judgement:
Appeals Nos. 116, 117 and 119 of 1967.
Appeals from the judgment and decrees dated May 19, 1966 of the Allahabad High Court in First Appeals Nos.
441 of 1950, 198 of 1952 and 442 of 1950 respectively.
section V. Gupte, section T. Desai, J. P. Goyal and G. N. Wantoo, (or the appellants (in all the appeals).
Sidhartha Ray, A. K. Sen, Rameshwar Nath, Krishna Sen and Swaranjit Sodhi, for the respondent (in all the appeals).
The Judgment of the Court was delivered by Shelat, J.
Prior to January 18, 1944 M/s. Lakshmiratan Cotton Mills Co. Ltd. (hereinafter referred to as the appellant company), Aluminium Corporation of India Ltd. (hereinafter referred to as the corporation, J.K. Limited, Beharilal Kailashpat India Supplies, Northern India Trading Co., and Northern India Brush Manufacturing Co. Ltd. were all jointly managed by two, groups, who may conveniently be called the Singhania and the Gupta groups.
Disputes having arisen between them, they were referred to arbitration by a deed of reference, dated December 9, 1943.
It is not necessary to go into the details of the award, dated January 18, 1944, by which these disputes were adjudi 626 cated upon except that from and after the date of the award the aforesaid concerns were brought under the management and ,control of one or the other of the said two groups.
The corporation came under the control and management of the Singhania group.
Cl. 9 of the award provided as follows "The above award or directions in respect of Laxmi Ratan Cotton Mills Co. Ltd., Aluminium Corporation of India Ltd., J. K. Ltd., Beharilal Kailashpat India Supplies, Northern India Trading Co. and Northern Brush Manufacturing Co. do not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and they shall be payable and paid in their usual course." According to the appellants, there existed in their trading books :accounts in respect of amounts advanced or spent by them for, ' the corporation in respect of which cl.
(9) of the award specifically made provision for and also for interest due thereon.
After the award was made the appellant company sent a statement of account to the corporation, but this was objected to on the ground that the appellant company, during the course, of the previous joint management of the corporation, had not properly maintained the accounts and that several items were either not properly accounted for or entered into.
Correspondence thereafter ensued between the parties.
The parties also appointed their respective officers to meet and reconcile their respective accounts the corporation being represented by its Secretary cum,Chief Accountant, one Subramanayam, and the appellant company sometimes by one Arora and at other times by one Newatia.
Since no settlement could be arrived at, the appellants filed two suits claiming Rs. 3,56,207 9 6 and Rs. 72,595 4 6 from the corporation, being Suit Nos. 63 and 65 of 1949.
In para 14 of the plaint in Suit No. 63 of 1949, it was claimed that the suit was within time as after adjustment of several items in 1946 and 1947 a sum of Rs. 2,96,110 11 6 was found due to the appellant company and that in any event the suit was saved from being barred by limitation by a letter ,dated April 16, 1946 addressed by the said Subramanayam, thereby acknowledging the liability of the corporation to pay the amount which would be found due and payable under the said accounts.
Similar averments were also made in the plaint in Suit No. 65 of 1949.
The written statements filed by the corporation inter alia pleaded that the said claims were, barred by limitation, 627 LAKSHMIRATAN COTTON MILLS V. ALUMINIUM CORP. 627 (Shelat, J.) that the said letter did not amount to an acknowledgement within the meaning of section 19 of the Limitation Act, 1908 which was then applicable to the suits, and lastly, that even if the said letter did amount to an acknowledgment, it was not binding on the corporation as the said Subramanayam had no authority to make any such acknowledgement for and on behalf of and binding on the corporation.
On the question of limitation, the Trial Court raised three questions for its determination; (1) whether the letter (exhibit 1) was binding on the corporation, (2) whether it amounted to an acknowledgement, and (3) if so, whether it would extend the period of limitation so as to save the claims made by the appellants, from being barred.
On consideration of the, evidence, both oral and documentary, the Trial Court held in favour of the appellants on all the three questions and passed decrees in both the suits.
Three appeals were filed in the High Court against those decrees, two by the corporation and the third by the appellant company as the claim allowed in its favour was for a reduced amount.
As framed by the High Court, the question common to all the three appeals was whether the said letter (exhibit 1) amounted to an acknowledgement extending the period of limitation.
The High Court, on consideration of the correspondence between the parties and the other evidence, reached the conclusion that the letter (exhibit 1) was "merely explanatory" and was not, meant to bind the corporation, that even if it did amount to " some kind of acknowledgement", its author, the said Subramanayam, bad no authority to acknowledge any debt or liability on behalf of the corporation.
In this view the High Court held the two suits barred by limitation and allowed the corporations, appeals.
It rejected the appellant company 's appeal and dismissed the two suits.
Hence these three appeals under certificates granted by the High Court.
It was never disputed that, except for the letter (exhibit 1) relied on by the appellant company, provided it amounted to an acknowledgement binding on the corporation, the claims of the, appellants would be barred by limitation.
Consequently, the questions for determination in these appeals are the same as the ones before the High Court.
These questions were canvassed before us in their three aspects; firstly, whether the letter (exhibit 1) amounted to an acknowledgement, secondly, if it did, whether it was an acknowledgement by the corporation, and thirdly, if not, whether the said Subramanyam, who addressed it, had the authority express or implied, to acknowledge liability on behalf of the I corporation so 'as to bind that corporation.
Counsel for the appellant company sought to argue that in as much as the letter, (exhibit 1) was written by the corporation 's 628 Secretary, who also combined the position of the Chief Accountant, and furthermore, addressed that letter for and on behalf of the corporation, the letter was of and by the corporation.
Therefore, if the letter amounts to an acknowledgement, such acknowledgement would be by the corporation itself and no enquiry would then be necessary to ascertain whether the said Subramanayam had the authority to acknowledge the liability so as to bind the corporation.
No such plea, however, is to be found in the plant which merely stated that "there are several letters constituting acknowledgement of the unsettled account.
The plaintiff files one of such letters which is dated 16th April, 1946.
" The written statement denied that the corporation, ever made any acknowledgement or that the letter of April 16, 1946 was any such acknowledgement.
It further denied that Subra manayam, who wrote it, had any authority to acknowledge any debt.
Such a comprehensive denial notwithstanding, no issue was raised covering the argument now urged that the said letter was and must be treated as one of or by the corporation, and that therefore, there was no question of Subramanayam having or not having the authority to make an acknowledgement on behalf of the corporation.
No such argument also appears to have been made either in the Trial Court or the High Court where the controversy was centered around the question whether the said letter contained an acknowledgement and whether its writer, addressing it on behalf of the corporation, had the authority to make such an acknowledgement binding on the corporation.
In our view Mr. Gupte could not, at such a belated stage, raise for the first time the plea that it was the corporation which through the said letter made the acknowledgement and that we should understand that letter to mean such an acknowledgement by the corporation itself.
The question, therefore, that really arises for our determination is whether the said letter contains an acknowledgement, which its writer, Subramanyam, had the authority, express or implied, to make.
Even that question gets reduced in extent and scope as it was never the case of the appellant company at any stage that the corporation had clothed its Secretary with such authority expressly.
Such a case Mr" Gupte did not make out even before us and proceeded in fact to argue that the evidence on record showed that he had such authority given to him impliedly.
19(1) of the Limitation Act, 1908 provides that where, before the expiration of the period prescribed for a suit in respect of any property or right, an acknowledgement of liability in respect of such property or right has been made in writing signed by the party against whom such property or right is claimed, a fresh period of limitation shall be computed from the time 629 when the acknowledgement was so signed.
The expression 'signed ' here means not only signed personally by such a party, but also by an agent duly authorised in that behalf.
Explanation 1 to the section then provides that an acknowledgement would be sufficient though it omits to specify the exact nature of the property or right, or avers that the time for payment has not yet ,come, or is accompanied by a refusal to pay or is coupled with a claim to a set off, or is addressed to a person other than the person entitled to the property or right.
The new Act of 1963 contains in section 18 substantially similar provisions.
It is clear that the statement on which the plea of acknow ledgement is founded must relate to a subsisting liability as the section requires that it must be made before the expiration of the period prescribed under the Act.
It need not, however, amount to a promise to pay, for, an acknowledgement does not create a new right to action but merely extends the period of limitation.
The statement need not indicate the exact nature, or the specific character of the liability.
The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship, between the parties, such as, for instance, that of a debtor and a creditor, and the intention to admit such jural relationship.
Such an intention need not be in express terms and can be inferred by implication from the nature of the admission and the surrounding circumstances.
Generally speaking, a liberal construction of the statement in question should be given.
That of course does not mean that where a statement is made without intending to admit the existence of jural relationship, such intention should be fastened on the person making the statement by an involved and far fetched reasoning.
(see Khan Bahadur Shapoor Freedom Mazda vs Durga Prosad Chamaria(1) And Tilak Ram vs Nathu(2).
As Fry, L.J., in Green vs Humphreys(3) said "an acknowledgement is an admission by the writer that there is a debt owing by him either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt as being due from somebody.
In order to take the case out of the statute there must upon the fair construction of the letter, read in the light of the surrounding circumstances, be an admission that the writer owes the debt.
" As already stated, the person making the acknowledgement can be both the debtor himself as also a person duly authorised by him to make the admission.
In Khan Bahadur (1) (2) A. I. R. , at 938, 939.
(3) at 481.
13 L436 Sup C 1/71 630 Shapoor Fredoom Mazda 's case(1) the Court accepted a statement in a letter by a bortgagor to a second mortgagee to save the mortgaged property from being sold away at a cheap price at the instance of the prior mortgagee by himself purchasing it as one amounting to an admission of the jural relationship of a mortgagor and mortgage&, and therefore, to an acknowledgement within section 19.
Also, an agreement of reference to arbitration containing an unqualified admission that whoever on account should be proved to 'be the debtor would pay to the other has been held to amount to an acknowledgement.
Such an admission is not subject to the condition that before the agreement should operate as an acknowledgement, the liability must be ascertained by the arbitrator.
The acknowledgement operates whether the arbitrator acts or not.
(see Tejpal Saraogi vs Lallanjee Jain(2), ,approving Abdul Rahim Oosman & Co. vs Ojamshee Prushottamdas & Co. (3).
The letter (exhibit 1) relied on as an acknowledgement was written to the appellant company by Subramanayam signing it "for Aluminium Corporation of India Ltd." it consists of Several paragraphs dealing with diverse items relating to different amounts ,claimed by the appellant company in a statement of claim previously sent by it to the corporation, some of which are refuted by the writer, while the others are accepted.
The penultimate paragraph, which is said to contain the admission, reads as follows "After all the above adjustments, the position will be as per statement attached.
Interest has been provided on some balances and on others it has not been provided.
We request you, to confirm the balance of Rs. 1,07,477 13 11, so that we may proceed with the calculation of interest and settle your claim once and for all immediately.
Kindly acknowledge this letter and favour us with an immediate reply.
" The letter speaks in the last sentence of a copy of it to be sent to Lala Purshottam Dasji Singhania "for information".
The co of the letter, as is clear from the other evidence as also the words "for information" was not sent for approval and was obviously not intended to be subject to such approval by Purushottam Singhania.
The statement enclosed with the letter headed "Account of M/s. Lakshmiratan Cotton Mills Co. Ltd. ' and first sets out the balance of Rs. 1,00,760 0 7 in favour of (1) (2) C.A. No. 766 of 1962, decided.
on Feb. 8, 1965.
(3) (1928) 1.
L. R. 631 the appellant com any "as per our ledger", meaning the ledger of the corporation, and the first foot note thereto states that that amount included interest of Rs. 26,490 11 10 calculated upto March 31, 1943.
Several amounts due to other concerns payable to or by the appellant company are, then adjusted and finally the balance is struck at Rs. 1,07,447 13 11 (which is the one mentioned in the letter (exhibit 1) which if confirmed by the appellant company, the corporation would "settle your claim once and for all immediately." The High, Court, as aforesaid, held, contrary to the view of the Trial Court, that these letter was only "explanatory" and was not intended to be an admission of liability or of the jural relationship between the parties as debtor and creditor.
Counsel for the corporation also argued in support of the High Court 's view that the letter was written in the process of adjustment and reconciliation of the statement of claim addressed by the appellant company and a counter. statement to it by the corporation and therefore, could not be held to be one intended as an admission of liability on the part of the corporation, and that, in any event, Subramanayam, who wrote it, had no authority to acknowledge any such liability on behalf of the corporation.
Before we proceed to inquire into the correctness or other wise of the High Court 's view in regard to the letter (exhibit 1), it would be necessary to examine the correspondence which previously ensued between the parties and the surrounding circumstances which led to that letter.
As already stated, under cl.
(9) of the award by which the concerns, once, jointly controlled, were separated, moneys advanced by either of the parties or their firms or standing in deposit with them were to be payable by one to the other.
The award also directed the Gupta group to hand over to the Singhanias account books and other papers and files relating to the corporation.
Accordingly, the Guptas handed them over to the corporation on February 1. 1944.
The complaint of the corporation was that these books had not been properly posted up and contained discrepancies and that the corporation consequently required the help of the Guptas to finalise them.
Early in March 1945, the appellant company had also sent a statement of account in respect of the amounts due and payable to it by the corporation.
On April 20, 1945, one Col. Naidu, a director of the corporation, wrote to the appellant company pointing out from the said statement of account certain items which the corporation disputed.
On 11th/12th September,, 1945, the appellant company sent a statement of account claiming Rs. 2,94,000 and odd as payable to it.
On December 17, 1945, 63 2 a reply thereto was given by a letter sent by Lakshmipat Singhania, the director incharge, of the corporation, mentioning various items disputed by the corporation and the efforts made by it to reconcile those items and enclosed with that reply a reconciliation statement showing the true position according to the corporation.
Among other things, the reply stated as follows "You will find from the above that we have tried our level best to see that these accounts are settled as early as possible as we have been very anxious for finalising but unfortunately, there has been absolutely no response from your side.
From the reconciliation statement you will find that according to our books amount due to the Laxmi Ratan Cotton Mills Co. Ltd., is Rs. 98,101 3 1 which includes interest calculated and credited to your account up to 31st March, 1943.
The interest from that date till the date of settlement is further to be calculated when this account is properly reconciled and confirmed by you.
" The reply pointed out that as against the said amount of Rs. 98,101 3 1 the corporation claimed Rs. 38,490 2 2 and Rs. 8,256 13 6 which, according to it, had to be adjusted.
Lastly,, the reply threatened that unless the accounts were finalised within a month "we will not be paying you any interest on any of your dues beyond 30th September, 1945 ".
The position, as stated in the statement enclosed with the reply, was as follows "Reconciliation of Accounts of M/s. Lakshmiratan Cotton Mills Co. Ltd. Balance as per A.C.I. Ltd. Books Rs. 98,101 3 1 Balance as per statement Rs. 2,94,658 0 9 Difference Rs. 1,96,556 13 8" Then followed detailed items claimed by the corporation totalling Rs. 1,96,556 13 8.
The statement referred to above was the one under which the appellant company claimed Rs. 2,94,658 0 9 and which was sent earlier in March 1945 by Ram Ratan Gupta to Purushottam Singhania.
The corporation took objection to it by claiming various amounts and against which, according to the corporation, only a sum of Rs. 98,.101 3 1 was payable by it "as per A.C.I. Ltd. Books that is to say, as shown by the books of account maintained by the corporation.
The reply of the appellant company, dated December 6, 1945, to the 633 of the appellant company, dated December 6, 1945, to the afore aforesaid letter of September 17, 1945 and the statement enclosed thereto shows that the said Arora on behalf of the appellant company and the said Subramanayam on behalf of the corporation met and tried to reconcile the accounts.
The appellant company by this reply also sent particulars of certain items apparently called for by Subramanayam at that meeting and in its turn asked for particulars of certain items debited to it in the said reconciliation statement.
On December 21, 1945, Subra manayam replied to the appellant company 's letter of December 6, 1945.
By that letter he conveyed two things, (1) that in respect of certain items claimed by the appellant company and which were disputed, those items were either passed or disallowed, and (2) that since the appellant. company had combined in its statement of claim accounts of other allied concerns also, he too had combined those accounts while preparing the statement of accounts he was sending along with his letter.
The letter concluded by stating : "we herewith enclose a consolidated statement after merging all these accounts.
" The consolidated state ment, (exhibit 44) enclosed by Subramanayam with his reply, reads as follows : "Accounts of Messrs Lakshmiratan Cotton Mills Co. Ltd. 1945 December 1.
By balance as per our ledger Rs. 1,00,304 7 7 Then follow accounts of other concerns whose accounts were brought in in what Subramainayam called the consolidated statement of account.
This statement reflected the position of the appellant company in the corporation 's books of accounts as on December 1, 1945.
It will be noticed that the amount admitted in the statement by the corporation as due to the appellant company rose from Rs. 98,000 and odd (as per the earlier statement, dated September 17, 1945) to Rs. 1,00,304 7 7.
This increase was due to the fact that, while adjusting the disputed items.
Subramanayam had allowed and "passed" some of them between September and December 1945 when the disputed items were discussed and adjusted, and entries relating to those which were passed were posted to the credit of the appellant company in the books of the corporation.
The letter of December 21, 1945 was replied to by the appel lant company on February 25, 1946 by asking particulars in 63 4 respect of item claimed by Subramanayam in his said letter.
It was in answer to this letter that Subramanayam wrote the letter (exhibit 1) in controversy and with which he sent the statement showing Rs. 1,07,447 13 11 as "Balance carried down".
Correspondence continued thereafter between the parties, the appellant company maintaining that a much larger amount was due to it than the sum of Rs. 1,07,447 13 11.
Except that, the later correspondence would not throw any light on the question as to acknowledgement, and therefore, we need now detain ourselves on it.
Leaving aside for the time being the question as to Subra manayam 's authority, the following facts emerge from the correspondence and the statements of accounts accompanying some of the letters sent on behalf of the corporation : (a) In pursuance of cl.
(9) of the said award, the appellant company sent to the corporation in the beginning of March 1945 a statement of account claiming Rs. 2,94,000 and odd as due to it.
(b) At no time during the lengthy correspondence which ensued between the parties, the corporation denied its liability to pay; what it did was.
to dispute the correctness of the amount claimed by the appellant company by challenging certain items for which the appellant company claimed credit and by making certain counter claims of its own.
As against the statement of account sent by the appellant company, the corporation sent its own statement which it called the 'reconciliation account '.
(c) During the process of adjustment and reconciliation of the several items claimed by the appellant company some were allowed and some were rejected, and the corporation sought to debit certain items claimed by it against the appellant company.
(d) According to the reconciliation statement sent by the corporation on September 17, 1945 only Rs. 98,000 and odd was due to the appellant company as against its claim for Rs. 2,94,000 and odd.
Later, this figure was raised from time to time as some of the items claimed by the appellant company were allowed 6 3 5 with the result that in the statement sent along with the letter (exhibit 1 ) the balance due to the appellant company was shown at Rs. 1,07,447.
(e) The statements of accounts, (Exs. 43 and 44) and the one enclosed with the letter, (exhibit 1 ) in clear terms stated that the balances shown therein were as shown in the ledger maintained by the corporation.
The letters equally clearly stated that interest on such balances was being credited up to certain dates and for the further period would be credited when the accounts were finalised.
It must follow from these facts that there was a subsisting.
account in the name of the appellant company in the books of the corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconciliation were also being credited.
The statement in the letter (exhibit 1) that "after all the above adjustments the position will be as per statement attached", that is to say, that there was a balance of Rs. 1,07,447 13 11 due and payable to the,appellant company, must clearly amount to an acknowledgement within the meaning of section 19(1).
In our view if the letter (exhibit 1) were to be looked at in the background of the controversy between the parties, which controversy was, as aforesaid, limited to the question as to the correctness of the amount claimed by the appellant company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter (exhibit 1) and the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural relationship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.
But the argument was that since the letter (exhibit 1) called for confirmation of the amount of Rs. 1,07,447 as being the balance due to the appellant company and. as the appellant company failed to confirm it, the admission of liability was conditional, and therefore, cannot operate as an acknowledgement.
In this connection the decision in Maniram vs Rupchand(1) was relied on and in particular the famous dictum of Mellish, L.J., in In re River Steamer Co. vs Mitehell(2) approvingly cited therein.
The dictum was that an acknowledgement to take the case out of the statute of limitation must be either one from which an absolute promise to pay can be inferred, or secondly, an (1) L. R. 33 1.
A. 165.
(2) L. R. , at 828.
636 unconditional promise to pay the specific debt, or thirdly, that there must be a conditional promise to pay the debt and evidence that the condition has been performed.
The statement relied on in Maniram 's case(1) as an acknowledgement was by the respondent in a written statement filed by him in an earlier bate proceeding in which it was averred that the applicant chand Nanabhai (the respondent) "had for the last five ye open and current accounts with the deceased (the testator) that the alleged indebtedness did not affect his right to apply for probate", as one of the executors.
It was held that the statement was sufficient to constitute an acknowledgement.
"An unconditional acknowledgement", said their Lordships, "has always been held to imply a promise to pay, because that is the natural inference if nothing is said to the contrary.
It is what every honest man would mean to do.
There can be no reason for giving a different meaning to an acknowledgement that there is a right to have the accounts settled, and no quali fication of the natural inference that whoever is the creditor shall be paid when the condition is performed by the ascertainment of a balance in favour of the claimant.
It is a case of the third proportion of Mellish, L.J., a conditional promise to pay and the condition performed.
" We do not see how this decision can support the corporation since in the present case also there was an admission of a subsisting account on the finalisation of which the corporation was prepared to pay the balance found due at the foot thereof.
The only dispute was what would such as balance, Rs. 1,07,447, according to the corporation, a larger sum according to the appellant. company.
The con firmation sought for in the letter (exhibit 1) was not a condition to the admission as to the existence of a subsisting account an the liability to pay when accounts were finalised, but to the specific amount which, according to the corporation, would the amount payable by it.
according to its calculation.
The decision in, Raja Kavali Arunachella Row Bahadur vs Sri R Rangiah App Row Bahadur(2) does not apply as the condition subject to which the settlement there was made was not performed, and therefore, the document was held to be one which could not be spelt out as an acknowledgement.
In Rallapragada Ramamurthy vs Thammana Gopayva(3) also, the letter relied on as an acknowledgement stated that if certain arbitrators should decide that the defendant should pay any amount he would immediately pay, but if the arbitrators failed to decide the plaintiff might sue and the defendant in that case would not plead limitation.
The arbitrators failed to decide.
It was held that the letter being conditional and the condition not having been (1) L. R. 33 1A. 165.
(2) [1906] 1.
L. R. 29 mad.
519: (3) Mad.
637 performed did not operate as an acknowledgement.
This deci sion too has no bearing on the facts of the present case.
Unlike the cases relied on by Mr. Sen, the present case is one of an admission of a subsisting, account and the jural relationship and the liability to pay whatever amount would be found due on finalisation of accounts.
There is no condition subject to which the admission was made which remained unperformed.
Ordinarily, the functions of Subramanym as the secretary of the corporation would be ministerial and administrative.
As a secretary only, he would have no authority to bind the corporation by entering into contracts or other commitments on its behalf.
As the chief accountant and holder of a power of attorney, his functions in regard to the former would be to supervise over maintenance of proper accounts, and in regard to the latter to look after and represent the corporation in litigation.
None of these three positions held by him would by itself or cumulatively make him a person duly authorised to make an acknowledgement binding on the corporation.
Also, the fact that he carried on correspondence for the corporation would not make him a, person authorised to make an acknowledgement binding on the corporation.
[see Uma Shankar vs Gobind Narain(1)].
But such a description of the functions and duties perfomed by him would not be complete.
If the correspondence together with the statements of accounts encolsed therewith is closely examined it becomes clear that he was authorised to scrutinise the claim made by the appellant company, the various items for which the appellant company claimed credit and to reject some, and what is important, to allow the others.
That he had such an authority is clear from the fact that in respect of such of the items which he allowed credit was given to the appellant company and necessary entries to the credit of the appellant company were posted in the account maintained by the corporation in its books of account.
Thus, in the reconciliation statement (exhibit 43) sent along with the corporation 's letter of September 17, 1945.
Rs. 98,101 were shown to be the balance due to the appellant company.
The words used in that statement were "balance as per A.C.I. Ltd. Books".
These words clearly indicate that there was a subsisting account in the name of the appellant company in the books of the corporation and that at the foot of that account the sum of Rs. 98,101 was due to it.
exhibit 44, another statement of account sent to the appellant company, stated Rs. 1,00,304 7 7 as being the "Balance as per ledger" as on December 1, 1945.
As explained earlier, the increase in the balance from Rs. 98,101 to Rs. 100,304 was due to certain items aggregating Rs. 2,203 4 6 having been passed by Subramanayam, and entries (1) 1.
L. R. 46 All.
6 38 having thereupon been posted in the ledger.
Thereafter, further items were passed by him totalling Rs. 465 10 0 which when added raised the balance to Rs. 1,60,760 1 7, as at the end of December 1945.
This was the balance "as per our ledger" stated in the statement sent along with the letter (exhibit 1).
It is impossible to think that in the course of finalising the accounts Subramanayam accorded his assent to various items claimed by the appellant company without having been authorised so to do.
Nor is it possible to say that on his passing those items necessary entries were made in the books of accounts of the corporation without his having so authorised.
Further, he could not have sent to the appellant company statements of accounts showing the balance due to it "as per the ledger" unless he was authorised to finalise the accounts and arrive at the amount due and payable to the appellant company.
In his evidence Subramanayam testified that Lakshmipat Singhania, the director in charge of, the corporation, knew that he was dealing with Arora, the representative of the appellant company, in the matter of accounts between the parties.
He also said that he was to find out the difference between the two and that as a result many points were resolved an he confirmed by letters to the appellant company those points which were so resolved.
He then stated that the directors of the corporation were aware of the settlement of the said points by him but they neither ratified nor repudiated them.
This was because, as conceded by him, be never placed those settled points before the directors for their ratification.
He did not say that he had no authority to settle the differences or that he settled them subject to the approval of the directors.
It is clear that he could not have settled the various points of difference between the parties and suitable entries in the books consequent upon such settlement could not have been posted unless he was authorised by the directors to finalise the accounts and make final adjustment with the appellant company.
He tried, of course, to make out that he had no authority except as a secretary to carry on cor respondence for clarifying the position of the corporation.
He even denied that entries were made in the books of the corporation after he had settled the said items.
The denial is futile because the statements of account sent by him to the appellancompany from time to time clearly show that such entries were made.
The effect of all this evidence is that besides his functions as the secretary cum chief accountant, he was authorised to finalise the accounts between the parties, to settle differences between them and to arrive at the final figure payable by the corporation.
It was in pursuance of such authority that he dealt with Arora, passed some of the items for which the 639 appellant company claimed credit, had those entries posted in the books of the corporation, sent statements of accounts from time to time and finally addressed the letter, (exhibit 1), stating therein that according to the books of the corporation the sum of Rs. 1,07,447 was the balance payable to the appellant company.
He could not possibly have asked the appellant ,company to confirm that balance unless he had the authority on behalf of the corporation to acknowledge on its behalf that that was the balance payable by it.
Therefore, the conclusion is inescapable that he had the implied authority to make the acknowledgement and wrote the letter (exhibit 1) with the intention of doing so.
Accordingly, the suits were not liable to be dismissed on the ground of their being barred by limitation, and the High Court was in error in allowing the appeals by the corporation and dismissing the suits.
The result is that the appeals are allowed, and the judgment and order passed by the High Court are set aside.
The case will have to be remanded to the High Court for deciding the rest of the questions arising in the suits and ascertaining the amounts due to the appellants (the original plaintiffs) as the High Court has not gone into those questions as it dismissed the suits on the point of limitation.
In view of the very long period having elapsed due to prolonged adjournments of the appeals while they were pending before the High Court, we earnestly hope that the High Court will dispose of the cases as expeditiously as possible.
The corporation will pay to the appellants costs of these appeals, such costs to be in one set of costs.
G.C. Appeals allowed.

summary:
Prior to January 18, 1944 six companies including M/s. Lakshmiratan.
Cotton Mills Co. Ltd. (the appellant company) and the Aluminium Corporation of India Ltd. (respondent corporation) were jointly managed by two groups known as the Singhania and Gupta groups.
As a result of disputes between the two groups there was a reference to arbitration.
After January 18, 1944, the date of the award, the aforesaid six concerns were brought under the management and control of one or the other of the two groups The Corporation came under the control and management of the Singhania group.
In cl. 9 of the award it was said that the award did not cover the advances which either party or their separate firms may have made to all or any of them or their moneys which may be in deposit with them and that they would be payable and paid in their usual course.
After the award the appellant Company sent a statement of account in respect of advances made to the respondent corporation, and expenditure incurred on its behalf.
The statement was objected to.
on the ground that the appellant company had not properly maintained its accounts during the period of joint management.
Efforts at reconciliation of accounts having faded the appellants filed two suits claiming Rs. 3,56,207.9.6 and Rs. 72,595.4.6 from the Corporation, being suits Nos. 63 and 65 of 1949.
In suit No. 63 of 1949 it was claimed that the suit was within time as after adjustment of several items in 1946 and 1947 a sum of Rs. 2,96,110. 11.6 was found due to the appellant company and that in any event the suit was saved from being barred by limitation by a letter (exhibit 1) dated April 16, 1946 addressed by s the Secretarycum Chief Accountant of the Corporation, thereby acknowledging the liability of the Corporation to pay the amount which would be found due and payable under the said accounts.
Similar averments were made in, Suit No. 65 of 1949.
The written statements filed on behalf of the Corporation inter alia pleaded that the said claim was barred by limitation, that the said letter didnot amount to an acknowledgement within the meaning of section 19 of theLimitation Act, 1908 which was then applicable to the suits, and lastly,that even if the said letter did amount to an acknowledgement, it wasnot binding on the Corporation.
The trial court decreed the suits but theHigh Court dismissed them as being time barred.
In appeals to this Courtthe questions that fell for consideration were (i) whether the letter in question amounted to an acknowledgment;(ii) whether it was an acknowledgement by the corporation, and if not (iii) whethe 'r the Secretary cum Chief Accountant had authority express or implied.
to acknowledge liability on behalf of the Corporation so as, to bind that corporation.
Allowing the appeals, HELD: (1) (a) From the provisions of section 19(1) of the Limitation Act, 1908 it is clear that the statement on which the plea of acknowledgement is founded must relate to a subsisting liability as the section requires 624 that it must be made before the expiration of the period prescribed by the Act.
It need not, however, amount to a promise to pay, for an acknowledgement does not create a new right of action but merely extends the period of limitation.
The statement need not indicate the exact nature or the specific character of the liability.
The words used in the statement in question, however, must relate to a present subsisting liability and indicate the existence of jural relationship between the partes such as, for instance, that of a debtor and a creditor and the intention to admit such a jural relationship Such an intention need not be in express terms and can be inferred by implication or the nature of the admission and the surrounding circumstances.
Generally speaking a liberal construction of the statement in question should be given.
That of course does not mean that where a statement is made without intending to admit the existence of a particular jural relationship, such an intention should be fastened on the person making the statement by an involved or a far fetched reasoning.
[629 C E] Khan Bchadur Shapoor Freedoom Mazda vs Durga Prosad Chamaria, , Tilak Ram vs Nathu, A.I.R. , 938, 939, Green vs Humphreva, [1884] 26 Ch. D. 474, 481, Tajpal Saraogi vs Lallanjee Jain, C.A. No. 766/62 dt.
8 2 1965 and Abdul Rahim Oosman & Co. vs Ojamshee Prushottamdas & Co., Cal.
6,39, referred to.
(b) From the correspondence between the parties and the surrounding circumstances it must follow that there was a subsisting account in the name of the appellannt company in the books of the Corporation in which interest on the balance shown therein from time to time was being credited and in which amounts in respect of items passed during the course of reconciliation were also duly credited.
The statement in the letter exhibit 1 that "after all the above adjustments the position will be as per statement attached", that is to say, that there 'was a balance of Rs. 107447/13/11 due and payable to the appellant company must clearly amount to acknowledgement within the meaning of section 19(1).
If the letter be looked at in the background of the controversy between the parties which controversy was limited to the question as to the correct ness of the amount claimed by the appellant company as also the correspondence which ensued in regard to it, it would be impossible to say that the letter and the statement of account enclosed therewith were merely explanatory and did not amount to an admission of the jural reship of debtor and creditor and of the liability to pay the amount found due at the foot of the account on finalisation.
[635 D F] The mere fact that letter called for confirmation of the amount of the balance mentioned therein and the fact that the appellant company failed to confirm it, could not lead to a conclusion that the admission of liability was conditional and therefore could not operate as an acknow ledgement.
The confirmation sought in the letter was not a condition to the admission as to the existence of a subsisting account and the liability to pay when accounts were finalised but to the specific amount which according to the corporation would be the amount payable by it according to its calculation. 'There was no condition subject to which the admission was to be made which remained unperformed.
[635 G; 636 F G; 637 B] Maniram vs Rupchand, L.R. 33 I.A. 165, Raja Kayali Arunachella Row Bahadur vs Sri Rajah Rangiah Appa Row Bahadur, Mad.
519 and Ballapragada Ramamurthy vs Thammana Gopayya, Mad. 701, distinguished.
625 LAXMIRATAN COTTON MILLS V. ALUMINIUM CORP. (Shelat, J.) In re River Steamer Co. vs Mitchell, , 828, referred to.
, (ii) The plea that the letter exhibit I should be regarded as an acknowledgement by the corporation itself was not included among the issues formulated before the courts below.
It could not be allowed to be raised for the first time in this Court.
[628 B] (iii) If the correspondence between the parties together with the statements of accounts enclosed therewith was closely examined it became clear that S was authorised to scrutinise the claim made by the appellant company, the various items for which the appellant _company claimed credit and to reject the same and, what is important, to allow others.
That he had such an authority was clear from the fact that in respect of such of the items which he allowed, credit was given to the appellant and necessary entries to the credit of the appellant company were posted in the account maintained by the Corporation in its books of account.
It was impossible to say that in the course of finalising the accounts, S accorded his assent to various items claimed by the appellant company without having been authorised so to do.
Nor was it possible to say that on his passing those items necessary entries were made in the books of accounts of the corporation without his having so authorised.
Further, he could not have sent to the appellant company statements of account showing the balance due to it "as per the ledger" unless he was authorised to finalise the accounts and arrive at the amount due and payable to, the company.
[637 E F; 638 B C] Uma Shankar vs Govind Narain, I.L.R. 46 All. 982, referred to.


judgement:
of 1951.
Appeal under article 132 (1) of the Constitution of India from the Judgment and Order dated November 15, 1950, of the High Court of Judicature at Madras (Menon and Sayeed JJ.) in Criminal Miscellaneous Petition No. 1278 of 1950.
V. K. T. Chari (Advocate General of Madras) (Ganapathy Iyer, with him) for the appellant.
K. section Krishnaswamy Iyengar (K. Venkataramani, with him) for respondent No. 1. 1952.
December 5.
The Judgment of Patanjali Sastri C.J., Mukherjea, Chandrasekhara Aiyar and Ghulam Hagan JJ. was delivered by Patanjali Sastri C.J. Vivian Bose J. delivered a separate judgment.
PATANJALI SASTRI C. J.
This is an appeal from an order of the High Court of Judicature at Madras quashing certain criminal proceedings instituted in 337 the Court of the Third Presidency Magistrate, Madras, against the first respondent who is the managing director of a cinema company carrying on business in Madras under the name of "Prabhat Talkies.
" The proceeding arose out of a charge sheet filed by the police against the first respondent for an offence under section 29 of the (hereinafter referred to as the Act).
The charge was that the first respondent failed to implement certain terms of an award dated 15th December, 1947, made by the Industrial Tribunal, Madras, appointed under the Act and thereby committed a breach of those terms which were binding on him.
The first respondent raised a preliminary objection before the Magistrate that the latter had no jurisdiction to proceed with the enquiry because the award on which the prosecution was based was ultra vires and void on the ground that the reference to the Industral Tribunal which resulted in the award was not made by the Government in accordance with the requirements of section 10 'of the Act.
As the Magistrate refused to deal with the abjection as a preliminary point, the first respondent applied to the High Court under article 226 of the Constitution for a writ of certiorari to quash the proceeding pending before the Magistrate.
The application was heard in the first instance by a single Judge who referred the matter to a Division Bench in view of the important questions involved, and it was accordingly heard and decided by Govinda Menon and Basheer Ahmed Sayeed JJ.
who upheld the objection and quashed the proceeding by their order dated 15th November, 1950.
From that order the State of Madras has preferred this appeal.
The second respondent, the South Indian Cinema Employees ' Association (hereinafter referred to as the Association) is a registered trade union whose members are employees of various cinema companies carrying on business in the State of Madras.
Among these are the 24 cinema houses operating in the City of Madras, including the " Prabhat Talkies".
On 8th 338 November, 1946, the Association submitted to the Labour Commissioner of Madras, who had also been appointed as the Conciliation 'Officer under the Act a memorandum setting forth certain demands against the employers for increased wages and dearness allowance, annual bonus of three months ' wages, increased leave facilities, provident fund, and adoption of proper procedure in imposing punishment and requesting the Officer to settle the disputes as the employers were unwilling to concede the demands.
After meeting the representatives of the employees and the employers, the Labour Commissioner suggested on 28th April, 1947, certain " minimum terms " which he invited the employers and the union officials to accept.
The managers of six cinema companies in the City including " Prabhat Talkies " agreed to accept the terms but the managements of other companies did not intimate acceptance or non acceptance.
It would appear that, in the meantime, a meeting was convened on 22nd February, 1947, of the employees of four cinema companies including "Prabhat Talkies." Ninety four out of 139 workers attended the meeting and resolutions were passed to the effect that no action need be taken about the demands of the Association as the managements of those companies agreed to some improvement in the matter of wages and leave facilities and promised to look into the workers ' grievances if they were real.
But as the terms suggested by the Labour Commissioner were not accepted by all the employers, the representatives of the Association met that Officer on 13th May, 1947, and reported that the Association had decided to go on strike on any day after 20th May, 1947, if their demands were not conceded.
As the conciliation proceedings of the Labour Commissioner thus failed to bring about a settlement of the dispute, he made a report on 13th May, 1947, to the State Government as requited by section 12 (4) of the Act stating the steps taken by him to effect a settlement and why they proved unsuccessful.
In that report, after mentioning the minimum terms suggested by him and 339 enumerating the ten demands put forward by the employee,;, the Labour Commissioner stated as follows: "As the employers have not accepted even the minimum terms suggested by me and as the employees are restive, I apprehend that they may strike work at ' anytime.
I therefore suggest that the above demands made by the workers may be referred to an Industrial Tribunal for adjudication.
I have advised the workers to defer further action on their notice pending the orders of Government," and he concluded by suggesting the appointment of a retired District and Sessions Judge as the sole member of the Special Industrial Tribunal " to adjudicate on this dispute.
" Thereupon the Government issued the G. O. M. section No. 2227 dated 20th May, 1947, in the following terms: " Whereas an industrial dispute has arisen between the workers and managements of the cinema talkies in, the Madras City in respect of certain matters ; And whereas in the opinion of His Excellency the Governor of Madras, it is necessary to refer the said industrial dispute for adjudication; Now, therefore, in exercise of the powers conferred by section 7 (1) and (2) read with section 10 (1) (c) of the " His Excellency the Governor of Madras hereby constitutes an Industrial Tribunal consisting of one person, namely, Sri Diwan Bahadur K. section Ramaswami Sastri, Retired District and, Sessions Judge, and directs that the said industrial dispute be referred to that tribunal for adjudication.
The Industrial Tribunal may, in its discretion, settle the issues in the light of a preliminary enquiry which it may hold for the purpose and thereafter adjudicate on the said industrial dispute.
The Commissioner of Labour is requested to send copies of the order to the managements of cinema talkies concerned," 44 340 The Tribunal sent notices to all the cinema companies in the City and to the Association calling upon them to file statements of their respective cases and to appear before it on 7th July, 1947.
Pleadings were accordingly filed on both sides and the Tribunal framed as many as 22 issues of which issue (3) is ,material here and runs thus: " Is there a dispute between the managements of the City theatres and their respective employees justifying the reference by the Government to the Industrial Tribunal for adjudication ? Whether such an objection is tenable in law ?" It appears to have been claimed on behalf of some of these companies including " Prabhat Talkies " that so far as they ware concerned there was no dispute between the, management and their employees and therefore they should not be included in the reference or the award.
The Tribunal repelled this argument observing: "That even if some of the theatres have got a staff contented with their lot there is a substantial dispute in the industry taken as a whole.
After I arrive at my decision about the basic wages, increments, dearness allowance, etc.
the same will bind the industry as a whole in the City of Madras if the Government accepts and implements my award.
" The Tribunal accordingly held that none of the cinema companies should be "removed from the ambit of this industrial dispute and adjudication ".
It also found as a matter of fact that " the idyllic picture of industrial peace and contentment " put forward by the first respondent company was not justified by the evidence. 'Issue No. 3 was thus found for the Association.
The Tribunal finally passed its award on 15th December, 1947, which was confirmed by the Government on 13th February, 1948, and was declared binding on the workers and the managements with effect from 25th February, 1948, the date of its publication in the Fort St. George Gazette, for a period of one year from that date.
It is alleged that 341 the first respondent failed to implement certain provisions of the award when their implementation was due and thereby committed an offence punishable under section 29 of the Act.
No prosecution, however, was instituted till 24th April, 1950, as, in the meanwhile, certain decisions of the Madras High Court tended to throw doubt on the validity of references made in general terms without specifying the particular disputes or the groups of workers and managements between whom such disputes existed, and legislation was considered necessary to validate awards passed on such references.
Accordingly the Industrial Disputes (Madras Amendment) Act, 1949, was passed on 10th April, 1949, purporting to provide, inter alia, that all awards made by any Industrial Tribunal constituted before the commencement of that Act shall be deemed to be valid and shall not be called in question in, any court of law on the ground that the dispute to which the award relates was not referred to the Tribunal in accordance with the provisions of the (section 5).
It also purported to validate certain specified awards including " the award in the disputes between the managements of cinema theatres and workers " (section 6), which obviously refers to the award under consideration in these proceedings.
In support of his application to the High Court the first respondent herein raised three contentions.
First, the Government had no jurisdiction to make the reference in question as there was no dispute between the management and workers of " Prabhat Talkies " and, therefore, the reference and the award in so far as they related to the first respondent were ultra vires and void; secondly, in any case the notification by the Government purporting to refer an industrial dispute to the Tribunal was not competent under the Act, inasmuch as it did not refer to any specific disputes as &rising for adjudication and did not mention the companies or firms in which the disputes are said to have existed or were apprehended; and thirdly, the Madras Amendment Act was 342 unconstitutional and void under section, 107 of the Government of India Act, 1935, being repugnant 10the provisions of, the Central , and also void under article 13 (1) read with article 14 of the Constitution as being discriminatory in character.
The learned Judges, by separate but concurring judgments, upheld these contentions and issued a certificate under article 132 (1) of the Constitution as the case raised substantial questions of law regarding the interpretation of the Constitution.
As we considered that the contentions of, the appellant on the first two points must prevail, we did not hear arguments on the constitutional issue.
Before dealing with the main contentions of the parties, we may dispose of a minor point raised by Mr. Krishnaswami Aiyangar, for the first time before us, namely, that the prosecution of the first respondent for the alleged breach of some of the terms of the Tribunal 's award is unsustainable inasmuch as it was instituted after the expiry of the award.
In support of this argument learned counsel invoked the analogy of the cases where it has been held that a prosecution for an offence under a temporary statute could not be commenced, or having been commenced when the statute was in force, could not be continued after its expiry.
Those decisions have no application here.
The first respondent is prosecuted for an offence made punishable under section 29 of the Act which is a permanent statute and when he committed the alleged breach of some, of the terms of the award, which was in force at the time, he incurred the liability to be prosecuted under the Act.
The fact that the award subsequently expired cannot affect that liability.
On behalf of the appellant, the Advocate General of Madras urged that the question whether there existed an industrial dispute when the Government made the reference now under consideration was an issue of fact which the High Court ought not to have found in the negative at this preliminary stage 343 before evidence was recorded by the trial court.
He submitted, however, that, on the facts already appearing on the record, there could be no reasonable doubt that an industrial dispute did exist at the relevant time.
We are.
inclined to agree.
The ten demands set forth in the Labour Commissioner 's letter of the 13th May, 1947, which were not agreed to by the managements of the 24 cinema theatres in Madras clearly constituted industrial disputes within the meaning of the Act.
Basheer Ahmed Sayeed J., with whom the, other ' learned Judge concurred, says: "There is nothing in the letter of the Commissioner which would indicate that these demands made by the South Indian Cinema Employees ' Association were referred to the respective owners of the cinema houses in the City of Madras as a body or to any of them individually.
" This, we think is based on a misapprehension of the true facts.
Thedemandswereidenticalwiththose mentioned in the Association 's memorandum originally submitted on the 8th November, 1946, and they formed the subject of discussion with the representatives of the cinema companies in the City in the course of the conciliation proceedings.
That memorandum, which was not made part of the I record in the court below, was produced here, and Mr. Krishnaswami Aiyangar was satisfied that the demands referred to in that memorandum were the same as those mentioned in the Labour Commissioner 's letter of 13th May, 1947, of which all the employers were thus fully aware.
Nor is it correct to say " that the disputes, if any, ' which might have existed between the workmen of the petitioner 's cinema and the petitioner him self had been settled by the petitioner 's ready and willing acceptance of the terms suggested.
by the Commissioner ".
The terms accepted by the first respondent were what the Commissioner called "the minimum terms " and were by no means the same as the demands put for ward by the Association, which were never accepted 344 by the Association.
The Commissioner 's letter of the 13th May, 1947, made this clear.
But, in truth, it was not material to consider whether there was any dispute outstanding between the first respondent and his employees when the Government made the reference on 20th May, 1947.
The learned Judges appear to have assumed that the disputes reference to a Tribunal under section 10 (1) (c) of the Act must, in order that the resulting award may be binding on any particular industrial establishment and its.
employees, have actually arisen between them.
" Analysing the order of reference of the Madras Government now under consideration," the learned Judges observe, " it is obvious that there is no mention of the existence of any dispute between the petitioner (the first respondent herein) and his workmen . . .
In fact there was no dispute to be referred to a Tribunal so far as this petitioner is concerned.
If, therefore, there was no jurisdiction to make any reference, it follows that the whole reference and the award are both invalid and not binding on the petitioner.
" This view gives no effect to the words "or is apprehended " in section 10 (1).
In the present case, the Government referred " and industrial dispute between the workers and managements of cinema talkies in Madras City in respect of certain matters." As pointed out in the Labour Commissioner 's letter to the Government, there were 24 cinema companies in Madras, and the Association, which, as a duly registered trade union, represented their employees, put forward the demands on behalf of the employees of all the cinema houses in the City.
Fifteen out of 43 workers of the " Prabhat Talkies " were admittedly members of the Association which thus figured as one of the parties to the dispute.
In that situation, the Government may have thought, without a close examination of the conditions in each individual establishment, that disputes which affected the workmen collectively existed in the cinema industry in the City and that, even if such disputes had not actually arisen in any particular establishment, they could, 345 having regard to their collective nature, well be appre hended as imminent in respect of that establishment also.
It is not denied that notices were sent by the Tribunal to all the 24 companies and they all filed written statements of their case in answer to the demands made by the Association on behalf of the employees.
In these circumstances, it is idle to claim that the Government had no jurisdiction to make the reference and that the award was not binding on the respondent 's Organisation.
The latter was clearly bound by the award under section 18 of the Act.
It was next contended that the reference was not competent as it was too vague and general in its terms containing no specification of the disputes or of the parties between whom the disputes arose.
Stress was laid on the definite article in clause (c) and it was said that the Government should crystallise the disputes ,before referring them to a Tribunal under section 1 0 (1) of the Act.
Failure to do so vitiated the proceedings and the resulting award.
In upholding this objection, Govinda Menon J., who dealt with it in greater detail in his judgment, said, " Secondly, it is contended that the reference does not specify the dispute at all.
What is stated in the reference is that an industrial dispute has arisen between the workers and the management of the cinema talkies in the City of Madras in respect of certain matters.
Awards based on similar references have been the subject of consideration in this Court recently.
In Bamayya Pantulu vs Kutty and Rao (Engineers) Ltd.(1) Horwill and Rajagopalan JJ.
had to consider an award based on similar references without specifying what the dispute was.
" After referring to the decision of the Federal Court in India Paper Pulp Co. Ltd. vs India 'Paper Pulp Workers ' Union(2), and pointing out that though the judgment of the Federal Court was delivered on 30th March, 1949, it was not referred to by the High Court in Kandan Textile Ltd. vs Industrial Tribunal, Mad ras(3), which was decided on 26th August, 1949, the learned Judge expressed the view that the trend of (1) (3) (2) 346 decisions of this Court exemplified in the cases referred to by me above has not been overruled by their Lordships of the Federal Court.
" Basheer Ahmed Sayeed J. I however, sought to distinguish the decision of the Federal Court on the facts of that case, remarking "that a reading of the order of reference that was the subject matter of the Federal Court decision conveys a clear idea as to a definite dispute, its nature and existence and the parties between whom the dispute existed.
" It is, however,, clear from the order of reference which is fully extracted in the judgment that it did not mention what the particular dispute was, and it was in repelling the objection based on that omission that Kania C.J. said: "The section does not require that the particular dispute should be mentioned in the order; it is sufficient if the existence of a dispute and the fact that the dispute is referred to the Tribunal are clear from the order.
To that extent the order does not appear to be defective.
Section 10 of the Act, however, requires a reference of the dispute to the Tribunal.
The Court has to read the order as a whole and determine whether in effect the order makes such a reference.
" This is, however, not to say that the Government 'will be justified in making a reference under section 10 (1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry, and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference.
But, it must be remembered that in making a reference under section 10(1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character. ' The Court cannot, therefore, canvass the order of reference closely to see if there was any 347 material before the Government to support its conclusion, as if it was a judicial or quasi judicial determination.
No doubt, it will be open to a party seeking to impugn the resulting award to show that what was referred by the Government was not an industrial dispute within the meaning of the Act,, and that, therefore, the Tribunal had no jurisdiction to make the award.
But if the dispute was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters.
The observations in some of the decisions in Madras do not appear to have kept this distinction in view.
Moreover, it may not always be possible for the Government, on the material placed before it, to particularise the dispute in its order of reference, for situations might conceivably arise where public interest requires that a strike or a look out either existing or imminent should be ended or averted without delay, which, under the scheme of the Act, could be done only after the dispute giving rise to it has been referred to a Board or a Tribunal (vide sections 10(3) and 23).
In such cases the Government must have the power, in order to maintain industrial peace and production, to set in motion the machinery of settlement with its sanctions and prohibitions without stopping to enquire what specific points the contending parties are quarrelling about, and it would seriously, detract from the usefulness of the statutory machinery to construe section 10 (1) as denying such power to the Government.
We find nothing in the language of that provision to compel such construction.
The Government must, of course, have sufficient knowledge of the nature of the dispute to be 45 348 satisfied that it is an industrial dispute within the meaning of the Act, as, for instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 10 (1) or to specify them in the order.
This conclusion derives further support from clause (a) of section 10 (1) which provides in the same language for a reference of the dispute to a Board for promoting a settlement.
A Board is part of the conciliation machinery provided by the Act, and it cannot be said that it is necessary to specify the dispute in referring it to such a body which only mediates between the parties who must, of course, know what they are disputing about.
If a reference without particularising the disputes is beyond cavil under clause (a), why should it be incompetent under clause (c) ? No doubt, the Tribunal adjudicates; whereas the Board only mediates.
But the adjudication by the Tribunal is only an alternative form of settlement of the disputes on a fair and just basis having regard to the prevailing conditions in the industry and is by no means analogous to what an arbitrator has; to do in determining ordinary civil disputes according to the legal rights of the parties.
Indeed, this notion that a reference to a Tribunal under the Act must specify the particular disputes appears appears to have been derived from the analogy of an ordinary arbitration.
For instance in Ramayya Pantulu vs Kutty & Rao (Engineers) Ltd.(1) it is observed "that if a dispute is to be referred to: a Tribunal the nature of the dispute must be set out just as it Would if a reference were made to an arbitrator in a civil dispute.
The Tribunal like any other arbitrator can give an award on a reference only if the points of reference are clearly placed before it.
" The analogy is somewhat misleading.
The scope of adjudication by a Tribunal under the Act is much wider as pointed out in the Western India (1) 349 Automobile Association 's case (1), and it would involve no hardship if the reference also is made in wider terms provided, of course the dispute is one of the kind described in section 2(k) and the parties between whom such dispute has actually arisen or is apprehended in the view of the Government are indicated either individually or collectively with reasonable clearness.
The rules framed under the Act provide for the Tribunal calling for statements of their respective cases from the parties and, the disputes would thus get crystallised before the Tribunal proceeds to make its award.
On the other hand, it is significant that there is no procedure provided in the Act or in the rules for the Government ascertaining the particulars of the disputes from the parties before referring them to a Tribunal under section 10(1).
In view of the increasing complexity of modern life and the interdependence of the various sectors of a planned national economy, it is obviously in the interest of the public that labour disputes should be peacefully and quickly settled within the frame work of the Act rather than by resort to methods of direct action which are only too well calculated to disturb the public peace and order and diminish production in the country, and courts should not be astute to discover formal defects and technical flaws to overthrow such settlements.
In the result we set aside the order of the High Court and dismiss the first respondent 's petition.
BOSE J. I agree but would have preferred to rest my decision on the ground that in this case there was sufficient compliance with the terms of section 10(1) (C) of the Act even on the first respondent 's interpretation of it, namely that the words, " the dispute " require Government to indicate the nature of the dispute which the Tribunal is required to settle.
I say this because, in my judgment, we must read the order of the 20th May, 1947, along with the documentS which accompanied it.
I also agree that one (1) 350 must not be over technical, but had it not been for the /of act that the point is now settled by the decision in the India Paper ' Pulp Company 's case(1) I would have been inclined to consider that an indication of the nature of the dispute, either in the order itself or in the papers accompanying it, was necessary.
However, that is now settled and I have no desire to go behind the decision but I would like to say that even if it is not legally necessary to indicate the nature of the dispute, it is, in my opinion, desirable that that should be done.
Appeal allowed.
Agent for respondent No. 1: section Subramanian.

dataset_name: IN-Abs

summary:
The South Indian Cinema Employees ' Association, a regis tered trade union whose members were the employees of the 24 cinema houses operating in the Madras City including some of the employees of the Prabhat Talkies, submitted to the Labour Commissioner a memorandum setting forth certain demands against their employers for increased wages etc.
and requesting him to settle the disputes.
The Labour Commissioner suggested certain, " minimum terms " which were accepted by some of the companies including the Prabhat Talkies and at a meeting of the employees of the Prabhat Talkies a resolution was passed to the effect that no action be taken about the demands of the Association.
The Association decided to go on strike.
The Labour Com missioner reported to the Government, and the Government made a reference to an Industrial Tribunal, the material portion of which " 'Whereas an industrial dispute has arisen between the workers was: and management of the Cinema Talkies in the Madras City in respect of certain matters and whereas in the opinion of His Excellency the Governor of Madras it is necessary, to refer the said industrial dispute for adjudication: now therefore etc.
" The Prabhat 335 Talkies contended before the tribunal that as there was no dispute between them and their employees they should not be included in the reference or award, but the Tribunal did not exclude them and an award was passed, and the managing director of the Prabhat Talkies was prosecuted for non compliance with the award: Held by the Full Court, (i) that the Labour Commissioner 's report clearly showed that an industrial dispute existed between the management and the employees of the cinema houses; (ii) that as some of the workers of the Prabhat Talkies were members of the Union, and a reference could be made even when a dispute was apprehended, the Government had jurisdiction to make a reference even in respect of the Prabhat Talkies and the reference and the award were binding on the Prabhat Talkies.
Held Per PATANJALI SASTRI C.J., MUKHERJEA, CHANDRA SEKHARA AIYAR and GHULAM HASAN JJ.
(BosE J. dubitante) that the reference to the Tribunal under section 10 (1) of the , cannot be held to be invalid merely because it did not specify the disputes or the parties between whom the disputes arose.
Per BOSE J.
The order of reference must be read with the documents which accompanied it and there was sufficient compliance with section 10 (1) (c) of the even if the words " the dispute " in the said clause require the Government to indicate the nature of the dispute which the Tribunal is required to settle.
Even if it is not legally necessary to indicate the nature of the dispute in a reference, it is desirable that that should be done.
Per PATANJALI SASTRI C. T., MUKHERJEA, CHANDRASEKHARA AIYAR and GHULAM HASAN JJ.
Though the Government will not be justified in making a reference under section 10 (1) without satisfying itself on the facts and circumstances brought to its notice that an industrial dispute exists or is apprehended in relation to an establishment or a definite group of establishments engaged in a particular industry and it is also desirable that the Government should, wherever possible, indicate the nature of the dispute in the order of reference, it must be remembered that in making a reference under section 10 (1) the Government is doing an administrative act and the fact that it has to form an opinion as to the factual existence of an industrial dispute as a preliminary step to the discharge of its function does not make it any the less administrative in character.
The Court cannot, therefore, canvass the order of reference closely to see if there was any material before the Government to support its conclusion, as if it was a judicial or quasi judicial determination.
No doubt, it will be open to a party seeking to impugn the resulting award to show that what, was referred by the Government, was not an industrial dispute within the meaning of the Act, and that, therefore, the Tri bunal had no jurisdiction to make the award But, if the dispute 336 was an industrial dispute as defined in the Act, its factual existence and the expediency of making a reference in the circumstances of a particular case are matters entirely for the Government to decide upon, and it will not be competent for the Court to hold the reference bad and quash the proceedings for want of jurisdiction merely because there was, in its opinion, no material before the Government on which it could have come to an affirmative conclusion on those matters.
The Government must have sufficient knowledge of the nature of the dispute to be satisfied that it is an industrial dispute within the meaning of the Act, as, for instance, that it relates to retrenchment or reinstatement.
But, beyond this no obligation can be held to lie on the Government to ascertain particulars of the disputes before making a reference under section 10 (1) or to specify them in the order.
The adjudication by the Tribunal is only an alternative form of settlement of the disputes on a fair and just basis having regard to the prevailing conditions in the industry and is by no means analogous to what an arbitrator has to do in determining ordinary civil disputes according to the legal rights of the parties.
Ramayya Pantulu vs Kuttti and Rao (Engineers) Ltd. [(1949) , India Paper Pulp Co. Ltd. vs India Paper Pulp Workers ' Union ([1949 50] F.C.R. 348), Kandan Textiles Ltd. vs Industrial Tribunal, Madras [(1949) and Western India Automobile Association 's case ([1949 50] 1 F.C.R. 321) referred to.
Judgment of the High Court of Madras reversed.


judgement:
minal Appeal No. 134 of 1968.
Appeal from the judgment and order dated April 16, 1968 of the Allahabad High Court in Criminal Misc.
Case No. 3403 of 1967.
Yogeshwar Prasad, for the appellant 0.
P. Rana, for respondent No. 2.
701 The Judgment of the Court was delivered by Dua, J.
The short point requiring determination in this appeal on certificate of fitness granted by the Allahabad High Court under article 134(1)(c) of the Constitution is whether tolltax on laden motor vehicles levied under section 128(1)(vii) of the, U.P., Municipalities Act 11 of 1916 (hereinafter described as the Act) on their entry within the limtis of Nainital Municipality can be realised from the passengers carried by them.
The relevant facts which lie within a narrow compass may now be briefly stated.
Brij Mohan Chandra, Vice President of the Notified Area Committee, Bhowali, District Nainital (respondent No. 1 in this Court) traveled in U.P. Government Roadways Bus from Bhowali to Nainital on 17th, 26th and 29th May, 1967.
At Kaila Khan Municipal toll barrier one and a half mile from Nainital on the Bhowali Nainital Road, toll tax was demanded from him but he declined to pay.
The Executive Officer, Municipal Boad, Nainital, thereupon filed a complaint against him under section 190(1)(c) of the Code of Criminal Procedure on the allegation that he had by entering the municipal limits of Nainital without paying the toll dues committed breach or r. (1) of the Rules made under section 153(a) of the Act for the 'assessment and collection of tolls within the municipality of Nainital.
Brij Mohan Chandra 's contention in reply was that the levy of toll tax by the Municipal Board on passengers was ultra vires the taxing power of the Board.
During the pendency of the proceedings in the court of Sub Divisional Magistrate, Nainital, Brij Mohan Chandra applied to the High Court of Judicature at Allahabad under section 561A, Cr.
P.C. for quashing those proceedings.
The High Court (section D. Singh J) on April 16, 1968 quashed the proceedings by the impugned order holding that cl, (vii) of section 128(1) of the Act did not authorise levy of toll tax on passengers and that the relevant notification also levied tax only on vehicles and not on passengers.
The rule imposing an obligation on the passengers to pay the toll was, therefore, struck down as ultra vires.
In this Court Shri Yogeshwar Prasad, learned counsel for the appellants (the Municipal Board, Nainital and the Executive Officer of the Board) at the outset attempted obliquely to seek support for the validity of the levy on passengers from cl.
(xiv) of section 128(1) as pleaded in the memorandum of appeal lodged in this Court under O.21, r. 12 of the Supreme Court Rules.
But this attempt was soon abandoned and Shri Yogeshwar Prasad felt constrained to concede that in view of the clear and precise position taken on behalf of the Board in the High Court that it had never been intended to impose toll tax on passengers, it was not 702 open to him in this Court to rely on cl.
(xiv).
Shri O. P. Rana, the learned counsel for the respondent State of U.P. supporting the appeal, also did not rely on cl.
(xiv).
We, therefore, do not purpose to express any opinion on the question whether or not a toll tax on passengers would be permissible under cl.
(xiv).
The only point seriously pressed on behalf of the appellants as also by Shri O. P. Rana on behalf of the State of U.P. was that the toll imposed on the vehicle entering the municipality could legally be realised from the passengers carried by it because of their nexus with the entry of the vehicle.
Before examining this contention we may in passing turn to cl.
(vii) of section 128 ( 1 of the Act which reads: "128(1) Subject to any general rules or special orders of the State Government, in this behalf, the taxes which a board may impose in the whole or part of a municipality are (vii) a toll on vehicles and other conveyances, animals, and laden coolies entering the municipality; This clause in clear and unambiguous terms speaks of a toll on vehicles and other conveyances, animals and laden coolies ,entering the municipality.
It does not take within its Cold the, passengers carried by vehicles to be taxed, with the result that imposition of tax on passengers by the Municipal Board would be incompetent under this clause.
And this in fact was not ,disputed at the Bar.
The argument of nexus was also raised in the High Court: but it was repelled by that Court which observed as follows "It was urged that when a tax on conveyance is levied, some provision has to be made for the assessment and collection of that tax and some provision made about the persons from whom that tax may be recovered and that if there is any reasonable or rational nexus between the levy of the tax and the persons from whom that tax may be recovered, the Municipal Board would be within its rights to realise the tax from the persons so named.
It is difficult, however, to apply the nexus theory in a manner so as to enable the Municipal Board to recover the toll tax from the passengers travelling in a bus otherwise there will be no distinction left between a vehicles tax and a passenger tax.
When a toll tax is 703 levied on a vehicle, it is levied at the point of its entry within the municipal limits.
It is obviously, therefore, the person, who is in charge of the vehicle or who makes an attempt to take the vehicle inside the municipal limits, who takes upon himself the responsibility for the payment of the toll tax.
There is no question of there being any nexus between the levy of the tax on the vehicle and the persons sitting inside the same.
In the case of ,vehicles plying on hire the driver or conductor of the vehicle can, of course, charge the amount of tax which has to be paid, from the passengers in addition to the fare which is normally charged from them.
" The same argument was repeated before us.
The submisssion seems to be based largely on the policy of the law to ensure the collection of taxes by preventing fraudulent evasion.
in order to, appreciate its cogency we may appropriately advert 'to the Rules made by the State Government, in 1922 under section 296 read with section 153(a) of the Act, with respect to the assessment and collection of tolls in the Nainital Municipality.
So far as relevant for the purposes of this appeal, according to r. (1), no person can bring within the limits of the Nainital Municipality any vehicle in respect of which the toll tax imposed under section 128 ( 1 ) (vii) of the Act is leviable until the toll due in respect thereof has been paid to such muharrir and at such barrier as the Board may from time to time appoint.
Under r. 2(a), in the case of laden motor vehicles the load recorded in the chalan or invoice accompanying the vehicle has to be accepted by the muharrir for purposes of assessing the toll.
If no chalan or invoice accompanies the vehicle the load is to be assumed for the purposes of assessment to exceed three mounds unless it is ascertained to be less by weighment undertaken 'at the request of the person in charge of the vehicle.
The toll on a laden motor vehicle has to be paid by the person in charge of the vehicle and toll on a passenger is to be paid by the passenger.
Rule 2 (b) provides that when any person in charge of a laden vehicle enters the municipal limits such person shall pay the toll to the muharrir at the barrier add the muharrir shall tender a face value ticket with coupon attached for the amount to the person paying the toll.
This face value ticket can be examined by the official appointed for the purpose and the person bringing the vehicle with the municipal limits is bound under r. 3 to permit such examination.
Under r. 2(c), every driver of a motor lorry or other vehicle plying for ,hire and every driver of a private motor can or vehicle carrying passengers or goods has to so his lorry or vehicle at the toll barrier for a reasonable time to enable the, toll staff to recover prover tolltax from passengers and on the goods loaded therein.
The pro 704 vision contained in r. 2(a) that the toll on a passenger shall be paid by the passenger on which reliance has principally been placed, is of no assistance to the appellants beacuse it postulates imposition of toll on_ passengers and, therefore, unless a ton has been imposed on passengers none can be demanded from them under this clause.
Similarly the notification (No. 1450/XI 476 E) dated 19th August, 1921, according to which toll tax under section 128 (1) (vii) of the Act sanctioned by the U.P. State Government under section 135(2) of the Act is levied on motor vehicles other than cars at the rate of Re. 1/ per passenger carried by them and at the rate of Rs. 2/ per vehicle is unhelpful to the appellants.
As already observed by us, no toll tax has been imposed on passengers and indeed it was conceded on behalf of the appellants, both here and in the High Court, that the Board had never intended to impose a tax on passengers.
It is also noteworthy that the toll imposed on the laden vehicles is expressly made payable by the person incharge of such vehicles and according to the scheme of the rules which provide the procedure for collecting such tolls, the person bringing the vehicle within the municipal limits (who is supposed to be the person in charge) is enjoined to permit examination of the face value ticket when demanded after the vehicle 's enquiry into, those limits.
No liability has been fixed on the passengers for payment of the tax imposed on the vehicles carrying them 'and entering the Nainital Municipality.
The liability for the payment of such tax having been fixed only on the person in charge of the vehicle and not on the passengers it is difficult to appreciate how the authorities entrusted with the duty of realising the same can demand it from the passengers.
Our attention was not invited to any provision of law under which the passengers can be held liable to pay the toll tax imposed on the vehicles.
Neither any precedent nor any principle was cited at the Bar in support of the submission that merely because the passengers were carried by the vehicles the toll tax imposed on the entry of the vehicles into the municipal limits could be demanded from them.
On the facts and circumstances of this case and on the arguments addressed we are, therefore, unable to hold that the passengers carried by the vehicles entering the municipality of Nainital can be legally called upon to pay the tax imposed on the vehicles.
As a last resort a faint attempt was made by the appellants ' counsel to rely on section 164 of the Act in bar of the jurisdiction of the High Court in entertaining the petition under section 561A, Cr.
P.C. and in holding the impugned assessment and liability of the passengers to be unauthorised and illegal.
This argument ignores the vital point that if the impugned levy is outside the Act then this section cannot operate and the jurisdiction of the High Court 705 to quash the proceedings relating to the levy which is ultra vires the taxing power of the Board under the Act cannot be taken away to the prejudice of the aggrieved, citizen.
This submission is accordingly repelled.
In the final result this appeal fails and is dismissed.
R.K.P.S. Appeal dismissed.

summary:
While the first respondent was travelling by a U.P. Government Road.
ways bus from Bhowali to Nainital in May 1967, toll tax was demanded from him at the appellant 's municipal toll barrier but he declined to pay.
The Executive Officer, Municipal Board, Nainital, thereupon filed a complaint against him under section 190(1) (c) la.
P.C., for breach of rule 1 of the Rules made under section 153(a) of the U.P. Municipalities Act, 1916.
The first respondent 's contention was that the levy of toll tax by the Municipal Board on passengers was ultra viruses the taxing pow& of the Board.
During the pendency of these proceedings, on an application made,,, by the first respondent under section 561A, Cr.
P.C., the High Court quashed those proceedings holding that clause (vii) of section 128(1) of the Municipalities Act did not authorise the levy of toll tax on passengers and that a connected notification also levied tax only on vehicles and not on passengers.
The Rule imposing an obligation on the passengers to pay the toll was therefore struck down as ultra vires.
In appeal to this Court it was contended inter alia that toll imposed on the vehicle entering the Municipality could legally be realised from the passengers carried by it because of their nexus with the entry of the vehicle.
HELD:Dismissing the appeal, The toll imposed on the laden vehicles is expressly made payable by the person in charge of such vehicles.
No liability has been fixed on the passengers for payment of the tax imposed on the vehicles carrying them and entering the Nainital Municipality.
There was no precedent or any principle in support of the submission that merely because the passengers were carried by the vehicles the toll tax imposed on the entry of the vehicles into the municipal limits could be demanded from them [704 D G] When the impugned levy was outside the Act, section 164 of the Act could not operate to bar the jurisdiction of the High Court to quash the proceedings relating to the levy which was ultra virus the taxing power of the Board.
[704 H]