judgement:
Appeal No. 512 of 1964.
Appeal from the judgment and decree dated December 23, 1960 of the Allahabad High Court in Income tax Misc.
Case No. 475 of 1954.
A. V. Viswanatha Sastri, 4.
Ganapathy lyer, R. H. Dhebar and R.N. Sachthey, for the appellant.
section T. Desai, and J. P. Goyal, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Under an agreement dated January 2, 1931, Lab Manmohan Das hereinafter called 'the assessee was appointed Treasurer of the Allahabad Bank Ltd. in respect of certain Branches, Sub Agencies and Pay Offices.
The assessee was assessed to income tax as representing his Hindu undivided family, and the income received by the assessee under the terms of the agreement with the Allahabad Bank, was treated as income of the Hindu undivided family.
In the previous year corresponding to the assessment year 1950 51 the assessee in performing his duties as a Treasurer suffered a net loss of Rs. 38,027.
For the assessment year 1951 52, the profit and loss account of the assesses showed Rs. 73,815 as receipts, against which were debited outgoings amounting to Rs. 39,370 which included Rs. 20,000 being the loss suffered by the assessee as Treasurer of the Patna Branch of the Allahabad Bank arising from misappropriation by an Assistant Cashier.
The Income tax Officer refused to allow the loss suffered in the previous year to be set off against the net profit of Rs. 34,445 and brought that amount of profit to tax as remuneration received by the assessee as Treasurer of the Allahabad Bank.
The order of the Income tax Officer was conflrmed in appeal by the Appellate Assistant Commissioner.
The 5 33 Income tax Appellate Tribunal held that the remuneration received by the assessee as Treasurer of the Allahabad Bank was income arising from pursuit of a profession or vocation within the meaning of section 10 of the Act and the loss suffered during the preceding year was liable to be set off against the assessee 's income from that source in the year under consideration.
At the instance of the Commissioner of Income tax, U.P., the following questions were referred to the High Court of Allahabad under section 66(1) of the Income tax Act, 1922: "(1) Whether on a true interpretation of the deed of agreement dated 2nd January, 1931, appointing the assessee as Treasurer of the Allahabad Bank Limited, income earned by the assessee from his activities as such Treasurer fell to be computed under Section 10 of the Act or Section 7 or Section 12 of the Income tax Act ? If the answer to this question is that such income is liable to be computed under Section 10 of the Act, (2)Whether the assessee could claim a set off of the loss suffered by him in the preceding year 1950 51 against his profits in the year under consideration, i.e., 1951 52 having failed to prefer an appeal against the refusal by the Income tax Officer making the assessment for the year 1950 51 to allow the assessee to carry forward the loss under Section 24(2) of the Act ?" The High Court held that the remuneration received by the from the Allahabad Bank was income liable to be taxed under section 10 of the Income tax Act, and that the assessee could claim to set off the loss computed in the assessment year 1950 51 against the profit in the subsequent year.
With certificate granted by the High Court, this appeal has been preferred by the Commissioner of Income tax.
The second question presents little difficulty.
In making his order of assessment for the year 1950 51 the Income tax Officer declared that the loss computed in that year could not be carried forward to the next year under section 24(2) of the Income tax Act, as it was not a business loss '.
The Income tax Officer has under section 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits.
Section 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward L3Sup.
Cl/66 4 5 34 the loss as is not set off under sub section (1) to the following year, and to set it off against his profits and gains, if any, from ',the same business, profession or vocation for that year.
Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under section 24(2) has to be determined by the Income tax Officer who deals with,the assessment of the subsequent year.
It is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year.
A decision recorded by the Income tax Officer who computes the loss in the previous year under section 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee.
The answer to the first question depends upon the true interpretation of the terms of the agreement between the Allahabad Bank and the assessee ' If under the terms of the agreement it is found that the assessee was carrying on a business, profession or vocation, the assessee would be entitled to carry forward the loss suffered therein and set it off against the profits in the subsequent year of the same business, profession or vocation under section 24(2).
If the remuneration was received by the assessee as a servant of the Bank, and on that account has to be computed under section 7 of the Act, the right to set off the loss cannot be claimed under section 24(2).
The fact that the assessee held an office is however not decisive of the question whether remuneration earned by him was as a servant of the.
Allahabad Bank.
Receipt of remuneration for holding an office does not necessarily give rise to a relationship of master and servant between the holder of the office and the person who pays the remuneration.
The agreement is between the Allahabad Bank Ltd., and Lala Manmohan Das called in the agreement "Treasurer", and the expression Treasurer includes "his heirs and representatives".; By cl. 2 it is recited that the Treasurer is appointed for the Bank 's Branches and Sub Agencies and Pay Offices mentioned therein and such other offices in other parts of India for which he may be appointed, and that the Treasurer has agreed to provide security to the Bank for the discharge and performance of his duties and obligations to the Bank.
The agreement I then proceeds to set out the conditions of the agreement, the following of which are relevant: (1) "The Treasurer shall serve, the Bank as Treasurer for its Branches,, Sub Agencies and: Pay 535 Offices until, this agreement is determined as hereinafter provided." (2)"The remuneration of the.
Treasurer shall be a monthly allowance for each of the Branches, SubAgencies and Pay Offices the total of such monthly allowance to be Rs. 2,250 (Rupees two thousand two hundred and fifty) plus Rs. 350 (Rupees three hundred fifty) for travelling expenses.
" (3)"The duties, liabilities and responsibilities of the Treasurer to the Bank shall be such as either by custom or contract usually devolve on a Treasurer in the service of the Bank including the duties, liabilities and responsibilities hereinafter mentioned and the Treasurer shall faithfully discharge his duties and duly perform his obligations to the Bank." (4)"The Treasurer shall with the approval of the Bank appoint at adequate salaries to be paid by the Bank all the Indian staff as may be con sidered sufficient by the Bank for the business of the Cash Department of the Bank 's Branches, Sub Agencies and Pay Offices .
and shall dismiss any person or persons so appointed whom he shall be reasonably directed by the Bank to dismiss and shall with like approval appoint another or others in the place of person or persons so dismissed.
The Treasurer shall be deemed to have appointed the present staff of the Cash Department of the Branches, Sub Agencies and Pay Offices aforesaid.
Provided always that the Bank shall accept any proposal of the Treasurer for transfer, suspension or dismissal of any member of the Cash staff in the Bank." (5) "The Treasurer shall be responsible to the Bank for the work and conduct of every person to be appointed or employed on his staff and shall make good to the Bank any loss or damage sustained or incurred by the Bank from any embezzlement, theft, fraud, misappropriation, misconduct, mistake, omission, negligent act or default of any such person or persons." (6)"The Treasurer shall keep under his care and supervision or that of his staff the moneys, cash bullion, securities, cheques, notes, hundies, drafts, orders and 536 other documents or property which may from time to time be entrusted to him at the Branches, Sub Agencies and Pay Offices. . and shall whenever so required to do so transmit from one place to another place under such guard as may be provided by the Bank all such money, documents or properties and shall be responsible for the care and proper custody of the same while in transit.
Thai the Bank shall for the efficient working of its Cash Department provide proper iron safes and a strong room in each of the said Branches, Sub Agencies and Pay Offices and the Treasurer shall be responsible to the Bank for any loss occasioned to the Bank through the negligence, malfeasance or misfeasance of any of his servants or agents by the payment or delivery of any money, document or property aforesaid to a wrong person whether owing to forgery, mistake, fraud or otherwise.
" (7)"The Treasurer shall be responsible for the correctness and genuineness of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language or character which the Treasurer or any of his staff may accept and certify as genuine and correct and shall make good to the Bank any loss or damage from any forged instrument or signature on a document as dealt with and shall also be liable for any loss occasioned to the Bank by receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note." (9)"The Treasurer shall not nor shall any substitute or any one of the staff of the Treasurer publish or divulgeany of the business affairs or transactions of the Bank or any of its constituents." (10) "The Treasurer 's employment. . may be determined at any time by either party giving to the other three calendar months written notice to that effect, and in case of the Treasurer 's death, this agreement as regards the Treasurer 's liabilities and obligations for the staff and other persons shall remain in force so as to bind his heirs, representatives and estate for any loss then accrued or accruing claim of the Bank hereunder but also for any future claim of the Bank in respect of any subsequent transaction or occurrence unless and 5 37 A until determined by his heirs or representatives giving like notice to the Bank.
" The agreement contains certain peculiar covenants : for instance, the expression "Treasure" includes the heirs and representatives and except where the content may justify a contrary implication, the rights, obligations and liabilities of the Treasurer would apparently be enforceable by or be enforced against the heirs and legal representatives of the assessee.
The Treasurer is entitled under the terms of cl.
(4) to transfer, suspend and dismiss any member of the staff in the cash department of the Bank and his recommendation in that behalf has to be accepted by the Bank.
The Treasurer has if reasonably directed by the Bank, but not otherwise, to dismiss any member of the Indian staff appointed by him, and to appoint another in the place of the person so dismissed.
The staff in the Cash department is referred in cls.
(5), (6) & (7) as the Treasurer 's staff.
Under cl.
(4) all the staff originally in the employment of the Bank at the date of the agreement and 3 the staff subsequently appointed were to be paid by the Bank, but the Treasurer was to stand responsible for any loss or damage which may be sustained not only for embezzlement, theft, fraud, misappropriation, misconduct, but even for mistake, omission, negligent act or de fault of any member of the staff.
The Treasurer has by the agreement undertaken to keep the moneys, cash, bullion, securities, cheques, notes, hundies, drafts, orders, and other documents or property under his care and supervision through his staff, and is liable to protect the property of the Bank in his custody, and has to make good any loss occasioned to the Bank by the negligence, malfeasance or misfeasance of any of "his servants or agents" even though not belonging to the Cash Department.
The Treasurer is responsible for the "correctness and genuineness" of all hundies, cheques, drafts, securities, vouchers, documents, writing and signature in an Indian language and he is responsible for any loss or damage from any forged instrument or signature on a document dealt with by his staff, and also for any loss arising from receipt, of any bad or base money coin or bullion or any forged or fraudulently altered currency note.
It may be noticed that the liability imposed under that covenant is for the acts of the staff appointed by him or deemed to have been appointed by him within the meaning of cl.
(4), and also for loss arising from the receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note by any person employed by the Bank.
The agreement also contemplates that the Treasurer may appoint any substitute to carry on the work of the Bank.
The Treasurer is under the agreement 538 responsible for the acts of the Indian staff at the Branches, SubAgencies and Pay.
Offices as far apart as Calcutta, Lahore, Lucknow, Patna, Amritsar, Benaras and Secunderabad.
On a fair reading of the terms of the agreement it appears that the Treasurer had to provide the staff for the cash section : he had power to suspend, transfer or dismiss any member of the staff or to appoint another person in his place: he had to perform the duties, liabilities and responsibilities which by custom or contract usually devolve upon a Treasurer and the duties specified in the agreement, and he was responsible for all acts of the staff so appointed which result in loss or damage to the Bank.
The Treasurer was also responsible for the protection of the property of the Bank and was also responsible for receipt of any bad or base money coin or bullion or any forged or fraudulently altered currency note.
Personal attendance by the Treasurer and supervision over the staff in the cash section in all the Branches and Pay Offices being in the very nature of things impossible, it was open to the Treasurer to appoint his own agents to supervise the work of the cash section.
An office of Treasurer was undoubtedly created by the agree ment.
It is recited in cl.
(1) that the Treasurer shall serve the Bank and in cl.
(3) that the duties, liabilities and responsibilities I of the Treasurer shall be such as by custom or contract usually devolve on a Treasurer in the service of the Bank.
For performing these duties there is a fixed remuneration which is paid to the Treasurer, beside the travelling expenses.
But the use of the expressions "serve.
, the Bank" and "in the service of the Bank" have to be read in the setting of the other covenants.
By them I selves they are not decisive of the ' intention of the parties to the agreement.
The office of the Treasurer can be determined only by notice on either side of a duration of three months, and even on the death of the assessee, the Treasurer 's obligations accrued or accruing during his life time, and future claims in respect of any transactions, even subsequent to his death, remain enforceable.
Express reference to liability of the Treasurer for future claims for subsequent transactions clearly indicates that the agreement does not come to an end by the death of the assessee : it is determined only by notice of three months ' duration.
Liability for transactions subsequent to the death of the person for the time being acting as Treasurer remaining enforceable, it is reasonable to infer that the right to receive remuneration would tenure to the person who would step into the office of the Treasurer.
539 The office of Treasurer is therefore to be held by the assessee, and After his death by, his heirs and legal representatives.
It is unnecessary to consider whether the agreement would be determined by any supervening disability of the Treasurer, which may render the contract impossible of performance.
But the Treasurer holds the office not as a servant of the Bank.
The Treasurer has unquestionably undertaken very onerous responsibilities.
There is however no covenant which authorises the Bank to control the Treasurer in the due performance of duties undertaken by him under the terms of the agreement.
Business of the Bank has undoubtedly to be carried on in the manner normally done by the Banks, and the duties, liabilities and responsibilities of the Treasurer are to be such as "either by custom or contract usually devolve on a Treasurer".
The Bank pays the Indian staff in the Cash Department, but the control is of the assessee.
He has control over the staff appointed by him or deemed to be appointed by him: he has therefore the power to initiate proposals for transfer, suspension or dismissal of any member of the cash staff.
This Court in Dharangadhara Chemical Works Ltd. vs State of Saurashtra(1) observed "The principles according to which the relationship as between employer and employee or master and servant has got to be determined are well settled.
The test which is uniformly applied in order to determine the relationship is the existence of a right of control in res pect of the manner in which the work is to be done.
A distinction is also drawn between a contract for service and a contract of service and that distinction is put in this, .,way.: "In the one case the master can order or require what is to be done while in the other case he cannot only order or require what is to be done but how itself it shall be done"." After referring to a large number of cases the Court observed P. 160 "The nature or extent of control which is requisite to establish the relationship of employer and employee must necessarily vary from business to business and is by its very nature incapable of precise definition.
it is not necessary for holding that a person is an employee, that the employer should be proved to have exercised control over his work, that the test of control (1)[1957] S.C.R., 152, 157.
54 0 was not One of universal application and that there were many contracts in which the master could not control the manner in which the work was done.
The correct method of approach, therefore, would be to consider whether having regard to the nature of the work there was due control and supervision by the employer or.
to use the words of Fletcher Moulton, L.J., at page 549 in Simons vs Health Laundry Company [(1910)1 K.B. 543] ".
it is impossible to lay down any rule of law distinguishing the one from the other.
It is a question of fact to be decided by all the circumstances of the case.
The greater the amount of direct control exercised over the person rendering the services by the person contracting for them the stronger the grounds for holding it to be a contract of service, and similarly the greater the degree of independence of such control the greater the probability that the services rendered are of the nature of professional services and that the contract is not one of service".
" Under the contract the Treasurer had to procure due performance of the duties of the Cash Department by employees under his supervision and that he was to be responsible for all acts done by them and to make good the loss which may result from any embezzlement, theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person.
In carrying out his duties under the contract apparently he was not to be controlled or supervised by the Bank.
The contract was therefore ,one for service and the Treasurer could not be called a servant of the Bank.
But Mr. Sastri on behalf of the Revenue contended relying upon Shivnandan Sharma vs The Punjab National Bank Ltd.(1) and Piyare Lal Adishawar Lal vs Commissioner of Income tax, Delhi(2), that under the contracts substantially similar to the contract in this case, Treasurers were held merely to be servants of the Banks, business whereof they attended.
It is true that in each of these cases this Court in interpreting a contract in which a Treasurer was appointed to supervise the Cash Department of a Bank, held that the Treasurer was a servant of the Bank, and not an independent contractor.
But unless the terms of the contracts (1) [1955]1 S.C.R. 1427.
(2) ; 541 and the circumstances in which they are made are identical, interpretation of one contract cannot be regarded as a guide for determining the intention of parties to another contract.
In Shivnandan Sharma 's case(1) the position of a Treasurer of a Bank fell to be determined somewhat indirectly.
Shivnandan a head cashier in one of the branches of the Punjab National Bank appointed by the Treasurer who was in charge of the Cash Department of the Bank under an agreement between the Bank and the Treasurer, was dismissed from the service by the Bank.
In a reference made to the Industrial Tribunal of certain industrial disputes including one for reinstatement of Shivnandan, it was held by this Court that under the terms of the agreement between the Treasurer and the Bank, the Treasurer was the servant of the Bank and not an independent contractor.
In coining to that conclusion the Court was substantially guided by the covenants which reposed the direction and control over Shivnandan and of the ministerial staff in charge of the Cash Department in the Bank.
The covenants of the agreement between the Treasurer and the Bank disclosed that the Treasurer had agreed to serve the Bank and to obey and observe all lawful orders and instructions of the Bank and to carry out such duties and to discharge such responsibilities as usually devolve upon a Treasurer in the employment of the Bank and in consideration thereof to receive remuneration mentioned in the Schedule.
The Treasurer and his nominees were bound as expressly stipulated to obey all the orders, rules, and regulations prescribed by the Bank with regard to the discharge of their duties by the cashiers as well as with regard to the amount of balance they were allowed to keep with them.
The Bank was also given power in case of gross negligence or misconduct or of any fraud, misappropriation or embezzlement by the Treasurer or any of the nominees in the discharge of their duties to dispense with the services of the Treasurer forthwith.
The Treasurer was not to engage any person as his assistant or, peon about whose character, conduct or reliability the manager of the Board of Directors of the Bank may have any objection.
Shivnandan was a nominee of the Treasurer, but from the terms of his employment it appeared that he was working directly under the control and supervision of the Punjab National Bank.
This Court held that the Treasurer 's relation to the Bank was that of a servant to the master, and the ministerial staff of the Cash Department appointed by him were also the employees in the Cash Department.
It is difficult to regard the agreement in Shivnandan Sharma 's case(1) as even substantially similar to (1) [1955]1 S.C.R. 1427.
542 the agreement in the present case between the Allahabad Bank and the Treasurer, so as to make the interpretation of the agreement a guide or a precedent in the interpretation of the agreement before us.
In Piyare Lal Adishwar Lal 's case(1), one Sheel Chandra was appointed Treasurer of the Central Bank for various branches on a monthly salary.
Under the agreement between Sheel Chandra and the Bank, Sheel Chandra had to engage and employ all subordinate staff.
He had the power to control, dismiss and change the staff at his pleasure, but he could not engage or transfer any member of the staff except with the approval of the Bank and he had to dismiss any such member if so required by the managing director of the Bank or Agent of the office.
The Treasurer was responsible for the acts and omissions of his representatives ' whom he was entitled to appoint at the various branches with the approval of the Bank, and he had agreed to indemnify the Bank against any loss arising from any neglect or omission on their part.
But the Treasurer and his staff were under the direct control of the Bank.
The agreement which was terminable by three calendar months ' notice in writing by either side, could in the event of any breach of any condition of the agreement by the Treasurer be terminated by the Bank forthwith.
Having regard to the nature of his work and the control and supervision of the Bank over the Treasurer, it was held that the Treasurer was a servant of the Bank and the emoluments received by the Treasurer were in the nature of salary and assessable under section 7 of the Income tax Act and not profits and gains of business under section 10.
Some of the covenants of the contract between the Central Bank and the Treasurer are similar to the agreement under consideration in this appeal, but in Piyarelal Adishwar Lars case(1) this Court founded its conclusion upon the existence of control and supervision of the Bank over the Treasurer and upon the power vested in the Bank to summarily dismiss the Treasurer in case of breach of any of the conditions of the agreement.
In the present case there is no covenant which either expressly or impliedly confers upon the Bank such control and supervision over the work done by the Treasurer, and the agreement is not liable to summary determination.
His duties, liabilities and responsibilities are to be such as either by custom or contract usually devolve upon the Treasurers and those which are specified in the agreement.
It is true that under cl.
(d) he has to transmit from one place to another place whenever so required, under such guard (1) [1960]1 S.C.R. 669.
543 as may be provided by the Bank, all such money, cash, bullion, securities, cheques, notes, hundies, drafts, orders and other documents, but that does not put the Treasurer under the general supervision of the Bank.
On a careful consideration of the covenants, we are of the view that the Treasurer was not a servant of the Allahabad Bank under the terms of the agreement dated January 2, 1931, and the remuneration received by him was not "salaries" within the meaning of section 7 of the Income tax Act.
But that is not sufficient to conclude the matter in favour of the assessee.
The benefit of section 24(2) of the Indian Income tax Act may be availed of by the assessee only if the loss sought to be set off was suffered under the head "Profits and gains .
in any business, profession or vocation".
It is difficult to regard the occupation of the Treasurer under the agreement as a profession, for a profession involves occupation requiring purely intellectual or manual skill, and the work of the Treasurer under the contract cannot be so regarded.
Occupation of a Treasurer is not one of the recognized professions, nor can it be said that it partakes of the character of a business or trade.
In performing his duties under the agreement the assessee exercised his skill and judgment in making proper appointments and made arrangements for supervising the work done by the 'Staff in the Cash Department of the Bank 's Branches.
The remuneration received by him was for due per formance of the duties and also for the guarantee against loss arising to the.
Bank out of the acts or omissions of the Cash and other staff of the Bank.
Taking into consideration the nature of the duties performed, and the obligations undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by him into the business of the Bank, the assessee may be regarded as following a vocation.
The remuneration must therefore be computed under section IO of the Income tax Act and loss of profit suffered in that vocation in any year may be carried forward to the next year and be set off against the profit of the succeeding year.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.

summary:
The respondent was appointed Treasurer of a Bank in respect of certain of its branches, sub agencies and pay offices.
In the previous year corresponding to the assessment year 1950 51, he suffered a loss in performing his duties as Treasurer.
But the Incometax Officer, in assessing the respondent to income tax, declared that the loss could not be carried forward to the next year under section 24(2) of the Income tax Act ' 1922, on the ground that it was not a business loss.
For the assessment year 1951 52, the Income tax Officer refused Lo allow the loss to be set off against the net profit for the year and brought that amount of profit to tax as remuneration received by the respondent as Treasurer of the Bank.
The order was confirmed by the Appellate Assistant Commissioner,.
but the Appellate Tribunal held that the remuneration received by the respondent was income arising from the pursuit of a profession or vocation.
within the meaning of section 10 of the Act and therefore the loss suffered during the preceding year could be set off against his income in the subsequent year.
On a reference the High Court agreed with the Tribunal.
In appeal to this Court, HELD:(i) The decision recorded by the Income tax Officer, who. computed the loss in the previous year under a. 24(3), that the loss could.
not be set off against the income of the subsequent year was not binding on the respondent, as, under section 24(2), it is for the Income tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year.
[534 A C (ii)The use of the expressions "serve the Bank" and "in the service of the Bank" in the contract appointing the respondent as Treasurer of the Bank have to be read in the setting of the other covenants and are not decisive of the question whether the respondent was a servant of the Bank.
Under the contract the respondent had to procure due performance of the duties of the cash department by employees under his supervision and he was to be responsible for all acts done by them and to make good the loss which might result from any embezzlements theft, fraud, misappropriation, mistake, misconduct, omission, negligent act or default of any such person.
in carrying out his duties under the contract he was not to be controlled or supervised by the Bank and the agreement was not liable to summary determination.
The contract was therefore for service and the respondent could not be called a servant of the Bank.
Therefore, the remuneration received by him was not "salaries" within, the meaning of section 7 of the Act.
[538 F 0; 540 E F; 543 B) Section 24(2) confers a statutory right upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward so much of the loss as is not set off under sub section
(1) to the following year, and to set it off against his profits and gains, if 532 any, from the same business, profession or vocation for that year.
The occupation of a Treasurer is not a profession, nor does it partake of the character of a business or trade.
But taking into consideration the nature of the duties performed, and the obligati7on undertaken, together with the right to remuneration subject to compensation for loss arising to the Bank from his own acts and omissions or of the servants introduced by 'him into the business of the Bank, the respondent could be regarded as following a vocation.
His remuneration must therefore be computed under section 10 and loss of profit suffered in that location in any Vear could be carried forward to the next year and be set off against the profit of that year.
[543 B, C D, F G] Dharangadhara Chemical Works Ltd. vs State of Saurashtra, ; , followed.
Shivnandan Sharma vs The Punjab National Bank Ltd. ; and Piyare Lal Adishwal Lal vs Commissioner of Income tax, Delhi , distinguished.


judgement:
Appeal No. 64 of 1953.
Appeal by special leave from the Judgment and Decree, dated the 29th November, 1951, of the Court of the Judicial Commissioner for Himachal Pradesh at Simla in Civil Revision No. 52 of 1951.
Gopal Singh for the appellants.
section C. Isaacs (Amar Nath Chona, with him) for the respondents.
January 19.
The Judgment of the Court was delivered by DAS J.
This is an appeal by special leave against the order made on the 20th November, 1951, by the Judicial Commissioner of Himachal Pradesh in proceedings instituted by the respondents under articles 226 and 227 of the Constitution of India.
There is no substantial dispute as to the facts leading up to the present appeal.
The 'appellants 567 were tenants of a certain shop premises situate in Solan Bazar in the district of Mahasu in Himachal Pradesh.
On the llth October, 1947, they had executed a rent deed by which they agreed to pay an annual rent of Rs. 175 payable as to Rs. 50 on the last of Baisakh and as to the balance of Rs. 125 in the month of October, in default of which payment,% the respondents, as landlords, would be entitled to recover the whole of the said rent in one lump sum.
The tenancy created by the rent deed was only for one year in the first instance but it provided that if the tenants desired to continue in occupation they must execute a further rent deed before the expiration of the said term.
The appellants never executed any further rent deed but held over and continued in occupation of the demised premises.
The appellants fell into arrears with the payments of rents due for the years 1948 and 1949 and the respondents made applications to the Rent Controller for eviction of the appellants under section 13 (2) (i) of the East Punjab Urban Rent Restriction Act, 1949, as extended to Himachal Pradesh.
The appellants, however, paid up the arrears of rent into court and claimed the benefit of the proviso to section 13 (2) (i).
The claim was allowed and the said applications were dismissed accordingly on the 18th December, 1950.
The appellants again fell into arrears with the pay ment of rent due for the year 1950.
On the 26th December, 1950, the respondents served on the appellants a notice c alling upon the latter to pay whole of the said rent forthwith but the appellants failed to do so.
The respondents thereupon, on the 2nd January, 1951, filed an application under section 13 (2) (i) for the eviction of the appellants on the ground of nonpayment of rent.
Thereafter, on the 10th January, 1951, the appellants made an application to the Rent Controller for the fixation of a fair rent under section 4 of the said Act.
On the 25th January, 1951, the appellants filed their written statements in the proceedings under section 13 568 (2) (i) admitting the nonpayment of rent and the receipt of the notice but pleaded (i) that the respondents ' application was barred by reason of the rejection of the previous applications for eviction made by the respondents and (ii) that the present application could not be entertained in view of the pendency of their application for fixation of a fair rent under section 4 of the said Act.
On the 20th February, 1951, the Rent Controller framed the following issues: (1) Whether the application in question was not entertainable in view of the judgment of the District Judge, dated the 18th December, 1950 Onus on defendants.
(2) If issue No. I is not proved, had the opposite party (tenants) not paid the rent and as such were they liable to be ejected? Onus on plaintiffs.
(3) Have the opposite party already filed an application in the said court for the fixation of rent and are they, therefore, not liable for ejectment pending the decision on the application and what is its effect on the said application? Onus on defendants.
By his judgment, dated the 29th May, 1951, the Rent Controller held that as the previous applications related to non payment of rents for the years 1948 and 1949 the present application which was founded on non payment of rent for 1950 was not barred under section 14 of the said Act but, although the fact of rent being in arrears was admitted, the Rent Controller did not think fit to make an order directing the appellants to put the respondents in possession of the demised premises.
The reasons given by him were as follows: " Regarding the non payment of the rent when the plea of the tenant is only that he is waiting for the fixation of fair rent by the Rent Controller there is not enough ground for ejectment.
A civil suit for the recovery of the rent would have been a more appropriate method of obtaining that rent.
I therefore dismiss the suit. ' The parties should bear their own 569 The respondents preferred an appeal to the District Judge of Mahasu under section 15 of the said Act.
The learned District Judge dismissed the appeal observing "On behalf of the landlord it was urged that under section 13 (2) of the Punjab Urban Rent Restriction Act, as applied to Himachal Pradesh, the Controller, if it came to the finding that rent had not been paid, had no option but to direct the tenant to put the landlord in possession.
Undoubtedly, that is the correct legal position, but in the present case the non payment of rent was due to a misapprehension of the legal position created by the tenant filing an application for fixing fair rent.
1, therefore, think that this case can be distinguished and does not fall within section 13 (2), Punjab Urban Rent Restriction Act.
" The respondents moved the Judicial Commissioner, Himachal Pradesh, under articles 226 and 227 of the Constitution of India for setting aside the order of the District Judge.
The learned Judicial Commissioner held that in view of the admitted failure to pay the rent as provided by the rent deed or at the first hearing of the court under the proviso to section 13 (2) (i) the courts below had acted arbitrarily in refusing to make an order for ejectment against the tenants who had not done what was incumbent on them to do under the law and that such a situation called for inter ference by the court of the Judicial Commissioner in order to keep the subordinate courts within the bounds of their authority.
He accordingly set aside the orders of the courts below and allowed the application for ejectment but gave the appelants three months ' time for vacating the premises.
The appellants have now come up before this court on appeal by special leave obtained from this court.
Learned advocate appearing in support of this appeal urges that the learned Judicial Commissioner acted wholly without jurisdiction inasmuch as (1) the Rent Controller or the District Judge exercising powers 570 under the Act was not amenable to the jurisdiction of the High Court and, therefore, article 227 confers no power on the court of the Judicial Commissioner over the Rent Controller or the District Judge, and (2) that article 227 read with article 241 confers no power of judicial superintendence on the court of the Judicial Commissioner.
Re. l.
The court of the Judicial Commissioner of Himachal Pradesh exercises jurisdiction in relation to the whole of the territories of Himachal Pradesh.
The Rent Controller and the District Judge exercising jurisdiction under the Act are certainly tribunals, if not courts, and they function within the territories of Himachal Pradesh.
Therefore, article 297 (1) read with article 241 confers on the court of the Judicial Commissioner power of superintendence over such tribunals.
The words " in relation to which " obviously qualify the word " territories " and not the words "courts and tribunals".
2.The material part of article 227 substantially reproduces the provisions of section 107 of the Government of India Act, 1915, except that the power of superintendence has been extended by the article also to tribunals.
That the Rent Controller and the District Judge exercising jurisdiction under the Act are tribunals cannot and has not been controverted.
The only question raised is as to the nature of the power of superintendence conferred by the article.
Reference is made to clause (2) of the article in support of the contention that this article only confers on the High Court administrative superintendence over the subordinate courts and tribunals.
We are unable to accept this contention because clause ( 2) is, expressed to be without prejudice to the.generality of the provisions in clause (1).
Further, the preponderance of judicial opinion in India was that section 107 which was similar in terms to section 15 of the High Courts Act, 1861, gave a power of judicial superintendence to the High Court apart from and independently of the provisions of other laws conferring revisional jurisdiction on the High Court.
In this connection it has to 571 be remembered that section 107 of the Government of India Act, 1915, was reproduced in the Government of India Act, 1935, as section 224.
Section 224 of the 1935 Act, however, introduced sub section (2), which was new, providing that nothing in the section should be construed as giving the High Court any jurisdiction to,question any judgment of any inferior court which was not otherwise subject to appeal or revision.
The idea presumably was to nullify the effect of the decisions of the different High Courts referred to above.
Section 224 of the 1935 Act has been reproduced with certain modifications in article 227 of the Constitution.
It is significant to note that sub section (2) to section 224, of the 1935 Act has been omitted from article 227.
This significant omission has been regarded by all High Courts in India before whom this question has arisen As having restored to the High Court the power of judicial superintendence it had under section 15 of the High Courts Act, 186 1, and section 107 of the Government of India Act, 1915.
See the cases referred to in Moti Lal vs The State through Shrimati Sagrawati(1).
Our attention has not been drawn to any case which has taken a different view and, as at present advised, we see no reason to take a different view.
This power of superintendence conferred by article 227 is, as pointed out by Harries C. J., in Dalmia Jain Airways Ltd. vs Sukumar Mukherjee(2), to be exercised most sparingly and only in appropriate cases in order to keep the Subordinate Courts within the bounds of their authority and not for correcting mere errors.
As rightly pointed out by the Judicial Commissioner in the case before us the lower courts in refusing to make an order for ejectment acted arbitrarily.
The lower courts realised the legal position but in effect declined to do what was by section 13 (2) (i) incumbent on them to do and thereby refused to exercise jurisdiction vested in them by law.
was, therefore, a case which called for an interference by the court of the Judicial Commissioner and it acted (1) I.L.R. [1952] 1 All.
558 at p. 567, (2) A.I.R. 1951 Cal.
75 572 quite properly in doing so.
In our opinion there is no ground on which in an appeal by special leave under article 136 we should interfere.
The appeal, therefore, must stand dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary:
The Court of the Judicial Commissioner of Himachal Pradesh exercises jurisdiction in relation to the whole of the territories of Himachal Pradesh.
The Rent Controller and the District Judge exercising juris.
diction under the East Punjab Rent Restriction Act,,1949, are certainly tribunals it not courts within the meaning of article 227 of the Constitution and they function within the territories of 566 Himachal Pradesh.
Therefore article 227(1) read with article 241 confers on the Court of the Judicial Commissioner power of superintendence over such tribunals.
The words "in relation to which" in article 227(1) qualify the word "territories" and not the words "courts and tribunals".
There is no force in the contention that cl.
(2) of article 227 only confers on the High Court administrative superintendence over the subordinate courts and tribunals because cl.
(2) of the article is expressed to be without prejudice to the generality of the provisions in cl.
The power of superintendence conferred by article 227 should be exercised most sparingly and only in appropriate cases in order to keep the subordinate courts within the bounds of their authority and not for correcting mere errors.
In view of the admitted failure by the tenants to pay the rent as provided by the rent deed or at the first hearing of the court under the proviso to section 13(2)(1) the lower courts had acted arbitrarily in refusing to make an order for ejectment against the tenants who had not done what was incumbent on them to do under the law and thereby refused to exercise jurisdiction vested in them by law and it was a case which called for interference by the Court of Judicial Commissioner and it acted quite properly in doing so.
Moti Lal vs The State through Shrimati Sagrawati (I.L.R. [1952] 1 All.
558 at p. 567) and Dalmia Jain Airways Ltd. vs Sukumar Mukherjee (A.I.R. 1951 Cal.
193) referred to.


judgement:
Appeals Nos.
569 to 571 of 1964.
Appeals from the judgment and orders dated August 4, 1961 of the Calcutta High Court in Appeals from Original Orders Nos. 22, 29 and 30 of 1959.
B. Sen and section N. Mukherjee, for the appellants.
K. R. Chaudhuri, for the respondents.
454 The Judgment of the Court was delivered by Gajendragadkar, C. J.
These three appeals arise out of three writ petitions filed by the three respondents, Jaffar Imam, Brindaban Nayak and Jambu Patra, respectively on the Original Side of the Calcutta High Court against the appellant, the Calcutta Dock Labour Board.
Each one of the respondents challenged the validity of the order passed by the appellant, terminating his employment as a registered dock worker with the appellant, on the ground that the said order was illegal and inoperative.
The basis on which the impugned orders were challenged was that the enquiry which had been held before passing the said orders had not afforded to the respondents a reasonable opportunity to defend themselves and as such, the principles of natural justice had not been followed and even the relevant statutory provisions had been contravened.
The writ petitions filed by Jaffar Imam and Jambu Patra were heard by Sinha, J., whereas the writ petition filed by Bridaban Nayak was heard by P.B. Mukherji, J. The learned single Judges who heard these respective writ petitions substantially took the same view and rejected the contentions raised by the respondents.
In the result, the writ petitions were dismissed.
Against these decisions, the respondents preferred appeals before a Division Bench of the Calcutta High Court.
The Division Bench has allowed the appeals and has issued an appropriate writ directing that the impugned orders by which the employment of the respondents was terminated by the appellant should be quashed.
The appellant then applied for and obtained a certificate from the said High Court and it is with the certificate thus granted to it that it has come to this Court in appeal.
It appears that the three respondents were Dock workers at tached to the Port of Calcutta and were registered in the Reserve Pool.
On August 12, 1955, the Commissioner of Police, Calcutta, passed an order under section 3(1)(a)(ii) of the (No. 4 of 1950) (hereinafter called 'the Act ') directing that the respondents should be detained, as he was satisfied that they were guilty of violent and riotous behaviour and had committed assault and as such, it was necessary to detain them with a view to preventing them from acting in any manner prejudicial to the maintenance of public order.
The respondents then made representations to the State Government under section 7 of the Act alleging that the grounds set out in the detention orders passed against them were untrue and that their detention was in fact malafide.
On receipt of these representations, they were forwarded by the State Government to the Advisory Board under section 9.
It is wellknown that the Act had made a provision for referring orders of detention to the Advisory Boards constituted under section 8.
When the Advisory Board received the representations made by the respondents, it took into account the material placed before it, considered the said representations, and submitted its report within the time 455 specified by section 10(1).
Since the report was against the respondents, their detention was confirmed by the State Government under section 11 of the Act and in consequence, their detention was continued for about 11 months.
After they were released from detention, they applied for allocation to registered dock employment, but instead of passing orders in favour of such allocation, the appellant commenced disciplinary proceedings against them and notices were served on them to show cause why their services should not be terminated on 14 days ' notice in terms of clause 36(2)(d) of the Calcutta Dock Workers (Regulation of Employment) Scheme, 1951 (hereinafter called "the Scheme").
The principal ground in these notices was that the respondents had been detained for acts prejudicial to the maintenance of public order and as such, their services were liable to be terminated.
Accordingly, the respondents showed cause against the proposed order, but the Deputy Chairman of the appellant was net satisfied with their representations, and so, he terminated their services on December 17, 1956.
While doing so, each one of them was given 14 days ' wages in lieu of notice for the equivalent period,.
The respondents challenged this decision by preferring appeals to the Chairman of the appellant, but their appeals did not succeed and the orders passed by the Deputy Chairman were confirmed on April 4, 1957.
It is against these appellate orders that the respondents filed the three writ petitions which have given rise to the pre sent appeals.
It is plain that both the Deputy Chairman who passed the im pugned orders against the respondents, and the Chairman of the appellant who heard the respondents ' appeals, have taken the view that the orders of detention passed against the respondents, in substance, amounted to orders of conviction and as such, the appellant was justified in terminating the respondents ' employment.
Both the original as well as the appellate orders unequivocally state that having regard to the fact that the respondents had been detained, and that their detention was confirmed and continued after con sultation with the Advisory Board, it is clear that they were guilty of the conduct alleged against them in the orders of detention.
In that connection, it was pointed out that the Advisory Board consisted of persons of eminent status and undoubted impartiality, and so, the fact that the representations made by the respondents were not accepted by the Advisory Board and that their detention was, confirmed by the State Government in consultation with the Advisory Board, was enough to justify the appellant in terminating the employment of the respondents.
The two learned single Judges who heard the respective writ petitions substantially took the same view.
Sinha, J. has observed that the respondents had a hearing before a very responsible body and the report that went against them showed that the detaining authority was justified in holding that the respondents were guilty 456 of the charges and had thus committed acts of indiscipline and misconduct within the meaning of the Scheme.
In fact, Sinha J., felt no hesitation in holding that the appellant would be entitled to take disciplinary action against the respondents upon suspicion, and he held that the appellant 's suspicion against the respondents was more than justified by the fact that the detention of the respondents received the approval of the Advisory Board.
P.B. Mukherjee, J., also approached the question on the same lines.
He held that the appellant was entitled to take into consideration the fact that the respondents had been detained, that the statutory Advisory Board had considered the representations of the respondents and had not accepted them, and that the grounds of detention showed that the detaining authority was satisfied that the respondents were guilty of the conduct which was prejudicial to the maintenance of public order.
"In the premises", said the learned Judge, "I am satisfied that the order terminating Brindaban Nayak 's services was justified".
The Court of Appeal which heard the three appeals filed by the respondents against the respective orders passed by the two learned single Judges has disagreed with the approach adopted by them in dismissing the respondents ' writ petitions.
It has held that in acting merely on suspicion based on the fact that the respondents had been detained, the appellant had acted illegally and that made the impugned orders invalid and inoperative.
Mr. B. Sen for the appellant contends that the view taken by the Court of Appeal is erroneous in law.
Before dealing with this point, it would be useful to refer to the relevant provisions of the Scheme.
The Scheme has been made by the Central Government in exercise of the powers conferred on it by sub section
(1) of section 4 of the (IX of 1948).
Clause 3(n) defines a "reserve pool" as meaning a pool of registered dock workers who are available for work, and who are not, for the time being, in the employment of a registered employer as a monthly worker.
The three respondents belong to this category of workers.
Clause 23 of the Scheme guarantees the specified minimum wages to workers on the Reserve Pool Register.
Clause 29 prescribes the obligations of registered dock workers, whereas clause 30 provides for the obligations of registered employers.
Clause 31 prescribes restriction on employment, Clause 33 deals with wages, allowances and other conditions of service, whereas clause 34 is concerned with pay in respect of unemployment or underemployment.
Clause 36 deals with disciplinary procedure and it is with this clause that we are directly concerned in these appeals.
Clause 36(2) provides that a registered dock worker in the Reserve Pool who is available for work and fails to comply with any of the provisions of the Scheme, or commits any act of indiscipline or misconduct may be reported in writing to the Special Officer, who may.
after investigating the matter and without prejudice to and in addition to the powers conferred by clause 35, 457 take any of the five steps indicated by sub clauses (a) to (e) as regards that worker.
Sub clause (e) refers to dismissal of the guilty workman.
Clause 36(3) lays down that before any action is taken under sub cl.
(1) or (2), the person concerned shall be given an opportunity to show cause why the proposed action should not be taken against him.
Clause 36A provides for the disciplinary powers of the Chairman of the Board.
Clause 37 deals with termination of employment.
Clauses 38 and 39 provide for appeals.
That, in brief, is the nature of the Scheme.
This Scheme was substituted by another Scheme in 1956.
Clause 45(6) of this new Scheme corresponds to cl.
36(3) of the earlier Scheme.
In other words, the relevant clauses under both the Schemes require that before any disciplinary action is taken against a worker, an opportunity must be given to him to show cause why the proposed action should not be taken against him.
There can be no doubt that when the appellant purports to exercise its authority to terminate the employment of its employees such as the respondents in the present case, it is exercising authority and power of a quasi judicial character.
In cases where a statutory body or authority is empowered to terminate the employment of its employees, the said authority or body cannot be heard to say that it will exercise its powers without due regard to the principles of natural justice.
The nature or the character of the proceedings which such a statutory authority or body must adopt in exercising its disciplinary power for the purpose of terminating the employment of its employees, has been recently considered by this Court in several cases, vide the Associated Cement Companies Ltd. V. P. N. Sharma & Another,(1) and Lala Shri Bhagwan and Another vs Shri Ram Chand & Anr.(2 ) and it has been held that in ascertaining the nature of such proceedings with a view to decide whether the principles of natural justice ought to be followed or not, the tests laid down by Lord Reid in Ridge vs Baldwin & Others(3) are relevant.
In view of these decisions, Mr. Sen has not disputed this position and we think, rightly.
Therefore, the question which falls to be considered is whether the appellant can successfully contend that it was justified in acting upon suspicion against the respondents, the basis for the suspicion being that they were detained by orders passed by the appropriate authorities and that the said orders were confirmed by the State Government after consultation with the Advisory Board.
It is hardly necessary to emphasise that one of the basic postulates of the rule of law as administered in a democratic country governed by a written Constitution, is that no citizen shall lose his liberty without a fair and proper trial according to law; and legal and proper trial (1) ; (2) ; (3) ; , 458 according to law inevitably means, inter alia, a trial held in accordance with the relevant statutory provisions or in their absence, consistently with the principles of natural justice.
The Act is an exception to this rule and in that sense, it amounts to an encroachment on the liberty of the citizen.
But the said Act has been held to be constitutionally valid, and so far as detention of a citizen effected by an order validly passed by the appropriate authorities in exercise of the powers conferred on them is concerned, its validity can be challenged only on grounds permissible in the light of the relevant provisions of the Act or on the ground of malafides.
Whenever detenus move the High Courts or the Supreme Court challenging the validity of the orders of detention passed against them, the scope of the enquiry which can be legitimately held in such proceedings is thus circumscribed and limited.
In such proceedings, Courts cannot entertain the plea that the loss of liberty suffered by the detenu by his detention is the result of mere suspicions entertained by the detaining authorities, provided the detaining authorities act bona fide; their subjective judgment about the prejudicial character of the activities or conduct of the citizen sought to be detained, is not open to challenge or scrutiny in ordinary course, and in that sense, it may have to be conceded that the loss of liberty has to be suffered by a citizen if he is detained validly under the relevant provisions of the Act.
Thus far, there is no dispute.
But the question which we have to consider in the present appeals is of a different character.
A citizen may suffer loss of liberty if he is detained validly under the Act; even so, does it follow that the detenion order which deprived the citizen of his liberty should also serve indirectly but effectively the purpose of depriving the said citizen of his livelihood? If the view taken by the appellant 's officers who tried the disciplinary proceedings is accepted, it would follow that if a citizen is detained and his detention is confirmed by the State Government, his services would be terminated merely and solely by reason of such detention.
In our opinion, such a position is obviously and demonstrably inconsistent with the elementary concept of the rule of law on which our constitution is founded.
When a citizen is detained, he may not succeed in challenging the order of detention passed against him, unless he is able to adduce grounds permissible under the Act.
But we are unable to agree with Mr. Sen 's argument that after such a citizen is released from detention, an employer, like the appellant, can immediately start disci plinary proceedings against high and tell him in substance that he was detained for prejudicial activities which amount to misconduct and that the detention order was confirmed by the State Government after consultation with the Advisory Board, and so, he is liable to be dismissed from his employment.
It is obvious that the Advisory Board does not try the question about the propriety or validity of the citizen 's detention as a Court of law would; indeed, its function is limited to consider the relevant material placed before it and the representation received from the detenu, and then submit 459 its report to the State Government within the time specified by s.10(1) of the Act.
It is not disputed that the Advisory Board considers evidence against the detenu which has not been tested in the normal way by cross examination , its decision is essentially different in character from a judicial or quasi judicial decision.
In some cases, a detenu may be given a hearing; but such a hearing is often, if not always, likely to be ineffective, because the detenu is deprived of an opportunity to cross examine the evidence on which the detaining authorities rely and may not be able to adduce evidence before the Advisory Board to rebut the allegations made against him.
Having regard to the nature of the enquiry which the Advisory Board is authorised or permitted to hold before expressing its approval to the detention of a detenu, it would, we think, be entirely erroneous and wholly unsafe to treat the opinion expressed by the Advisory Board as amounting to a judgment of a criminal court.
The main infirmity which has vitiated the impugned orders arises from the fact that the said orders equate detention of a detenu with his conviction by a criminal court.
We are, therefore, satisfied that the Court of Appeal was right in taking the view that in a depart mental enquiry which the appellant held against the respondents it was not open to the appellant to act on suspicion, and inasmuch as the appellant 's decision is clearly based upon the detention orders and nothing else, there can be little doubt that, in substance, the said conclusion is based on suspicion and nothing more.
Even in regard to its employees who may have been detained under the Act, if after their release the appellant wanted to take disciplinary action against them on the ground that they were guilty of misconduct, it was absolutely essential that the appellant should have held a proper enquiry.
At this enquiry, reasonable opportunity should have been given to the respondents to show cause and before reaching its conclusion, the appellant was bound to lead evidence against the respondents, give them a reasonable chance to test the said evidence, allow them liberty to lead evidence in defence, and then come to a decision of its own.
Such an enquiry is prescribed by the requirements of natural justice and an obligation to hold such an enquiry is also imposed on the appellant by clause 36(3) of the Scheme of 1951 and cl.
45(6) of the Scheme of 1956.
It appears that in the present enquiry, the respondents were not given notice of any specific allegations made against them, and the record clearly shows that no evidence was led in the enquiry at all.
It is only the detention orders that were apparently produced and it is on the detention orders alone that the whole proceedings rest and the impugned orders are founded.
That being so, we feel no hesitation in holding that the Court of Appeal was perfectly right in setting aside the respective orders passed by the two leaned single Judges when they dismissed the three writ petitions filed, by the respondents.
Mr. Sen strenuously contended that if we were to insist upon a proper enquiry being held against the respondents before termi 460 nating their services, the appellant would find it impossible to take any disciplinary action against them.
He urges that the respondents are bullies and they have terrorised their co workers to such an extent that no one would be willing or prepared to give evidence against them in a departmental enquiry.
Even assuming that Mr. Sen is right that the appellant would experience difficulty in bringing home its charges to the respondents, we do not see how such a fear could justify the approach adopted by the enquiry officer in the present case.
What would happen if a desperate character who is in the employment of the appellant had not been detained under the Act? In such a case, before the appellant can validly dismiss such an employee, it will have to hold a proper enquiry.
The circumstance that the respondents happened to be detained can afford no justification for not complying with the relevant statutory provision and not following the principles of natural justice.
Any attempt to short circuit the procedure based on considerations of natural justice must, we think, be discouraged if the rule of law has to prevail, and in dealing with the question of the liberty and livelihood of a citizen, considerations of expediency which are not permitted by law can have no relevance whatever.
The result is, the appeals fail and are dismissed with costs.
Appeals dismissed.

summary:
The respondents had been detained under the Preventive Detention Act.
On their release their employer the appellant Board, commenced disciplinary proceedings and issued show cause notices why their services should not be terminated on the principal ground that they had been detained for acts prejudicial to the maintenance of public order.
Not being satisfied with their answers, the appellant terminated their services.
The respondents ' appeals to the Chairman of the appellant Board were dismissed.
Thereupon, the respondents filed writ petitions in the High Court, challenging the orders on the grounds that reasonable opportunity was not given to them, and that even the relevant statutory provisions had been contravened.
The petitions were dismissed, but were allowed by a Division Bench on appeal.
In the appeal to this Court, HELD: If the appellants wanted to take disciplinary action against respondents on the. ground that they were guilty of misconduct, it was absolutely essential that the appellant should have held a proper enquiry instead of equating the detention to a conviction by Criminal Court.
At this enquiry, reasonable opportunity should have been given to the respondents to show cause and before reaching its conclusion, the appellant was bound to lead evidence against the respondents, and give them a reasonable chance to test the evidence in accordance with the rules of natural justice.
Therefore, the Court of appeal was right in taking the view that in the departmental enquiry which the appellant held against the respondents it was not open to the appellant to act on suspicion, and inasmuch as the appellant 's decision was based only upon the detention orders and nothing else, there could be little doubt that the said conclusion was based on suspicion and nothing more.
[459E H] Case law referred to: An obligation to hold such an enquiry is also imposed on the employer by cl.
36(3) of the Calcutta Dock Workers (Regulation of Employment) Scheme, 1951, and cl.
45(6) of the Scheme of 1956.
[459G]


judgement:
Appeal No. 116.
of 1964.
Appeal from the judgment and order dated September 13, 1960, of the Allahabad High Court in Special Appeal No. 212, of 1956.
J. P. Goyal and B. P. Jha, for the appellants.
A. V. Ranganadham Chetty and A. V. Rangam, for the res pondents.
At the time when the present suit was brought, the U.P. (Temporary) Control of Rent and Eviction Act, 1947 (U.P. Act III of 1947) (hereinafter called 'the Act ') was in force.
Section 3 of the Act imposes certain restrictions on the landlord 's right to eject his tenant from the premises to which the Act applies.
Broadly stated, the effect of the provisions contained in section 3(1) is that a landlord can evict his tenant if he satisfies two conditions.
The first condition is that he must obtain the permission of the District Magistrate to file such a suit; and the second condition is that he must provethe existence of one or the other of the seven grounds; enumeratedin clauses (a) to (g) of section 3(1).
We shall presently refer to therelevant provisions of this section.
In their plaint, the appellants pleaded that they needed the premises in suit to carry on their own business in the shop, and they alleged that they had applied for permission to the District Magistrate, Moradabad, under section 3 (1 ) of the Act; that the said permission had been refused by him, whereupon they had moved the Commissioner in his revisions jurisdiction under section 3(2) of the Act; and that the Commissioner had given them permission to file the suit.
That is how the appellants claimed to have satisfied both the, conditions prescribed by section 3 (1).
The appellants further claim 555 ed ejectment of the respondents and asked for a decree for damages.
for use and occupation of the suit premises from 11th April, 1953 to 11th July, 1954 Rs. 35/ per month.
The suit (No. 349, of 1954) was filed on the 14th July, 1954.
The respondents resisted the claim made by the appelants on.
several grounds.
They urged that the suit was bad for non joinder of necessary parties; that the permission to sue granted to the appellants by the Commissioner was not valid in law; that the rent note executed by them was not admissible in evidence; and that the notice given by the appellants under section 106 of the Transfer of Property Act was also invalid in law.
On these pleadings, the learned Munsif, Chandausi, framed appropriate issues.
Evidence wag led by both the parties in support of their respective contentions.
The learned trial Judge recorded findings in favour of the appellants on all the issues and decreed their suit with costs on the 25th March, 1955.
The respondents then preferred an appeal (Civil Appeal No. 213 of 1955) in the Court of the District Judge, Moradabad, and urged that the findings recorded by the trial Judge were erroneous and asked for the reversal of the decree passed by him.
The learned District Judge rejected the respondents ' contentions and confirmed the decree under appeal on the 2nd June, 1955.
That took the respondents to the High Court at Allahabad in second appeal (No. 1106 of 1955).
The learned single Judge of the said High Court who heard this appeal, upheld the respondents ' contention that the permission granted by the Commissioner under section 3(3) of the Act was invalid in law; and so, he came to the conclusion that the appellants ' suit was incompetent.
This judgment was delivered on the 26th July, 1956.
The learned Judge, however, allowed the appellants leave to file a Letters Patent Appeal.
The Letters Patent Appeal was placed before a larger Bench of three learned Judges of the High Court, because it was thought that the question raised by the appellants was of some importance.
On the question as to whether the permission granted by the Commissioner was valid or not, the learned Judges who heard the appeal differed.
Two of the learned Judges held that the said permission was invalid, whilst the third learned Judge held that it was valid.
In accordance with the majority opinion the Letters Patent appeal.preferred by the appellants was dismissed on the 13th September, 1960.
The appellants then applied for 556 and obtained a certificate from the High Court and it is with the said certificate that this appeal has come to this Court.
At the hearing of this appeal, the first point which Mr. Goyal for the appellants has raised for our decision is that the courts below had no jurisdiction to consider the question about the validity of the permission granted by the Commissioner.
He contends that section 3 of the Act provides a self contained code for the grant of permission, and all questions in relation to the grant or refusal of the said permission have to be decided by the appropriate authorities constituted under the Act.
Once the question about the grant of permission asked for by a landlord is determined by the appropriate authorities, their decision is final and cannot be questioned in a civil court.
In support of this argument, Mr. Goyal has based himself on the provisions contained in section 3 (4) and section 16 ,of the Act.
Section 3 (4) provides that the order of the Commissioner under sub section (3) shall subject to any order passed by the State Government under section 7 F, be final.
Similarly, section 16 provides that no order made under this Act by the State Government or the District Magistrate shall be called in question in any Court.
The combined effect of these two provisions, according to Mr. Goyal, is to exclude the jurisdiction of the civil courts to entertain the question about the correctness, propriety or legality of the order passed by the Commissioner in the present case whereby he granted permission to the appellants to bring the present suit.
In order to appreciate the validity of this argument, it is necessary to consider the scheme of the, relevant provisions of the Act.
Section 3(1) reads thus.: "Subject to any order passed under sub section (3) no suit shall, without the permission of the District Magistrate, be filed in any Civil Court against a tenant for his eviction from any accommodation, except on one or more of the following grounds".
It is unnecessary to cite the said grounds, because it is not disputed that the ground of personal need set out by the appellants justifies their claim for the respondents ' ejectment.
Section 3(2) and (3) as they stood at the relevant time read thus : "(2) The party aggrieved by the order of District Magistrate granting or refusing to grant the permission referred to in sub section (1) may, within 30days from the date of the order or the date on which it is communi 5 57 cated to him, whichever is later, apply to the Commissioner to revise the order.
(3) The Commissioner shall, as far as may be, hear the application within six weeks from the date of its making, and, if he is satisfied that the District Magistrate has acted illegally or with material irregularity or has wrongly refused to act, he may confirm or set aside.
the order of the District Magistrate".
We have already referred to section 3(4).
It would thus be seen that the scheme of section 3 is that if a landlord wants to bring a suit to eject his tenant, he has to apply to the District Magistrate for permission to do so.
The District Magistrate may grant or refuse to grant such permission.
After the District Magistrate makes an order on the landlord 's application, the party aggrieved by the order can apply in revision to the Commissioner within 30 days; and the Commissioner, in exercise of his revisional jurisdiction, has to deal with the revision application under section 3(3).
If he is satisfied that the District Magistrate has acted illegally or with material irregularity, or has wrongly refused to act, he can make an appropriate order; and the order thus made by him is final under sub section
(4), subject to any order that the State Government may pass under section 7 F of the Act.
Section 7 E provides for the revisional powers of the State Government in very wide terms.
It reads thus : "The State Government may call for the record of any case granting or refusing to grant permission for the filing of a suit for eviction referred to in section 3 or requiring any accommodation to be let or not to be let to any person under section 7 and may make such order as appears to it necessary for the ends of justice".
It is clear that the power conferred on the State Government by section 7 F to revise the orders passed by the Commissioner under section 3 (3 ) is very wide.
In the first place, the State Government need not necessarily be moved by any party in that behalf.
It may call for the record suo moto and it can exercise its powers in the interests of justice.
In other words, whenever it is brought to the notice of the State Government either by a party aggrieved by the order passed by the Commissioner, or otherwise, that the order passed by the Commissioner is unfair or unjust, the State Government may in the ends of justice pass an appropriate order revising the order made by the Commissioner.
That, in brief, is the 558 scheme of.
the relevant provisions of the Act relating to the grant of permission to the landlord to sue his tenant in ejectment.
Mr. Goyal contends that the words of section 3 (4) read with section 16 are clear and unambiguous, and they indicate that the jurisdiction of the civil courts is completely excluded in relation to the question as to whether permission has been properly or validly granted or refused by the appropriate authorities exercising their powers under the relevant provisions of the Act.
It cannot be seriously disputed that the jurisdiction of the civil courts to deal with civil causes can be excluded by the Legislature by special Acts which deal with special subject matters; but the exclusion of the jurisdiction of the civil courts must be made by a statutory provision which expressly provides for it, or which necessarily and inevitably leads to that inference.
In other words, the jurisdiction of the civil courts can be excluded by a statutory provision which is either express in that behalf or which irresistibly leads to that inference.
One of the points which is often treated as relevant in dealing with the question about the exclusion of civil courts ' jurisdiction, is whether the special statute which, it is urged, excludes such jurisdiction, has used clear and unambiguous words indicating that intention.
Another test which is applied is : does the said statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions ? Applying these two tests, it does appear that the words used in section 3 (4) and section 16 are clear.
Section 16 in terms provides that the order made under this Act to which the said section applies shall not be called in question in any court.
this is an express provision excluding the civil courts ' jurisdiction.
Section 3 (4) does not expressly exclude the jurisdiction of 'the civil courts, but, in the context, the inference that the civil courts ' jurisdiction is intended to be excluded, appears to be inescapable.
Therefore, we are satisfied that Mr. Goyal is right in contending that the jurisdiction of the civil courts is excluded in relation to matters covered by the orders included within the provisions of section 3 (4) and section 16.
This conclusion, however, does not necessarily mean that the plea against the validity of the order passed by the District Magistrate, or the Commissioner, or the State Government, can never be raised in a civil court.
In our opinion, the bar created by the relevant provisions of the Act excluding the jurisdiction of the civil courts cannot operate in cases where the plea raised before the civil court goes to the root of the matter and would, if upheld, 559 lead to the conclusion that the impugned order is a nullity.
Take,, for instance, the case of an order purported to have been passed by a District Magistrate who is not a District Magistrate in law.
If it is shown by a party impeaching the validity of the order in a civil court that the order was passed by a person who was not a District Magistrate, the order in law would be a nullity, and such a plea cannot be ruled out on the ground of the exclusion of the jurisdiction of the civil court.
Similarly, if an order granting permission to a landlord is passed by a District Magistrate of one District when the property in question is situated in another district outside his jurisdiction, a party would be entitled to urge before a civil court that the permission purported to have been granted by the District Magistrate is wholly invalid and a nullity in law.
Let us take another case to illustrate the position.
If section 3 had provided that before a District Magistrate grants permission to the landlord to sue his tenant, he shall issue notice to the tenant and give him an opportunity to represent his case before the application of the.
landlord is dealt with on.
the merits; and in the face of such a statutory provision, the District Magistrate grants permission ex parte without issuing notice to the tenant; in such a case, the failure of the District Magistrate to comply with the mandatory provision% prescribed in that behalf, would render the order passed by him completely invalid, and a plea that an order has been passed by the District Magistrate without complying with the mandatory provision of the Act, would be open for examination before a civil court.
Likewise, in the absence of such a statutory provision, if it is held that the proceedings before the appropriate.
authorities contemplated by section 3 are in the nature of quasi judcial proceedings and they must be tried in accordance with the principles of natural justice, and it is shown that in a given case, an order has been passed without notice to the party affected by such order, it would be open to the said party to contend that an order passed in violation of the principles of natural justice is a nullity and it existence should be ignored by the civil court.
Such a plea cannot, in our opinion, be excluded by reason of the provisions contained in section 3 (4) and section 16 of the Act.
In this connection, we may incidentally refer to a recent deciSion of this Court in Lala Shri Bhagwan & A nr.
vs Shri Ram Chand and Another(1).
In that case, this Court upheld the decision of the Allahabad High Court which had set aside the order passed by the appropriate authority under the relevant provisions the Act on the ground that in passing the said order, principles of natural (1) ; 560 justice had not been followed.
The view which was taken by this Court in that case was that the proceedings taken by a landlord under section 3 are proceedings of a quasi judicial nature and the appropriate authorities, in exercising their powers in relation to such proceedings, must act in accordance with the principles of natural justice.
It must, however, be made clear that in that ,case, the question as to whether such a plea can be raised in a civil court having regard to the bar created by sections 3 (4) and 16 of the Act, was not raised and has not been considered.
We ought to point out that the provisions contained in sec tions 3(4) and 16 undoubtedly raise a bar against pleas which ,challenge the correctness or propriety of the orders in question.
The merits of the order are concluded by the decision of the ,appropriate authorities under the Act and they cannot be agitated in a civil court.
But where a plea seeks to prove that the impugned order is a nullity in the true legal sense, that is a plea which does not come within the mischief of the bar created by sections 3(4) and 16 of the Act.
Similar questions have often been considered by judicial ,decisions to some of which we will now refer.
In The Secretary ,of State for India in Council vs Roy Jatindra Nath Chowdhury and A nr., (1) dealing with the effect of section 6 of the Bengal Alluvion and Diluvion Act (IX of 1847), the Privy Council observed that the finality of the orders specified in the said section had to be read subject to two conditions; the first was that the said orders should not suffer from any fundamental irregularity, that is to say, "a defiance or noncompliance with the essentials of the procedure"; and the second condition was that the alleged defiance or non compliance, with the essentials of the procedure must be strictly proved by the party alleging it.
This decision show that if the special statute prescribes certain mandatory conditions subject to which the orders in question can be passed, and the said mandatory provisions are violated, the validity of the said orders ,can be challenged in a civil proceeding.
Similarly, if principles ,of natural justice are not complied with, the orders passed in violation of the said principles would be wholly inoperative in law and their validity can be impeached in civil proceedings.
The same principle has been emphasised by the Privy Council in Secretary of State vs Mask & Co.(1).
In that case, though the words used in sections 188 and 191 of the Sea Customs Act (1878) were held to exclude the jurisdiction of the civil courts, (1) A.I.R. 1924 P.C. 175.
(2) 67 1.
A. 222 561 the Privy Council observed that even where jurisdiction is excluded, the civil courts have jurisdiction "to examine into cases where the provisions of the Act have not been complied with, or the statutory tribunal has not acted in conformity with the fundamental principles of judicial procedure".
This latter clause presumably covers cases where orders are passed in violation of the principles of natural justice.
In M/s Kamala Mills Ltd. vs The State of Bombay(1), while dealing with a similar point, this Court has considered the effect of the two decisions of the Privy Council, one in the case of Mask & Co.(1), and the other in Raleigh Investment Company Ltd. vs Governor General in Council(3).
The conclusion reached by this Court in M/s. Kamala Mill 's case(1) also supports the view which we are taking in the present appeal.
Therefore, while upholding the contention raised by Mr. Goyal that the jurisdiction of the civil courts is barred, we wish to make it clear that this contention will not avail Mr. Goyal if the respondents ' plea, if upheld, would render the permission granted by the Commissioner totally invalid land a nullity.
The second point which then calls for our decision in the present appeal is: is the permission granted by the Commissioner without jurisdiction and as such, a nullity ? The majority decision of the Allahabad High Court is in favour of the respondents; and Mr. Goyal 's argument is that the said decision is inconsistent with the true scope and effect of the provisions prescribed by section 3 (3) of the Act.
The decision of this point lies within a very narrow compass.
The majority decision is that the jurisdiction conferred on the Commissioner under section 3(3) is exactly similar to the jurisdiction conferred on the High Court under section 115 of the Code of Civil Procedure.
It will be recalled that.
115 of the Code confers revisional jurisdiction on the High Court to make such order as it thinks fit in a given case, if the subordinate court whose order is brought before the High Court under section 115 "appears (a) to have exercised a jurisdiction not vested in it by law, or (b) to have failed to exercise a jurisdiction so vested, or (c) to have acted in exercise of its jurisdiction illegally or with material irregularity".
There is no doubt that the requirements of clauses (a), (b) & (c) all centre round the question about the jurisdiction of the subordinate court, and the view which has been accepted by the majority decision under appeal is that the same limitation must be imported in construing (1) ; (3) 74 T. A. 50, at pp.
62 63.
(2) 67 I.A. 222.
56 2 the scope of the authority and power conferred on the Commissioner by section 3(3).
Let us examine whether this conclusion is right.
In construing the provision of section 3 (3), one factor which is patent is that it ,does not refer to any considerations of jurisdiction at all.
In fact, it is not easy to conceive of a limitation as to jurisdiction being relevant in section 3(3), because the said provision deals with .orders passed by District Magistrates, and the District Magistrates normally would have jurisdiction to deal with applications made by landlords.
But quite apart from this aspect of the matter, the words used in section 3(3) are unambiguous.
There are 'three ,categories of cases in which the Commissioner can interfere with the order passed by the District Magistrate.
If the District Magistrate has acted illegally, the Commissioner can interfere with his order; so can he interfere with the order if the District Magistrate has acted with material irregularity; and lastly, the Commissioner can interfere with the order of the District Magistrate if the District Magistrate has wrongly refused to act.
This last clause is wide enough to empower the Commissioner to correct the error committed by the District Magistrate in making an order brought before it; quite clearly if the District Magistrate refuses to grant permission and the Commissioner thinks that in doing so, he has committed an error, that would be a case where the District Magistrate has wrongly refused to act, and that would give the,Commissioner jurisdiction to exercise his revisional power.
It is significant that the revisional application can be made to the Commissioner only against orders passed by the District Magistrate granting or refusing to grant such permission.
It is, we think, fallacious to assume that a party can move the Commissioner under section 3(3) in cases where the District Magistrate just refuse to make an order on the application made by the landlord for permission to bring a suit against the tenant.
If a District Magistrate just does not deal with the application and passes no, order on it, the party aggrieved may be justified in applying for an appropriate writ to the High Court or adopt some other suitable remedy in law; but a revision in such a case does not appear to be competent under section 3 (3).
Besides, the illegality or the irregularity to which section 3 (3) refers need not necessarily be correlated with questions of jurisdic tion.
Therefore, we are satisfied that the High Court was not justified in introducing a limitation pertaining to questions of jurisdiction in determining the scope of the width of the revisional ,visional power conferred on the Commissioner by section 3 (3).
That is why it must be held that the High Court was in error in coming to the conclu 563 sion that the permission granted by the Commissioner in exercise of the powers conferred on him by section 3 k 3) is invalid in law.
As we have already emphasised, the only plea which can be raised before a civil court in relation to orders passed under the relevant provisions of the Act can be a plea which, if sustained, would render the order wholly invalid and as such, a nullity.
No other plea can be raised, because all other pleas are barred by sections 3 (4) and 16 of the Act.
In this connection, we may incidentally point out that by a subsequent amendment of section 3(3), the Legislature has made it clear that its intention is to confer wide jurisdiction on the Commissioner.
The amendment in question has been introduced by Act 17 of 1954.
The amended provision reads thus : " 'The Commissioner shall hear the application made under sub section (2), as far as may be, within six weeks from the date of making it, and he may, if he is not satisfied as to the correctness, legality or propriety of the order passed by the District Magistrate or as to the regularity of proceedings held before him, alter or reverse his order, or make such other order as may be just and proper".
There is no doubt that under this amended provision, the Commissioner can deal not only with the legality, but also with the correctness and propriety of the order passed by the District Magistrate.
In our opinion, the position about the Comissioner 's powers was not different even under the unamended provision.
It may also be relevant to point out that the power conferred on the State Government at all material times by section 7 F was very wide.
As we have already indicated, in exercise of its powers under section 7 F, the State Government can pass such orders as appear to it to be necessary in the ends of justice.
Therefore, there is no doubt that the relevant provisions of the Act did not intend, even prior to the amendment of 1954, to limit the jurisdiction of the Commissioner only to cases where irregularity or illegality bad been committed by the District Magistrate in granting or refusing, to grant permission.
The result is, the appeal is allowed, the order passed by the High Court in the Letters Patent Appeal is set aside, and that of the District Court restored with costs throughout.
Appeal allowed.

summary:
The appellants sued the respondents their tenants for ejectment from their shop.
They had applied to the District Magistrate for the requisite permission to institute the suit under section 3(1) of the U.P. (Temporary) Control of Rent and Eviction Act.
When the permission was refused they moved the Commissioner in his revisional jurisdiction under section 3(2) of the Act and the Commissioner gave the permission.
The Munsif decreed the suit.
This was confirmed in appeal by the District Judge.
The High Court, on appeals, upheld the respondents contention that the permission granted by the Commissioner under section 3 (3) of the Act, was invalid in law, and so concluded that the appellants ' suit was incompetent.
In this Court the appellants contended (i) sections 3(4) and 16 of the Act totally excludes the jurisdiction of civil courts in relation to the question as to whether permission has been properly or validly granted or refused by the appropriate authority exercising their powers under the relevant provisions of the Act, and (ii) the decision of the High Court that the permission granted by the Commissioner was invalid in law was inconsistent with the true scope and effect of the provisions prescribed by section 3(3) of the Act.
HELD:(i) Section 3 (4) and 16 of the Act create a bar against pleas which challenge the correctness or propriety of the orders in question.
[558 G] The two tests, which are often considered relevant in dealing with the question about the exclusion of civil courts ' jurisdiction are (a) whether the special statute which excludes such jurisdiction has used clear and unambi guous words indicating that intention; and (b) does that statute provide for an adequate and satisfactory alternative remedy to a party that may be aggrieved by the relevant order under its material provisions.
Applying these tests the inference is inescapable that the jurisdiction of the civil courts is intended to be excluded.
[558 D G] This conclusion, however, does not necessarily mean that the plea against the validity of order passed by.
the District Magistrate, or the Commissioner, or the State can never be raised in a civil court.
The bar excluding the jurisdiction of civil courts cannot operate in cases where the plea raised before the civil court goes to the root of the matter and would, if upheld, lead to the conclusion that the impugned order is a nullity.
[558 G H] (ii)The High Court was not justified, in introducing a limitation pertaining to questions of jurisdiction in determining the scopeof the width of the revisional power conferred on the Commissionerby section 3 (3).
There are three categories of cases in which the commissioner 'can interfere with the order passed by the District Magistrate :(a) if the District Magistrate has acted illegally; (b) if he has acted with material irregularity and(c) if he has wrongly refused to act.
This last ground is wide enough 5 54 to empower the Commissioner to correct the error committed by District Magistrate in making an order brought before it; clearly if the District Magistrate refused to grant permission and the Commissioner thinks that in doing so, he has committed an error, that would be a case where the District Magistrate "has wrongly refused to act" and that would give the Commissioner jurisdiction to exercise his revisional powers.
[562 C E, H]