judgement:
Appeal No. 30 of 1957.
Appeal by special leave from the judgment and order dated September 1, 1955, of the Bombay High Court in Income tax Reference No. 37 of 1952.
N. A. Palkhivala and I. N. Shroff, for the appellant.
K. N. Rajagopala Ayyangar and D. Gupta, for the respondent.
December 7.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
The Raghuvanshi Mills Ltd., Bombay (a public limited Company), has filed this appeal by special leave against the judgment and orders of.the High Court of Bombay dated March 10, 1953, and September 1, 1955.
By the first order, the Bombay High Court directed the Income tax Tribunal to submit a supplementary statement in the case in the light of its judgment, giving the parties liberty to lead further evidence, if any.
By the second order, the High Court re framed the question, and answered it against the assessee.
The assessee Company 's issued and subscribed capital was, at the material time, Rs. 10,00,000 divided into 10,000 shares of Rs. 100 each.
Prior to 980 November 14, 1941, one Maganlal Parbhudas, who was a Director of the Company, held 6,344 shares.
On November 14, 1941, he made a gift of 1,000 shares to each of his five sons, Ravindra, Surendra, Bipinchandra, Hareshchandra and Krishnakumar.
We are concerned with the account year of the Company, April 1, 1942, to March 31, 1943, the assessment year being 1943 44.
In that year, the dividend which was declared at the Annual General Meeting held on December 17, 1943, was less than what was required under section 23A of the Indian Income tax Act.
The question, therefore, arose whether the Company could be said to be one to which section 23A(1) of the Act was applicable, regard being had to the third proviso and the Explanation under it.
During the accounting period, the Company had eight Directors, whose names along with the shares respectively held by them are given below: Shares (1) Shri Maganlal Parbhudas 1,344 (2) Ravindra Maganlal 1,168 (3) Surendra Maganlal. 1,100 (4) Amritlal Chunilal (jointly with Babulal Chunilal). 833 (5) Babulal Chunilal. 100 (6) Bhagwandas Harakchand. 50 (7) Haridas Purshottam. 50 (8) Sir Chunilal B. Mehta (jointly with Lady Tapibai Chunilal) 50 Total 4,695 Out of the balance of the shares, 4,754 shares were held by the relatives of some of the above named Directors, as stated below: Shares (1) Shrimati Kantabai Maganlal (wife of a Director) 771 (2) Shri Bipinchandra Maganlal 1,000 (3) Shri Hareshchandra Maganlal (son of a Director) 1,000 (4) Shri Krishnakumar Maganlal (do) 1,000 981 (5) Shrimati Dhanlaxmi Mohanlal (6) Srimati Prabhavati Nanalal Harilal (5 and 6 daughters of a Director) 50 (7) Shri Hirjibhai Purshottam and Haridas Purshottam (brothers of a Director) 25 (8) Shri Dhanjibhai Purshottam and Haridas Purshottam (brothers of a Director) 25 (9) Shri Chimanlal Vithaldas (cousin of a Director) 833 Total 4,754 The remaining 551 shares were held by the members of the public, who were not connected with the Directors of the Company in any way.
Before March, 1942, Messrs. Ravindra Maganlal and Bros. were the Managing Agents of the Company.
Maganlal Parbhudas was the sole proprietor of that firm.
On March 7, 1942, the Company appointed Ravindra Maganlal & Co. Ltd. as the Managing Agents for.
a period of 20 years.
The Managing Company had a total issued and subscribed capital of Rs. 5,000 and the five sons of Maganlal Parbhudas who have been named before had subscribed that capital equally.
During the account year, Maganlal Parbhudas and two of his sons, Ravindra Maganlal and Surendra Maganlal, were three of the Directors of the Company.
Ravindra, Surendra and Bipinchandra were Directors of the Managing Company.
On these facts, the Income tax Officer applied section 23A (as it stood prior to its amendment by the Finance Act, 1955) to the Company, holding that this was not a Company in which the public were substantially interested.
The order of the Income tax Officer was confirmed on appeal, both by the Appellate Assistant Commissioner and the Tribunal.
The Tribunal also refused to state a case under section 66(1) of the Incometax Act, but the High Court of Bombay acting under section 66(2) called for a statement of the case on the question: "Whether on the facts and circumstances of the 124 982 case the provisions of section 23A of the Indian Income tax Act (XI of 1922) are applicable to the petitioners?" In stating the cases the Tribunal pointed out that probably the question ought to have been: "Whether on the facts and circumstances of the case 1,000 shares each held by Bipinchandra, Haresh chandra and Krishnakumar in the capital of the assessee Company are held by members of the public within the meaning of the Explanation to the third proviso to section 23A?" The members of the Tribunal in deciding the appeal before them, gave slightly different reasons.
According to the Accountant Member, the shares held by persons interested in the Managing Company were under the control of the Directors of the appellant Company, and those persons could not be considered to be members of the public.
The Judicial Member held that the Directors were controlling the shareholders of the Company, that their relatives were mere nominees, whose voting power was controlled by the Directors, and that the public could not, therefore, be said to be substantially interested, as required by the Explanation to the third proviso to the section.
When the High Court heard the case, the learned Judges addressed themselves to the question, what was the proper meaning of the expression "held by the public" in the Explanation.
They came to the conclusion that the object of the third proviso and the Explanation was that the voting power to be exercised by the public should be independent of the control of the Directors, and that the word "Public" was used in contradistinction to the Directors.
They apparently thought that a holding by a Director could not be described, in any event, as a holding by the public.
The High Court came to the tentative opinion that both the tests stated by the Accountant Member and the Judicial Member were incorrect, and held that what the law required was de facto control, 4 c a control which is, in fact, exercised," and that no finding appeared to have been given on that point by the Tribunal.
The case was accordingly remitted to 983 the Tribunal for submission of a fresh statement of the case whether the Directors were exercising de facto control.
over any of the other shareholders, who belonged to the second category mentioned by us above.
The Tribunal thereupon re stated the case, and after examining further evidence, gave the finding that the Directors, particularly the three sons of Maganlal Parbhudas who formed the Directors of the Managing Company were under the de facto control of their father.
At no stage in the case did the Tribunal alter the finding reached by the Department that the shares of the Company were not, in fact, freely transferable by the holders to members of the public.
The High Court then reheard the case, and came to the conclusion that there was evidence on which the Tribunal could hold that Maganlal Parbhudas exercised de facto control over his three sons.
In view of this finding, the High Court held that the order made by the Tribunal was correct, and answered the question in the negative, re framing it as follows: "Whether on the facts and circumstances of the case the shares held by Bipinchandra, Harishchandra and Krishnakumar can be considered to be shares held by members of the public within the meaning of the explanation to the third proviso to Section 23A?" The High Court refused to grant a certificate; but the Company has obtained special leave from this Court, and has filed this appeal.
It is first contended that the test that the shares held by the Directors of a company are not shares in which the public are substantially interested is incorrect.
According to learned counsel, all the authorities, the Tribunal and the High Court have proceeded on this wrong assumption, and have failed to apply the proper test laid down by the Explanation to the third proviso.
It may be pointed out that there is no dispute that 551 shares, were, in fact, held by the public.
The total shares of the Company being 10,000, the Company can only avoid the application of section 23A, if the public hold shares carrying not less than 25 per cent.
of the voting power, that is to say, 2,500 shares.
The Directors between them hold 4,695 shares.
These 984 have been held by the High Court to be shares, which cannot be said to be beneficially held by the public.
Even so, if the rest of the shares can be said to be held by the public, then the minimum 25 per cent.
would still be reached.
It was in this context that the shares of the sons of Maganlal, Bipinchandra, Harishchandra and Krishnakumar, were considered.
If those shares can be said to fall outside the category of shares beneficially held by the public, then those shares along with the shares held by the Directors reduced the number of shares held by the remaining shareholders to less than 25 per cent.
It was on this view that the case was remitted to the Tribunal by the High Court to obtain a further statement whether Maganlal Parbhudas was de facto controlling these three shareholders.
Two questions, therefore, arise in this appeal.
The first is whether the shares held by the Directors must always be regarded as not held by the public.
The second is what is the meaning of the provision: "a company shall be deemed to be a company in which the public are substantially interested, if its shares carrying not less than twenty five per cent.
of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public.
" In this connection, we may point out that a ruling of the Privy Council appears to take a different view from that taken by the High Court, in regard to an Uganda Ordinance in pari materia with the proviso and the Explanation.
We shall refer to that case as also to a case of the House of Lords, where also a different conclusion in law from that of the High Court has been reached.
Section 23A (as it stood prior to its amendment in 1955), omitting the portions not material, read as follows: "23A. Power to assess individual members of certain companies.
Where the Income tax Officer is satisfied that in respect of any previous year the profits and gains distributed as dividends by any company up to the end of the sixth month after its accounts for that 985 previous year are laid before the company in general meeting are less than sixty per cent.
of the assessable income of the company of that previous year, as reduced by the amount of income tax and super tax payable by the company in respect thereof he shall, unless he is satisfied that having regard to losses incurred by the company in earlier years or to the smallness of the profit made, the payment of a divi dend or a larger dividend than that declared would be unreasonable, make with the previous approval of the Inspecting Assistant Commissioner an order in writing that the undistributed portion of the assessable income of the company of that previous year as computed for income tax purposes and reduced by the amount of income tax and super tax payable by the company in respect thereof shall be deemed to have been distributed as dividends amongst the shareholders as at the date of the general meeting aforesaid, and thereupon the proportionate share thereof of each shareholder shall be included in the total income of such shareholder for the purpose of assessing his total income: . . . . . . .
Provided further that this sub section shall not apply to any company in which the public are substantially interested or to a subsidiary company of such a company if the whole of the share capital of such subsidiary company is held by the parent company or by the nominees thereof.
Explanation.
For the purpose of this sub section a company shall be deemed to be a company in which the public are substantially interested if shares of the company carrying not less than twentyfive per cent.
of the voting power have been allotted unconditionally to, or acquired unconditionally by, and are at the end of the previous year beneficially held by the public. and if any such shares have in the course of such previous year been the subject of dealings in any stock exchange or are in fact freely transferable by the holders to other members of the public.
" It is clear from the third proviso that the sub section 986 does not apply to a company in which the public are substantially interested.
The Explanation lays down, among the tests, the minimum interest which can be called substantial ' by saying that shares of the company carrying not less than 25 per cent.
of the voting power must be allotted unconditionally to, or acquired unconditionally by, the public and they must be beneficially held by the public.
The essence of the Explanation lies not in the percentage which only shows the limit of the minimum holding by the public, but lies in the words "unconditionally" and "beneficially".
These words underline the fact that no person who holds a share or shares not for his own benefit but for the benefit of another and who does not exercise freely his voting power, can be said to belong to that body, which is designated 'public '.
The word 'Public ' is used in contradistinction to one or more persons who act in unison and among whom the voting power constitutes a block.
If such a block exists and possesses more than seventy five per cent.
of the voting power, then the company cannot be said to be one in which the public are substantially interested.
In Sardar Baldev Singh vs The Commissioner of Income tax, Delhi and Ajmer (1), this Court took the following view: "The section thus applies to a company in which at least 75 per cent.
of the voting power lies in the hands of persons other than the public, which can only mean, a group of persons allied together in the same interest.
The company would thus have to be one which is controlled by a group.
The group can do what it likes with the affairs of the company, of course, within the bounds of the Companies Act.
It lies solely in its hands to decide whether a dividend shall be declared or not.
" judged from the test we have indicated, it is clear that such a group may be formed by the Directors of a company acting in concert, or by some Directors acting in concert with others or even by some , shareholder or shareholders, none of whom may be a Director.
Such a group which may, for convenience, be (1) ; 987 designated a block, must hold a controlling interest, and if the voting power of the block is 75 per cent.
or more, then obviously it can do anything at a meeting, whether general or special.
When a company starts, the promoters may subscribe a portion of its capital and release the other unconditionally to the public.
This is a case of unconditional allotment of shares to the public.
The public may also unconditionally acquire a portion of the shares which were previously held by the group which promoted the company.
If at the end of the previous year 25 per cent.
or more of the voting power is so held by the public, the company can take the benefit of the third proviso.
But if more than 75 per cent.
of shares have again passed into the hands of a group which acts as a block, the third proviso ceases to apply.
In deciding if there is such a controlling interest, there is no formula applicable to all cases.
Relationship and position as Director are not by themselves decisive.
If relatives act, not freely, but with others, they cannot be said to belong to that body, which is described as 'public ' in the Explanation.
But it would be otherwise if they were free.
Similarly, if Directors or some of them do not act as a body or in concert with others, the fact that they are Di rectors is of no significance.
The case of Tatem Steam Navigation Co., Ltd. vs Commissioners of Inland Revenue (2) illustrates the first proposition.
There, the assessing Commissioners had made directions under section 21 of the Finance Act, 1922, against which the Company appealed on the ground that it was a Company in which the public were substantially interested, inasmuch as shares of the Company carrving not less than 25 percent.
of the voting power had been allotted unconditionally to or acquired unconditionally by, and were, at the end of the relevant periods, beneficially held by the public and the decision of the Special Commissioners that 16,000 shares given by Lord Glanely to his niece were not allotted to or acquired by the public and that the Company was, therefore, not (1) 988 a Company in which the public were "substantially interested" was erroneous.
It was held by Lawrence, J., that merely because she was a niece of Lord Glanely did not make her cease to be a member of the public.
The Court of Appeal agreed with Lawrence, J. No doubt, there were other provisions which laid down the kind of relationship which would lead to the inference that the holder was controlled by another, and a niece was not such a relative.
The Act we are considering did not lay down the kind of relationship which would show such a control, and the same principle will apply.
Mere relationship thus is not of consequence, unless control of the voting power held by such a relative, by another relative, is proved.
The other test adopted in the case by the Bombay High Court that Directors stand outside the 'public ' is also not decisive.
In Commissioner of Income tax vs H. Bjordal (1), the Judicial Committee dealt with section 21(1) of the Income Tax Ordinance No. 8 of 1940 (Uganda), as amended by section 5 of the Income Tax (Amendment) Ordinance, 1943.
That provision of law is completely in pari materia with section 23A.
Two brothers, H. Bjordal and section Bjordal, held 73.96 and 25.09 per cent.
of the voting power.
Five others held 04 per cent.
of the voting power.
The shares held by section Bjordal were purchased for full value by him from his brother.
There was no suggestion that he was a nominee of the respondent or that he was acting in concert with his brother.
Both brothers were Directors of the Company.
It was held by the Judicial Committee that shareholders in a company who are members of the 'public ' do not cease to be so, because they become Directors.
In the Uganda Ordinance also, like our Act, there was no guidance as to the meaning of the word 'public ', as there was in the English statute considered in Tatem 's case (2).
It is significant that in Jubliee Mills Ltd. vs Commissioner of Income tax (3), Chagla, C. J., and section T. Desai, J., speaking of the judgment under appeal and (1) (2) (3) , 41.
989 taking into consideration the Privy Council case, observed: "It may be that our view is erroneous; and it may be and very probably it is that the view taken by the Privy Council is the right one.
" In our judgment, the test is first to find out whether there is an individual or a group which controls the voting power as a block.
If there be such a block, the shares held by it cannot be said to be "unconditionally" and "beneficially" held by members of the public.
In the category of shares held by the public, only those shares can be counted which are unconditionally and beneficially held by the public, or, in other words, which are uncontrolled by the group, which controls the affairs.
The group itself may be composed of Directors or their nominees or relations in different combinations, but none can be said to be.long to that group, be he a director or a relative unless he does not hold the shares unconditionally and beneficially for himself.
It is only such a person, who can fall properly outside the word 'public '.
Judged from this point of view, the judgment and orders of the High Court cannot be upheld.
Directors cannot, by reason of being Directors, be said not to be members of the public.
To that extent, the judgment is erroneous.
There is a finding by the Tribunal in the supplementary statement of the case that the shares held by Bipinchandra, Harishchandra and Krishnakumar were under the control of their father, Maganlal Parbhudas.
Their holding was 3,000 and with Maganlal 's holding of 1,344 shares, makes up a total of 4,344 shares.
Though the question as framed by the High Court appears to have been correctly answered in the negative, it does not dispose of the matter.
The, question to be determined still is whether more than per cent.
of the shares are not beneficially held by the public.
We accordingly set aside the judgment and orders of the High Court, and direct the High Court to decide the question originally framed by it, viz.: "Whether on the facts and circumstances of the 125 990 case the provisions of section 23A of the Indian Income tax Act, XI of 1922, are applicable to the petitioners?" The High Court may call for a supplemental statement of the case from the Tribunal, if it finds it neces sary.
The appeal is allowed.
The respondents shall bear the costs of this appeal.
The costs in the High Court shall abide the result.
Appeal allowed.

summary:
One Maganlal Parbhudas who was a Director of the assessee company held 6,344 shares out of a total of 10,000 shares of the company and he made a gift of 1000 shares to each of his five sons.
During the accounting period the company had eight Directors including the said Maganlal Parbhudas and two of his sons and they held 4695 shares as between themselves.
Out of the balance of the shares 4754 shares were held by the relatives of some of the Directors.
Three sons of Maganlal Parbhudas were Directors of the Managing Company.
The Income tax Officer applied section 23A of the Income tax Act as it stood prior to its amendment by the Finance Act, 1955 to the company holding that this was not a company in which the public were substantially interested.
The order of the Income Tax Officer was confirmed on appeal both by the Assistant Commissioner and the Tribunal.
The High Court remitted the case to the Tribunal for a statement whether the Directors were exercising de facto control over any of the other shareholders.
The Tribunal thereupon gave the finding that the Directors, particularly the three sons of Maganlal Parbhudas who formed the Directors of the Managing Company were under the de facto control of their father.
The High Court agreed with the finding of the tribunal and held that on the facts and circumstances of the case the shares held by the three sons of Maganlal Parbhudas could not be considered to be shares held by the members of the public within the meaning of the Explanation to the third proviso to section 23A of the Income Tax Act.
On appeal by the assessee company, Held, that in the Explanation the word "public" is used in contradistinction to one or more persons who act in unison and among whom the voting power constitutes a block.
If such a block exists and possesses more than seventy five per cent of the voting power, then the company cannot be said to be one in which the public are substantially interested.
Sardar Baldev Singh vs Commissioner of Income tax, Delhi and Ajmer, ; , considered.
The test is first to find out whether there is an individual or a group which controls the voting power as a block.
If there is such a block the shares held by it cannot be said to be held 979 "unconditionally" or "beneficially" by the public.
Only those shares which are "unconditionally" and "beneficially" held by the public uncontrolled by the controlling group can be treated as shares held by the public under the Explanation.
The group may be composed of Directors or their nominees or relations in different combinations, but none can be said to belong to that c group, be he a Director or a relative unless he does not hold the shares unconditionally and beneficially for himself.
It is only such a person who can fall properly outside the word "public".
The view that Directors merely by reason of their being Directors stand outside the "public" is erroneous.
Commissioner of Income tax vs H. Bjordal, , followed.
Mere relationship is of no consequence unless it is proved that the voting power of one relative is controlled by another relative.
Tatem Steam Navigation Co. vs Commissioner of Inland Reve nue, , followed.


judgement:
Appeal No. 531 of 1959.
Appeal by special leave from the Award dated October 21, 1957 of the Central Government Industrial Tribunal, Dhanbad, in Reference No. 6 of 1957.
N. Dutta Mazumdar, G. N. Bhattacharjee and B. P. Maheshwari, for the appellants.
M. C. Setalvad, Attorney General of India and R. Gopalakrishnan, for the respondent.
December 7.
The Judgment of the Court was delivered by GAJFNDRAGADKAR, J.
The short question of law which falls to be decided in the present appeal is whether a dispute raised by the employees of a General Insurance Company against their employer for payment of bonus in any particular year can be referred for adjudication by an Industrial Tribunal under section 10(1) of the (XIV of 1947).
This question arises in this way.
The workmen of the Hercules Insurance Co. Ltd. are the appellants and the Insurance Company is the respondent before us.
On April 11, 1957, the Central Government referred the appellants ' claim for bonus for the years 1954 and 1955 for adjudication to the Industrial Tribunal, Dhanbad, constituted under section 7A of the , and this reference has been made under section 10(1)(d) of the Act.
Before the Tribunal the respondent urged a preliminary objection against the validity of the reference itself.
Its case was that the payment of bonus by an Insurance Company is conditioned entirely by the relevant provisions of the (IV of 1938), and that the said provisions did not justify the reference of a dispute in that behalf for adjudication by any Industrial Tribunal.
This preliminary objection was based on the provisions of section 31A(1) and proviso (vii) of the 997 .
It was also urged by the respondent that having regard to the limitations imposed on the General Insurance Companies by section 40C of the the claim for bonus made by the appellants, could not be sustained.
The Tribunal has upheld the preliminary objection thus raised by the respondent and held that the reference is invalid.
Incidentally it has also considered the plea raised under section 40C and has observed that the said plea is also well founded In the result the Tribunal refused to entertain the reference and dismissed it accordingly.
It is against this order of the Tribunal that the appellants have come to this Court by special leave.
It is common ground that the respondent has paid the appellants bonus equivalent to two months ' basic wages for each of the two years 1954 and 1955.
The appellants claim two months ' basic wages as additional bonus for each of the two years under reference.
It is their case that if the trading profits made by the respondent are ascertained from the respondent 's balance sheet and the Full Bench formula is applied, it would appear that the respondent has in its hands a substantial amount of available surplus from which the additional bonus claimed by them can be awarded.
Since the reference has been rejected on the preliminary ground the Tribunal has naturally not considered this aspect of the problem.
The preliminary objection raised by the respondent is founded on the relevant provisions of section 31A of the (hereafter called the Act) and so we must now turn to the said provisions.
Section 31A(1)(c) of the Act provides, inter alia, that notwithstanding anything to the contrary contained in the Indian Companies Act, 1913, or in the articles of association of the insurer, if a company, or in any contract or agreement, no insurer shall after the expiry of one year from the commencement of the Insurance (Amendment) Act, 1950, be directed or managed by, or employ as manager or officer or in any capacity, any person whose remuneration or any part thereof takes the form of commission or bonus in respect of the 126 998 general insurance business of the insurer.
Thus looking section at 31A(1)(c) by itself without the proviso the position is absolutely at clear.
The respondent cannot be directed to employ the appellants in any capacity so as to include in their remuneration a liability to pay bonus in respect of the general insurance business of the respondent.
Bonus under the is not a part of wages, but the right to claim bonus which has been universally recognised by industrial adjudication in cases of employment falling under the said Act has now attained the status of a legal right.
Bonus can be claimed as a matter of right provided of course by the application of the Full Bench formula it is shown that for the relevant year the employer has sufficient available surplus in hand.
Therefore a claim for bonus made by the appellants in the present proceedings is a claim in respect of the general insurance business of the respondent, and if allowed it would add to the remuneration payable to them.
In other words, bonus claimed by the appellants, if awarded, would, for the purpose of section 31A (1)(c), be a part of their remuneration, and that is precisely what is prohibited by the said provision.
There are, however, certain exceptions to this general prohibition, and it is to one of these exceptions that we must now turn.
Proviso (vii) to section 31A (1)(c) lays down that nothing in this subsection shall be deemed to prohibit "the payment of bonus in any year on a uniform basis to all salaried employees or any class of them by way of additional remuneration, such bonus, in the case of any employee, not exceeding in amount the equivalent of his salary for a period which, in the opinion of the Central Government, is reasonable having regard to the circumstances of the case.
" This provision which constitutes an exception to the rule prescribed by section 31A(1)(c) allows the payment of bonus to the employees of Insurance Companies subject to the condition specified by it.
Bonus intended to be paid to such employees must not exceed in amount the equivalent of their salary for a period which the Central Government regards as reasonable.
999 The result of this provision appears to be that the Central Government has to consider the circumstances of each insurer and then decide whether any bonus should be paid by the insurer to its employees.
If the financial position of the insurer is sufficiently satisfactory, the Central Government may decide to allow the insurer to pay bonus to its employees, and in that context the Central Government would prescribe the maximum within which the payment should be made.
In no case can payment exceed the maximum prescribed by the Central Government, and in all cases the matter has to be considered by the Central Government and no other authority.
Having regard to the scheme of the Act which purports to supervise and regulate the working of Insurance Companies the legislature thought that the payment of bonus by the Insurance Companies to their employees should normally be prohibited and its payment should be permitted subject to the over riding control of the Central Government to prescribe the maximum in that behalf.
If the Central Government decides that no bonus should be paid, no bonus can be paid by the insurer.
If the Central Government decides that bonus should be paid but not beyond specified limit the insurer cannot exceed that limit.
That, in our opinion, is the effect of proviso (vii) to section 31A(1).
It is, however, urged that proviso (vii) merely enables the Central Government to prescribe the maximum.
It does not take away the Central Government 's authority to refer an industrial dispute in respect of bonus for adjudication under section 10 of the .
In this connection it is urged by Mr. Mazumdar that in some cases the Central Government may take the view that the financial position of the insurer justified the payment of bonus, but the quantum may be better left to the Industrial Tribunal.
In such a case the Central Government should have authority to make the reference.
Similarly it is urged that the Central Government may decide that within the maximum prescribed by it, bonus should be paid by an insurer, but the insurer 1000 may not comply with the Central Government 's decision and in that case the only way to make the Central Government 's decision effective is to refer the matter to adjudication and enable the employees to obtain an award which can be executed.
That is why the appellants contend that the enabling provision contained in proviso (vii) should not be construed to constitute a bar against the Central Government 's power to act under section 10(1) of the .
We are not impressed by this argument.
In our opinion the policy of the relevant clause of the proviso is absolutely clear.
Payment of bonus by insurers was intended by the legislature to be conditioned by the provisions contained in the said clause, and we feel no doubt or difficulty in reaching the conclusion that the intervention of the Industrial Tribunals was intended to be excluded and the matter was intended to be kept within the discretion of the Central Government so far as the payment of bonus by the insurers is concerned.
Then, as to the argument that the Government directive issued under proviso (vii) may not be obeyed by any insurer, we do not think that such an event is likely to happen; but theoretically it is conceivable that an insurer may refuse to comply with the decision of the Government.
In that case all we can say is that there is a lacuna left and the legislature may consider whether it is necessary to provide adequate remedy for making the Government decision binding and final.
Having regard to the unqualified and absolute prohibition contained in section 31A(1)(c) it seems to us difficult to hold that the payment of bonus to the employees of Insurance Companies is not absolutely conditioned by proviso (vii).
In the absence of the said provision no bonus could have been claimed by Insurance employees, and so the effect of the said provision must be to limit the said right to the conditions prescribed by it.
That is why we think that the Tribunal was right in coming to the conclusion that the reference made by the Central Government is invalid.
The fact that the Central Government took the view that it could make such a reference 1001 is hardly relevant in determining the scope and effect of the relevant provisions of the Act.
This question must be considered on what we regard to be the fair construction of the relevant statutory provision, and as we have just indicated the construction of the relevant provision clearly supports the view taken by the Tribunal.
Incidentally, it may be pointed out that in its award the Tribunal has referred to several other decisions of Industrial Tribunals which have taken the same view though there are one or two decisions which have upheld the validity of the reference without duly considering the effect of section 31A(1).
In this connection we may refer to the decision of this court in The Central Bank of India vs Their Workmen (1), where a similar question has been considered.
In that case the Court had to consider the effect of section 10 of the Banking Companies Act, 1949, prior to its amendment in 1956.
The said section, according to that decision, prohibited the grant of industrial bonus to bank employees inasmuch as such bonus is remuneration which takes the form of a share in the profits of a banking company.
In dealing with the character of bonus in relation to remuneration specified by section 10, section K. Das, J., who spoke for the Court, observed that "bonus in the industrial sense as understood in our country does come out of the available surplus gap, wholly or in the actual wage.
id it fills the wage and age in that sense, whether it be called contingent or supplementary.
None the less, it is labour 's share in the profits, and as it is a remuneration which takes the form of a share in profits, it comes within the mischief of section 10 of the Banking Companies Act".
Section 10 of the Banking Companies Act is comparable to section 31A of the , and so this decision supports the view that we have taken about the effect of section 31A(1)(c).
We have already held that the payment of bonus would be an additional remuneration to the employees of Insurance Companies and it would be (1) ; 1002 bonus in respect of the general insurance business of the insurer.
In view of our conclusion that the Tribunal was right in upholding the preliminary objection, we do not propose to consider the other argument which had been urged by the respondent before the Tribunal under section 40C of the Act, and which the Tribunal has incidentally considered and accepted.
The result is that the appeal fails and is dismissed.
There will be no order as to costs.
Appeal dismissed.

dataset_name: IN-Abs

summary:
In view of the unqualified and absolute prohibition contain ed in section 31A(1)(c) of the , against payment of bonus to the employees in general insurance business, the exception made by proviso (vii) to that section must be strictly confined to the limits prescribed by the said proviso.
The policy underlying the proviso clearly is to exclude the intervention of Industrial Tribunals and leave the question of payment of such bonus entirely to the discretion of the Central Government.
Consequently, where the workmen in general insurance business claimed bonus and the Central Government referred the dispute for adjudication to the Industrial Tribunal under section 10(1) of the , and the Tribunal, on a preliminary objection under section 31A(1)(c) of the , read with proviso (vii) thereof, held that the reference was invalid, (1) ; 996 Held, the decision of the Tribunal was correct and must be upheld.
The Central Bank of India vs Their Workmen, [1960] 1 S.C.R. 200, relied on.


judgement:
minal Appeal No. 169 of 1959.
Appeal by special leave from the judgment and order dated March 27, 1958, of the Allahabad High Court in Criminal Appeal No. 785 of 1955.
972 Nuruddin Ahmad and Naunit Lal, for the appellant.
G. C. Mathur and C. P. Lal, for the respondent.
December 7.
The Judgment of the Court was delivered by S.K. DAS, J.
This is an appeal by special leave from the judgment and order of the High Court of Judicature at Allahabad dated March 27, 1958, whereby the said High Court maintained the conviction of the appellant under section 5(2) of the Prevention of Corruption Act, 1947 (2 of 1947) but reduced the sentence of four years ' rigorous imprisonment passed on the appellant by the Special Judge, Kanpur, to two years ' rigorous imprisonment.
The short facts are these.
The appellant Surajpal Singh was employed in the Police Department of the Uttar Pradesh Government.
He started his service as a constable on a salary of Rs. 13 per month from August 1, 1930.
In 1946 his pay was increased to Rs. 46 per month.
He was appointed a Head constable on a salary of Rs. 50 per month in 1947.
He officiated as a Sub Inspector of Police sometime in 1948 and 1949 on a salary of Rs. 150 per month.
On March 1, 1949, he was reverted to his post of Head constable.
Between the dates February 27, 1951, and September 9, 1952, he was posted as a Head constable attached to the Sadar Malkhana, Kanpur.
The charge against him was that in that capacity he dishonestly or fraudulently misappropriated or otherwise converted to his own use many articles, principally those seized in connection with excise offences kept in deposit in the said Malkhana.
These articles included opium, bottles of liquor etc.
The charge further stated that a sum of Rs. 9,284 1 0 was recovered on a search of his house on September 9 and 10, 1952 and this amount was disproportionate to the known sources of income of the appellant.
There was an allegation by the prosecution that the acts of dishonest misappropriation etc. were committed by the appellant in conspiracy with two other persons called Bhagawat Singh and Gulab Singh.
Therefore, the charges against the 973 appellant were (1) for the offence of conspiracy under section 120B of the Indian Penal Code; (2) for the offence under section 5(1)(c) of the Prevention of Corruption Act, 1947, for the acts of dishonest misappropriation or user, read with section 5(2) of the said Act; and (3) for an offence under section 465 of the Indian Penal Code in respect of a particular entry said to have been forged in the Register of Properties kept in the Sadar Malkhana.
The learned Special Judge who tried the appellant Bhagawat Singh and Gulab Singh recorded an order of acquittal in respect of the latter two persons.
As to the appellant, he was also acquitted of all the charges except the charge under section 5(2) of the Prevention of Corruption Act.
On this charge the learned Special Judge recorded an order of conviction, but this was based on the sole ground that the appellant had failed to account satisfactorily for the possession of Rs. 9,284 1 0 which, according to the finding of the learned Special Judge, was disproportionate to the known sources of income of the appellant.
It should be noted here that the learned Special Judge held the appellant not guilty of the various acts of dishonest misappropriation or user alleged against him in respect of the properties kept in the Sadar Malkhana.
In his appeal to the High Court the appellant urged various grounds, one of which was that he could not be convicted on the rule of presumption laid down in sub section
(3) of section 5 of the Prevention of Corruption Act, 1947, when on the only charge of criminal misconduct alleged under section 5(1)(c) of the said Act he had been found not guilty.
The High Court repelled this contention and upheld the conviction of the appellant but reduced the sentence.
The principal question before us is whether in the circumstances of this case, the conviction of the appellant on the charge under sub section
(2) of section 5 of the Prevention of Corruption Act, 1947, by invoking the rule of presumption as laid down in sub section
(3) of that section, is correct.
It is convenient to read here section 5 of the Prevention 123 974 of Corruption Act, 1947, in so far as it is relevant for our purpose. "section 5(1) A public servant is said to commit the offence of criminal misconduct in the discharge of his duty (a)if he habitually accepts or obtains or agrees to accept or attempts to obtain from any person for himself or for any other person any gratification (other than legal remuneration) as a motive or reward such as is mentioned in section 161 of the Indian Penal Code, or (b)if he habitually accepts or obtains or agrees to accept or attempts to obtain for himself or for any other person, any valuable thing without consideration or for a consideration which he knows to be inadequate, from any person whom he knows to have been, or to be, or to be likely to be concerned in any proceeding or business transacted or about to be transacted by him, or having any connection with the official functions of himself or of any public servant to whom he is subordinate, or from any person whom he knows to be interested in or related to the person so concerned, or (c)if he dishonestly or fraudulently misappropriated or otherwise converts for his own use any property entrusted to him or under his control as a public servant or allows any other person so to do, or (d)if he, by corrupt or illegal means or by otherwise abusing his position as public servant, obtains for himself or for any other person any valuable thing or pecuniary advantage.
(2)Any public servant who commits criminal misconduct in the discharge of his duty shall be punishable with imprisonment for a term which shall not be less than one year but which may extend to seven years and shall also be liable to fine: Provided that the Court may, for any special reasons recorded in writing ' impose a sentence of imprisonment of less than one year.
(2A). . . . . . . . . . (3) In any trial of an offence punishable under sub section (2) the fact that the accused person or any 975 other person on his behalf is in possession, for which the accused person cannot satisfactorily account, of pecuniary resources or property disproportionate to his known sources of income may be proved, and on such proof the court shall presume, unless the contrary is proved, that the accused person is guilty of criminal misconduct in the discharge of his official duty and his conviction therefor shall not be invalid by reason only that it is based solely on such pre sumption.
" Now, learned Counsel for the appellant has put his argument on the principal question in the following way: he has submitted that the is not in a position in an appeal by special leave to go behind the finding of fact arrived at by the courts below.
The appellant, it appears, gave some explanation with regard to the possession of Rs. 9,284 1 0.
That explanation was not, however, accepted by the courts below.
Learned Counsel has submitted that he does not wish to go behind that finding of fact.
He has submitted, how ever, that the scheme of section 5 of the Prevention of Corruption Act, 1947 is this: sub section
(1) defines the offence of criminal misconduct in the discharge of his duties by a public servant; the offence can be one or more of four categories mentioned in cls.
(a), (b), (c) and (d): sub section
(2) is the penal section which states the punishment for the offence of criminal misconduct; and sub section
(3) lays down a rule of presumption and states that no conviction for the offence shall be invalid by reason only that it is based solely on such presumption.
Learned Counsel has pointed out, rightly in our opinion, that the charge against the appellant in the present case referred only to criminal misconduct in the discharge of his duty by a public servant of the nature mentioned in cl.
(c) of sub section
In other words, the charge against the appellant was that he had dishonestly or fraudulently misappropriated or otherwise converted for his own use property entrusted to him etc.
It was open to the learned Special Judge to have convicted the appellant of that offence by invoking the rule of presumption laid down in sub section
He did not, however, do so.
On the 976 contrary, he acquitted the appellant on that charge.
Therefore, learned Counsel has submitted that by calling in aid the rule of presumption laid down in sub section
(3), the appellant could not be found guilty of any other type of criminal misconduct referred to in cls.
(a), (b) or (d) of sub section
(1) in respect of which there was no charge against the appellant.
We consider that the above argument of learned Counsel for the appellant is correct and must be, accepted.
This Court pointed out in C. section D. Swamy vs The State (1) that sub section
(3) of section 5 of the Prevention of Corruption Act, 1947 does not create a new offence but only lays down a rule of evidence which empowers the Court to presume the guilt of the accused in certain circumstances, contrary to the well known principle of Criminal law that the burden of proof is always on the prosecution and never shifts on to the accused person.
In Swamy 's case there were charges for the offence of criminal misconduct under two heads, cl.
(a) and cl.
The trial court held the accused person ' in that case not guilty of the offence under cl.
(a) but guilty of the offence under cl.
(d) by invoking the rule of presumption laid down in sub section
(3) of section 5.
The distinction between that case and the case under our consideration is this: in Swamy 's case there were two charges either of which could be founded on the rule of presumption laid down in sub section
(3); but in our case there is only one charge of criminal misconduct of which the appellant has been acquitted; therefore, there is no other charge which can be founded on the rule of presumption referred to in sub section
This is the difficulty with which the respondent is faced in the present case.
It appears to us that the learned Special Judge and the High Court proceeded wrongly on the footing as though sub section
(2) or sub section
(3) of section 5 of the Act creates an offence.
The offence which is punished under sub section
(2) or can be founded on the rule of presumption laid down in sub section
(3) must be the offence of criminal misconduct of one or more of the categories mentioned in cls.
(a) to (d) of sub section
In the case before us the only category which was alleged against the appellant was that of category (c), (1) ; 977 namely, dishonest or fraudulent misappropriation etc.
That charge having failed, there was no other charge which could be founded on the rule of presumption laid down in sub section
Learned Counsel for the respondent State has contended before us that it was open to the appellate Court to affirm the conviction of the appellant under sub section
(2) of section 5 by holding him guilty of the offence of criminal misconduct of the category mentioned in cl.
(a) or cl.
(d) of sub section
We are unable to accept this contention as correct.
The prosecution never alleged that the sum of Rs. 9,284 1 0 was the result of the appellant habitually accepting or obtaining illegal gratification etc.
The prosecution case was that the sum of Rs. 9,284 1 0 was the result of the dishonest user of property which was entrusted with the appellant.
It is not open to the appellate Court to affirm the conviction of the Appellant on an entirely new case never suggested against the appellant at any earlier stage.
It is unfortunate that in this case the courts below did not choose to rely on the rule of presumption laid down in sub section (3) with reference to the charge under cl.
(c) of sub section
(1) of section 5.
But that misfortune cannot now be repaired by evolving out of a vacuum as it were a new case against the appellant based on cl.
(a) or cl.
(d) of sub section
(1) of section 5 in support of which no facts were ever alleged or suggested.
For the reasons given above, we allow this appeal and set aside the conviction and sentence passed against the appellant.
Appeal allowed.

summary:
The appellant was a Head Constable attached to a malkhana where articles seized in connection with excise offences were kept in deposit.
The appellant was charged under section 5(1)(c) read with section 5(2), Prevention of Corruption Act, 1947, in that he had dishonestly or fraudulently misappropriated or otherwise converted to his use these articles; the charge further stated that a sum of Rs. 9,284 1 0 was recovered from him which was disproportionate to his known sources of income.
He was acquitted of the charge under section 5(1)(c) but was convicted under section 5(2) on the ground that he had failed to account satisfactorily for the possession of Rs. 9,284 1 0 which was disproportionate to his known sources of income.
Held, that the conviction of the appellant under section 5(2) of the Prevention of Corruption Act, 1947, was illegal.
The only charge against the appellant was of criminal misconduct under section 5(1)(c) of the Act for dishonestly or fraudulently misappropriating property entrusted to him and of this charge he could have been convicted by invoking the rule of presumption under section 5(3).
But since this was not done and he was acquitted of that charge, he could not be convicted of criminal misconduct referred to in cls.
(a), (b) or (d) of section 5(1) for which he had not been charged.
The Courts below had proceeded wrongly on the footing as though sub section
(2) or sub section
(3) of section 5 created an offence; the offence which was punishable under section 5 (2) or which could be founded on the rule of presumption under section 5(3) was the offence of criminal misconduct of one or more of the cate gories mentioned in cls.
(a) to (d) of sub section
(1) of S 5.
C.S. D. Swamy vs The State; , , refer red to.


judgement:
Appeal No. 147 of 1951.
Appeal from the Judgment and Decree dated September 4, 1946, of the late Chief Court of Oudh (now the High Court of Judicature at Allahabad, Lucknow Bench) (Misra and Wallford JJ.) in First Civil Appeal No. 139 of 1941, arising out of the Judgment,and Decree dated October 23, 1941, of the Court of the Civil Judge, Bahraich, in Regular Suit No. I of 1941.
234 Onkar Nath Srivastava for the appellant.
Bishan Singh for the respondent.
November 7.
The Judgment of the Court was delivered by MUKHERJEA J.
This appeal is on behalf of the plaintiff and is directed against a judgment and decree of the Chief Court of Avadh dated September 4, 1946, affirming, on appeal, those of the Civil Judge, Bahraich, passed in Regular Suit No. 1 of 1941.
To appreciate the controversy between the parties to this appeal it would be necessary to state a few facts.
One Raja Bisheshwar Bux Singh, the father of the plaintiff and of the defendant 's husband, was a taluqdar of Oudh, and the estate known as Gangwat Estate, to which he succeeded in 1925 on the death of the widow of the last holder, is one to which the Oudh Estates Act (I of,1869) applies.
Raja Bisheshwar died on 16th October, 1930, leaving behind him two sons, the elder of whom, Bajrang Bahadur, is the plaintiff in the present litigation, while the younger, whose name was Dhuj Singh, has died since then, being survived by his widow Bakhtraj Kuer.
who is the defendant in the suit.
Shortly before his death Raja Bisheshwar executed a will dated 11th September, 1929, by which five properties, described in lists A and B attached to the plaint, were bequeathed to Dhuj Singh, the younger son, by way of making provisions for the maintenance of the said son and his heirs.
On the death of Raja Bisheshwar,the estatement to the plaintiff as his eldest son under the provisions of the Oudh Estates Act and Dhuj Singh got only he five properties mentioned above under the terms of his father 's will.
Dhuj Singh had no issue of his own and on his death in 1940 disputes arose in respect of these properties between the plaintiff on the one land and Dhuj Singh 's widow on the other.
The plaintiff succeeded at first in having his name mutated as owner of these properties in the revenue records in place of his deceased brother, but the appellate 235 revenue authority ultimately set aside this order and directed mutation to be made in the name of the defendant.
The plaintiff thereupon commenced the suit out of which this appeal arises, praying for declaration of his title to the five properties mentioned above on the allegation that they vested in him on the death of Dhuj Singh and that the defendant could not) in law, assert any right to, the same.
It may be stated here that four out of these five properties have been described in list A to the plaint and there is no dispute that they are taluqdari properties.
The fifth item is set out in list B and admittedly this property is not taluqdari in its character.
Besides lists A and B there is a third list, viz., Catached to the plaint, which mentions two other properties as being in possession of the defendant and in the plaint a claim was made on behalf of the plaintiff in respect to these properties as well, although they were not covered by the will of Bisheshwar.
This claim, however, was abandoned in course of the trial and we are not concerned with it in the present appeal.
The plaintiff really rested his case on a two fold ground.
It was averred in the first place that Dhuj Singh hadonly a life interest in the properties bequeathed to him by Bisheshwar and on the termination of his life interest, the property vested in the plaintiff as the heir of the late Raja.
In the alternative the case put forward was that even if Dhuj Singh had an absolute interest created in his favour under the terms of his father 's will, the plaintiff was entitled to succeed to the taluqdari properties at any rate, under the provision of section 14(b) read with section 22 (5) of the Oudh Estates Act.
The defendant in her written statement resisted the plaintiff 's claim primarily on the ground that Bisheshwar Bux Singh, as the full owner of the properties, was competent to dispose of them in any way he liked and under his will it was the defendant and not the plaintiff in whom the properties vested after the death of Dhuj Singh.
The contention, in .
substance, was that the will created a life estate for Dhuj 236 Singh followed by a devise in favour of the widow as his personal heir.
The decision of the point in dispute between the parties thus hinges on the proper construction of the will left by Bisheshwar.
The trial court after an elaborate consideration of the different portions of the will, viewed in the light of surrounding circumstances, came to the conclusion that Dhuj Singh got a life interest in the devised properties but there were similar life estates created in favour of his personal heirs in succession, the ultimate remainder being given to the holder of the estate when the line of personal heirs would become extinct.
The defendant, therefore, was held entitled to the suit properties so long as she was alive and in that view the plaintiff 's suit was dismissed.
Against this decision, the plaintiff took an appeal to the Chief Court of Avadh and the Chief Court affirmed the decision of the trial judge and dismissed the appeal.
The plaintiff has now come, up to this court on the strength of a certificate granted by the High Court of Allahabad with which the Chief Court of Avadh was amalgamated sometime after the disposal of this case.
The learned counsel appearing for the appellant first of all drew our attention to the provisions contained in certain sections of the Oudh Estates Act and it was urged by him on the basis of these provisions that as Dhuj Singh, who got the suit properties under the will of his father, the late.
Taluqdar, came within the category of persons enumerated in clause (1) of section 13 A, Oudh Estates Act, he could, under section 14 of the Act, hold the properties subject to the same conditions and the same rules of succession as were applicable to the, taluqdari himself.
In these circumstances, it is said that the provisions of section 22 (5) of the Act would be attracted to the facts of this case and the plaintiff, as the brother of Dhuj Siugh, would be entitled to succeed to the properties of the latter in preference to his widow.
The argument formulated in this way does not I appear to us to be helpful to the appellant.
Section.
11 237 of the Oudh Estates Act confers very wide powers of disposition upon a taluqdar and he is competent under the section "to transfer the whole or any portion of his estate, or of his right and interest therein, during his lifetime, by sale, exchange, mortgage, lease or gift, and to bequeath by his will to any person the whole or any portion of such estate, and interest.
" Sections 13 and 13 A make certain special provisions in cases of transfers by way of gift and bequest in favour of certain specified persons and lay down the formalities which are to be complied with in such cases.
Section 14 then provides that "if any taluqdar or grantee, or his heir or legatee, shall heretofore have transferred or bequeathed, or if any taluqdar:or grantee, or his heir or legatee shall hereafter transfer or bequeath the whole or any portion of his estate (a) . . . (b) to any of the persons mentioned in clauses (1) and (2) of section.
13 A, the transferee or legatee and his heirs and legatees shall have same rights and powers in regard to the property to which he or they may have become entitled under or by virtue of such transfer or bequest, and shall hold the same subject to the same conditions and to the same rules of succession as the transferor or testator.
" It is true that Dhuj Singh being a younger son of the testator came within the purview of clause (1) of section 13 A of the Oudh Estates Act and if he became full owner of the properties under the will of his father, succession to such properties after his death would certainly be regulated by the special rules of succession laid down in the Oudh Estates Act, and not by the ordinary law of inheritance.
But section 14 would have no application if the disposition by the will did not make Dhuj Singh an absolute owner of the properties and he was given only an interest for life which was followed by subsequent interests created in favour of 31 238 It cannot also be contended that a taluqdar governed by the Oudh Estates Act cannot convey anything less than his absolute proprietary right in a property by transfer inter vivos or by will, or that 'it is not competent for him to create any limited interest or future estate.
Apart from the plenary provision contained in section 11, section 12 of the Act which makes the rule against perpetuity applicable to transfers made by a taluqdar, furnishes a clear indication that the Act does not interdict the creation of future; estates and limitations provided they do not trans gress the perpetuity rule.
The questions, therefore, which require consideration in this case are really two in number.
The first is whether Dhuj Singh got an absolute estate or an estate for life in the properties given to, him by the will of Raja Bisheshwar? If he got an absolute estate, the contention of the appellant should undoubtedly prevail with regard to the taluqdari properties specified in list A of the plaint.
If, on the other hand,, the interest was one which was to inure only for the period of his life, the further question would arise as to whether any subsequent interest was validly created by the will in favour of the widow on the strength of which she can resist the plaintiff 's claim.
If the life estate was created in favour of Dhuj Singh alone, obviously the plaintiff as the heir of the grantor would be entitled to come in as reversioner after his death .
The answers to both the questions would have to be given on a proper construction of the will left by Raja Bisheshwar.
The will has been rightly described by the trial judge as a most inartistic document with no pretension to any precision of language, and apparently it was drawn up by a man who was not acquainted with legal phraseology.
The Civil Judge himself made a translation of the document, dividing its contents into several paragraphs and this was found useful and convenient by the learned Judges of the Chief Court.
The material portions of the will, as translated by the trial judge, may be set out as follows: 239 "As I have become sufficiently old and no reliance can be placed on life, by God 's grace I have got two sons namely, Bajrang Bahadur Singh, the elder, and Dhuj Singh the younger.
After my death the elder son would according to rule, become the Raja, the younger one is simply entitled to maintenance.
Consequently with a view that after my death the younger son and his heirs and successors, generation after generation, may not feel any trouble and that there may not be any quarrel between them.
I have decided after a full consideration that I should execute a will in favour of Dhuj Singh with respect to the villages detailed below.
So that after my death Dhuj Singh may remain in possession of those villages as an absolute owner with the reservation that he will have no right of transfer.
If God forbid, Dhuj Singh may not be living a the time of my death, his son or whoever may be his male heir or widow may remain in possession of the said villages on payment of the Government revenue as an absolute owner.
The liability for the land revenue of the said villages will be with Dhuj Singh and his heirs and successors; the estate will have no concern with it.
Although Dhuj Singh and his heirs are not given: the power of transfer, they will exercise all other rights of absolute ownership that is to say, the result is that the proprietor of the estate or my other heirs and successors will not eject Dhuj Singh or his heirs or successors in any way.
Of course if Dhuj Singh or his heirs become ever heirless then the said villages will not escheat to the Government but will revert and form part of the estate.
Hence with the soundness of my mind without any force or pressure and after having fully under , stood and also having thought it proper I execute this will in favour of Dhuj Singh, my own ;on, with the above mentioned terms.
" 240 The learned counsel for the appellant naturally lays stress upon the words "absolute owner " (Malik kamil) and " 'generation after generation? ' (naslan bad naslan) used in reference to the interest which Dhuj Singh was to, take under the will.
These words, it cannot be, disputed, are descriptive of a heritable and alienable estate in the donee, and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to, be conferred.
In all such cases the true intention of the testor has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
"The object of the testator in executing the will clearly set out in the preamble to the document and in spite of the somewhat clumsy drafting that object to have been kept in view by the testator throughout, in making the provisions.
The language and tenor of the document leave no doubt in OUT minds that the dominant intention of the testator was to make provision not for Dhuj Singh alone but for the benefit of his heirs and successors, " generation after generation " as the expression has been used.
The expression " heirs" in this context obviously means and refers to the personal heirs of Dhuj Singh determined according to the, general law of inheritance and not the successors to the estate under the special provisions of the Oudh Estates Act, for paragraph 6 of the will mentioned above is expressly intended to protect the personal heirs of Dhuj Singh from eviction from the properties in question by the future holders of the estate.
Thus the beneficiaries under the will are Dhuj Singh himself and his heirs in succession and to each such heir or set of heirs the rights of malik are given but without any power of alienation.
On the total, extinction of this line of heirs the properties affected by the will are to revert to the estate.
As it was the intention of the testator that the properties should 241 remain intact till the line of Dhuj Singh was exhausted and each successor was to enjoy and hold the properties without any power of alienation, obviously what the testator wanted was to create a series of life estates one after another, the ultimate reversion being given to the parent estate when there was a complete failure of heirs.
To what extent such intention could be, given effect to by law is another matter and that we shall consider presently.
But it can be said without hesitation that it was not the intention of the testator to confer anything but a life estate upon Dhuj Singh in respect of the properties covered by the will.
The clause in the will imposing total restraint on alienation is also a pointer in the same direction.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would certainly be repelled on the ground 'of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the Will, it is a material circumstance to be relied upon for displacing the presumption of absolute ownership implied in the use of the word "malik".
We hold, therefore, that the courts below were right in holding that Dhuj Singh had only a life interest in the properties under the terms of his father 's will.
Of course this by itself gives no comfort to the defendant; she has to establish, in order that she may be able to resist the plaintiff 's claim, that the will created an independent interest in her favour following the death of Dhuj Singh.
As we have said already, the testator did intend to create successive life estates in favour of the successive heirs of Dhuj Singh.
This, it is contended by the Appellant is not permissible in law and he relies on the case of Tagore vs Tagore(1).
It is quite true that no interest could be created in favour of an unborn person but when the gift is made to a class or series of persons, some of (1) 18 Weekly Report 359.
242 whom are in existence and some are not, it does not fail in its entirety; it is valid with regard to the persons who are in existence at the time of the testator 's death and is invalid as to the rest.
The Widow, who is the next heir of Dhuj Singh, was in existence when the testator died and the life interest created in her favour should certainly take effect.
She thus acquired under the will an interest in the suit properties after the death of her husband, commensurate with the period of her own natural life and the plaintiff consequently has no present right to, possession.
The result, therefore, is that the appeal fails and is dismissed with costs.
Appeal dismissed.
Agent for the appellant Rajinder Narain.

summary:
The Oudh Estates Act (Act I of 1869) does not interdict the creation of future estates and limitations provided they do not transgress the rule of perpetuities and where a disposition by a will made by a taluqdar does not make the legatee an absolute owner but gives him only an interest for life which is followed by subsequent interests created in favour of other persons the rule of succession laid down in section 14 of the Act will not apply on the death of the donee and the property bequeathed to him will pass according to the will to the next person entitled to it under the will, 233 The words malik kamil (absolute owner) and naslan bad naslan (generation after generation) are descriptive of a heritable and alienable estate in the donee and they connote full proprietary rights unless there is something in the context or in the surrounding circumstances which indicate that absolute rights were not intended to be conferred.
In all such cases the true intention of the testator has to be gathered not by attaching importance to isolated expressions but by reading the will as a whole with all its provisions and ignoring none of them as redundant or contradictory.
In cases where the intention of the testator is to grant an absolute estate, an attempt to reduce the powers of the owner by imposing restraint on alienation would be repelled on the ground of repugnancy; but where the restrictions are the primary things which the testator desires and they are consistent with the whole tenor of the will, it is a material circumstance to be relied on for displacing the presumption of absolute ownership implied in the use of the word malik.
Though under the rule laid down in Tagore vs Tagore no interest could be created in favour of unborn persons, yet when a gift is made to a class or series of persons, some of whom are in existence at the time of the testator 's death and some are not, it does not fail in its entirety ; it will be valid with regard to the persons who are in existence at the time of the testator 's death and invalid as to the rest.
A will made by a taluqdar of Oudh recited that with a view that after his death his younger son D and his heirs and successors, generation after generation, may not feel any trouble or create any quarrel, D shall after the testator 's death remain in possession of certain villages as absolute owner, with the reservation that he will have no right to transfer, that if D may not be living at the time of his death D 's son or whoever may be his male heir or widow may remain in possession and that although D and his heirs are not given the power of transfer they will exercise all other rights of absolute ownership: Held, that the will did not confer an absolute estate on D and on D 's death the succession was not governed by section 14 of the Oudh Estates Act and D 's widow was entitled to succeed in preference to D 's elder brother.


judgement:
Appeal No. 88 of 1957.
Appeal from the judgment and order dated January 18, 1956, of the Rajasthan High Court (Jaipur Bench) in D.B.C. Writ Petition No. 262 of 1954.
section K. Kapur and Ganpat Rai, for the appellants.
N. section Bindra and D. Gupta, for the respondents.
December 7.
The Judgment of the Court was delivered by SARKAR, J.
The appellants are traders of Jhalawar.
Respondent No. 1, the Collector of Jhalawar, ,served on the appellants a notice under section 6 of the ,Rajasthan Public Demands Recovery Act, 1952, hereafter called the Act, for the recovery from them as a public demand, of Rs. 2,24,607/6/6 said to be due on account of loans taken by them from the Jhalawar State Bank.
The appellants filed a petition under section 8 of the Act contending, among other things, that 964 the amount sought to be recovered from them was not a public demand.
Respondent No. 1 appears to have called upon the appellants to prove that it was not a public demand.
The appellants without proceeding further before respondent No. 1, filed a petition in the High Court of Rajasthan for the issue of a writ quashing the proceedings under the Public Demands Recovery Act.
The High Court dismissed the petition but granted a certificate that the case was fit for an appeal to this Court.
Hence the present appeal.
The only question raised in this appeal is whether any loan due to the Jhalawar State Bank could be recovered as a public demand.
A "public demand" within the meaning of the Act is "any money payable to the Government or to a department or an officer of Government under or in pursuance of a written instrument or agreement".
The Government here means the Government of Rajasthan for the Act was passed in 1952 by the Rajasthan State Legislature.
The question then is whether money due to the Jhalawar State Bank, is money payable to the Government of Rajasthan.
Now, the Jhalawar State Bank was started in 1932.
At that time Jhalawar was a ruling State.
Sometime in or about April, 1948, the State of Jhalawar, along with nine other ruling States of Rajputana, integrated and formed the United State of Rajasthan under a covenant executed by the Rulers of these States.
One of the articles of this covenant provided, "All the assets and liabilities of the covenanting States shall be the assets and liabilities of the United State." Subsequently, on March 30, 1949, the States of Bikaner, Jaipur, Jaisalmer and Jodhpur joined the United State of Rajasthan.
On the promulgation of the Constitution of India, the United State of Rajasthan became a Part B State in the Indian Union.
The assets of the previous ruling State of Jhalawar, which had earlier vested in the United State of Rajasthan, thereupon passed to and devolved upon the State of Rajasthan in the Indian Union.
965 The proceedings under the Act against the appellants were started by the filing of a requisition with respondent No. 1 by respondents Nos. 2 and 3, being respectively the Treasury Officer, Jhalawar, and the Recovery Officer, Jhalawar State Bank, under section 3 of the Act stating that the amount earlier mentioned was due from the appellants to the Government of Rajasthan in respect of the claims of the Jhalawar State Bank against them.
This was done presumably shortly prior to June 16, 1953, on which date respondent No. 1 signed a certificate specifying the amount of the demand and certain other particulars and filed it in his own office under section 4 of the Act.
A notice of the signing and filing of the certificate was served upon the appellants under section 6 of the Act.
This notice and the subsequent proceedings have been referred to in the beginning of this judgment.
The claim thus is in respect of moneys due to the Jhalawar State Bank.
If that Bank was not the property of the Jhalawar State, then its dues cannot of course be said to have merged in the present State of Rajasthan.
The appellants first contended that the Jhalawar State Bank was not the property of the State of Jhalawar.
The only material to which we have been referred by the appellants in support of this contention is certain rules framed by the Ruler of Jhalawar in respect of the Bank.
It was pointed out that the rules showed that the Bank was like any other commercial enterprise.
We are unable to agree that for this reason it could not be an institution belonging to the State.
There was nothing to prevent the Jhalawar State carrying on a commercial undertaking.
If it did so, the assets of that undertaking would be those of the State and, in the circumstances earlier mentioned, must now be held to be vested in the State of Rajasthan.
It was also said that the rules showed that the management of the Bank was in the hands of a board of which certain non officials were members.
It was contended that this showed that the Bank was not the property of the State.
It is clear, however, from the 122 966 rules that the Bank was not the property of the board.
Again, the board was constituted from time to time by the Ruler and the majority of its members were officers of the State.
This would show that the Ruler was in full control of the management of the Bank as a State undertaking.
It is true that the rules indicate that the Bank might sue or be sued in respect of transactions made by or with it.
That, however, would not indicate that the Bank had a separate identity.
The rules in this connection only indicate in what name suits could be brought by or against the State 's banking business.
On the other hand, it is perfectly clear that the capital of the Bank was derived solely from the funds of the Jhalawar State.
No part of it was contributed by anyone else.
One of the objects of the Bank was to invest the surplus funds of the State.
The entire transaction of the business of the Bank was in the ultimate control of the Ruler.
The Jhalawar State guaranteed the financial liabilities of the Bank.
The name "Jhalawar State Bank" also indicates that the institution belonged to the State of Jhalawar.
About the time of the formation of the United State of Rajasthan in 1948, the Chief Executive Officer, Jhalawar, issued a public notification in which, after referring to the article in the Covenant which provided that the assets and liabilities of the covenanting States would be the assets and liabilities of the United State, he proceeded to state that by virtue of this article, on the formation of the new State, the responsibility and guarantee of the existing transactions with the different departments of Jhalawar State or the Jhalawar State Bank, would be of the newly formed United State of Rajasthan.
This would show that the assets of the Jhalawar State Bank were being treated by all concerned as assets of the former Jhalawar State, which, upon the formation of the United State of Rajasthan, had vested in the latter State.
Further, no one else has at any time made any claim to the assets of the Jhalawar State Bank.
It is, therefore, clear beyond all doubt, that the Jhalawar State Bank was one of the assets of Jhalawar State and is now vested in the State of Rajasthan.
967 The second point argued for the appellants is that the dues of the Jhalawar State Bank have in any case been transferred by the Government of Rajasthan to the Bank of Rajasthan Ltd. under certain Notifications to which we shall presently refer.
It is said that the Bank of Rajasthan Ltd. is, as its name shows, obviously a limited company having an inde pendent existence and is not a department of the Government of Rajasthan State.
It is also contended that this vesting took place before the proceedings under the Act had started.
Therefore, it is said that at the commencement of those proceedings, the amount claimed from the appellants as due to the Jhalawar State Bank, was not a public demand within the meaning of the Act.
This contention which is based on the Notifications, earlier mentioned, does not seem to us to be well founded.
We will assume for the present purpose that the Bank of Rajasthan Ltd. is not a department of the Government of Rajasthan State.
The question is whether the effect of these Notifications, which were two in number, was to vest the dues of the Jhalawar State Bank in the Bank of Rajasthan Ltd. The first Notification is dated February 15, 1951.
It, stated that the Government of the State of Rajasthan had decided to transfer, among others, the Jhalawar State Bank, to the Bank of Rajasthan Ltd.
It was contended that by this Notification the assets of the Jhalwar State Bank were transferred to the Bank of Rajasthan Ltd.
We do not think that that was the effect of this Notification.
It contained two very significant provisions which we set out below: "All debtors of the State Banks irrespective of the class, category and nature of the debt are hereby informed that within one month from the date of publication of this notice they should clear accounts with the aforesaid State Banks which will continue to function only to clear the old accounts, and thereafter their accounts with the securities pledged will automatically be transferred to the Bank of Rajasthan Ltd., who will be authorised on behalf of the State, to effect necessary recoveries and settle accounts.
968 The transfer of these debts to the Bank of Rajasthan Ltd. will not, on any account, take away the inherent right which the Rajasthan Govt.
possess in these various transactions made on the guarantee of the respective convenanting States to make recoveries and settle accounts in accordance with the existing rules or laws that may hereafter be made to effect recovery of State dues or State debts.
" It is clear from these provisions that the Bank of Rajasthan Ltd. was being authorised "on behalf of the State", that is, the Government of the State of Rajasthan, to recover the amounts due to the Jhalawar State Bank.
The transfer of the latter Bank to the Bank of Rajasthan Ltd. was to be subject to this qualification that its dues would remain the dues of the Government of the State of Rajasthan and would only be recovered by the Bank of Rajasthan Ltd. as the agent of that Government.
The last paragraph set out above emphasises this Position.
It preserves the right of the Government of the State of Rajasthan to recover the amounts due to the Jhalawar State Bank in accordance with any law that might be made after the date of the Notification.
The position then is that under this Notification the debts due to the Jhalawar Bank were not transferred to the Bank of Rajasthan Ltd. and remained payable to the Government of Rajasthan.
The other Notification is dated April 16, 1952, and it repeats that the banks mentioned in the earlier Notification, including the Jhalawar State Bank, "will be merged in the Bank of Rajasthan Limited".
It is said that the effect of this Notification was in any event to cancel the earlier Notification, in so far as the latter preserved the power of the State to collect the debts of the Jhalawar State Bank.
We are wholly unable to agree.
This Notifi cation only reiterates the intention of the Government of the State of Rajasthan to merge the banks named, in the Bank of Rajasthan Ltd. It says nothing specifically about the dues of these banks or as to their recoveries, with regard to which, therefore, the provisions of the previous Notification must have effect.
Furthermore, there is nothing to show that the debts 969 due to the Jhalawar State Bank were by any document specifically transferred to or vested in the Bank of Rajasthan Ltd. and thereupon became its property.
That being so, there is no basis for the contention that the debts due from the appellants are now due to the Bank of Rajasthan Ltd. in its own right.
It would follow that such debts remained debts due to the Government of the State of Rajasthan.
The third point argued was that the moneys claimed from the appellants were not payable under a written instrument or agreement.
This contention is wholly unfounded.
It appears that the loans were granted by the Jhalawar State Bank to the appellants on their own applications.
In each application the appellants stated that they wanted a loan from the Jhalawar State Bank and promised to repay it with interest at the rate mentioned in it.
By these applications the appellants also proposed to hypothecate various properties belonging to them as security for the due repayment of the loans taken.
They signed the applications and the receipts, which latter also bore the signatures of the officers of the Bank in token of the sanction of the loan.
In our view, the money payable by the appellants was payable under these applications and receipts and was, therefore, payable under written instruments or agreements.
A point was sought to be made that in each case there were two documents, namely, the application by the appellants and the receipt for the moneys advanced signed by them, whereas a public demand as defined in the Act, required one instrument.
It is enough to say in regard to this contention that the Act does not say that the moneys shall be due under a single instrument.
It is well known that in a statute a singular includes the plural.
In any case, the two documents constituted the written agreement between the parties and that is enough to satisfy the requirement of the Act, even if read in the way suggested by the appellants.
The fourth point advanced was that the certificate under the Act was defective and therefore the proceedings were a nullity.
Section 4 of the Act requires that the certificate shall be in the prescribed form.
970 One of the particulars to be stated in the form, requires that the period for which the demand was due should be specified.
That period was not specified in the certificate in the present case.
It seems to us however that this is no defect.
In the case of loans due, there is no question of any period for which the demand is due.
Obviously, the requirement as to, the specification of the period was meant to apply where the demand consisted of a claim for revenue or rent or the like, which could be due for a period.
It is clear to us that the requirement as to stating the period for which the demand is due, as appears from the prescribed form, does not arise in the case of a loan due to the Government which is a public demand within the Act and in such a case no question of stating the period arises.
The certificate was not, therefore, defective.
The last point argued was that in so far as the Act enables moneys due to the Government in respect of its trading activities to be recovered by way of public demand, it offends article 14 of the Constitution.
It is said that the Act makes a distinction between other bankers and the Government as a banker, in respect of the recovery of moneys due.
It seems to us that the Government, even as a banker, can be legitimately put in a separate class.
The dues of the Government of a State are the dues of the entire people of the State.
This being the position, a law giving special facility for the recovery of such dues cannot, in any event, be said to offend article 14 of the Constitution.
We have now discussed all the points raised in this appeal and are unable, for the reasons earlier mentioned, to find merit in any of them.
In the result we come to the conclusion that the amount claimed from the appellants was a public demand within the meaning of the Act and was legally recoverable by the impugned proceedings.
This appeal therefore must be dismissed with costs and we order accordingly Appeal dismissed.

summary:
The jhalawar State Bank was originally a Bank belonging to the ruling State of jhalawar and its assets, including moneys 963 due to it, became vested in the United State of Rajasthan under the covenant executed by the Ruler of Jhalawar along with other Rulers by which the United State of Rajasthan was formed.
On the promulgation of the Constitution of India, the United State of Rajasthan became the State of Rajasthan in the Indian Union and all its assets, including the jhalawar State Bank and its dues, vested in the State of Rajasthan.
Moneys due from the appellants in respect of advances made to them by the jhalawar State Bank at a time when it belonged to the ruling State of jhalawar, could be recovered by the State of Rajasthan after the Bank had become vested in it, as a public demand under the Rajasthan Public Demands Recovery Act, 1952.
The form prescribed in the Rajasthan Public Demands Recovery Act, in which a certificate has to be drawn up and filed under section 4 of the Act for commencing proceedings for recovery of public demands under the Act in so far as it required a statement as to the period for which a public demand is due, was not applicable to a public demand like a loan due to the Government in respect of which there is no question of any period for which it is due.
The Rajasthan Public Demands Recovery Act did not off end article 14 of the Constitution as giving special facility to the Government as a banker for the recovery of the bank 's dues for, the Government can legitimately be put in a separate class for this purpose.