judgement:
Writ Petition (Crimi nal) No. 200 of 1989.
(Under Article 32 of the Constitution) C.P. Mittal for the Petitioner.
Anil Dev Singh, Yogeshwar Prasad, Ms. Kitty Kumar Manga lam, Ms. A Subhashini, Anil Malik and D. Bhandari for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This petition under Article 32 of the Constitution challenges the detention of the peti tioner a ,detenu, under section 3(2) of the (hereinafter called 'the Act ').
The petitioner is a bachelor.
He does not own any property.
The order for detention under section 3(2) of the Act was passed on April 15, 1988 by the District Magistrate, Meerut.
In the grounds of detention it is stated that on the night of 2/3rd April, 1988 which was an occasion of "Shabberat" festival, a muslim festival, the religious celebration was going on at Gudfi Chaupala.
At about 11 p.m. in the night on that day, a cow belonging to the muslims of Ismail Nagar came from Sabun Garan towards Chaupal Gudri and was going towards Ismail Nagar and, according to the order of detention, 'some unde sirable elements ' 59 present there did not allow the cow to go on the right way and .she again came towards Chaupala Gudri, and was made to run avoiding the crowd towards Nakaar Chian but near the shop of Haj Dhola, 'some undesirable elements ' stopped the cow and poked a wood piece on her back.
Due to this the cow started pumping and himping and ran inside the celebration.
It is stated that at this the petitioner came to the stage, got excited and spread the rumor that "the police had not made any arrangements".
It was stated that the cow belonged to the Hindus and had been deliberately sent inside the festival and "other provoking" things.
Due to the aforesaid, the people started running and communal feelings got around.
It is stated in the order of detention that in this way the petitioner had committed an act which was prejudicial to the maintenance of public order.
Again on 9th April, 1988 at about 9 p.m. near Transformer at Gudri Chaupala P.S. Kotwa li, the petitioner is alleged to have "provoked some per sons" of the muslim community by saying that "the adminis tration even now has not allowed to get a loud speaker fixed here and all of you are silent, get a loud speaker on the Mosque and we will see.
I am with you.
" It is also stated that the petitioner had also said that on the occasion of Shabberat these Hindus had deliberately "sent their cow on the road" for their festive celebrations and the "people are silent".
He had also said about teaching "them" a lesson.
It was stated that due to the "aforesaid bad act", communal feelings got aroused in the Meerut City and fear and terror got spread, and in this way the petitioner had done an act which was "prejudicial to maintenance of public law and order".
In the aforesaid, it was stated that for the reasons mentioned hereinbefore, there was possibility of the petitioner doing such an act, and therefore in order to restrain the petitioner from doing so, it is necessary to detain him.
Accordingly, the order was passed with conse quential directions and information.
As mentioned hereinbefore, the alleged incidents were on 2/3/4th April, 1988 as well as 9th April, 1988.
The order of detention (hereinafter referred to 'the order ') was made on 15th April, 1988.
The petitioner was arrested pursuant to the said order on 2nd October, 1988.
There was representa tion but the same was rejected and the order of detention was confirmed.
In this petition various grounds have been taken before this Court challenging the order under Article 32 of the Constitution.
Mr. C.P. Mittal, learned counsel for the petitioner, however, urged 60 before us three grounds upon which he contended that the said order be quashed or set aside.
It was submitted by Mr. Mittal that there was inordinate delay in arresting the petitioner pursuant to the order, which indicated that the order was not based on a bona fide and genuine belief that the action or conduct of the petitioner were such that the same were prejudicial to the maintenance of public order and that preventive detention of the petitioner was necessary for preventing him from such conduct.
He .further submitted that delay in the circumstances of this case in arresting the petitioner and or in acting pursuant to the order indi cated that the "so called grounds" were merely make belief and not genuine grounds upon which the satisfaction of the authority concerned was based.
In answer to this contention, on behalf of the Distt.
Magistrate, Meerut, by an affidavit affirmed on 28th August, 1989 and filed in these proceedings, stated that raids on the petitioner 's premises for the service of the order dated 15.4.1988 were conducted.
It was further stated that the respondent authorities had made all efforts to serve the order on the petitioner and for this purpose the house of the petitioner was raided on several occasions and a refer ence was made to the general diary report, details whereof were extracted in the affidavit.
The details indicate that in respect of the order dated 15.4.1988 the first raid was made in the house of the petitioner on 12th May, 1988, followed by eight other attempts up to the end of May, 1988 to arrest the petitioner but he was not available.
There was, however, no attempt in the months of June, July, Au gust ' 88 but on 23, 25 & 29th September, 1988 three attempts were made and as such, it was stated on behalf of the re spondents, the order could not be served before 2nd October, 1988.
According to the District Magistrate, the respondent authorities did not leave any stone unturned to arrest the petitioner.
It was, however, stated that from May, 1988 to September, 1988 the entire police force of Meerut City was extremely busy in maintaining law and order, but the peti tioner was all along absconding in order to avoid the serv ice of the order.
The District Magistrate has further stated that during the period from May to September, 1988 great communal tension was prevailing in the Meerut City and a large number of people were arrested on account thereof.
The question that requires consideration is, whether there was in ordinary delay.
The detention under the Act is for the purpose of preventing persons from acting in any manner prejudicial to the maintenance of public order.
Subsection (2) of section 3 of the Act authorises the Central Govt.
or the State Govt.
, if satisfied with respect to any person that with a view to preventing him from acting in any manner prejudicial to the security of 61 the State, it is found necessary then the person can be detained.
Hence, there must be conduct relevant to the formation of the satisfaction having reasonable nexus with the action of the petitioner which are prejudicial to the maintenance of public order.
Existence of materials relevant to the formation of the satisfaction and having rational nexus to the formation of the satisfaction that because of certain conduct "it is necessary" to make an order "detain ing" such person, are subject to judicial review.
Counsel for the petitioner contends that in the aforesaid facts and the circumstances if the conduct of the petitioner was such that it required preventive detention, not any punitive action, for the purpose of "preventing" the person concerned from doing things or indulging in activities which will jeopardise, hamper or affect maintenance of public order then there must be action in pursuance of the order of detention with promptitude.
Delay, unexplained and not justified, by the circumstances and the exigencies of the situation, is indicative of the fact that the authorities concerned were not or could not have been satisfied that "preventive custody" of the person concerned was necessary to prevent him from acting in any manner prejudicial to the maintenance of public order.
Whether there has been unrea sonable delay, depends upon the facts and the circumstances of a particular situation.
Preventive detention is a serious inroad into the freedom of individuals.
Reasons, purposes and the manner of such detention must, therefore, be subject to closest scrutiny and examination by the courts.
In the interest of public order, for the greater good of the commu nity, it becomes imperative for the society to detain a person in order to prevent him and not merely to punish him from the threatened or contemplated or anticipated course of action.
Satisfaction of the authorities based on conduct must precede action for prevention.
Satisfaction entails belief.
Satisfaction and belief are subjective.
Actions based on subjective satisfaction are objective indication of the existence of the subjective satisfaction.
Action based on satisfaction should be with speed commensurate with the situation.
Counsel for the petitioner submitted that in this case there was no material adduced on behalf of the Govt.
indicating that the petitioner was "absconding".
It was urged that there are no material at all to indicate that the petitioner was evading arrest or was absconding.
It was submitted that section 7 of the Act gave power to the authorities to take action in case the persons were absconding and in case the order of detention cannot be executed.
It is stated that in this case no warrant under section 7 of the Act has been issued in respect of his property or person.
Hence, it was contended that the respondent was not justified in raising the plea that the petitioner was absconding.
We are, howev er unable to accept this contention.
If in a situation the 62 person concerned is not available or cannot be served then the mere fact that the action under section 7 of the Act has not been taken, would not be a ground to say that the detention order was bad.
Failure to take action, even if there was no scope for action under section 7 of the Act, would not be deci sive or determinative of the question whether there was undue delay in serving the order of detention.
Furthermore, in the facts of this case, as has been contended by the Government, the petitioner has no property, no property could be attached and as the Govt. 's case is that he was not available for arrest, no order under section 7 could have been possibly made.
This, however, does not salvage the situation.
The fact is that from 15th April, 1988 to 12th May, 1988 no attempt had been made to contact or arrest the petitioner.
No explanation has been given for this.
There is also no explanation why from 29th September, 1988 to 2nd October, 1988 no attempt had been made.
It is, however, stated that from May to September, 1988 the 'entire police force ' was extremely busy in controlling the situation.
Hence, if the law and order was threatened and prejudiced, it was not the conduct of the petitioner but because of 'the inadequacy ' or 'inability of the police force of Meerut City to control the situation.
Therefore, the fact is that there was delay.
The further fact is that the delay is unexplained or not warranted by the facts situation.
To shift the blame for public order situation and raise the bogey of the conduct of the petitioner would not be proof of genuine or real belief about the conduct of the petitioner but only raising a red herring.
This question was examined by this Court in Nizamuddin vs The State of West Bengal, ; The question involved therein was under section 3(2) of the Internal Security Act, 1971.
There was delay of about two and a half months in detaining the peti tioner pursuant to the order of detention and the Court considered that unless the delay was satisfactorily ex plained, it would throw considerable doubt on the genuine ness of the subjective satisfaction of the Distt.
Magistrate recited in the order of detention.
Mr. Justice Bhagwati, as the learned Chief Justice then was, speaking for the Court observed at page 595 of the report that it will be reasona ble to assume that if the Distt.
Magistrate was really and genuinely satisfied after proper application of mind to the materials before him that it was necessary to detain the petitioner with a view to preventing him from acting in a prejudicial manner, he would have acted with greater promp titude in securing the arrest of the petitioner immediately after invoking of the order of detention, and the petitioner would not have been allowed to remain at large for such a long period of time to carry on his nefarious activities.
It is, however, not the law that whenever there is some delay 63 in arresting the subjective satisfaction of the detaining authority must be held to be not genuine or colourable.
Each case must depend on its own peculiar facts and circum stances.
In this case, from the facts and the circumstances set out hereinbefore we find no reasonable or acceptable explanation for the delay.
In a situation of communal ten sion prompt action is imperative.
It is, therefore, not possible for this Court to be satisfied that the District Magistrate had applied his mind and arrived at "real" and "genuine" subjective satisfaction that it was necessary to detain the petitioner to "prevent" him from wrong doing.
The condition precedent, therefore, was not present.
But as Justice Chinnappa Reddy explained in Bhawarlal Ganeshmalji vs State of Tamil Nadu & Anr., [1979] 2 SCR 633 at page 638 that there must be 'live and proximate link ' between the grounds of detention alleged by the detaining authority and the avowed purpose of detention, and in appropriate cases it is possible to assume that the link is 'snapped ' if there is a long and unexplained delay between the date of the order of detention and the arrest of the detenu.
Mr Yogeshwar Prasad, learned counsel for the State of U.P. drew our attention to the decision of this Court in Indradeo Mahato vs State of West Bengal, [1973] 4 SCC 4.
That was also a case of arrest under the .
It was urged in that case that there was no real or genuine apprehension that the petitioner there was likely to act in a manner prejudicial to the maintenance of public order.
This Court in the facts of that case, was unable to accept the said contention.
The Court held that mere failure to take recourse to sections 87 & 88 of the Criminal Procedure Code would be a warrant to believe that the delay was unrea sonable.
Whether the delay was unreasonable depends on the facts and the circumstances of each case.
We are satisfied, in view of the facts and circumstances of the case mentioned before, that by the conduct of the respondent authorities, there was undue delay, delay not commensurate with the facts situation in this case.
the conduct as aforesaid betrayed that there was no real and genuine apprehension that the petitioner was likely to act in any manner prejudicial to public order.
The order, therefore, is bad and must go.
The next ground urged in support of this application was that the grounds mentioned were not germane to maintenance of 'public order '.
It was submitted that the petitioner has only alleged inefficiency or incompetency of the police either in providing a loud speaker or in ensuring that the cows do not enter into or within the arena of muslim festi vals.
It was submitted that the criticism of the administra tion is not endangering public order.
Mr. Mittal submitted that it was not a question of law and order but public order that is important in 64 this case.
What the petitioner has alleged to have done may have some relevancy to the purpose of securing law and order but there cannot be any rational nexus with the satisfaction regarding the maintenancy of public order.
By the conduct alleged or the saying attributed as mentioned above, public order was not prejudiced.
Criticism of Police does not prejudice public order, it is said.
The Court has to ensure that the order of detention is based on materials before it.
If it is found that the order passed by the detaining au thority was on materials on record, the Court can examine the record only for the purpose of seeing whether the order of detention was based on no material or whether the materi als have rational nexus with satisfaction that public order was prejudiced.
Beyond this, the Court is not concerned.
See the observations of The State of Gujarat vs Adam Kasam Bhaya, ; The difference between public order and law and order is a matter of degree.
If the morale of the police force or of the people is shaken by making them lose their faith in the law enforcing machinery of the State then prejudice is occasioned to maintenance of public order.
Such attempts or actions which undermine the public faith in the police administration at a time when tensions are high, affects maintenance of public order and as such conduct is prejudicial.
See in this connection Indradeo Mahato 's case (supra), Subhash Bhandari vs Distt.
Magistrate, Lucknow & Ors., ; and Kanu Biswas vs State of West Bengal, ; Therefore, we are unable to accept the contention that the grounds were not relevant for the order of detention under the Act.
This contention of Mr. Mittal must, therefore, fail.
The last contention was that the grounds mentioned were vague and unintelligible.
It was not stated, it was urged, that as to what the petitioner said, to whom the rumour was spread as mentioned in ground No. 1 and what "other provok ing things" the petitioner is alleged to have said as al leged in the grounds mentioned before.
It was urged, it is further not clear as to whom the petitioner wanted to teach a lesson.
It has to be borne in mind that if more than one grounds are stated in the grounds then the fact that one of the grounds is bad, would not alter order of detention after the amendment of the Act in 1984 provided the other grounds were valid.
But quite apart from the same, it appears to us that none of the grounds were vague.
The grounds must be understood in the light of the background and the context of the facts.
It was quite clear what the detaining authorities were trying to convey was that the petitioner stated things of the nature and it was to teach Hindus a lesson.
Hence, it was meant to create communal tension.
We find no irrelevancy or vagueness in the 65 grounds.
On this ground the challenge cannot be sustained.
However, in the view taken by us on the first ground the order of detention must be quashed and set aside.
We order accordingly.
Let the petitioner be set at liberty forthwith unless he is required for any other offence under any other Act.
The application is disposed of accordingly.
Y. Lal Petition allowed.

summary:
In pursuance of an order of detention dated 15.4.1988, passed by the District Magistrate, Meerut, the Petitioner, a bachelor and having no property, was arrested on 2nd October 1988 and detained under Section 3(2) of the National Securi ty Act.
The petitioner was supplied with the grounds of detention enumerating therein the ' acts committed by him on 2nd, 3rd and 4th April 1988 and on 9.4.88 and the provoca tive speeches made by him on the occasion of Shabberat a Muslim festival to the effect that Hindus had deliberately "sent their cow on the road" and the "people are silent" and about teaching "them" a lesson and administration 's failure to fix a long speaker in the mosque These acts and the speeches made by the petitioner.
were, in the opinion of the detaining authority, prejudicial to the maintenance of public order.
The representation made by the petitioner against the order of detention was rejected and the order of his detention was confirmed.
Thereupon, the petitioner has filed this Writ Petition under Article 32 of the Constitution challenging his deten tion.
The contentions of the petitioner are that (i) that there was inordinate delay in arresting the petitioner which indicated that the order of detention was not based on a bona fide and genuine belief that the action and conduct of the petitioner were such that the same were prejudicial to the maintenance of Public Order and the so called "grounds" were merely make belief and not genuine grounds; (ii) that the grounds were not germane to the maintenance of "public order" and (iii) that the grounds were vague and unintelli gible.
Allowing the Writ Petition, this Court, HELD: Sub section (2) of section 3 of the Act autho rises the Central Government or the State Government, if satisfied with respect to any person that with a view to preventing him from acting in any 57 manner prejudicial to the security of the state, it is found necessary, then the person can be detained.
Hence there must be conduct relevant to the formation of the satisfaction having reasonable nexus with the actions of the petitioner which are prejudicial to the maintenance of public order.
Existence of material relevant to the formation of satisfac tion and having rational nexus to the formation of the. satisfaction that because of certain conduct "it is neces sary" to make an order "detaining" such person, are subject to judicial review.
[60H; 61A B] Delay, unexplained and not justified, by the circum stances and the exigencies of the situation, is indicative of the fact that the authorities concerned were not and could not have been satisfied that "preventive custody" of the concerned person was necessary to prevent him from acting in any manner prejudicial to the maintenance of public order.
Whether there has been unreasonable delay, depends upon the facts and circumstances of a particular situation.
[61C D] Satisfaction of the authorities based on conduct must precede action for prevention.
Satisfaction entails belief.
Satisfaction and belief are subjective.
Actions based on subjective satisfaction are objective indication of the existence of the subjective satisfaction.
Action based on satisfaction should be with speed commensurate with the situation.
[61E F] If in a situation the person concerned is not available or cannot be served then the mere fact that the action under section 7 of the Act has not been taken, would not be a ground to say that the detention order was bad.
Failure to take action, even if there was no scope for action under section 7 of the Act would not be decisive or determinative of the question whether there was undue delay in serving the Order of detention.
[62A B] The Petitioner has no property, so no property could be attached and as the Government 's case is that he was not available for arrest, no order under sec.
7 could have been possibly made.
This, however, does not salvage the situa tion.
The fact is that from 15th April 1988 to 12th May 1988, no attempt had been made to contact the Petitioner.
No explanation has been given for this.
There is also no explanation why from 29th September 1988 to 2nd October 1988, no attempt had been made.
It is however stated that from May to September 1988 the "entire police force" was extremely busy in controlling the situation.
Hence, if the law and order was threatened and prejudiced, it was not the conduct of the petitioner but because of "the inadequacy" or "inability" of the police force of Meerut City to control 58 the situation.
Therefore the fact is that there was delay.
The further fact is that the delay is unexplained.or not warranted by the facts/ situation.
To shift the blame for public order situation and raise the bogey of the conduct of the petitioner would not be proof of genuine or real belief about the conduct of the petitioner but only raising a red herring.
[62B E] The Court quashed the order of detention and directed the petitioner to be set at liberty forthwith.
[65B] Nizamuddin vs The State of West Bengal, ; ; Bhawarlal Ganeshmalji vs State of Tamil Nadu & Ant., ; at p. 638; Indradeo Mahato vs State of West Bengal, ; State of Gujarat vs Adam Kasam Bhaya, ; ; Subhash Bhandari vs Distt.
Magis trate, Lucknow & Ors., ; and Kanu Biswas vs State of West Bengal; , , referred to.


judgement:
ecial Leave Petition (C) No. 5628 of 1988.
From the Judgment and Order dated 4.1.1988 of the Punjab and Haryana High Court in Regular Second Appeal No. 9 18 of 1987.
P.P. Rao and Shakeel Ahmed for the Petitioner.
S.C. Maheshwari, P.K. Chakravarti, Ms. Sandhya Goswami and V.K. Bhardwaj for the Respondent.
The following Order of the Court was delivered We have heard this case arising out of Haryana Urban (Control of Rent and Eviction) Act 1973.
We feel that this case is fully covered by the decision of Hon 'ble Mr. Justice Sabyasachi Mukharji & Hon 'ble Mr. Justice Ranganathan in Atma Ram Mittal vs Ishwar Singh Punia, 122 ; We respectfully agree with the princi ple enunciated in that decision.
The special leave petition is dismissed.
Learned counsel for the respondent Mr. S.C. Maheshwari states that the decree will not be executed till 30th April, 1990 subject to an undertaking on usual terms being filed in this Court within four weeks from today.
If the undertaking is not filed, the decree shall become executable forthwith.
G.N. Petition dis missed.

dataset_name: IN-Abs

summary:
Applying the principle enunciated in Atma Ram Mittal vs Ishwar Singh Punia; , , this Court dismissed the special leave petition, and, HELD: 1.1 The exemption would apply for a period of ten years and will continue to be available until suit is dis posed of or adjudicated.
[121H] 1.2 If the petitioner fails to file an undertaking on usual terms, the decree shall become executable forthwith.
[122B]


judgement:
ivil Appeal No. 3838 of 1989.
From the Judgment and Order dated 12.10.
1987 of the Bombay High Court in Appeal No. 244 of 1983.
C.S. Vaidyanathan, S.R. Bhat and K.V. Mohan for the Appellant.
M.S. Ganesh for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This is an appeal from the judgment and order dated October 12, 1987 of the Division Bench of the High Court of Bombay.
The appellant had chartered their vessel 'KRISTEL ' to the respondent for carrying oil from Arabian Gulf to India under a charter party, dated 30th November, 1979.
Clause 40(a) of the charter party provided that the charter shall be construed and the relations between the parties shall be determined in accordance with the English Law.
Clause 40(b) of the charter party provided that any dispute arising under the charter party shall be decided by the English Courts but that either party may elect, in writing, to have the dispute referred to the arbitration of a single arbitrator in London in accordance with the (English) Arbi tration Act, 1950.
, Disputes and differences arose between the parties, and they appointed one Mr. Robert William Reed of the Baltic Exchange and of 28, Reddons Road, Beckenham, Kent BR 3 ILZ to be the sole arbitrator.
The parties appeared before the arbitrator represented by their respective Solicitors and counsel.
The arbitrator made his award on 28th July, 1982 which contained, inter alia, as follows: "I AWARD AND ADJUDGE that the Charterers do 73 forthwith pay the Owners the sum of U.S. $ 291,822.00 (United States Dollars two hundred and ninetyone thousand eight hundred and twenty two only) together with interest at the rate of 15 per cent per annum as from 20th June, 1980, to the date of this my Final Award in full and final settlement of the matters at issue in the Reference.
I FURTHER AWARD AND ADJUDGE that the Charter ers do bear and pay their own and the Owners ' costs of the Reference (the latter to be taxed in the event of disagreement) and that the Charterers do bear and pay the cost of this my Final Award which I hereby tax and settle at E4,684 including my disbursements.
Provided always that if in the first instance the Owners shall have paid the said cost of this my Award, then they shall be entitled to an immediate refund from the Charterers of the sum so paid." As mentioned hereinbefore, the arbitrator awarded the cost of reference to be taxed in the event of disagreement.
The respondent paid only the principal sum and failed and neglected to pay any interest on it and the appellant 's cost of reference to arbitration and the cost of the award.
Pursuant to section 20 of the English Arbitration Act, 1950 a sum directed to be paid by the award shall carry interest as from the date of the award at the same rate as the judg ment date.
It appears that from 8th June, 1982 the interest rate on judgment debt in England was 14% per annum.
The award is enforceable under the Foreign Awards (Recognition & Enforcement) Act, 1961 (hereinafter called 'the Act ').
The appellant filed an application under the Act in the High Court of Bombay, inter alia, contending for the judgment be pronounced and a decree to be passed according to the award in favour of the appellant.
The learned Single Judge of the High Court by his judgment and order dated 21st February, 1983 decreed in favour of the appellant and di rected the respondent to pay interest and costs of the award so awarded by the arbitrator and also cost of the petition.
The learned Judge, however, rejected the appellant 's prayer for the cost of reference to arbitration, and also rejected the applicant 's prayer that in the alternative liberty should be reserved in respect of the said prayer.
The said prayer was made orally but was refused by the learned Single Judge because as he observed that he saw no reason to re serve such liberty, as the appellant had not taken any steps.
74 Aggrieved by the said judgment and order dated 21st February, 1983 the appellant preferred an appeal before the Division Bench of the High Court.
During the pendency of the said appeal in the High Court the appellant 's costs of reference to arbitration as awarded by the arbitrator were taxed because of the failure of the parties to agree and the taxed amount was Pound 10,901.45 by the Taxing Master of the Supreme Court of Judicature, England.
A taxation certificate dated 19th December, 1984 was issued and the same was pro duced at the time of hearing of the appeal before the Divi sion Bench.
Before the Division Bench, cross objections had been filed on behalf of the respondent.
By judgment dated 12th October, 1987, the Division Bench of the High Court dismissed the respondent 's cross objections, and held that the only point related to the refusal of the learned Single Judge to grant liberty to the appellant to file a separate petition upon the costs of the reference to arbitration being quantified.
The Division Bench held that at the time when the petition was filed, there had been no agreement upon or reference for taxing of such costs, and as such it appears that the application to have the costs taxed was made only after the appeal was filed.
No order could be made directing the respondent to make payment to the appellant of the costs so taxed.
The Division Bench held that if the appellant was entitled to file a fresh petition for such costs, it might adopt such proceedings.
Aggrieved thereby, the appellant has come up before this Court.
We are unable to uphold the views of the Division Bench of the Bombay High Court that no order could have been made by the Division Bench directing the respondent to make payment to the appellant 's costs so taxed.
Foreign awards, as it manifests, are executable in this country under the provisions of the Act.
The Act in question was passed to give effect to the convention on the recognition and en forcement of foreign arbitrator 's award.
Section 6 of the Act is as follows: "Enforcement of Foreign Award: (1) Where the Court is satisfied that the Foreign award is enforceable under this Act, the court shall order the award to be filed and shall proceed to pronounce judgment according to the award.
(2) Upon the judgment so pronounced, a decree shall follow and no appeal shall lie from such decree except in so far as the decree is in excess of or not in accordance with the award." Thus foreign award is enforceable in India.
In such a case the 75 Court is obliged to direct that the award be filed and proceed to pronounce judgment according to the award.
And upon the judgment so pronounced a decree shall follow.
This Court had occasion to examine the purpose and terms of the Act in Renusagar Power Co. Ltd. vs General Electric Co. & Anr., ; This Court held referring to the objects that the Act seeks to achieve speedy settlement of disputes arising from international trade through arbitra tion.
The Act was enacted to give effect to the Newyork International Convention on the Recognition and Enforcement of Foreign Awards to which India was a party.
This Court noted that it is obvious that since the Act was calculated and designed to subserve the cause of facilitating interna tional trade and promotion thereof by providing for speedy settlement of disputes arising in such trade through arbi tration, any expression or phrase occurring therein should receive, consistent with its literal and grammatical sense, a liberal construction.
The judgment has been pronounced in terms of the afore said and a decree has followed.
The award enjoins, inter alia, "that the Chatterers do pay and bear their own costs and the owner 's costs of reference (the latter to be taxed in the event of disagreement).
The judgment and decree which was pronounced in terms of the award did not direct any cost taxed or quantified of the reference to be paid.
Indubita bly, the costs of reference have been awarded.
The award, read properly, means, so far as costs of the reference are concerned, that it was an award upon certain conditions, i.e., the award stipulated that the costs of reference will be paid.
The costs of such reference were, however, directed to be determined either by agreement between the parties and in case there was no agreement or disagreement, to be taxed.
The parties have not been able to agree.
It appears from the averments made in the pleadings before the High Court, there was no agreement as to the costs, and the steps were taken after the appeal was filed before the Division Bench to have the costs taxed.
But there is no evidence of any delay or laches on the part of the appellant, as such, which would disentitle the appellant to such costs.
In that view of the matter this award can legitimately be considered as an award directing payment of costs upon the condition that these will be taxed on the failure of agreement or disagreement between the parties.
The parties have failed to agree.
The costs have been taxed and certified.
There is no dispute as to the costs taxed or certified.
We are of the opinion that law, justice and equity in the facts and the circumstances of this case, enjoin that the appellant should have such costs.
The appellant has taken all possible steps that could be 76 taken in the situation contemplated by the award.
The appel lant has written for agreement about the costs of reference.
The respondent did not agree.
The appellant took steps to have the costs taxed in London, and the costs have been taxed.
On behalf of the respondent, several contentions were urged mainly on the ground that there is no scope for addi tion to the award and the award had to be executed as it was and the costs of reference had not been awarded.
We are in agreement with Mr. Ganesh that the award must be executed as it is and there is no scope for any addition to any award in executing a foreign award but the award to be executed must be properly construed and given effect to.
If the award is ambiguous, the court has jurisdiction to determine what it means.
In this case, the award is not ambiguous.
It is clear that the costs of reference should be paid by the respond ent, and that such costs should be paid as are determined by agreement between the parties and in case of failure of the agreement by the taxation, such costs have been taxed and were placed before the Division Bench before it pronounced its judgment.
Our attention was drawn to the decision in Re Becker Shillan & Co. and Barry Bros., , where it was held that where an umpire in making his award dealt with the costs of the award including the expenses of the hire of the room for the arbitration and shorthand notes, but made no order as to the general costs of the parties to the reference, the court would not presume that he has exercised his discretion to make no order as to costs or that he has left them to be borne by the parties who incurred them, but will conclude that the question of costs has not been dealt with at all and, therefore, should remit the award to him for reconsideration.
In our opinion, the said decision has no application to the facts of this case.
The instant appeal before us is not a case where the award has not dealt with the costs of reference, rather it has specifically dealt with the same.
It has categorically provided that cost of reference is to be paid by the respondent.
The award has stated that such cost should be agreed between the parties and in case there was no agreement, cost should be taxed.
The award is clear and unambiguous and does not leave this question undecided.
In the circumstances, there is no scope of remission of this award or not enforcing what the arbitrator has awarded.
Under the Act, if an application is filed for decree in terms of the award, the court in upholding the award ought to grant a decree in terms of the award and not substract any portion thereof.
Since the award directed costs of appellant 's reference to be paid as is mutually agreed upon or as taxed, the Division Bench ought to have 77 passed an order for costs as taxed.
We, therefore, direct that the award to be enforced and the costs as mentioned hereinbefore should also be payable by the respondent.
The judgment and order of the High Court are modified to that extent.
In the facts and the circum stances of the case, we do not make any order as to costs of this appeal.
R.S.S. Appeal allowed.

summary:
The appellant company had chartered their vessel to the respondent for carrying oil from Arabian Gulf to India under a charter party.
Disputes and differences arose between the parties and the matter was referred to a single arbitrator in London, as stipulated in the charter party.
The arbitra tor awarded a certain sum to be paid by the respondent to the appellant, with interest.
The arbitrator further awarded to the appellant the costs of the reference, which were to be taxed in the event of disagreement.
The respondent paid only the principal sum and failed and neglected to pay interest, the appellant 's cost of reference to arbitration, and the cost of the award.
The appellant filed an applica tion under the Foreign Awards (Recognition & Enforcement) Act, 1961 in the High Court of Bombay.
The learned Single Judge of the High Court directed the respondent to pay interest and costs of the award so awarded by the arbitrator and also cost of the petition.
The learned Judge however rejected the appellant 's prayer for the cost of reference to arbitration, and also rejected the applicant 's prayer that in the alternative liberty should be reserved in re spect of the said prayer.
The appellant preferred an appeal before the Division Bench.
During the pendency of this appeal the appellant 's costs of reference to arbitration as awarded by the arbitrator were taxed and a taxation certifi cate was produced at the time of hearing of the appeal.
The Division Bench held that at the time when the petition was filed, there had been no agreement upon or reference for taxing.
of such costs, it appeared that the application to have the costs taxed was made only after the appeal was filed; and as such no order could be made directing the respondent to make payment to the appellant of the costs so taxed.
Before this Court it was urged on behalf of the respond ent that there was no scope for addition to the award, and the award had to be executed as it was, and the costs of reference had not been awarded.
71 Allowing the appeal, this Court, HELD: (1) Foreign awards, as it manifests, are executa ble in this country under the provisions of the Foreign Awards (Recognition & Enforcement) Act, 1961.
The Act was passed to give effect to the convention on the recognition and enforcement of foreign arbitrator 's award.
[74F] (2) It is obvious that since the Act was calculated and designed to subserve the cause of facilitating international trade and promotion thereof by providing for speedy settle ment of disputes arising in such trade through arbitration, any expression or phrase occurring therein should receive, consistent with its literal and grammatical sense, a liberal construction.
[75B] Renusagar Power Co. Ltd. vs General Electric Co. & Anr., ; , referred to.
(3) The Court agrees that the award must be executed as it is and there is no scope for any addition to any award.
But the award to be executed must be properly construed and given effect to.
If the award is ambiguous, the court has jurisdiction to determine what it means.
[75C] (4) In the instant case, the award is not ambiguous.
The award, read properly, means, so far as costs of the refer ence are concerned, that it was an award upon certain condi tions, i.e. the award stipulated that the costs of reference will be paid.
The costs of such reference were, however, directed to be determined either by agreement between the parties and in case there was no agreement or disagreement, to be taxed.
[75E] (5) Law, justice and equity in the facts and the circum stances of this case, enjoin that the appellant should have such costs.
The appellant has taken all possible steps that could be taken in the situation contemplated by the award.
The appellant has written for agreement about the costs of reference.
The respondent did not agree.
The appellant took steps to have the costs taxed in London, and the costs have been taxed.
[75H; 76A] (6) There is no evidence of the delay or laches on the part of the appellant, as such, which would disentitle the appellant to such costs.
[75F] 72 (7) Under the Act, if an application is filed for decree in terms of the award.
the court in upholding the award ought to grant a decree in terms of the award and not sub stract any portion thereof.
Since the award directed costs of appellant 's reference to be paid as is mutually agreed upon or as taxed, the Division Bench ought to have passed an order for costs as taxed.
[76H; 77A]


judgement:
ivil Appeal No. 1979 of 1981.
From the Judgment and Order dated 7.1.81 of the Bombay High Court in Civil Writ Petition No. 1248 of 1977.
P.P. Rao, Kailash Vasdev and section Murlidhar for the Appel lants.
A.K. Sanghi for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
This appeal by special leave is against the judgment dated January 7, 1981 in Writ Petition No. 1248 of 1977 of the Nagput Bench of the Bombay High Court.
The special leave has been confined only to the question of liability of the appellant, Life Insurance Corporation, to pay interest for the period after date of maturity of insur ance policy, in case of delay in payment.
Accordingly, this is the only question arising for decision in this appeal.
The writ petition in the High Court was filed by Smt.
Kamalabai G. Ranade, the wife of Gangadhar Vishwanath Ranade of Nagput.
The said G.V. Ranade took four policies on his own life from the Life Insurance Corporation of India (hereinafter referred to as "the LIC") during the period 1958 to 1960.
These policies were paid up and the particu lars thereof including their paid up value payable on the date of maturity are as under: Policy Sum Paid up Date of Number Assured Value Maturity.
19620636 10,000.00 3415.70 14.9.72 13932229 3,500.00 1118.65 28.12.73 13969 144 5,000.00 892.20 9.11.75 13972300 2,000.00 557.70 21.12.75 In April 1969 G.V. Ranade assigned absolutely all these four 101 insurance policies in favour of his wife Smt.
Kamalabai G. Ranade and the assignment so madewas duly registered by the LIC as under: "In registering this Assignment the Corpora tion makes no admission as to its validity.
Nagpur sd/ Dt.
8.4.69 P. Divisional Manag er" It appears that there were some income tax dues against the said G.V. Ranade for recovery of which Income tax Offi cer had commenced recovery proceedings.
Prior to the date of maturity of these policies the Income tax Officer on 27.1.1971 issued a notice under section 226(3) of the Income Tax Act, 1961 to the Manager of the LIC at Nagpur directing the LIC to pay to the ITO forthwith any amount due from the LIC to or, held by the LIC for or on account of the said G.V. Ranadeto meet the amount due from G.V. Ranade as ar rears of income tax.
This notice further mentioned the consequences envisaged by section 226(3) of the Income Tax Act, 1961.
The Divisional Manager of the LIC at Nagput intimated the fact of receipt of the notice under section 226(3) of the Income Tax Act, 1961 to the assignee of these policies, Smt.
Kamalabai G. Ranade, suggesting that she take steps to get the notice vacated in order to safeguard her interest in the policies.
The further correspondence in this behalf between Income tax Officer, the LIC and the assignee shows that the Income tax Officer required the LIC to depos it the amount of Rs.3415.70 payable against the first policy which was to mature on 14.9.72 and the LIC kept the assignee informed of this demand by the ITO adding in its letter dated 27.7.1972 to the assignee that the moneys due under the policies will be paid to her "only after your getting the notice served on us by the ITO vacated".
This was reit erated by the LIC in its letter dated 11.8.72 to the assign ee.
The assignee sent a notice dated 21.8.72 to the LIC reiterating that the policies had been absolutely assigned to her as admitted by the LIC as a result of which the amount payable against the same had to be paid only to her since the amount was not held by the LIC for or on account of G.V. Ranade.
The LIC was also required by this notice to take the necessary steps for revocation of the ITO 's notice and to make the payment due in respect of all these policies to the assignee.
The assignee sent a similar notice to the ITO asserting her claim as the assignee to get the moneys payable under the policies.
The ITO in a letter dated 28.7.72 addressed to the LIC had added that the alleged 102 transfer of policies by G.V. Ranade to his wife are void with an intention to defraud the revenue and the case falls within the mischief of section 281 of the Income Tax Act, 1961; and the LIC was requested to withhold any payment to Smt.
Kamalabai G. Ranade till further communication from the ITO.
On 5.9.1972 Smt.
Kamalubai G. Ranade filed a writ peti tion, (S.C.A. No. 861 of 1972), in the High Court of Bombay impleading the LIC and the ITO as respondents therein claim ing several reliefs which are mentioned at pages 33 to 35 of the paper book.
The reliefs included a direction to the LIC for payment of Rs.3415.70 due on 14.9.72 on maturity of the first policy to Smt.
Kamalabai G. Ranade and also to make a statement on oath as contemplated by section 226(3) of the Income Tax Act, 1961 that no part of the said amount is due to G.V. Ranade nor does the LIC hold any part of the sum for or on account of G.V. Ranade.
This writ petition was dis missed in limine by the High Court on 14.9.72.
The amount of Rs.3415.70 payable against the first policy which matured on 14.9.72 was paid by the LIC to the ITO.
Kamalabai G. Ranade filed an appeal (C.A. No. 373.of 1973) by special leave in this Court against dismissal of her writ petition by the Bombay High Court.
That appeal was disposed of by this Court on October 6, 1975 as under: "On behalf of the Life Insurance Corporation of India Mr. Rathi stated that he would file the necessary statement on oath in accordance with sub cl.
(vi) of CI.
(3) of section 226 of the Income Tax Act, 1961 and file it in Court within two months from today stating that no sum of money is due to the Assessee, insured person, before the Incometax Officer.
It will thereafter be open to the Income tax Officer to take such other proceedings as he might consider necessary in order to realise the amounts due from the assessee.
It is, however, stated that in respect of one policy, the Life Insurance Corporation has already paid the money to the Income tax Officer.
In respect of it no statement need be made and consequently no order can be made under section 226(3)(vi).
The appeal is disposed of accord ingly.
There will be no order as to costs".
In pursuance of the above order of this Court, the LIC filed on December 5, 1975 the requisite statement on oath under section 226(3)(vi) of the Income Tax Act, L961 in respect of the remaining three policies.
103 It appears that the ITO did not revoke the order of attachment in spite of the LIC making the requisite state ment on oath under section 226(3)(vi) of Income Tax Act, 1961 on 5.12.75.
This led to another writ petition (S.C.A. 302 of 1977) filed in the Bombay High Court by Smt.
Kamala bai G. Ranade praying for a direction to the ITO to revoke all notices issued under section 226(3) to the LIC and to the LIC to pay to her the amount due against the policies which had matured.
On 4.4.71 counsel for the ITO produced before the High Court a copy of the order dated 1.4.77 passed by the Income tax Officer withdrawing the notice under section 226(3) of the Income Tax Act, 196 1 and the writ petition was dismissed as withdrawn.
Kamalabai G. Ranade then promptly sent a notice to the LIC demanding payment of the total amount due against these four policies together with interest @ 15% since the delay in payment had been occasioned by the default of the LIC.
Admittedly the LIC had made the payment of these amounts to Smt.
Kamalabai G. Ranade in these circumstances.
The L.I.C. has not disputed at any stage its liability to pay to Smt.
Kamalabai G. Ranade the amounts due under these policies.
However, it has disputed its liability to pay interest thereon for any period after the date of maturity on the ground that the delay was Occasioned by the I.T.O. 's notice under section 226(3).
On the other hand, Smt.
Kamala bai G. Ranade claimed that the L.I.C. nad wrongfully refused to make the statement as contemplated under section 226(3)(vi) of the Income Tax Act, 1961 resulting in delay in payment of the moneys after maturity of the policies.
This dispute regarding the L.I.C. 's liability to pay interest led to the filing of the Writ Petition No. 1248 of 1977 decided on January 7, 1981 which gives rise to this appeal.
The impugned judgment of the Bombay High Court in Writ Petition No. 1248 of 1977 holds that the last two policies having matured on 9.11.
1975 and 21.12.1975, i.e., a few days before or after 5.12.75 when the statement on oath under section 226(3) of the Income Tax Act, 1961 was made by the L.I.C. did not qualify for award of such interest which was payable in respect of the first two which had matured much earlier on 14.9.72 and 28.12.73.
For the period com mencing from the date of maturity of the policy ending with performance of the L.I.C. 's obligation to make the statement under section 226(3)(vi) of the Income Tax Act, 1961 on 5.12.75 the L.I.C. has been held liable to pay interest on the basis of its failure to perform 104 its statutory obligation.
This view of the High Court on which the award of interest is based, is assailed on behalf of the appellant.
The surviving dispute in this appeal is now only .about the L.I.C. 's liability for payment of interest on the prin cipal amount from the date of maturity of the first two policies to 31.12.75, and the rate of 15 % per annum which is alleged to be excessive.
Broadly stated, the contention of the appellant is that the appellant was not liable to pay any interest for the period during which it was restrained from making the pay ment on account of the I.T.O. 's notice under section 226(3) of the Income tax Act, 1961 and the I.T.O. also adding that the matter fell within the ambit of section 281 of the Act.
On this basis it was urged on behalf of the appellant that the award of interest on the first two policies from the date of their maturity till 31.12.1975 (statement on oath by the L.I.C. being made only.
on 5.12.1975) is contrary to law.
To support the main contention of the appellant, that it is not liable for payment of any interest for any period after maturity of the policies, Shri P.P. Rao, learned counsel for the appellant advanced several arguments.
His first argument is that the Income tax Officer was a neces sary party in the writ petition giving rise to this appeal and in his absence no effective adjudication of this dispute can be made.
The second argument is that the High Court has misconstrued section 226(3) of the Income Tax Act, 1961 and thereby wrongly fastened the liability for payment of inter est upto 31.12.75 on the appellant.
The third argument is that the principle of res judicata or atleast constructive res judicata, as a result of the earlier writ petitions, bars the claim for payment of interest in this writ peti tion.
The fourth argument is that the writ petition (S.C.A. No. 302 of 1977) being withdrawn unconditionally without liberty to file a fresh petition, this writ petition (W.P. No. 1248 of 1977) is not maintainable.
The fifth argument is that the rate of 15% p.a. at which interest has been awarded is excessive.
The sixth and the last argument is that the appellant has been required to make double payment of Rs.3415.70 due against the policy which matured on 14.9.1972 inasmuch as the L.I.C. had already deposited that amount earlier in September 1972 with the I.T.O. in pursuance to the I.T.O. 's demand.
In reply, Shri A.K. Sanghi, learned counsel for the respondent contended that the liability for payment of interest has been correctly fastened on the appellant be cause of its failure to discharge the statu 105 tory obligation of making the requisite statement on oath under section 226(3)(vi) of the Income Tax Act, 1961 till 5.12.1975.
He argued that the L.I.C. having accepted and registered the absolute assignment made by the insured G.V. Ranade in favour of his wife Smt.
Kamalabai G. Ranade, it was the duty of the L.I.C. to promptly make the requisite statement on oath under section 226(3)(vi) of the Income Tax Act, 1961 which it made much later on 5.12.75 in pursuance to the Court 's order to enable the I.T.O. to revoke the notice issued by him under section 226(3) of the Income Tax Act, 1961.
Shri Sanghi stated that even though the special leave granted by this Court is confined only to the question of interest and therefore, does not extend to the question of alleged double payment of Rs.3415.70 by the L.I.C. yet the respondent concedes that the amount of Rs.3415.70 depos ited by the L.I.C. with the I.T.O. may be refunded by the I.T.O. to the L.I.C. together with interest, if any, payable on refund of that amount; and that the respondent does not lay any claim to that amount from the I.T.O. having obtained that amount from the L.I.C.
We shall first dispose of the last point relating to double payment by the L.I.C. of the amount of Rs.3415.70 in view of the express concession made by Shri Sanghi, learned counsel for the respondent that the respondent does not lay any claim to it and that the L.I.C. may obtain its refund from the I.T.O.
In view of this statement of learned counsel for the respondent, Shri Sanghi, it is sufficient to observe that it would be open to the L.I.C. to obtain refund of the amount of Rs.3415.70 deposited by it with the I.T.O. togeth er with interest, if any, payable on the refund by the Income Tax Department, since it has been conceded that the respondent does not claim that amount from the I.T.O. We shall now deal with the remaining arguments of Shri Rao, learned counsel for the appellant.
The first argument of the learned counsel for the appel lant is that the I.T.O. was a necessary party in the writ petition giving rise to this appeal.
We are unable to accept this contention.
The only claim made in Writ Petition No. 1248 of 1977 decided on 7.1.1981 giving rise to this appeal is for payment of interest by the appellant, and no relief has been sought against the I.T.O. This being so, for effective adjudication of the L.I.C. 's liability towards the respondent, the presence of the I.T.O. is not necessary.
The respondent 's claim is only against the L.I.C. without any claim being made in the alternative or otherwise against the I.T.O.
The respondent 's claim has, therefore, to succeed or fail only on the basis of the L.I.C. 's liability vis a vis the respondent without involving the I.T.O. or anyone else in that process.
Merely 106 because the defence of the L.I.C. was based on an act of the I.T.O., it was not incumbent for the respondent to implead the I.T.O. in this proceeding when neither any relief was claimed against the I.T.O. nor was any suggestion of I.T.O. 's liability for payment of interest made in the writ peti tion.
This argument is, therefore, rejected.
The second argument relating to construction of section 226(3) of the Income Tax Act, 1961 is in fact the main argument of Shri Rao and, therefore, we shall consider the same after disposing of the remaining arguments which are shorter points.
The third argument is based on the principle of res judicata and constructive res judicata on the basis of two earlier writ petitions filed by Smt.
Kamalabai G. Ranade.
The first writ petition was S.C.A. No. 861 of 1972 filed in the Bombay High Court on 5.9.72 prior to the date of maturi ty of the first policy claim against,which was required to be paid by the L.I.C. to the assignee, Smt.
Kamalaba G Ranade.
This was after issuance of the notice under section 226(3) of the Income Tax Act, 1961 by the I.T.O. to the L.I.C. One of the reliefs claimed therein was a direction to the L.I.C. to make a statement on oath as required by sec tion 226(3)(vi) of the Income Tax Act, 1961 that no part of the amount due against the policy maturing on 14.9.72 was due to the insured G.V. Ranade nor did the L.I.C. hold any part of that sum for or on account of the alleged defaulter.
No doubt some other reliefs including revocation of the notice under section 226(3) of the Income Tax Act, 1961 were.
also claimed including payment 01 ' the amount together with the accretions thereto.
This writ petition being dis missed, Smt.
Kamalabai G. Ranade came to this Court by special leave and Civil Appeal No. 373 of 1973 was disposed of by this Court 's order dated 6.10.1975 requiting the L.I.C. to make the necessary statement on oath in accordance with section 226(3)(vi) of the Income Tax Act, 1961 within two months.
It is obvious that with this direction requiring the L.I.C. to make the requisite statement on oath under section 226(3)(vi) of the Income Tax Act, 1961, no further question survived in that writ petition and the consequent civil appeal in this Court since the further questions including payment of interest on the principal amount were to arise only at a subsequent stage.
Asking for any other relief was obviously premature at that stage.
It is appar ently for this reason that this Court did not at that stage go into the other questions relating to the further reliefs specified in that writ petition.
That decision cannot, therefore, preclude agitation of the question of interest subsequently.
107 The next writ petition filed by Smt.
Kamalabai G. Ranade was S.C.A. No. 302 of 1977 in the Bombay High Court.
The prayer made therein was for a direction to the L.I.C. to pay the principal amount together with interest thereon.
In this writ petition also the I.T.O. was impleaded as a party.
This writ petition had to be filed because in spite of the L.I.C. having made the requisite statement under section 226(3)(vi) of the Income Tax Act, 1961 on 5.12.75, the Income tax Officer had not withdrawn the notice under section 226(3) of the Income Tax Act, 1961 issued to the L.I.C. and, there fore, the L.I.C. was not making the payment to the respond ent.
On 4.4.77 that writ petition was dismissed as withdrawn as a result of the I.T.O . 's counsel filing a copy of the order dated 1.4.1977 withdrawing the I.T.O. 's notice under section 226(3) of the Income Tax Act, 1961 enabling the L.I.C. to make the payment due against the policies to the respondent.
The operation of the notice under section 226(3) of the income Tax Act, 1961 by the I.T.O. being the only reason given by the L.I.C. to support its action of non payment to the respondent, it was unnecessary to persue that writ petition when the I.T.O. had made the order withdrawing the notice under section 226(3) of the Act.
Admittedly, it was in consequence of the withdrawal of the I.T.O. 's notice by order dated 1.4.77 that payment was actually made by the L.I.C. to the respondent.
It is, therefore, difficult to appreciate how the withdrawal of that writ petition can, in any manner, preclude the respondent from raising the ques tion of the L.I.C. 's liability to pay interest when the principal amount alone was paid later.
The L.I.C. having refused to pay the interest on the principal amount in spite of the inordinate delay in pay ment, the Writ Petition No. 1248 of 1977 had to be filed giving rise to this appeal raising only the question of L.I.C. 's liability to pay interest on the principal amount due against the policies.
The same is therefore, clearly maintainable and the earlier writ petitions cannot, in any manner, bar the adjudication of this point her, 'in for the reasons already given.
This contention of learned counsel for the appellant is also, therefore, rejected.
The fourth contention based on withdrawal of writ peti tion (S.C.A. No. 302 of 1977) being covered by the discus sion relating to the third contention, the same is rejected.
The fifth argument relates to the rate of interest.
Shri Rao contended that the award of interest @15% p.a. is exces sive even if the L.I.C. is held liable for payment of inter est.
Reference was made by 108 Shri Rao to Section 244 of the Income Tax Act, 1961 provid ing for payment of interest on refund which prescribed the rate of 12% p.a. from 1.7.1972 to 1.10.1984, the increase to 15% p.a. being made therein only from 1.10.84 by amendment of that section.
It was urged that the period in question in the present case being prior to 1.10.84 the rate of 15% p.a. in excess of the statutory provision of 12% p.a. in Section 244 of the Income Tax Act, 1961 is unjustified.
Admittedly, the award of interest, in the present case, for payment by the L.I.C. is not governed by Section 244 of the Income Tax Act, 1961.
Apparently, for this reason, learned counsel for the appellant relied on Section 244 of the Income Tax Act, 1961 as of persuasive value.
We are not impressed by this argument.
The High Court has relied on the fact that inter est @ 15% p.a. is reasonable, in the present case, particu larly in view of the fact that the L.I.C. itself charges interest at that rate.
It is sufficient for us to state that there is no material produced, in the present case, to suggest that award of interest @ 15% p.a. is excessive to permit interference with the rate in this appeal particular ly when the High Court has come to the conclusion that this is the reasonable rate.
This argument also is, therefore, rejected.
The only point remaining for consideration now is the construction of Section 226(3) of the Income Tax Act, 1961 the relevant portion of which, reads as under: "Other modes of recovery: 226.(1) Notwith standing the issue of a certificate to the Tax Recovery Officer under section 222, the In come tax Officer may recover the tax by any one or more of the modes provided in this section.
. . (3)(i) The Income tax Officer may, at any time or from time to time, by notice in writing require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee, to pay to the Income tax Officer either forthwith upon the money becoming due or being held or at or within the time specified in the notice (not being before the money becomes due or is held) so much of the money as is sufficient to pay the amount due by the assessee in respect of arrears or the whole of the money when it is equal to or less than that amount.
109 (ii) A notice under this sub section may be issued to any person who holds or may subsequently hold any money for or on account of the assessee jointly with any other person and for the purposes of this sub section, the shares of the joint holders in such account shall be presumed, until the contrary is proved to be equal.
(iii) A copy of the notice shall be forwarded to the assessee at his last address known to the Income tax Officer, and in the case of a joint account to all the joint holders at their last addresses known to the Income tax Officer.
(iv) Save as otherwise provided in this sub section, every person to whom a notice is issued under this subsection.
shall be bound to comply with such notice, and, in particular, where any such notice is issued to a post office, banking company or an insurer, it shall not be necessary for any pass book, deposit receipt, policy or any other document to be produced for the purpose of any entry, endorsement or the like being made before payment is made, notwithstanding any rule, practice or requirement to the contrary.
(v) Any claim respecting any proper ty in relation to which a notice under this sub section has been issued arising after the date of the notice shall be void as against any demand contained in the notice.
(vi) Where a person to whom a notice under this subsection is sent objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee, then, nothing contained in this sub section shall be deemed to require such person to pay any such sum or part thereof, as the case may be, but if it is discovered that such statement was false in any material particular, such person shall be personally liable to the Income tax Officer to the extent of his own liability to the assessee on the date of the notice, or to the extent of the assessee 's liability for any sum due under this Act, whichever is less.
(vii) The Income tax Officer may, at any time or 110 from time to time, amend or revoke any notice issued under this sub section or extend the time for making any payment in pursuance of such notice.
(viii) The Income tax Officer shall grant a receipt for any amount paid in compli ance with a notice issued under this sub section, and the person so paying shall be fully discharged from his liability to the assessee to the extent of the amount so paid.
(ix) Any person discharging any liability to the assessee after receipt of a notice under this sub section shall be person ally liable to the Income tax Officer to the extent of his own liability to the assessee so discharged or to the extent of the assessee 's liability for any sum due under this Act, whichever is less.
(x) If the person to whom a notice under this subsection is sent fails to make payment in pursuance thereof to the Income tax Officer, he shall be deemed to be an assessee in default in respect of the amount specified in the notice and further proceedings may be taken against him for the realisation of the amount as if it were an arrear of tax due from him, in the manner provided in sections 222 to 225 and the notice shall have the same effect as an attachment of a debt by the Tax Recovery Officer in exercise of his powers under sec tion 222." . . ." The argument of the learned counsel for the appellant is that on receipt of the I.T.O. 's notice under section 226(3) of the Income Tax Act, 1961, the L.I.C. was not left with the option to make the payment to assignee of the policies since the L.I.C. or its officer making the state ment on oath under section 226(3)(vi) would thereby have been exposed to personal liability as the defaulter of the income tax dues.
It was argued that in these circumstances the L.I.C. could make the payment only aftter revocation of the notice by the I.T.O. 's Order dated 1.4.77 and, there fore, the L.I.C. cannot be held liable for payment of inter est for any period prior to revocation of the notice.
The period for which the L.I.C. has been held liable to pay interest being prior to revocation of the notice by the I.T.O., it was urged that the same was unjustified.
111 Having given our anxious consideration to the argument we cannot persuade ourselves to accept the same.
On a close scrutiny of the provision we find that the benefit claimed by the L.I.C. is not available to it, in the facts of the present case.
Admittedly assignment of the policies was made by the insured G.V. Ranade and the same was duly accepted and registered by the L.I.C. in April 1969.
It is, therefore, obvious that the L.I.C. was bound to act on that assignment in favour of Smt.
Kamalabai G. Ranade unless the assignment was held to be invalid by a competent authority in a proper proceeding taken for this purpose.
It is significant that the L.I.C. never disputed the validity of the assignment and was throughout prepared to act on it.
It is undisputed that the assignment was not declared invalid by any competent authority.
Mere issuance of notice under section 226(3) of the Income Tax Act, 1961 did not have the effect of invali dating the assignment nor did the casual mention of Section 281 of the Income Tax Act, 1961 by the I.T.O. in his letter dated 28.8.72 result in this consequence.
Any further step towards formation of the final opinion by the I.T.O. could be taken only after the L.I.C. had made the requisite state ment on oath under section 226(3)(vi) of the Income Tax Act, 1961 on the basis of the registered assignment of policies.
This act was performed by the L.I.C. only on 5.12.75 which led to revocation of the notice under section 226(3) of the Act, by the I.T.O.
The question is of the liability of the L.I.C. in these circumstances.
Section 226 consists of several Sub sections of which sub sections (1) and (3) alone are relevant for our purpose.
Sub section (1) enables the I.T.O. to recover the tax by anyone or more of the further modes provided in this sec tion.
Sub section (3) deals with one such mode where the defaulter 's money is held by another person.
Clause (i) of sub section (3) enables the I.T.O. by notice in writing to require any person from whom money is due or may become due to the assessee or any person who holds or may subsequently hold money for or on account of the assessee to pay the Income tax Officer that money or so much of it as is suffi cient t6 pay the dues of the assessee in respect of the arrears of tax.
It is in exercise of this power that the I.T.O. had issued the notice to the L.I.C. in the present case.
Obviously, the I.T.O. had assumed that the money payable on maturity of these policies belonged to the in sured/assessee/defaulter G.V. Ranade overlooking the duly registered assignment made much earlier in favour of the assessee 's wife in April 1969.
The further clauses (ii) to (v) of sub section (3) deal with ancillary matters and also provide that any 112 claim in respect of property covered by the notice shall be void after the date of the notice as against the demand contained in the notice.
Clause (vi) is relevant for the present purpose and speaks of the obligation of a person to whom such a notice has been sent.
Clause (vi) relieves the person receiving such a notice from the liability to pay any sum to the I.T.O. in obedience to the notice if he "objects to it by a statement on oath that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on account of the assessee".
This clause fur ther provides that "if it is discovered that such statement was false in any material particular" such person shall be personally liable to the I.T.O. to the extent of the asses see 's liability on the date of notice.
Clause (vii) then provides, inter alia, for amendment or revocation of the notice issued under this sub section by the I.T.O.
This stage of amendment or revocation of the notice under clause (vii) is reached only after the stage provided in clause (vi), in a case where the notice objects that he does not hold the money for or on behalf of the defaulter of tax dues.
It is, therefore, obvious that the question of revoca tion of the notice under clause (vii) of sub section (3) of section 226 of the Income Tax Act, 1961 arose in the present case only after the L.I.C. made the requisite statement on oath under section 226(3)(vi) of the Act in view of its consistent stand throughout that the moneys due under the policies were held by it for and on behalf of the assignee and not the defaulter.
Mere information of the assignment to the I.T.O. and keeping the assignee informed of the I.T.O. 's action did not amount to discharge of the statutory obliga tion under section 226(3)(vi) of the Act, by the L.I.C.
The statute having expressly provided the mode of raising such an objection in the form of a statement on oath specified in clause (vi), performance of that obligation by the notice had to be made only in that manner.
This statutory obliga tion was performed by the L.I.C. only on 5.12.1975 as stated earlier.
The personal liability arising after making the requisite statement on oath as envisaged by clause (vi) is only "if it is discovered that such statement was false in any material particular and not otherwise.
Learned counsel for the appellant argued that the requisite statement under section 226(3)(vi) of the Income Tax Act, 1961 could not be made by the L.I.C. since it involved the risk of exposing the L.I.C. or its officer making the statement on oath to personal liability for the income tax dues of the assessee/defaulter G.V. Ranade.
In the first place, such a statement was in fact made without hesitation by the 113 L.I.C. on 5.12.75 after the assignee was compelled to obtain such a direction in a writ petition filed by her.
That apart the risk visualised on behalf of the L.I.C., in ultimate analysis, is entirely imaginary and not real.
The risk of personal liability envisaged in clause (vi) arises only "if it is discovered that such statement was false in any mate rial particular".
Thus, there is no risk of personal liabil ity of the person making the statement on oath unless any material particular mentioned in the statement is false.
The statement on oath required to be made by clause (vi) is only "that the sum demanded or any part thereof is not due to the assessee or that he does not hold any money for or on ac count of the assessee".
The L.I.C. itself has taken the stand throughout that the sum demanded by the notice issued under section 226(3) of the Income Tax Act, 1961 by the I.T.O. did not belong to the assessee inasmuch as it was payable only to the assignee, Smt.
Kamalabai G. Ranade by virtue of the assignment made, accepted and registered in April 1969 much earlier to the date of the notice.
This being so the making of this statement on oath of the L.I.C. 's own stand which in fact was so made on 5.12.75 did not involve even remotely the possibility of any risk of personal liability.
On the contrary, real risk of the L.I.C. being treated deemed defaulter assessee under clause (x) of sub section (3) of section 226 of the Act lay in its failure to pay to the I.T.O. after receipt of notice under section 226(3), the amounts of the matured policies within the time given by the I.T.O. or a reasonable time, without objecting to the demand by denying its liability to the assessee in the manner prescribed in clause (vi) thereof, instead of in doing so.
Prudence also required the L.I.C. in its own interest, to object to the demand according to clause (vi) instead of refusing or delaying the objection.
The argument that such a statement was not made since it involved the likelihood of exposing the L.I.C. or any of its officers to personal liability has, therefore, no merit.
This being the only reason given by the L.I.C. to justify the inordinate delay in making the requisite statement under section 226(3)(vi) of the Income Tax Act, 1961, it is obvious that this defence is untenable.
Sub section (3) of section 226 of the Income Tax Act, 1961 clearly shows that on a notice thereunder being issued by the I.T.O. to the L.I.C., in the present case, it was incumbent on the L.I.C. to make the requisite statement on oath under clause (vi) thereof raising an objection on the basis of the registered assignment.
It was then for the I.T.O. to proceed further and form his final opinion and revoke the notice under clause (vii).
It was not possible for the assignee of the 114 policies to obtain revocation of the notice by the I.T.O. without the requisite statement on oath being made by the L.I.C. as envisaged in clause (vi) of sub section (3) of section 226 of the Income Tax Act.
It is obvious that the inordinate delay in making the statement on oath by the L.I.C. under section 226(3)(vi) of the Income Tax Act, 1961 was the result of misconstruction of the provision and misappreciation of its liability thereunder.
Obviously the assignee of the policies who had become entitled to receive the amounts due thereunder on the dates of their maturity must be compensated by the L.I.C. for its failure to perform its statutory obligation under section 226(3)(vi) of the Income Tax Act, 1961 within a reasonable time.
We have no doubt that this is the proper construction of section 226(3) of the Income Tax Act, 1961 and the conse quential liability resulting from the failure of the notice to raise the objection in the prescribed manner under clause (vi) thereof within a reasonable time.
Performance of this statutory obligation by the L.I.C., in the present case, being after inordinate delay, award of interest to the assignee of the policies to whom the payment thereunder had to be made even according to the stand of the L.1.C. is, therefore, clearly justified.
This contention which is really the main contention urged on behalf of the appellant, therefore, fails and is rejected.
Consequently, the appeal is dismissed with costs.
The costs are quantified at Rs.2,000.
R.N.J. Appeal dis missed.

summary:
One Sh.
G.V. Ranade took four policies on his own life from the LIC during the period.
1958 to 1960.
In April 1969 G.V. Ranade assigned absolutely all these four policies in favour of his wife Smt.
Kamalabai G. Ranade and the assign ment was duly registered by the LIC.
These policies were paid up and the date of maturity of these were 14.9.72, 28.12.73, 9.11.75 and 21.12.75.
There were some income tax dues against the said G.V. Ranade for recovery of which income tax officer 'commenced recovery proceedings.
The Income Tax Officer on 27.1.71 issued a notice under Section 226(3) of the Income Tax Act, 1961 to the Manager of the LIC at Nagpur directing the LIC to pay to I.T.O. forthwith any amount due from the LIC to or, held by the LIC for or on account of the said Ranade to meet the amount due from Ranade as arrears of income tax.
The Divisional Manager of the LIC at Nagpur intimated this fact of receipt of the notice under section 226(3) of the Income Tax Act 1961 to the assignee of these policies Smt.
Kamalabai G. Ranade, suggesting that she take steps to get the notice vacated in order to safeguard her interest in the policies.
By further correspondence the ITO required the LIC to deposit the amount of Rs.3415.70 payable against the first policy which was to mature on 14.9.72 and the LIC informed the assignee that the moneys due under the policies will be paid to her only after her getting the notice served on LIC by the ITO vacated.
On 5.9.72 Smt.
kamalabai G. Ranade flied a Writ Petition in the High Court of Bombay impleading LIC and the ITO claiming several reliefs including a direction to the LIC for payment of Rs.3415.70 and also to make a statement that no part of the said amount is due to G.V. 98 Ranade nor does the LIC hold any part of the sum for or on account of Ranade.
This Writ Petition was dismissed in limine.
Kamalabai G. Ranade filed an appeal by special leave in this court and this court disposed of the appeal on the counsel for the LIC stating that he would file the necessary statement on oath in accordance with section 226(3)(vi) of the Income Tax Act, 1961 stating that no sum of money is due to the Assessee, insured person, before the ITO except one policy in respect of which the LIC having already paid the money to ITO no statement need be made and consequently no order can be made u/s 226(3)(vi) and the appeal was disposed of accordingly.
It appears that the ITO did not revoke the order of attachment inspite of the LIC making the requisite statement on oath under section 226(3)(vi) of the Income Tax Act on 5.12.75.
This led to the filing of another Writ Petition in the Bombay High Court by Smt.
Kamalabai praying for a direc tion to the ITO to revoke all notices issued under section 226(3) to the LIC and to the LIC to pay her the amount due against the policies which had matured.
On 4.4.1977 counsel for the ITO produced before the High Court a copy of the order dated 1.4.77 passed by the ITO withdrawing the notice u/s 226(3) of the Income Tax Act and the Writ Petition was dismissed as withdrawn.
Kamalabai then sent notice to the LIC demanding payment of the total amount due against the four policies together with interest @ 15% since the delay in payment had been occasioned by the default of the LIC.
LIC made the payment of these amounts to her but disputed its liability to pay interest thereon for the period subsequent to the date of maturity on the ground that the delay was occasioned by the ITOs notice u/s 226(3).
This dispute regarding the LIC 's liability to pay interest led to the filing of Writ Petition No. 1248 of 1977 decided on January 7, 1981 which gives rise to this appeal.
The impugned judgment holds that the last two policies having matured on 9.11.75 and 21.12.75 a few days before or after 5.12.75 when the statement on oath u/s 226(3) of the Income Tax Act was made by the LIC did not qualify for award of such interest which was payable in respect of the first two which had matured earlier on 14.9.72 and 28.12.73.
This view of the High Court on which the award of interest is based is assailed on behalf of the appellant.
The dispute in this appeal is only about the LIC 's liability for payment of interest on the principal amount from the date of maturity of the first two policies to 31.12.75 and the rate of 15% p.a. which is alleged to be excessive.
99 Dismissing the appeal with costs this Court, HELD: In the instant case, admittedly assignment of the policies was made by the insured G.V. Ranade and the same was duly accepted and registered by the LIC in April 1969.
It is, therefore, obvious that the LIC was bound to act on that assignment in favour of Smt.
Kamalabai G. Ranade unless the assignment was held to be invalid by a competent author ity on a proper proceeding taken for this purpose [111B] Mere issuance of notice under section 226(3) of the Income Tax Act, 1961 did not have the effect of invalidating the assignment nor did the casual mention of section 281 of the Income Tax Act, 1961 by the ITO in his letter dated 28.8.72 result in this consequence.
Any further step towards formation of the final opinion by the ITO could be taken only after the LIC had made the requisite statement on oath under section 226(3)(vi) of the Income Tax Act, 1961 on the basis of the registered assignment of policies.
[111C D] The question of revocation of the notice under clause (vii) of subsection (3) of Section 226 of the Income Tax Act, 1961 arose in the present case only after the LIC made the requisite statement on oath under section 226(3)(vi) of the Act in view of its consistent stand throughout that the moneys due under the policies were held by it for and on behalf of the assignee and not the defaulter.
Mere informa tion of the assignment to the ITO and keeping the assignee informed of the ITO 's action did not amount to discharge of the statutory obligation under section 226(3)(vi) of the Act by the LIC.
Sub section (3) of Section 226 of the Income Tax Act, 1961 clearly shows that on a notice thereunder being issued by the ITO to the LIC in the present case, it was incumbent on the LIC to make the requisite statement on oath under clause (vi) thereof raising an objection on the basis of the registered assignment.
It was then for the ITO to proceed further and form his final opinion and revoke the notice under clause (vii).
[112D E; 113G H] The inordinate delay in making the statement on oath by the LIC under section 226(3)(vi) of the Income Tax Act, 1961 was the result of misconstruction of the provisions and misappreciation of its liability thereunder.
[114B] Obviously the assignee of the policies who had become entitled to receive the amount due thereunder on the dates of their maturity must be compensated by the LIC for its failure to perform its statutory 100 obligation under section 226(3)(vi) of the Income Tax Act, 1961 within a reasonable time.
Performance of this statutory obligation by the LIC in the present case being after inor dinate delay award of interest to the assignee of the poli cies to whom the payment thereunder had to be made even according to the stand of the LIC is, therefore, clearly justified.
[114C D]


judgement:
ivil Appeal No. 3812 of 1989.
From the Judgment and Order dated .1.2.89 of the Andhra Pradesh High Court in Revision Petition No. 302 of 1989.
K.N. Bhatt, M.J. Paul and Kailash Vasdev for the Appellant.
A. Subba Rao for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
This tenant 's appeal raises the question whether a tenant who omits to pay or tender the rent in respect of the demised premises under the belief that he had a right to purchase the property under a prior agreement to sell and was, therefore, not obliged to pay the rent can be said to be a wilful defaulter within the meaning of the proviso to sub section (2) of Section 10 of the A.P. Buildings (Lease, Rent & Eviction) Control Act, 1960 (hereinafter called 'the Act ').
Section 10(1) lays down that a tenant shall not be evicted except in accordance with the provisions of this section or sections 12 and 13 of the Act.
Clause (i) of sub section (2) of that section next provides that a land lord who seeks to evict his tenant may apply to the Control ler for a direction in that behalf and the Controller on being satisfied that the tenant has not tendered the rent due by him within fifteen days after the expiry of the time fixed in the agreement of tenancy or in the absence of any such agreement by the last day of the month next following that for which the rent is due, shall make an order direct ing the tenant to put the landlord in possession.
This is, however, subject to the proviso which reads under: "Provided that in any case falling under clause (i), if the Controller is satisfied that the tenant 's default to pay or tender rent was not wilful, he may notwithstanding anything in section 11, give the tenant a reasonable time, not exceeding fifteen days, to pay or tender the rent due by him to the landlord upto the date of such payment or tender and 118 on such payment or tender, the application shall be rejected.
" The proviso, therefore, makes it clear that if the Control ler is satisfied that the tenant 's default is not wilful he may give the tenant an opportunity to pay or tender the rent due by him to the landlord and on such payment or tender being made within the time allowed, the landlord 's applica tion for eviction shall be rejected.
The benefit of this proviso is available to only those tenant who are not guilty of wilful default.
In the present case, the courts below have come to the conclusion that the tenant 's default was wilful and hence the benefit of the proviso was not avail able to him.
The question then is whether this conclusion reached by the courts below can be sustained on he facts found proved.
The facts lie in a narrow compass.
The respondents purchased the demised premises by a registered sale deed dated 7th December, 1977 for Rs.70,000.
The appellant was in actual possession of a part of the premises as a tenant of the vendors at the date of purchase.
After the purchase of the property the respondents served the appellant with a notice dated 13th December, 1977 calling upon him to pay the rent due and deliver vacant possession of the demised prem ises.
The appellant replied to the notice on 29th December, 1977 alleging that the vendors had orally agreed on 14th October, 1977 to sell the property to him for Rs.70,000 and had received Rs.5,000 as earnest.
The appellant, therefore, contended that he was under no obligation to pay the rent and vacate the premises since he was ready and willing to purchase the property.
The respondents sent a reply denying the existence of any such oral agreement and filed a suit for eviction.
It may here be mentioned that on the date of the purchase of the property the rent was paid to the ven dors up to the end of November 1977.
The respondents, there fore, claimed the rent from December 1977 to May 1978 from the appellant.
Since the appellant failed to pay the rent for the said period the courts below came to the conclusion that he was a wilful defaulter and passed a decree in eject ment against him.
The tenant has, therefore, come in appeal to this Court.
The short question then is whether it can be said that the tenant 's default to pay or tender rent from December 1977 to May 1978 was not wilful to avail of the benefit of the proviso extracted above.
It may be noticed that in cases where the tenant has defaulted to pay or tender the rent he is entitled to an opportunity to pay or tender the same if his default is not wilful.
The proviso is couched in nega tive form to reduce 119 the rigour of the substantive provision in Section 10(2) of the Act.
An Act is said to be wilful if it is intentional, conscious and deliberate.
The expressions 'wilful ' and 'wilful default ' came up for consideration before this Court in section Sundaram Pillai etc.
V.R. Pattabiraman etc., [1985] 2 SCR 643.
After extracting the meaning of these expressions from different dictionaries (See: pp. 659 & 660) this Court concluded at p. 661 as under. "Thus a consensus of the meaning of the words 'wilful default ' appears to indicate that default in order to be wilful must be inten tional, deliberate, calculated and conscious, with full knowledge of legal consequences flowing therefrom".
Since the proviso with which we are concerned is couched in negative form the tenant can prevent the decree by satisfy ing the Controller that his omission to pay or tender the rent was not wilful.
If the Controller is so satisfied he must give an opportunity to the tenant to make good the arrears within a reasonable time and if the tenant does so within the time prescribed, he must reject the landlords application for eviction.
In the present case, it is not in dispute that the tenant did not pay the rent from December 1977 to May 1978 before the institution of the suit.
Under the eviction notice served on him in December 1977 he was called upon to pay the rent from December, 1977 only.
The appellant tenant did not pay or tender the rent from Decem ber 1977 to May 1978 not because he had no desire to pay the rent to the respondents but because the bona fide believed that he was entitled to purchase the property under the oral agreement of 14th October, 1977.
He had also paid Rs.5,000 by way of earnest under the said oral agreement.
True it is, his suit for specific performance of the said oral agreement has since been dismissed but he has filed an appeal which is pending.
He, therefore, bona fide believed that he was entitled to purchase the property under the said oral agree ment and since he had already paid Rs.5,000 by way of ear nest thereunder he was under no obligation to pay the rent to the respondents.
In order to secure eviction for non payment of rent, it must be shown that the default was intentional, deliberate, calculated and conscious with full knowledge of its consequences.
Here is a tenant who felt that even though he had invested Rs.5,000 as earnest the vendor has sold the property to the respondents in total disregard of his right to purchase the same.
This is not a case of a tenant who has failed to pay the rent without any rhyme or reason.
He was not averse to paying the rent but he genuinely believed that he was under no obligation to do so as he had a prior 120 right to purchase the property.
We are, therefore, of the opinion that this is a case in which the Controller should have invoked the proviso and called upon the appellant to pay the arrears from December 1977 to May 1978 within a certain time.
Failure to do so has resulted in miscarriage of justice.
We are, therefore, of the opinion that the ejectment decree cannot be allowed to stand.
In the result we allow this appeal and set aside the eviction decree.
The matter will go back to the Controller with a direction that he will give the benefit of the provi so extracted above to the appellant in accordance with law.
Parties will bear their own costs.
N.V.K. Appeal allowed.

summary:
The respondents purchased the demised premises by a registered sale deed dated 7th December, 1977 for Rs.70,000.
The appellant was in actual possession of a part of the premises as a tenant of the vendors at the date of purchase.
After the purchase the respondents served the appellant with a notice dated 13th December, 1977 calling upon him to pay the rent due, and deliver vacant possession of the demised premises.
The appellant replied to the notice on 29th Decem ber, 1977 alleging that the vendors had orally agreed on 14th October, 1977 to sell him the property for Rs.70,000, and had received Rs.5,000 as earnest money, and that he was under no obligation to pay the rent and vacate the premises, since he was ready and willing to purchase the property.
The respondents sent a reply denying the existence of any such oral agreement.
A suit for eviction, was thereafter filed by the re spondents claiming rent from December 1977 to May 1978 from the appellant, and since the same was not paid, the appel lant it was contended had rendered himself liable to evic tion on the ground of wilful default.
The courts below held that the appellant failed to pay the rent, and concluded that he was a wilful defaulter and passed a decree for ejectment against him.
In the appeal to this Court, on the question: whether it can be said 116 that the tenant 's default to pay or tender rent from Decem ber 1977 to May 1978 was not wilful to avail of the benefit of the proviso to clause (i) of the sub section (2) of Section 10 of the Andhra Pradesh Building (Lease, Rent and Eviction) Control Act, 1960.
The Court, allowing the appeal.
HELD: 1.
An act is said to be wilful if it is intention al, conscious and deliberate.
[119A] section Sundaram Pillai etc.
vs V.R. Pattabiraman etc.
, [1985] 2 SCR 643, refered to. 2.
In order to secure eviction for non payment of rent, it must be shown that the default was intentional deliber ate, calculated and conscious with full knowledge of its consequences.
[119G] 3.
In cases where the tenant has defaulted to pay or tender the rent, he is entitled to an opportunity to pay or tender the same if his default is not wilful.
The proviso to sub section (2) of Section 10 is couched in negative form to reduce the rigour of the substantive provision in Section 10(2) of the Act.
[118H; 119A] 4.
The appellant tenant in the instant case, did not pay or tender the rent from December 1977 to May 1978, not because he had no desire to pay the rent to the respondents but because he bona fide believed that he was entitled to purchase the property under the oral agreement of October 14, 1977.
He had also paid Rs.5,000 by way of earnest under the said oral agreement.
He, therefore, bona fide believed that he was entitled to purchase the property under the said oral agreement and since he had already paid Rs.5,000 by way of earnest thereunder he genuinely believed he was under no obligation to pay the rent to the respondents.
[119E F] 5.
This is not a case of a tenant who has failed to pay the rent without any rhyme or reason.
He was not averse to paying the rent but he genuinely believed that he was under no obligation to do so as he had a prior right to purchase the property.
[119H; 120A] 6.
This is a case where the Controller should have invoked the proviso to sub section (2) of Section 10 of the Act and called upon the appellant to pay the arrears from December 1977 to May 1978 within a certain time.
Failure to do so has resulted in miscarriage of justice.
The 117 ejectment decree cannot therefore, be allowed to stand and is accordingly set aside.
The.matter will go back to the Controller who will give the benefit of the aforesaid provi so to the appellant.
[120A B]