judgement:
Appeal No. 674 of 1957.
Appeal by special leave from the judgment and decree dated August 10, 1955, of the Bombay High Court in C. R. Application No. 1213 of 1953, arising out of the judgment and decree dated April 25, 1953, of the Assistant Judge, Thana, in C. A. No. 97 of 1952, against the judgment and decree dated January 31, 1952, of the Court of the Civil Judge, J. D. Kalyan, in Suit No. 153 of 1949.
Purshottam Tricumdas, Rameshwar Nath and section N. Andley, for the appellant.
H. J. Umrigar, Ratnaparkhi Anant Govind and W. P. Oka, for the respondent.
February 16.
The Judgment of the Court was delivered by KAPUR, J.
This is an appeal by special leave against the judgment of the High Court of Bombay confirming the order of ejectment passed by the Assistant Judge, Thana.
The tenant who was the defendant in the suit is the appellant and the landlord who was the plaintiff is the respondent.
The facts giving rise to this litigation shortly stated are that the appellant was a tenant for about 20 years in the premises known as " Fida Ali Villa " in Kalyan.
This building was purchased by the respondent who gave notice to the appellant to vacate, as he wanted to construct a new building on the site of the old building.
The appellant agreed to vacate and the respondent let to him a portion of his new building which 219 was riot far from " Fida Ali Villa ".
The appellant had four sub tenants, three of them also shifted to the new premises which were let to the appellant by the respondent.
Although it was disputed, the courts below have found that they occupied the same position qua the appellant.
The 4th, a Bohri, was fixed up by the respondent in some other place.
There was some dispute as to the date when these new premises were let to the appellant, the appellant alleging that they were let on July 1, 1948, and the respondent that they were let on June 1, 1948.
The trial Court found that they were let on June 1, 1948.
The terms of the lease are contained in a document dated June 7,1948, which is a letter in Marathi written by the respondent to the appellant and contains the following terms as to sub tenancy: " In the shops in the old chawl which are with you you have kept sub tenants.
We are permitting you to keep sub tenants in the same manner, in this place also ".
The parties were not agreed as to the correctness of the translation of this term.
The submission of the appellant was that the word 'sub tenant ' should be in the plural and of the respondent that it should be in the singular but whether it is in the singular or plural it does not make any difference to the principal argument advanced in this Court.
On January 3, 1949, the respondent gave notice to the defendant to vacate the premises on the ground of nonpayment of rent and sub letting which it was alleged had resulted in the termination of the tenancy.
On April 20, 1949, the respondent brought a suit for ejectment on the ground of non payment of rent and sub letting of the premises.
The defence of the appellant was that under the terms of the lease he had the right to sub let the premises.
As to the claim on the ground of non payment of rent be deposited the arrears of rent in court.
The trial Court held that subletting was lawful in spite of section 15 of Bombay Hotel and Lodging Houses Rates Control Act, 1947 (Bom.
57 of 1947).
He also held that the appellant did not occupy the premises on the same terms and conditions on which he occupied the old premises in " Fida Ali 220 Villa".
He passed a decree for Rs. 445 on account of rent remaining due and dismissed the respondent 's suit for ejectment.
On appeal the Assistant Judge at Thana reversed the decree holding that section 15 of the Act completely prohibited sub letting and under section 13(1)(e) of the Act the landlord bad the right to evict the tenant on account of sub letting.
The appellant then went in revision to the High Court of Bombay, but it affirmed the order of ejectment.
The appellant has come to this Court by special leave.
Counsel for the appellant urged that there was no new tenancy after the coming into force of the Act and therefore sections 13(1)(e) and 15 of the Act did not apply; (2) that the tenant had not sub let the premises to the sub tenants and they were merely licensees of the landlord; (3) that no new sub tenancy had been created ; (4) that section 15 was confined to 'any other law '; it did not apply to contracts between the landlord and tenant and therefore it did not preclude an agreement between the parties as to sub letting; (5) that the parties were in pari delicto and therefore the plaintiff respondent could not succeed.
He also raised a new ground which had not been raised in the courts below or in the grounds of appeal or in the statement of case in this Court, that the respondent had waived his right in regard to the prohibition against sub tenancy and the provision in section 13(1)(e) was for the protection of his rights which he was entitled to waive.
The courts below have held that the tenancy by the letter of June 7,1948, was a new tenancy and not a continuation of the old and that the sub tenants were tenants of the appellant and not licensees of the respondent and in this Court no serious argument was addressed on these points.
The previous tenancy was of a different building called I Fida Ali Villa ' which came to an end when the appellant vacated those premises and entered into a new agreement of lease in regard to the premises in dispute.
There ",as no privity between the respondent and the sub tenants of the appellant and they could not be termed his licensees.
These contentions are without substance and have rightly been rejected.
221 It was then argued that under section 15 of the Act there is no prohibition against a contract of sub letting, the non obstante clause being confined to other laws.
The section when quoted runs as follows: " Notwithstanding anything contained in any law it shall not be lawful after the coming into operation of this Act for any tenant to sub let the whole or any part of the premises let to him or to assign or transfer in any other manner his interest therein: Provided that the (State) Government may, by notification in the Official Gazette, permit in any area the transfer of interest in premises held under such leases or class of leases and to such extent as may be specified in the notification ".
This section prohibits sub letting and makes it un lawful for a tenant to assign or to transfer his interest in the premises let to him.
The non obstante clause would mean that even if any other law allowed subletting, e. g., section 108 of the Transfer of Property Act, the sub letting would, because of section 15, be unlawful.
This would appy to contracts also as all contracts would fall under the provisions of the law relating to contracts, i. e., Contract Act.
An agreement contrary to the provisions of that section (section 15) would be unenforceable as being in contravention of the express provision of the Act which prohibits it.
It is not permissible to any person to rely upon a contract the making of which the law prohibits (section 23 of the Contract Act).
Counsel for the appellant contended that the view of the Bombay High Court in P. D. Aswani vs Kavashah Dinshah Mulla (1) was erroneous and that the correct rule was laid down by that Court in Cooper V. Shiavax Cambatta (2).
That was a case under section 10 of Bombay Rents, Hotel Rates and Lodging Houses Rates (Control) Act (Bom.
VII of 1944) which in ex press terms allowed sub letting as follows : " Notwithstanding anything to the Contrary in any law for the time being in force, a tenant may sublet any portion of his premises to a sub tenant, provided be forthwith intimates in writing to his landlord (1) (2) A.I.R. 1949 Bom.
222 the fact of his having so sub let the premises and also the rent at which they have been sub let ".
It was contended that the non obstante clauses in section 10 of Act VII of 1944 and of section 15 of the Act being similar in language must be similarly interpreted.
The non obstante clause has to be read in conjunction with the rest of the section.
Section 10 of the Act of 1944 permitted sub letting on certain conditions.
By section 9 of that Act provision was made for a Contract between the landlord and the tenant prohibiting sub letting and in Cooper vs Shiavax Cambatta (1) the two provisions were reconciled by saying that, a contract under section 9 prevailed over the permission given by section 10.
But section 15 expressly prohibits subletting and therefore a contract to the contrary cannot neutralise its prohibitory effect.
The non obstante clause of the two sections, section 10 of the Act of 1944 and of section 15 of the Act therefore cannot be said to have the same effect.
The respondent 's suit for ejectment was brought under section 13(1)(e) which provides: " Notwithstanding anything contained in this Act (but subject to the provisions of section 15), a landlord shall be entitled to recover possession of any premises if the Court is satisfied (e) that the tenant has, since the coming into operation of this Act, sub let the whole or part of the premises or assigned or transferred in any other manner his interest therein ; ".
It was contended that section 13(1)(e) had to be read separately and not in conjunction with section 15 of the Act.
The section itself makes it quite clear that it is subject to the provision of section 15 and the two sections must therefore be read together.
The appellant pleaded that under the agreement between him and the ' respondent he was entitled to sub let the premises.
Such an agreement, in our opinion is void because of the provisions of section 15 of the Act and section 23 of the Contract Act and enforcement of the agreement would produce the (1) A.I.R. 1949 Bom.
very result which the law seeks to guard against and to prevent and by sustaining the plea of the appellant the Court would be enforcing an agreement which is prohibited and made illegal.
The appellant relied on the maxim in pari delicto potior est conditio posidentis to support his plea that the respondent could not enforce his right under section 13 (1)(e).
But this maxim " must not be understood as meaning that where a transaction is vitiated by illegality the person left in possession of goods after its completion is always and of necessity entitled to keep them.
Its true meaning is that, where the circumstances are such that the Court will refuse to assist either party, the consequence must, in fact, follow that the party in possession will not be disturbed ".
(Per Du Parcq, L. J., in Bowmakers Ltd. vs Barnet Instruments Ltd. (1).
The respondent in the present case did not call upon the Court to enforce any agreement at all.
When the instrument of lease was executed and possession given and sub letting done it received its full effect; no aid of the Court was required to enforce it.
The respondents ' suit for ejectment was not brought for the enforcement of the agreement which recognised sub letting but he asked the Court to enforce the right of eviction which flows directly from an infraction of a provision of the Act (section 15) and for which the Act itself provides a remedy.
There is thus a manifest distinction between this case where the plaintiff asked the Court to afford him a remedy against one who by contravening section 15 of the Act has made himself liable to eviction and those cases where the Court was called upon to assist the plaintiff in enforcing an agreement the object of which was to do an illegal act.
The respondent is only seeking to enforce his rights under the statute and the appellant cannot be permitted to assert in a Court of justice any right founded upon or growing out of an illegal transaction.
Gibbs & Sterret Manufacturing Co. vs Brucker (2).
In our opinion section 15 of the Act is based on public policy and it has been hold that if public policy demands it even an equal participant in the (1) [1945] I K.B. 65, 72.
(2) (1884) III U.S. 597; ; 224 illegality is allowed relief by way of restitution of res cission, though not on the contract.
It was next contended that section 13(1)(e) is a provision for the protection of private rights of the landlord and unless there is in the Act itself any provision to the contrary such rights as far as they were personal rights may be parted with or renounced by the landlord.
In other words the right of the respondent to sue for ejectment on the ground of subletting being a personal right for his benefit, the landlord must be taken to have waived it as by an express contract he had allowed the tenant to sub let and consequently he could not evict the appellant under section 13(1)(e) of the Act.
The plea of waiver was taken for the first time in this Court in arguments.
Waiver is not a pure question of law but it is a mixed question of law and fact.
This plea was neither raised nor considered by the courts below and therefore ought not to be allowed to be taken at this stage of the proceedings.
But it was argued on behalf of the appellant that according to the law of India the duty of a pleader is to set up the facts upon which he relied and not any legal inference to be drawn from them and as he had set up all the circumstances from which the plea of waiver could be inferred lie should be allowed to raise and argue it at this stage even though it had not been raised at any previous stage not even in the statement of case filed in this Court and he relied upon Gouri Dutt Ganesh Lal Firm vs Madho Prasad (1).
Assuming that to be so and proceeding on the facts found in this case the plea of waiver cannot be raised because as a result of giving effect to that plea the Court would be enforcing an illegal agreement and thus contravene the statutory provisions of section 15 based on public policy and produce the very result which the statute prohibits and makes illegal.
In Surajmull Nargoremull vs Triton Insurance Co. (2), Lord Sumner said: " No Court can enforce as valid that which competent enactments have declared shall not be valid, nor is obedience to such an enactment a thing from (1) A.I.R. 1943 P. C. 147.
(2) (1924) L.R. 52 I. A. 126.
225 which a Court can be dispensed by the consent of the parties, or by a failure to plead or to argue the point at the outset: Nixon vs Albion Marine Insurance Co. (1).
The enactment is prohibitory.
It is not confined to affording a party a protection of which he may avail himself or not as he pleases.
It is not framed solely for the protection of the revenue and to be enforced solely at the instance of the revenue officials, nor is the prohibition limited to cases for which a penalty is exigible In the instant case the question is not merely of waiver of statutory rights enacted for the benefit of an individual but whether the Court would aid the appellant in enforcing a term of the agreement which section 15 of the Act declares to be illegal.
By enforcing the contract the consequence will be the enforcement of an illegality and infraction of a statutory provision which cannot be condoned by any conduct or agreement of parties.
Dhanukudhari Singh vs Nathima Sahu (2).
In Corpus Juris Secundum, Vol.
92, at p. 1068, the law as to waiver is stated as follows: ". . a waiver in derogation of a statutory right is not favoured, and a waiver will be inoperative and void, if it infringes on the rights of others, or would be against public policy or morals. . .
In Bowmakers Limited vs Barnet Instruments Ltd. (3) the same rule was laid down.
Mulla in his Contract Act at page 198 has stated the law as to waiver of an illegality as follows: " Agreements which seek to waive an illegality are void on grounds of public policy.
Whenever an illegality appears, whether from the evidence given by one side or the other, the disclosure is fatal to the case.
A stipulation of the strongest form to waive the objection would be tainted with the vice of the original contract and void for the same reasons.
Wherever the contamination reaches, it destroys ".
This, in our opinion, is a correct statement of the law and is supported by high authority.
Field, J., in (1) ; (2) , 852.
(3) [1945] 1 X.B. 65, 72.
29 226 Oscanyan vs Winchester Arms Company (1) quoted with approval the observation of Swayne, J., in Hall vs coppell (2) " The principle is indispensable to the purity of its administration.
It will not enforce what it has forbidden and denounced.
The maxim Ex dolo malo non oritur actio, is limited by no such qualification.
The proposition to the contrary strikes us as hardly worthy of serious refutation.
Wherever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case.
No consent of the defendant can neutralise its effect.
A stipulation in the most solemn form, to waive the objection, would be tainted with the vice of the original contract, and void for the same reasons.
Wherever the contamination reaches, it destroys ".
Waiver is the abandonment of a right which normally everybody is at liberty to waive.
A waiver is nothing unless it amounts to a release.
It signifies nothing more than an intention not to insist upon the right.
It may be deduced from acquiescence or may be implied.
Chitty on Contract, 21st Ed., p. 381 : Stackhouse vs Barnston (3).
But an agreement to waive an illegality is void on grounds of public policy and would be unenforceable.
In Mytton vs Gilbert(4) Ashurst, J., said: " Besides, there is still further reason why the trustees should not be estopped ; for this is a public Act of Parliament, and the Courts are bound to take notice that the trustees under this Act had no power to mortgage the toll houses.
This deed therefore cannot operate in direct opposition to an Act of Parliament, which negatives the estoppel ".
Vaughan Williams, L. J., in Norwich Corporation vs Norwich Electric Tramways Company(5) said : " The case is not like that of a provision in an agreement which is for the benefit of one of the parties and which he may waive.
This is a provision in an Act of Parliament, which, though to some extent (1) ; ; (2) 7 Wallace 542.
(3) ; ; (4) ; (1787) 2 T.R. 171 ; (5) , 124.
227 it may be for the benefit of the parties to the difference, must be regarded as inserted in the interest of the public also In that case there was a provision made by the Legislature that disputes mentioned in the section of the Act were to be determined by an Expert nominated by the Board of Trade and it was contended that though not in the strict technical sense estoppel, it was a waiver of the provisions introduced into the Statute for the benefit of private rights.
No doubt that was a case which proceeded on a question of jurisdiction but the judgment proceeded on the principle of waiver of a statutory provision inserted in public interest.
Thus the plea of waiver is unsustainable.
In our opinion, therefore, the judgment of the High Court is sound and the appeal must therefore be dismissed with costs.
Appeal dismissed.

summary:
The appellant was a tenant originally in the old building but after it was purchased by the respondent he vacated it and became a tenant under the respondent in the new premises.
In the old building the appellant had sub tenants, who shifted to the new premises along with the appellant when the latter occupied those premises.
One of the terms of the lease which were contained in a letter dated June 7, 1948, written by the respondent to the appellant provided: " In the shops in the old chawl which are with you, you have kept sub tenants.
We are permitting you to keep sub tenants in the same manner, in this place also.
" On April 20, 1949, the respondent brought a suit for ejectment against the appellant on the ground, inter alia, that section 15 of the Bombay Hotel and Lodging Houses Rates Con trol Act, 1947, prohibited sub letting and under section 13(1)(e) of the Act the landlord has the right to evict the tenant on account of sub letting.
The appellant 's defence was (1) that section 15 of the Act was confined to "any other law ", that it did not apply to contracts between the landlord and tenant and therefore it did not preclude an agreement between the parties as to sub letting, (2) that the parties were in pari delicto and therefore the respondent could not succeed, and (3) that the right of the respondent to sue for ejectment on the ground of sub letting being a personal right for his benefit, he must be taken to have waived it as he had allowed the appellant to sub let and, consequently, he could not evict him under section 13(1)(e) of the Act.
Held : (1) that the non obstante clause " Notwithstanding anything contained in any law " in section 15 of the Bombay Hotel and Lodging Rates Control Act, 1947, applies to contracts also as they would fall under the provisions of the law relating to contracts; (2) that the respondent was entitled to sue for ejectment, though the agreement recognised sub letting, as the suit was brought not for the enforcement of the agreement but to enforce the right of eviction which flowed directly from an infraction of the provisions of section 15 of the Act and for which the Act itself 28 218 provided a remedy.
The section is based upon public policy, and where public policy demands, even an equal participant in an illegality is allowed relief by way of restitution or rescission, though not on the contract; and, (3) that the plea of waiver which the appellant relied on cannot be sustained because as a result of giving effect to that plea the court would be enforcing an illegal agreement and thus contravene the statutory provisions Of section 15 Of the Act.
An agreement to waive an illegality is void on grounds of public policy and would be unenforceable.
Case law reviewed.


judgement:
vil Appeal No. 1204 (NT) of 1979.
From the Judgment and Order dated 3.2.1978 of the Madras High Court in Tax Case Petition No. 271 of 1977.
WITH Civil Appeal No. 4371 (NIT) of 1991.
Ms. A. Subhashini for the Appellant.
Ms. Janaki Ramchandran and A.T.M. Sampath for the Respondents.
The Judgment of the Court was delivered by RANGANATHAN, J.
Both these matters raise the same ques tion viz. whether the act of a member of a joint family by which he impresses his individual property with the charac ter of joint family property or "throws" it into the hotch potch of the joint family or "blends" it with the joint family property is a "disposition" within the meaning of the ( 'the ', for short).
Civil Appeal No. 1204/79 is an appeal from an order of the High Court declining to call upon the Income tax Appel late Tribunal to refer the above question for the decision of the High Court in view of certain earlier decisions of the Court.
The Madras High Court also declined to direct a reference on the above issue in T.C.P. No. 478 of 1977 and that is the subject matter of SLP (C) No. 335 of 1979.
In view of the pendency of Civil Appeal No. 1204/79, we grant special leave in SLP (C) No. 335/79 also.
Before discussing the correctness of the above conclu sion, it may be convenient to set out the background of facts in Civil Appeal No. 1204/79.
170 That appeal arises out of the estate duty assessment conse quent on the death of one Natesan Chetty, who died on 1.3.72.
He was the Karta of a Hindu Undivided Family (HUF) consisting of himself and his four sons.
He was also the owner, in his individual capacity, of five house properties in Madras.
On 18.6.1970 and 16.9.1970 he made declarations by which he impressed the above mentioned properties with the character of joint family properties and declared that they would thereafter belong to HUF of which he was the karta.
Subsequently, a partition was effected in the family in March 1971 in which two of the above mentioned properties came to the share of the deceased.
Sri Natesan Chetty had also borrowed a sum of Rs. 46,800 from the HUF out of the rental income from the above mentioned properties for being invested in the business earned on by him.
These borrowings were made between March 1970 and April 1971 and they were repaid in April 1971.
In completing the assessment to estate duty of the estate passing on the death of Natesan Chetty, the Assistant Controller of Estate Duty held that the declarations made by the deceased on 18.6.1970 and 16.9.1970 were "dispositions" within the meaning of the said expression as defined in the second explanation to section 2(15) of the .
These dispo sitions having been made for no consideration within the meaning of section 27 (1), amounted, according to him, to gifts and since the gift had been made within two years of the date of death, the subject matter of the gift was liable to be assessed as pan of the estate passing on death under section 9 of the .
As already mentioned, two of the properties had been allotted to the share of the deceased in the partition of 1971 and it is common ground that they passed on the death of the deceased as they belonged to him on the date of his death.
The question, however, was whether the other three properties which went to the other members of the family as a result of the declarations and partition were also liable to be included as pan of the estate deemed to pass on the death of the deceased by the application of section 9 read with S.27 (1) and section 2(15) of the .
The Assistant Controller answered this question in the affirmative and included their value, taken at Rs. 1,22,500, in the princi pal value of the estate.
As a consequence of his conclusion that the properties were liable to be included in the es tate, the officer ,,I so took the view that the sum of Rs. 46,800 being the loan taken by the deceased from the HUF and discharged within two years prior to the death should be added hack in computing the principal value of the estate by reason of the provisions of section 46 (2) of the .
It is not in dispute before us that though two points were thus involved in the assessment one regarding the inclusion of the value of 171 three items of property as part of the estate of the de ceased passing on his death and the other regarding the addition or disallowance of the debt of Rs. 46,800 they are inter connected and that, if the first question is answered in favour of the assessees, the second question will also stand answered likewise.
Dissatisfied with the conclusion of the Assistant Con troller, the accountable person preferred an appeal to the Appellate Controller of Estate Duty which was successful.
Thereupon the Department preferred an appeal to the Tribunal which, following a decision of the Madras High Court in Rajamani Ammal vs Controller of Estate Duty.
held that the sum of Rs. 1,22,500 could not be included in the value of the estate passing on the death and, consequentially, that the add back of Rs. 46,800 was also not justified.
Thereupon the Controller of Estate Duty applied, under section 64 (1) of the , for a reference to the Madras High Court, for its decision, of the following two questions: "1 Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the trans action by which a Hindu impressed his separate properties [as] with joint family character could not be considered as a disposition under the second explanation to section 2(15) and section 27 of the ? 2.
Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the addition of Rs. 1,22,500 made under section 9 and Rs. 46,800 made under section 46(2) could not be sus tained in the case of the deceased ?" The Madras High Court was of the opinion that the basic question at issue was covered by the earlier decisions of the Court in Rajamani Ammal vs Controller of Estate Duty, as well as a subsequent decision in Con troller of Estate Duty vs Smt.
Mookammal, The Court found no substance in the attempt, on behalf of the Revenue, to distinguish the above decisions on the strength of a decision of the Court in Ranganayaki Ammal vs CED, which had been confirmed by the Supreme Court in CED vs Kantilal Trikamlal, In this view of the matter the High Court de clined to call for a reference on the two questions above mentioned and dismissed the application for reference.
Hence the present Civil Appeal.
It is not necessary to set out the facts in SLP No. 335 of 1979 where the question involved is the same except that there was no subsequent partition after the blending and that no question regarding the deductibili ty of debts also arose in this case.
172 It will be seen that both these appeals are directed against the orders of the High Court declining to call for a reference.
It is fairly clear that the questions whether Rajamani Ammal was rightly decided and whether, if so, it needed reconsideration in the light of Kantilal Trikamlal are questions of law.
But, in view of the long lapse of time, we have considered the issues on merits and since we are satisfied that the High Court 's conclusion was correct, we dispose of the appeals straightaway without going through the formality of asking the Tribunal to make a reference to the High Court and then awaiting the High Court 's decision on the question of law referred.
The has ceased to be enforceable since 16.3.1985.
In the circumstances we need not elaborate ly set out the provisions of the and the principles behind them.
An outline of the provisions necessary for the determination of the issue before us will suffice.
The levies a duty on the aggregate market value of the proper ties passing on the death of any person (statutorily termed the 'principle value of the estate ').
It is manifest that the statute could be easily circumvented if duty were re stricted only to properties which actually pass on a death, for, various of devices could be thought of by which the property of such person could ostensibly be transferred to others sometime before the death, although it continues to be really under the domain and control of the deceased till the time of his death.
The statute therefore contains elabo rate provisions deeming certain properties to pass on death even though their beneficial enjoyment may not actually change hands at the time of his death.
One such item of properties which are deemed to pass on the death of a person are those which formed the subject matter of a gift made by him within a specified period preceding his death.
S.9 of the , which contains this deeming provision reads thus: "9.Gifts within a certain period before death (1) Property taken under a disposition made by the deceased purporting to operate as an immediate gift inter vivos whether by way of transfer, delivery, declaration of trust, settlement upon persons in succession, or otherwise, which shall not have been bona fide made two years or more before the death of the deceased shall be deemed to pass on the death".
In short, the provision enabled the Revenue to ignore any gift of property made by the deceased within two years of his death by creating a statutory fiction that properties so gifted passed on the death of the deceased, 173 although, in fact and in law, they ceased to be his a short time before his death.
This is the first fiction.
The legislature next proceeded to enact a second fic tion.
This was in order to bring into the net of taxation transactions which may not be comprehended within the legal concept of a gift because they are ostensibly made for some consideration.
It provided in section 27 that: "27.
(1) Dispositions in favour of relatives Any disposition made by the de ceased in favour of a relative of his shall be treated for the purposes of this as a gift unless (a) the disposition was made on the part of the deceased for full consideration in money or money 's worth paid to him for his own use or benefit; or (b) . . ; and references to a gift in this shall be construed accordingly: . . " Resort to this provision in the present case is needed for a purpose.
Admittedly, the deceased received no consideration for impressing the property with the character of joint family property.
If this amounted to a transfer, then S.9 alone would be sufficient to bring the properties within the net of taxation.
But it could be argued that a gift involves a 'transfer ' without consideration but the act of blending does not constitute a 'transfer ' [vide: Stremann vs CI.T., and a host of other cases under the Income tax ].
Section 27 helps the Department in the present case only in that it uses a much wider word, 'dispo sition ', and treats dispositions in favour of relatives as gifts.
The statute had to make provision for a third fiction as well as it could still be contended that the word 'disposi tion ' would not be sufficient to comprehend certain types of transactions.
To be on the safe side, therefore, the statute proceeded to enact a special definition of the word 'dispo sition ' in section 2(15) of the wide enough to rope in various kinds of acts in respect of property.
This provi sion, insofar as it is material for our present purposes, reads as follows: "2(15) 'Property ' includes any interest in property, movable or immovable, the proceeds of sale thereof and any money or investment for the time being representing the proceeds of sale and also includes any property con verted from one species into another by any method; Explanation I The creation by a person or with his consent 174 of a debt or other right enforceable against him personally or against property which he was or might become competent to dispose of, or to charge burden for his own benefit, shall be deemed to have been a disposition made by that person, and in rela tion to such a disposition expression 'proper ty ' shall include the debt or right created.
Explanation 2 The extinguishment at the expense of the deceased of a debt or other right shall be deemed to have been a disposi tion made by the deceased in favour of the person for whose benefit the debt or right was extinguished, and in relation to such a dispo sition the expression 'property ' shall include the benefit conferred by the extinguishment of the debt or right; The short case of the department now is this; the de ceased in these cases was the full and exclusive owner of the immovable properties in question.
By the act of blending he has convened them into HUF propertieS.
The properties no longer belong to him as an individual; they belong to the family thereafter with certain rights qua them in the other members of the HUF.
In other words, there 'has been an extinguishment, at the expense of the deceased, of a part, at least, of his rights in the properties with a correspond ing benefit to the others.
There has also been the creation, by the deceased, of a right in the others enforceable against the deceased and the properties e.g. the right to demand a partition.
The deceased, therefore, has made a disposition in favour of his relatives for no consideration within two years of his death.
The value of the properties, in respect of which he made the disposition in favour of the family, are, therefore, liable to be included in the principal value of the estate passing on his death under section 9 read with section 27 read with the Explanations to section 2(15).
This is quite apart from the fact that the value of the two properties, which subse quently fell to the share of the deceased at the partition in March 1971, are liable to be included as his own property actually passing on his death.
The question that we have to consider is, therefore, whether the legal incidence of the act of blending an be brought within the four corners of the two Explanations to section (15) of the .
It was precisely this question which had been considered by the Madras High Court earlier in Rajamani Ammal vs Controller of Estate Duty in deciding the issue, The High Court had the benefit of two earlier decisions of this Court in Goli Eswariah vs C G.T., and CG.T, vs Getti Chettiar., , 175 where this Court had held, in the context of the Gift Tax , that the act of blending and the act of a coparcener receiving, on partition of a HUF, less than the share he was entitled to receive would not constitute gifts.
The details of this decision need to be set out at some length.
Three contentions had been urged in Rajamani: (a) The first was that the act of blending constituted a 'disposi tion ' within the general meaning of that word.
Repelling this contention, the Court observed: "The learned counsel for the revenue placed strong reliance on the word "disposition" in section 27 (1) of the and contended that even an act of throwing of the self acquired property into the common stock of a joint Hindu family is included in that expression.
In a case arising under the Gift tax , the word "disposition" came up for consideration in the decision in Goli Eswariah vs Commis sioner of Gift tax, The Supreme Court held that the word "disposition" refers to a bilateral or a multilateral act and it does not refer to a unilateral act.
This decision of the Supreme Court approves the decision of this court in Commissioner of Gift tax vs
P. RangasamiNaidu, (F.B).
It is true that these decisions are under the Gift tax .
It is also true that the word "disposi tion" was considered in these decisions, with particular reference to the definition of "transfer of property" under that .
We are of the view that the word "disposition" in section 27(1) of the also refers to a bilateral or multilateral act.
The section refers to a disposition by the de ceased in favour of a relative and also speaks of partial failure of consideration.
Section 9 also refers to property "taken under a dispo sition".
Therefore, in our opinion the word "disposition" in section 27(1), however wide its ambit may be, would not include the uni lateral act of a person by which he throws his self acquired property into the common stock of the joint family.
" (b) It had been next contended, on behalf of the Revenue that, by throwing the self acquired properties into the common stock of the joint family, the deceased had created a right enforceable against him in favour of the sons or the other coparceners viz. the right to demand partition of the properties in question which they could not have exercised earlier.
This contention was rejected by the learned judges by applying the principle enunciated in an earlier Full Bench decision of the Court in CIT vs Rangasami Naidu, , where a similar contention had been repelled in the context of the Gift Tax .
The Court had there observed: 176 "With the father having absolute power of disposition inter vivos or testamentary in respect of his self acquisition and with no power in the son to interdict any alienation or disposition or call for partition, the son 's interest is next to nothing.
But the right is real.
It lies dormant.
It is this dormant right which the undivided sons have in their father 's property that entitles them to take the self acquired property of the father as coparceners to the exclusion of a divided son.
Juridically, it must be this dormant birth right that enables the father at his pleasure, without formalities, to deny to himself his independent power or predominant interest and look upon the property as the property of the family.
In our view, it is this birth right imperfect and subordinate to the special power and predominant interest of the father that comes into play and makes the interest of the son real and an interest in praesenti, when the father chooses to waive his rights.
At his pleasure and without reference to his son, if the father abandons or determines once for all not to exercise his independent power over the property, the son 's interest therein becomes a real and full fledged coparcenary right.
There is no vesting of rights here by the father on the son, but what is dormant springs to life but irrevocably at the pleasue of the father.
" (c) A third contention raised on behalf of the Revenue was that throwing the self acquired property into the common stock of the joint family would amount to "extinguishment at the expense of the deceased of a debt or other right" within the meaning of Explanation 2 to section 2 (15).
This conten tion was also repelled by the learned Judges.
They observe: "We are also of the opinion that throwing the self acquired property into the common stock of the joint family will not amount to "extin guishment at the expense of the deceased of a debt or other right" within the meaning of Explanation 2 to section 2 (15).
As seen from the judgments cited above, after the act of throwing into the common stock, it is the joint family or the coparcenary that owns the property.
The person who converted his indi vidual property into joint family property is a member of the Hindu joint family or the coparcenary and contines to be a member of the joint family.
His interest in 177 the erstwhile separate property would extend to the whole of the property even as of the other coparceners, for the interest of every coparceners extends over the whole of the joint family property.
There is community of interest and unity of possession between all the coparceners.
On the death of any one of the coparceners the others take the proper ty by survivorship.
It may be, the ultimate survivor is the person who threw the self acquired property into the common stock.
It, therefore, follows that there was no extinguishment of the right of the deceased and creation of a right in favour of another, in these of throw ing the self acquired properties into the common stock.
The decision in Valliammal Achi vs Controller of Estate Duty, relied on by the learned counsel for the revenue, and the decision in Kantilal Trikamlalv.
Controller of Estate Duty, , relied on by the learned counsel for the accountable person,related to what we may term as "unequal partitions".
They do not deal with cases of throwing the self acquired properties into the common stock.
We are not concerned with the case as to whether an unequal partition would amount to an extinguishment of a right and creation of a benefit within the meaning of Explanation 2 to section 2(15), which was the point that was considered in those cases.
" The above decision is clearly against the Revenue.
The Revenue, however, strongly relies upon a later decision of the same High Court in Ranganayaki Ammal & Ors.
vs Controller of Estate Duty, It is sub mitted that Ranganayaki Ammal has been af firmed by this Court in CED vs Kantilal Tri kamlal, a common judgment reversing Kantilal Trikamlal vs CE.D., and affirming Ranganayaki Ammal (Mad) and, therefore, Rajmani is no longer good law.
It is therefore, necessary to refer to these cases though the question involved there was somewhat different.
In Ranganayaki Ammal, the deceased Bheema Naidu and his widow and children constituted a Hindu undivided family.
A little within the period of two years prior to the death of the deceased, a partition was effected of the joint family properties and in that partition he took a smaller share instead of his legal half benefiting the other to the extent of the difference.
The same thing had happened in the case of Kantilal Trikamlal also.
Trikamlal Vadilal and his son Kantilal constituted a Hindu undivided family.
On 16th November, 1953, and instrument styled a "release deed" was executed between the two persons.
Under this instrument, a sum of rupees one lakh out of the joint family properties was taken by 178 the deceased m lieu of his share in the joint family properties and he relinquished his interest in the remaining properties of the joint family which were declared to belong to Kantilal as his sole and absolute properties and Kantilal also relinquished his interest in the amount of rupees one lakh given to the deceased and declared that the deceased was the sole and absolute owner of the said amount.
Trikamlal Vadilal died on 3rd June, 1955, that is within two years of the release deed.
The Assistant Controller found that, as on November 16, 1953, the deceased was enti tled to a one half share in the joint family properties, the value of which was Rs. 3,44,058, but had relinquished his interest in the joint family properties by receiving only a sum of rupees one lakh.
The officer, there fore, held that the difference between Rs.3,44,058 and Rs, 1,06,724 (being the amount received by the deceased together with inter est) was includible in the principal value of the estate of the deceased, being the value of a disposition by the deceased in favour of a relative for partial consideration.
This assessment was upheld eventually by the Su preme Court.
Both these decisions, thus, raised the question whether there was "gift" within the meaning of S.9 read with S.27 read with the Explanations to S.2(15) of the where a coparcener in a HUF, at the family parti tion, voluntarily agrees to accept properties of a value less than what he is entitled to claim, as a matter of right, at such partition.
This Court as did the Madras High Court in Ranganayaki Ammal, the Andhra Pradesh decision in Cherukuru Eswaramma vs C.ED., and the Punjab & Haryana High Court judgment in C.E.D.v.
Jai Gopal Mehra, answered the question in the affirmative.
This Court distinguished Go[i Eswariah, , S.C. and Getti Chettiar, , S.C. on the ground that the defi nition of 'disposition ' in Explanation 2 Sec tion 2(15) of the is much wider than the scope of that expression used in the Gift Tax Act.
We do not consider it necessary to set out here the full and de tailed reasoning of this Court in Kantilal Trikamlal 's case.
Before proceeding further, we may refer to a few later decisions of High Court relevant to the issue before ns.
The Allahabad High Court, in C.E.D.v.
Laxmi Bai, , a decision rendered after Kantilal Trikamlal, thought that the act of blending would not be a 'disposition ' within fie mean ing of:the .
In C.E.D vs Babub hai T. Panchal, (1982) 133 I.T.R.455, the Gujarat High Court had occasion to consider the question whether a transaction of release by a member of a Hindu Undivided family, within a period of two years of his death, of his interest in the family properties would amount to a 'disposition ' within the ' meaning of Explanation 2 to Section 2(15) of the .
The 179 question was answered in the negative.
In CE.D vs Satyanarayan Babulal Chaurasia, , the Bombay High Court, without touching the issue in detail, merely held, applying Goli Eswarian vs C G.T., (1970)76 I.T.R. 675 S.C, that the act of blending does not involve a transfer.
The question that falls for our considera tion now is whether, despite the extended definition in S.2(15) of the , as explained in Kantilal Trikamlal, the act of blending, unlike the voluntary acceptance of an unequal partition, fails outside the purview of the deeming part of the definition contained in the explanations.
We think the answer to this question has to be in the affirmative, Revert ing once again to the contentions of the Revenue in Rajamani (which are also the con tentions reiterated before us for the Revenue), it will be remembered that Rajamani specifically dealt with the language of the two explanations 10 S.2(15) and that its decision rested on three grounds: (i) a 'disposition ', as held on Goli Eswariah, S.C., has to be a 'bilateral ' or 'multilateral ' act or trans action, not a unilateral act; (ii) the act of blending does not create any right enforceable against the blender or his property but only brings to the surface rights already latent and inherent in the others; and (iii) the act of blending does not result in the extinguishment of any right of the blender with a correlative conferral of benefit on others.
our view.
Kantilal Trikamlal does not affect the validity of any of the three grounds set out above.
So far as the first ground is concerned, it does not touch upon the reasoning of Goli Eswariah, not to say doubt or dissent from it.
It refers to C.E.D. vs Kancherla Kesava Rao, , S.C. hinting at possible distinction and to Getti Chettiar (but without any hint of dis sent) and points out that the conventional construction of disposition ' has to submit to the larger sweep of hypothetical extension by definition" and that, unlike under the Gift Tax , "there is no limitation, environmen tal or by the society of words, warranting the whittling down of the unusually wide range of Explanation 2 to S.2 (15)".
In other words, the cumulative effect of Goli Eswariah, Getti Chettiar and Kantilal Trikamlal is that 'blending ' or 'partition ' will not be a 'disposition ' within the ordinary connotation of the expression but will be one if either of the Explanations to S.2(15) are attracted.
This takes us to the other two contentions dealt with in Rajamani as to the scope of the two explanations.
On this aspect, Rajamani has held that, unlike an 180 equal partition, the act of blending will not amount to a 'disposition ' attracting Ss.9 and 27 of the .
It distinguishes cases of unequal partition dealt 'with in Valliammal Achi, vs
C.E.D., and the High Court 's decision in Kantilal Trikam lal cited before it which have now received the imprimatur of this Court in Kantilal Trikamlal.
We are inclined to think that the distinction has been made on sound lines.
We do not consider it necessary to repeat or elaborate the rea soning in Rajamani on these two points as it succinctly epitomises well settled principles of Hindu Law.
Suffice it to say that we en dorse this reasoning and think that the High Court was right in holding, in the present cases, that the acts of blending did not result in the 'gift ' of immovable properties within the meaning of the statute and that Rajamani required no reconsideration because of Ranganayaki Ammal/Trikamlal.
This disposes of the question sought to be referred in these cases.
We should however like to advert to another aspect which may arise for consideration at some future date.
It may, perhaps, be possible to contend that, though a declaration of blending does not amount to a 'gift ', where the act of blending is followed up by a subsequent partition, the two transactions taken together do result in the extinguishment, at the expense of the deceased, of his rights in the properties which go to the share of other coparceners at the subsequent partition and that, if the two can be treated as parts of the same transac tion, Explanation 2 to S.2(15) may be attract ed.
But this, apart from being a totally new question of law not raised at any stage and not debated before us, would also require not only a closer look from the legal angle but also investigation into facts, particularly as to whether the act of blending and the subse quent partition can be treated, in law and on facts, as parts of a single transaction.
We, therefore, express no opinion on this issue.
For the reasons discussed above, these appeals fail and are dismissed.
But we make no order regarding costs.
Y.L. Appeals dismissed.

dataset_name: IN-Abs

summary:
A common question of law that arises for determination in these appeals by special leave is whether the act of a member of a joint family by which he impresses his individu al property with the character of joint family property or "throws" it into the hotch potch of the joint family or "blends" it with the joint family property is a 'disposi tion ' within the meaning of the .
In Civil Appeal No. 1204 of 1979 the facts are: One Natesan Chetty who died on 1.3.1972, was the Karta of a Hindu Undi vided Family, consisting of himself and his four sons.
He owned five house properties in Madras, On 18.6.70 and 16.9.1970, he made declarations by which he impressed the properties with the character of joint family properties and further declared that they would thereafter belong to HUF of which he was the Karta.
Thereafter a partition was effected in the family in March 1971 in which two of the properties came to his share.
Sri Chetty had also borrowed Rs. 46,800 from HUF out of the rental income from the properties for his business purposes.
These borrowings were duly repaid in April, 1971.
In completing the assessment to estate duty of the estate passing on the death of Natesan Chetty, the Assistant Controller of Estate Duty held that the declarations made by the deceased on 18.6.70 and 16.9.70 were "dispositions" within the meaning of the said expression as defined in the second explanation to section 2(15) of the .
He further held that since the declarations were made with out consideration, they amounted to gift which had been made within two years of the date of death and hence liable to be assessed as part of the estate passing on death under sec tion 9 of the Act.
The two properties which had fallen to the share of the deceased passed on the death of the de ceased.
He accordingly included Rs. 1,22,500 the value of the other three properties also in 168 the principal value of the estate.
The Asstt.
Controller further held that a sum of Rs. 46,800 being the loan taken and discharged by the deceased should also be added back in computing the principal value of the estate by virtue of section 46(2) of the Act.
Dissatisfied with the conclusion of the Asstt.
Control ler, the accountable person preferred an appeal to the Appellate Controller of Estate Duty which was successful.
Thereupon the Department preferred an appeal to the Tribunal which, following the decision of the Madras High Court in Rajamani Ammal vs Controller of Estate Duty, held that the sum of Rs. 1,22,500 could not be included in the value of the estate passing on the death and consequently, that the add back of Rs. 46,800 was also not justified.
Thereupon the Controller of Estate Duty applied under Section 64 (1) of the Act for a reference to the Madras High Court for its opinion on the two questions.
The Madras High Court was of the opinion that the basic question at issue was covered by the earlier decisions of the Court in Rajamani Ammal vs Controller of Estate Duty and Control ler of Estate Duty vs Smt.
Mookammal, The High Court declined to call for a reference and dis missed the application for reference.
Hence the appeals by the Department.
Dismissing the appeals, this Court, HELD: "Blending" or "partition" will not be a 'disposi tion ' within the ordinary connotation of the expression but will be one if either of the Explanations to Section 2(15) are attracted.
[179 G] Unlike an unequal partition, the act of blending will not amount to a 'disposition ' attracting Ss. 9 and 27 of the Act.
[179 H 180 A] The High Court was right in holding that the acts of blending did not result in the 'gift ' of immovable proper ties within the meaning of the statute.
[180 C] Though a declaration of blending does not amount to a 'gift ' where the act of blending is followed up by a subse quent partition, the two transactions taken together do result in the extinguishment, at the expense of the de ceased, of his rights in the properties which go to the share of other coparceners at the subsequent partition and, if the two can be treated as parts of the same transaction the Explanation to Section 2 (15) may be attracted.
[180 D E] 169 Rajamani Ammal vs Controller of Estate Duty, ; Controller of Estate Duty vs Smt.
Mookammal, ; Rangabayaki Ammal vs CED, ; CED vs Kantilal Trikamlal, ; Stremann vs CIT, SC; Goli Eswariah vs CGT, ; C.G.T.v.
Getti Chettiar, ; Cherukuru Eswaramma vs
C.E.D, ; CED vs Jai Gopal Mehta, ; C.E.D., vs Laxmi Bai, ; C.E.D.v.
Babubhai T. Panchal, ; and C.E.D.v.
Satyanaravan Babulal Chaurasia, , referred to.


judgement:
Appeal No. 1720 of 1986.
From the Judgment and Order dated 5.7.1985 of the Andhra Pradesh High Court in Writ Appeal No. 577 of 1985.
B. Kanta Rao for the Appellant.
K. Madhava Reddy and G. Prabhakar for the Respondents.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal by Special Leave from the judgment of a Division Bench of the Andhra Pradesh High Court dismissing the Writ Appeal No.577 of 1985 filed in that Court.
Very few facts are necessary for the disposal of this ap peal.
The appellant is the owner of a plot comprising roughly 2 acres of land in Ramavarappadu village, Vijayawada Taluk, in the Krishna District in Andhra Pradesh.
The Government of Andhra Pradesh sought to acquire about 1 acre and 89 cents out of the aforesaid land for a public propose.
A Notifica tion under section 4(1) of the Land Acquisition Act, 1894 (hereinafter referred to as "the said Act") was published in the Government 117 Gazette on February 9, 1976.
The substance of the said notification was published in the locality where the land proposed to be acquired is situated, on April 2, 1978, long after the period of 40 days within which it was required to be published as per the provisions of section 4(1) of the said Act as amended by the Andhra Pradesh (Amendment) Act, 1983, (Act 9 of 1983).
Enquiry under section 5A of the said Act was dispensed with invoking the urgency clause as per section 17(4) of the said Act.
Notification under section 6 was published on the same day as the publication of the notification under section 4(1) of the said Act.
An inquiry was conducted regarding the fixation of compensation to be awarded to the appellant and others whose lands were ac quired under the said notification.
It appears that during the course of the said inquiry the appellant stated to the Land Acquisition Officer concerned that he was willing to agree to the land being acquired provided he was given compensation in a lump sum.
Probably the reason was that if the compensation was awarded in a lump sum without delay, the appellant might have been able to purchase some other land, as his holding was under the ceiling limit.
The aforesaid facts have been found by the Trial Court and accepted by the High Court.
On November 9, 1979, before any award was made, the consent to the acquisi tion of the land given by the appellant, as aforestated, was withdrawn by him and on May 14, 1981, the appellant filed a writ petition in the High Court questioning the validity of the land acquisition proceedings.
The learned Single Judge before whom the said writ petition along with another writ petition came up for hearing held that the appellant had agreed to the acquisition of the said land on compensation being paid as aforestated, and hence it was not open to the appellant to challenge the validity of the said notifica tions issued under section 4(1) and section 6 of the said Act.
It was held by him that the withdrawal of the said representation or consent by the appellant did not in any manner assist him.
The learned Judge dismissed the writ petition filed by the appellant without going into the merits of the aforesaid petition on the aforesaid basis.
This judgment was upheld by the Division Bench of the High Court which dismissed the aforesaid writ appeal.
It is the correctness of these decisions which is impugned before us.
In our view, the learned Single Judge and the Division Bench of the High Court of Andhra Pradesh were, with re spect, clearly in error in dismissing the respective writ petition and the appeal filed by the appellant on the ground that the appellant had stated that he was willing to accept the acquisition provided a lump sum compensation was awarded to him.
The statement of the appellant amounted in law to no more than an offer in terms of the Contract Act.
The said offer was never accepted by the Land Acquisition Officer to whom it was made.
Leave alone, making 118 the award of lump sum compensation, no award at all was made by the said officer awarding compensation to the appellant till November 9, 1979, when the aforesaid offer was with drawn by the appellant or even till the writ petition was filed.
Till the offer was accepted there was no contract between the parties and the appellant was entitled to with draw his offer.
There was nothing inequitable or improper in withdrawing the offer, as the appellant was in no way bound to keep the offer open indefinitely.
The writ petition, therefore, ought not to have been dismissed on the ground of the appellant having made a statement or consented as afore stated before the Land Acquisition Officer.
On the merits, it is clear that the acquisition of the land is bad in law because the substance of the notification under section 40) of the said Act was not published in the locality within forty days of the publication of the notifi cation in the Government Gazette.
The time limit of forty days for such publication in the locality has been made mandatory by section 4(1) of the said Act as amended by the Andhra Pradesh (Amendment) Act.
It is well settled that such non compliance renders acquisition bad in law.
In the result, the appeal succeeds and Rule in the writ petition is made absolute.
It is declared that the acquisi tion of the aforesaid land of the appellant is bad in law.
If the possession has been taken, the same must be returned to the appellant.
The appeal is allowed as aforestated with costs throughout.
T.N.A. Appeal Allowed.

summary:
Proceedings for acquisition of appellant 's land were initiated.
and a Notification under section 4(1) of the Land Acquisition Act, 1894 was published in the Government Ga zette.
The substance of the said Notification was published in the locality long after 40 days within which it was required to be published under Section 4(1) of 1894 Act 'as amended by the Andhra pradesh(Amendment) Act, 1983.
During the course of enquiry regarding the fixation of compensa tion, the appellant consented to his land being acquired provided he was given compensation in a lump sum.
However, before any award was made he withdrew his consent and filed a petition challenging the validity of the acquisition proceedings.
A Single Judge of the High Court dismissed his petition by holding that since he gave his consent to the acquisition of land he could not challenge the acquisition proceedings.
On appeal the decision of the Single Judge was confirmed by the Division Bench of the High Court.
Against the decision of the Division Bench of the High Court, an appeal was filed in this Court.
Allowing the appeal, this Court, HELD: 1.
The Single Judge and the Division Bench of the.
High Court were clearly in error in dismissing the respective writ petition and the appeal filed by the appel lant respectively.
The appellant 's statement that he was willing to accept the acquisition provided a lump sum com pensation was awarded to him amounted 115 116 in law to no more than an offer in terms of the Contract ACt.
The said offer was never accepted by the Land Acquisi tion Officer to whom it was made.
Leave alone, making the award of lump sum compensation, no award at all was made by the said officer awarding compensation to the appellant till the aforesaid offer was withdrawn by the appellant or even till the writ petition was filed.
Till the offer was accept ed there was no contract between the parties and the appel lant was entitled to withdraw his offer.
There was nothing inequitable or improper in withdrawing the offer, as the appellant was in no way bound to keep the offer open indefi nitely.
1117 G H, 118 A] 2.
The acquisition of the appellant 's land is bad in law because the substance of the Notification was not pub lished in the locality within forty days of the publication of the Notification in the Government Gazette.
The time limit of forty days for such publication in the locality has been made mandatory by section 4(1) of the 1894 Act as amended by the Andhra Pradesh (Amendment) Act, 1983.
Such non compliance renders acquisition bad in law.
[118 C]


judgement:
Civil Appeal No. 4380 of 1991.
From the Judgment and Order dated 10.4.1991 of the Madras High Court in Writ Appeal No. 38 of 1991.
K. Parasaran, K.V. Vijaya Kumar and V. Bala Chandran for the Appellants.
C.T. Selvamani and P.P. Tripathi for the Respondents.
The Judgment of the Court was delivered by K. RAMASWAMY, J.
Special Leave is granted.
This appeal is against the judgment dated April 4, 1991 of the Madras High Court.
A sum of Rs. 12,163.50 p. was alleged to have been misappropriated by the appellant (now he was acquitted of the charge of misappropriation) and for the recovery thereof his 13.07 acres of coffee estate situated in Semmanthaputhur village was brought to sale under the Tamil Nadu Revenue Recovery Act, 1894 (for short 'The Act ').
On March 30, 1979 the sale by auction was held by the Tahsildar.
The first respondent purchased for a sum of Rs. 12,225 and deposited a sum of Rs.2,000 being 15 per cent of the sale price.
Under Sec.
36 of the Act, the first respondent should have deposit ed the balance consideration within 30 days from the date of the auction.
On October 23,1981 the sale was confirmed and the balance amount was deposited on November 4, 1981.
The appellant filed an application but by proceed ing dated October 23, 1981, the Revenue Divi sional Officer overruled the objections and dismissed the application.
On appeal the Addl.
Distt.
Collector, Salem set aside the sale on October 13,1982.
The first respondent filed writ petition 184 No. 246 of 1984 in the High Court.
The learned Single Judge by judgment dated August 21, 1990 quashed the order of the Addl.
Collec tor.
On writ appeal, the Division Bench dis missed it.
Thus this appeal.
The formidable objection raised by the appellant is that it is mandatory under Sec.36 that the date and place of sale shall be published in the Gazette and that the publica tion did not mention the place of sale.
There fore, the sale is invalid in law.
It is also his further plea that it is equally mandatory that the balance sale consideration of 85% should be deposited within 30 days from the date of sale which was done only on November 4, 1981 long after one year and eight months of the date of sale.
The sale and Confirmation thereof are, therefore, illegal.
The learned Single Judge and the Division Bench held that Form 7A of the forms prescribed under the Act read with relevant provisions of the Board Standing Order No.41 does not prescribe the place of sale and that, therefore, the omis sion to specify the place of sale does not render the sale invalid nor an irregularity.
Shri Selvamam, the first respondent in person (himself a practising Advocate) contended that it is Form 7 and not Form 7A that would be applicable to the facts of the case.
Form 7 contains the place of sale and that it was complied with.
Therefore, the sale is not illegal.
It is also contended that the deposit was made after protracted correspondence and that, therefore, the non deposit within 30 days from the date of sale is not illegal.
At any rate, having accepted the amount, the authority acquiesced to the deposit/Therefore, the confirmation of the sale is not illegal.
We find no substance in either of the conten tions.
The contention that Form 7 and not Form 7A would be applicable to the facts, is not the case set up or argued either before the authorities or the courts below.
For the first time he cannot raise that plea in this Court.
That apart specifically the High Court (learned Single Judge and the Division Bench) held that it is form 7A that is applicable and that it does not prescribe publication of place of sale and therefore, the omission thereof does not render the sale invalid.
The High Court wholly misconceived of Sec.36.
A reading of Sec.
36 manifests that the word 'shall ' is mandatory in the context.
The publication is an invitation to the intending bidders to prepare and participate at the bid.
Unless there is a due publication of the date and place of sale, the intending purchasers cannot be expected to run after the Sale Officer to find out the date and place of sale and to participate thereat.
The Sale officer has a statutory duty and a responsi bility to have the date and place of sale men tioned in the notice and given due publication in terms of the Act and the Rules.
Public auction is one of the modes of sale intending to get highest competitive price for the property.
Public auction also ensures fairness in actions of the public authorities or the sale 185 officers who should act fairly, objectively and kindly.
Their action should be legitimate.
Their dealing should be free from suspicion.
Nothing should be suggestive of bias, favouri tism, napotism or beset with suspicious fea tures of underbidding detrimental to the legitimate interest of the debtor.
The fair and objective public auction would relieve the public authorities or sale officers from above features and accountability.
Any infraction in this regard would render the sale invalid.
It is settled law that the word 'shall ' be construed in the light of the purpose the Act or Rule that seeks to serve.
It is not an invariable rule that even though the word 'shall ' is ordinarily mandatory but in the context or if the intention is otherwise, it may be construed to be directory.
The construc tion ultimately depends upon the provisions itself, keeping in view the intendment of the enactment or of the context in which the word 'shall ' has been used and the mischief it seeks to avoid.
Where the consequence of failure to comply with any requirement of a provision is provided by the statute itself, the consequence has to be determined with reference to the nature of the provision, the purpose of enactment and the effect of non compliance thereof.
In its absence the conse quence has to be determined with reference to the effect of the non compliance of the provi sion of the legislature.
Mere use of the word 'shall ' need not be given that connotation in each and every case that the provision would be invariably interpreted to be mandatory or directory.
But given due consideration to the object, design, purpose and scope of the legislation the word shall be construed and interpreted in that design and given due emphasis.
See.36 obligates the Sale Officer (Tahsildar) that he shall publish the date and place of sale.
The object thereby is an invita tion to the public at large that the notified property would be brought to sale at that specified time and place and that they are invited to participate, if they so desire.
To reiterate for emphasis and continuity that the object of the sale is to secure the maximum price and to avoid arbitrariness in the proce dure adopted before sale and to prevent under hand dealings in effecting sale and purchase of the debtor 's property.
As a responsibility as sale officer and a duty towards the debtor, the sale officer should conduct the sale strictly in conformity with the prescribed procedure under the statute and the rules as the case may be.
Such due and wide publicity would relieve the debtor from the maximum liability he owes and payable to the creditor.
This responsibility is not only salutory to vouchsafe bonafides in the conduct of the sale officer but also to ensure fairness in the procedure adopted in bringing the property of the debtor to sale.
Considered from this perspective the non compliance of Sec.35 i.e., omission to mention the place of sale world visit with deprivation of the property to the debtor 186 for an inadequate sale consideration due to absence of competing bidders.
Thus, we hold that specification of the date and place of sale shall be mandatory.
The forms either 7 or 7A are only procedural and they should be in conformity with Sec. 36.
The form cannot prevail over the statute.
The omission of specification of the place of sale in the form renders the sale not merely irregulate but also invalid.
Equally the second objection is insur mountable.
It is mandatory that "the balance of the sale amount shall be remitted within 30 days from the date of auction" and if not the earnest money deposited is liable to forfei ture.
Confirmation of the sale should precede the deposit of the sale amount.
36 man dates remittance of the balance of 85% of the sale consideration within 30 days from the date of auction.
It is obligatory on the purchaser to deposit the amount within that period unless he is prevented by an order of the court or tribunal from so making depos it.
The 'non compliance renders the 15% depos it liable to forfeiture.
Therefore, the con firmation of the sale without compliance is illegal.
We hold that the sale is vitiated by manifest error of law and rightly set aside by the Addl.
Collector, Salem (Appellate Authority).
The High Court, both the learned Single Judge and the Division Bench committed menifest error of law in interfering with the order of the appellate authority.
The appeal is accordingly allowed.
The writ petition stands dismissed and that of the order of the Addl.
Distt.
Collector, Salem restored, but in the circumstances parties are directed to bear their own costs throughout.
S.B. Appeal allowed.

summary:
The appellant was alleged to have misap propriated a sum of Rs. 12,163.50 [though acquitted of the charge of misappropriation] and for the recovery thereof his 13.07 acres of coffee estate was brought to sale under the Tamil Nadu Revenue Recovery Act, 1894.
On March 30,1979 the sale by public auc tion was held by the Tehsildar.
The first respondent purchased the said estate for a sum of Rs. 12,225 and deposited a sum of Rupees 2000 being 15% of the sale price.
Under sec tion 36 of the Act, he should have deposited the balance consideration within 30 days from the date of the auction.
This sale was con firmed on October 23,1981 and the balance amount was deposited on November 4, 1981.
So the appellant filed an application to set aside the sale but the Revenue Divisional Officer overruled the objections and dismissed the application.
On appeal to Additional District Collector on October 13, 1982, the sale was set aside.
So the first respondent filed writ petition in the High Court and the single High Court Judge quashed the order of the Additional District Collector.
The writ appeal by the appellant to the Division Bench was also dismissed.
Hence the appellant came to this Court.
The appellant urged that under section 36 of the Act it is mandatory that the date and place of sale 'shall ' be published in the Gazetee and that the publication did not mention the place of sale so the sale is invalid in law.
It was further submitted that it was equally mandatory that the balance sale consideration of 85% should be deposited within 30 days from the date of sale which was done by the first respondent only on November 4, 1981 long after one year 182 and eight months of the date of sale and therefore illegal.
While the first respondent contended that it was Form 7 and not Form 7A that would be applicable to the facts of the instant case and that Form 7 contains the place o[ sale and that it was complied with.
Therefore, the said sale is not illegal.
It was further submitted that the deposit was made after protracted correspondence and that the non deposit within 30 days from the date of sale is not illegal since the deposit was accepted by the authority.
Therefore the confirmation of the sale is not illegal.
Granting the special leave, dismissing the writ Petition, setting aside the Judgment of the High Court, and restoring the order of the Additional District Collector, the Court HELD: That in the instant case, the High Court has wholly misconceived section 36 of the Act.
A reading of the said section mani fests that the word 'shall ' is mandatory in the context.
The publication is an invitation to the intending bidders to prepare an partic ipate at the bid.
Unless there is due publica tion of the date and the place of sale, the intending purchasers cannot be expected to run after the sale officer.
The sale officer has a statutory duty and a responsibility to have the date and place of sale mentioned in the notice giving due, publication in terms of the Act and the Rules.
Public auction is one of the modes of sale intending to get highest competitive price for the property and it also ensures fairness in actions of the public authorities or the sale officers who should act fairly objectively and kindly.
Nothing should be suggestive of bias favouritism nepotism or beset with suspicious features of under bidding detrimental to the legitimate interest of the debtor.
[184 F, G 1 85 A] Further it is settled law that the word 'shall ' be construed in the light of the purpose of the Act or Rule that seeks to serve.
Even though the word 'shall ' be ordi narily mandatory but in the context or if the intention is otherwise it may be construed to be directory.
The construction ultimately depends upon the provision itself.
Considered from this prospective of non compliance of section 35 that is comission to mention the place of sale would visit the deprivation of the property to the debtor for an adequate consideration due to absence of competing bidders.
Hence the specification of the date & place of sale 'shall ' be mandatory.
The forms either 7 or 7A are only procedural and they should be in conformity with section 36.
The form cannot prevail over the statute.
The omission of specification of the place of sale in the form renders the sale not merely irreg ular but also invalid.
[185 C; H 186 B] 183 Equally the second objection is insur mountable.
It is mandatory that the balance of the sale amount shall be remitted within 30 days from the date of auction and if not the earnest money deposited is liable to forfei ture.
Section 36 mandates remittance of the balance of 85% of the sale consideration within 30 days from the date of auction.
It is obligatory on the purchaser to deposit the amount within the period unless prevented by an order of the Court or Tribunal.
So the confirmation of sale without compliance is illegal and the sale is vitiated by manifest error of Law & rightly set aside by the Addi tional District Magistrate.
The High Court has committed error in law in interfering with the order of the appellate authority.
[186 B D]


judgement:
ivil Appeal Nos.4554 to 4556 of 1991.
From the Judgment and Order dated 18.2.91 of the Madhya Pradesh High Court in Misc.
Petition Nos.
1707, 1746 and 1797 of 1986.
D.D. Thakur, C.S.Chazed, V.Gambhir, Surinder Kamail, S.K.Gambhir and N.N.Bhatt for the Appellants.
K.K. Venugopal, P.P.Rao, G.L.Sanghi, K.K. Sharma, Ashok K. Mahajan, L.R. Singh, D.Mehta, A.Vachher, R.N.Mittal and S.K.Mehta for the Respondents.
The Judgment of the Court was delivered by 249 RANGANATH MISRA, CJ.
Special leave granted.
Ujjain Development Authority is in appeal challenging the judgment of the Madhya Predesh High Court, Indore Bench, rendered in an application under Article 226 of the Consti tution annulling the notification issued under section 4 of the Land Acquisition Act of 1894 (hereinafter referred to as 'the Act ') by holding that scheme No.23 flamed under Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973 does not operate against certain specified lands of the respondents.
It would appear that there was a similar notification under section 4(1) of the Act for acquisition of the self same properties along with some 600 hectares for the purpose of development of Ujjain, a historical town of Kalidas fame within Madhya Pradesh.
On 17.9.80 for different reasons the notification had been quashed.
In 1985 the impugned notifi cation was issued afresh under section 4(1) of the Act.
The High Court found that the requirements of the stat ute for completing the scheme for the purpose of which the acquisition had been made had not been complied with and, therefore, no action for acquisition under the scheme could be taken.
We have heard learned counsel for both the sides and must state that the reasoning given by the High Court is difficult to find fault with.
There are, however certain features which lead us not to sustain the decision of the High Court.
Admittedly there has been a notification under section 50(2) of the Adhiniyam.
Gazette Notification in respect of Scheme No. 23 has also been produced.
Though there is a finding that the pre conditions had not been complied with strictly under the statutory provisions, the High Court has not found any mala fides.
The Development Authority in question consisted of only one person.
His own order was perhaps taken by him and the governmental authori ties as the requisite resolution.
The respondents did not take the ground that there was no valid authority behind the scheme.
In the earlier petition also such a ground had not been raised.
The High Court called for the record and dis covered for itself that the statutory pre condition had not been complied with for the said scheme to operate.
If this question had been raised when the earlier writ petition was filed about 12 years back, the defect could have then been rectified.
It is the admitted case before us that the undisputed huge patch of land has been substantially improved upon under the scheme.
Cancellation of the notification does not bring the matter to an end.
Obviously fresh proceedings would be taken after complying with the defect if the judg ment of the High Court is allowed to stand.
If the acquisi tion is not made the respondents should enjoy usual benefits of their land on account of the 250 development of the neighbouring area and if the re acquisi tion is made there would be claim for higher compensation.
Looking at the matter from these different angles, we have thought it appropriate to allow the appeal, vacate the judgment of the High Court and allow the acquisition to remain subject, however, to the condition that the notifica tion under section 4(1) of the Act issued in 1985 shall be deemed to be one dated 1.1.88 and the market value of the land for the acquisition shall be determined with reference to that date.
We would like to point out that the potential value of the land has substantially enhanced on account of the improvements made pursuant to the notification which had been assailed.
We have directed the deemed date of the notification under section 4(1) to be postponed by almost three years and during this period the appellant has brought about the bulk of the improvements in the neighbourhood.
We direct that 25 per cent of the potential value of the land relatable to the improvements made by the appellant would only be available to the respondents, but in fixing market value all other legitimate considerations shall be taken into account.
We make it clear that we have no intention to extend the benefit under section 28A of the Act to the owners of the lands already acquired under the notification of 1980 or 1985 on the basis of our direction that the respondents ' lands shall be deemed to have been notified under section 4(1) of the Act on 1.1.
In fact our order must be deemed to be a separate notification for acquisition and, therefore, it would not be a common notifi cation for the purpose of section 28 A of the Act.
The respondents should, therefore, be entitled to this benefit that instead of the notification under section 4(1) of the Act being of 1985, it shall be treated to be of 1.1.1988.
The appellate authority is now entitled to take position in accordance with law subject to the valuation of the compen sation in the manner indicated.
There will be no order as to costs.
V.P.R. Appeals dis posed of.

summary:
A notification u/s.4(1) of the Land Acquisition Act, 1894 was issued for acquisition of the questioned lands along with some other lands for the purpose of development of the town.
On 17.9.80 the same was quashed.
In 1985 another similar notification was issued u/s 4(1) of the Act, for acquisition of the same lands for the Scheme No.23 framed under Madhya Pradesh Nagar Tatha Gram Nivesh Adhiniyam, 1973.
The respondents challenged the notification before the High Court under Article 226 of the Constitution.
The High Court allowed the writ petitions annulling the notification and holding that the Scheme No.23 did not operate against certain specified lands of the respondents.
It also found that the statutory requirements for completing the scheme were not complied with and therefore, no action for acquisition under the Scheme could be taken.
These appeals were filed by the Development Authority against the High Court judgments by special leave.
Disposing of the appeals, this Court, HELD: 1.
The pre conditions had not been complied with strictly under the statutory provisions.
The High Court has not found any malafides.
The Development Authority in ques tion consisted of only one person.
His own order was perhaps taken by him and the gov 248 ernmental authorities as the requisite resolution.
The respondents did not take the ground that there was no valid authority behind the scheme.
[249 E F] 2.
The huge patch of land has been substantially improved upon under the scheme.
Cancellation of the notifi cation does not bring the matter to an end.
Obviously, fresh proceedings would be taken after complying with the defect if the judgment of the High Court is allowed to stand.
If the acquisition is not made the respondents should enjoy usual benefits of their land on account of the development of the neighbouring area and if the re acquisition is not made there would be claim for higher compensation.
[249 G250 A] 3.
It is directed that the acquisition remain to subject, to the condition that the notification under sec tion 4(1) of the Act issued in 1985 shall be deemed to be one dated 1.1.88 and the market value of the land for the acquisition shall be determined with reference to that date, and that as the deemed date of the notification under sec tion 4(1) to be postponed by almost three years and during this period since the appellant has brought about the bulk of the improvements in the neighbourhood, 25 per cent of the potential value of the land relatable to the improvements made by the appellant would only be available to the re spondents, but in fixing market value all other legitimate considerations shall be taken into account.
There is no intention to extend the benefit under section 28 of the Act to the owners of the lands already acquired under the noti fication of 1980 or 1985 on the basis of court 's direction that the respondents ' lands shall be deemed to have been notified under section 4(1) of the Act on 1.1.1988.
[250 B D]