 20, 1959, of the Madhya Pradesh High Court in Misc.
Petition No. 325 of 1955.
section V. Gupte, Solicitor General, W. section Barlingay, section T. Khirwarkar and A. G. Ratnaparkhi, for the appellants.
M. section K. Sastri and M. section Narasimhan for I. N. Shroff, for the, respondent.
The Judgment of the Court was delivered by Hidayatullah J.
The appellants claiming to be the descen dants of former ruling chiefs in the Hoshangabad and Nimar Districts of Madhya Pradesh applied under the Central Provinces and Berar Revocation of Land Revenue Exemptions Act, 1948, for grant of money or pension as suitable maintenance for themselves.
By that Act, every estate, mahal, village or land which was exempted from the payment of the whole or part of land revenue by special grant of, or contract with the Crown, or under the provision of any law or rule for the time being in force or in pursuance of any other instrument was after the appointed date made liable to land revenue from the year 1948 49, notwithstanding anything contained in the grant, contract, law, rule or instrument.
The appellants held estates in the two districts on favourable terms as Jahgirdars Maufidars and Ubaridars, and enjoyed an exemption from payment of land revenue amounting in the aggregate to Rs. 27,828 5 0 yearly.
On the passing of the Act the exemption was lost and they claimed to be entitled to grant of money or pension under the provisions of the Act about to be set out.
They applied to the Deputy Commissioner, who forwarded their application to the State Government.
The State Government by its order No. 993 /XVI 4, dated April 26, 1955 rejected their petition.
No reasons are contained in that order.
The appellants thereupon filed a petition in the High Court of Madhya Pradesh under article 226 of the Constitution for a writ of certiorari to quash the order of the State Government.
In that LlSup./65 18 680 petition they contended that the, rejection of their petition by the State Government without giving any reasons amounted to no decision at all and was an improper and illegal exercise of the power vested in the State Government by section 5 of the Act.
The State Government resisted the petition by contending that the appellants were not descendants of any former ruling chief and further that the exercise of the power by the State Government was proper and legal.
The petition in the High Court was heard and disposed of by a Full Bench.
The learned Chief Justice, who delivered the judgment on behalf of the Full Bench held that the State Government was not compelled to grant either money or pension because the exercise of the power under section 5 was discretionary and the petition, therefore was incompetent.
No other question was gone into by the High Court even though a suit is barred under the provisions of the Act and a petition under article 226 would appear to be the only remedy in case the State Government failed to comply with the terms of the Act, or acted in an illegal manner.
The Act consists of eight sections.
The revocation of exemption from liability for land revenue is laid down by section 3, the purport of which has already appeared in this judgment.
It is not necessary to refer to that section in detail because in addition it speaks of lands in Berar governed by the Berar Land Revenue Code and of lands in Madhya Pradesh governed by the Central Provinces Land Revenue Act, 1917 and lays down the classes of such lands and the special rules applicable to them.
In the present appeal we are not concerned with these details and they may, therefore, be put aside.
Section 4 of the Act makes suitable amendments in the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code consequent upon the provisions of section 3 of the Act.
We need not attempt to set out these amendments.
Section 5 then provides as follows : "5.
Awards of money grants or pension.
(1) Any person adversely affected by the provisions of section 3 may apply to the Deputy Commissioner of the district for the award of a grant or money or pension.
(2) The Deputy Commissioner shall forward the application to the Provincial Government, which may pass such orders as it deems fit.
(3) The Provincial Government may make a grant of money or pension 681.
(i) for the maintenance or upkeep of any religious, charitable or public institution or service of.
& like nature; or (ii) for suitable maintenance of any family of at descendant from a former ruling chief.
(4) Any amount sanctioned by way of grant of money or pension under this section shall be a charge on the revenues of the Province.
" Section 6 bars the jurisdiction of civil courts.
Section 8 enables the Provincial Government to make rules for carrying out the purposes of the Act.
Section 7 grants power to the: State Government to grant exemptions from payment of land revenue under the Central Provinces Land Revenue Act, 1917 and the Berar Land Revenue Code in whole or in part, as it may deem fit.
The short question in this appeal is whether the provisions of section 5(3) make it obligatory upon the State Government to make a suitable grant of money or pension in case it is proved that the applicant has lost the exemption under the Act and is a descendant from a former ruling chief? The Full Bench of the High Court was of the view that there was no obligation on the State Government to make such a grant inasmuch as section 5 (3) was discretionary.
The appellants contend that the view of the High Court of section 5 (3) is erroneous and the section is mandatory notwithstanding the use of language which appears to confer a discretion, provided the other conditions of the sub section are fulfilled.
Before we deal with this question we may also refer to the rules which have been framed under section 8 of the Act.
These rules, were made for dealing with applications received under section 5(1) of the Act.
They are six in number.
After defining the terms 'maufi ', 'inane, 'maufidar ' and 'inamdar, rule 3 says that on receipt of the application the Deputy Commissioner may enquire into it personally or may transfer it to a Revenue Officer not below the rank of Extra Assistant Commissioner for enquiry and report.
Rule 4 then provides what the enquiry should cover.
Though the rule is divided into sub rules (a) to (g), under sub rules (a) to (e) the enquiry is directed to ascertain the lands held by the applicant, his income, class of maufi or inam and the details of the maufi and inam.
There were many maufidars, ubaridars, who were holding lands under diverse titles and concessions.
Sub rules (a) to (e) seem to apply to all the applicants.
When, however, a maufi is held by any religious, charitable or public institution or for any service as stated in section 5 (3) (i) quoted above or is held for maintenance Sup./65 19 682 by a descendant of a former ruling chief as mentioned in section 5 (3) (id), sub rules (f) and (g) apply in addition to sub rules (a) to (e).
Under sub rule (f) some special enquiry is required to be made in respect of religious, charitable or public institutions or service, such as, whether the institution should be continued to be maintained or service continued to be rendered and the minimum annual expenditure required for the maintenance of the institution or the service.
Sub rule (g) then says "In the case of maufi or inam for the maintenance of a descendant of a former ruling chief the following further information should also be furnished This is followed by four sub rules the first lays down that the minimum amount required to ensure suitable maintenance of the family should be stated after enquiry; the second requires that any other source of income should be specified; the third requires the enquiring officer to state the extent to which such a person is dependent on maufi income and the fourth requires that his loyalty to Government should be ascertained.
Rule 5 then enjoins that after completing the enquiry the Deputy Commissioner should make his report and his recommendation.
Rule 6 provides that the Deputy Commissioner should also consider whether it would be desirable to exempt some land from liability to pay land revenue in whole or part under section 7 instead of making a money grant under section 5(3).
It is contended on behalf of the State of Madhya Pradesh that the powers exercisable under the Act are in the discretion of the Government and there can be no remedy by way of a writ under article 226 of the Constitution.
It is pointed out in support of the submission that sub section
(2) of section 5 confers on the Government complete discretion because it says "that the Provincial (State) Government". . ." may pass such orders as it deems fit" in respect of every application forwarded by the Deputy Commissioner, and that sub section
(3) is also worded in language which is directory where it says "The Provincial (State) Government may make a grant of money or pension etc.
" This view ,appears to have been accepted in the High Court.
In our opinion, this contention cannot be supported if the scheme of the fifth section is closely examined.
No doubt, the Deputy Commissioner is required to make enquiries and to forward all applications to Government and Government has been 683 given the power to pass such orders as it deems fit but the operation of sub section
(2) and the discretion in it relates to applications in general while in respect of some of the applications the order has to be made under the third sub section where the discretion is to a considerable extent modified.
The rules here help in the understanding of the third sub section.
In all cases an enquiry has to be made which generally follows a pattern disclosed by rule 4, sub rules (a) to (e).
But in cases of maufi or inam held by religious, charitable or public institutions or service or in case of a maufi or inam for the maintenance of a descendant of a former ruling chief additional enquiries have to be made.
File rules highlight the distinction between revocation of exemption in the case of persons belonging to two special categories and the revocation of exemption in the case of others.
It will be noticed presently that section 5 of the Act also follows the same scheme and the rules do no more than emphasise the special character of sub section
(3) of section 5.
Power has been conferred on Government to make some other lands free from land revenue so that sometimes a grant of money or pension and sometimes exemption from land revenue may be ordered.
It could hardly have been intended that sub section
(3) of section (5) was to be rendered nugatory in its purpose by the operation of the discretion conferred by sub section
The two sub sections have to be read separately because though the word "may" appears in both of them that word in sub section
(3) takes its meaning from an obligation which is laid upon Government in respect of certain institutions and persons if the stated conditions are fulfilled.
It is impossible to think that in the case of a religious, charitable or public institution which must be continued or in the case of descendants of former ruling chiefs, Government possessed an absolute discretion to refuse to make a grant of money or pension for their maintenance or upkeep even though they satisfied all the conditions for such a grant and were deserving of a grant of money or pension.
The word "may" in section 5(3) must be interpreted as mandatory when the conditions precedent, namely, the existence of a religious, charitable or public institutions which ought to be continued or of the descendants of a ruling chief, is established.
The words "may pass such orders as it deems fit" in sub section
(2) mean no more than that Government must make its orders to fit the occasion, the kind of order to be made being determined by the necessity of the occasion.
As stated in Maxwell on the Interpretation of Statutes ( 11th edn.
p. 23 1 "Statutes which authorise persons to do acts for the benefit of others, or, as it is sometimes said.
for the 684 public good or the advancement of justice, have often given rise to controversy when conferring the authority in terms simply enabling and not mandatory.
In enacting that they "may", or "shall, if they think fit," or, "shall have power," or that "it shall be lawful" for them to do such acts a statute appears to use the language of mere permission, but it has been so often decided as to have become an axiom that in such cases such expressions may have to say the least compulsory force, and so would seem to be modified by judicial exposition.
" This is an instance where, on the existence of the condition precedent, the grant of money or pension becomes obligatory on the Government notwithstanding that in section 5(2) the Government has been given the power to pass such orders as it deems fit and in sub section
(3) the word "may" is used.
The word "may" is often read as "shall" or "must" when there is something in the nature of the thing to be done which makes it the duty of the person on whom the power is conferred to exercise the power.
Section 5 (2) is discretionary because it takes into account all cases which may be brought before the Government of persons claiming to be adversely affected by the provisions of section 3 of the Act.
Many such persons may have no claims at although they may in a general way be said to have been adversely affected by section 3.
If the power was to be discretionary in every case there was no need to enact further than sub section
The reason why two sub sections were enacted is not far to seek.
That Government may have to select some for consideration under sub section
(3) and some under section 7 and may have to dismiss the claims of some others requires the conferment of a discretion and sub section
(2) does no more than to give that discretion to Government and the word "may" in that subsection bears its ordinary meaning.
The word "may" in sub section
(3) ha, ,, however, a different purport.
Under that sub section Government must, if it is satisfied that an institution or service must be continued or that there is a descendant of a former ruling chief, grant money or pension to the institution or service or to the descendant of the former ruling chief, as the case may be.
Of course, it need not make a grant if the person claiming is not a. descendant of a former ruling chief or there is other reasonable ground not to grant money or pension.
But, except in those cases where there are good grounds for not granting the pension, Government is bound to make a grant to those who fulfill the required condition and the word "may" in the third sub section though apparently discretionary has to be read as "must".
File 685 High Court was in error in thinking that the third sub section also like the second conferred an absolute discretion.
The next question is whether Government was justified in making the order of April 26, 1955 ? That order gives no reasons at all.
The Act lays upon the Government a duty which obviously must be performed in a judicial manner.
The appellants do not seem to have been heard at all.
The Act bars a suit and there is all the more reason that Government must deal with such case in a quasi judicial manner giving an opportunity to the claimants to state their case in the light of the report of the Deputy Commissioner.
The appellants were also entitled to know the reason why their claim for the grant of money or a pension was rejected by Government and how they were considered as not falling within the class of persons who it was clearly intended by the Act to be compensated in this manner.
Even in those cases where the order of the Government is based upon confidential material this Court has insisted that reasons should appear when Government performs curial or quasi judicial functions (see Messrs Hari Nagar Sugar Mills Ltd. vs Shyam Sunder Jhunjhunwala & Others(1).
The High Court did not go into any other question at all because it rejected the petition at the threshold on its interpretation of section 5(3).
That interpretation has been found by us to be erroneous and the order of the High Court must be set aside.
As the order of Government does not fulfil the elementary requirements of a quasi judicial process we do not consider it necessary to order a remit to the High Court.
The order of the State Government must be set aside and the Government directed to dispose of the case in the light of our remarks and we order accordingly.
The respondents shall pay the costs of the appellants in this Court and the High Court.
Appeal allowed.

summary:
The appellants who were descendants of a former ruling chief and had lost their exemption from land revenue as a result of the operation of section 3 of the C.P. & Berar Revocation of Land Revenue Exemptions Act, 1948, applied for a pension or money grant under the provisions of section 5 of the Act.
their petition was rejected by the State Government without reasons being recorded.
They filed a writ petition under article 226 but the High Court held that the granting of a pension was completely within the discretion of the Government and the petition was therefore incompetent.
In appeal before the Supreme Court the appellants contended that rejection of their petition without any reasons being given amounted to no decision at all, and that once the conditions for the grant of a pension were satisfied it was obligatory on the State Government to make a grant of money or pension.
On behalf of the State Government reliance was placed on the words of section 5(2) that after enquiry in respect of the applications the Government 'may pass such orders as it deems fit ' and the directory word 'may ' used in section 5(3) itself.
HELD: (i) Sub section (2) and (3) of section 5 must be considered separately.
Under sub section
(2) all the applications for grant of money or pensionhad to be considered and Government could deal with them in several ways.
Notwithstanding its apparent discretion section 5(2) only enabled Government to pass orders as fit the occasion.
[683 E H].
In sub section
(3) special classes namely religious and charitable institutions etc.
and descendants of ruling chiefs had to be dealt with and therefore the discretion stood modified.
The rules highlighted the distinction between the two sub sections because they provided for special enquiries in cases falling under sub section
(3) [683 A D].
Enabling provisions sometimes acquire a compulsory force and in the present instance on the existence of the condition precedent, the grant of money or pension became obligatory on the Government notwithstanding that in sub section
(2) the Government had power to pass such orders as it thought fit and in sub section
(3) the word 'may ' was used.
Except in those cases where there were good grounds for not granting the pension, Government was bound to make a grant to those who fulfilled the desired conditions and the word 'may ' in the third sub section though apparently discretionary had to be read as 'must '.
[684 B H].
Maxwell on Interpretation of Statutes, referred to.
(ii)In passing orders on the appellants ' application Government had to act in a quasi judicial manner.
The appellants had to be given an 679 opportunity to state their case and were also entitled to know why their claim had been rejected.
[685 B D].
M/s. Hari Nagar Sugar Mills Ltd. vs Shyam Sundar Jhunjhunwala and Others ; , referred to.
Order of the State Government set aside.