judgement:
Appeal No. 135 of 1962.
Appeal from the judgment and order dated April 30, 1958, of the Orissa High Court in O.J.C. No. 321 of 1955.
M. C. Setalvad, Sarjoo Prasad and A. D. Mathur, for the appellant.
section V. Gupta, Additional Solicitor General, M. section K. Sastri and R. N. Sachthey, for the respondent.
March 5, 1964.
The Judgment of the Court was delivered by WANCHOO, J.
This appeal on a certificate granted by the Orissa High Court raises the question of the constitu tionality of the Shri Jagannath Temple Act, 1954, No. 11 of 1955, (hereinafter referred to as the Act).
The challenge to the Act was made by the father of the present appellant by a writ petition filed in the High Court of Orissa.
The appellant was substituted for his father on the death of the latter while the writ petition was pending in the High Court.
The case put forward in the petition firstly was that the Shri Jagannath Temple (hereinafter referred to as the Temple) was the private property of the petitioner, Raja of Puri, and the Act, which deprived the appellant of his property was unconstitutional in view of article 19 of the Constitution.
In the alternative it was submitted that the appellant had the sole right of superintendence and management of the Temple and that that right could not be taken away without payment of compensation, and the Act inasmuch as it took away that right without any compensation was hit by article 31 of the Constitution.
It was further pleaded that the right of superintendence was property within the meaning of article 19 (1) (f) and inasmuch as the appellant had been deprived of that property by the Act, it was an unreasonable provision which was not L/P(D)1SCI 2 . 34 saved under article 19(5).
The Act was further attacked on the ground that it was was discriminatory and was therefore hit by article 14 of the Constitution, as the Temple had been singled out for special legislation, though there was a general law in force with respect to Hindu religious endowments, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952.
Reliance was placed on articles 26, 27 and 28 of the Constitution to invalidate the Act, though the appellant did not indicate in the petition how those Articles hit the Act.
Lastly, it was urged that the utilisation of the Temple funds for purposes alien to the interest of the deity as proposed under the Act was illegal and ultra vires.
The petition was opposed on behalf of the State and it was urged that the Temple was not the private property of the appellant.
The case of the State was that it was a public temple and the State always had the right to see that it was properly administered.
Before the British conquered Orissa in 1803, the Temple had for a long time been managed by Muslim Rulers directly, though through Hindu employees.
After 1803, the Temple began to be managed directly by the British Government, though by Regulation IV of 1809 the management was made over to the Raja of Khurda (who is now known as the Raja of Puri), who was appointed as hereditary superintendent in view of his family 's connection in the past with the Temple.
Even so, whenever there was mismanagement in the Temple during the course of the last century and a half, the Government always intervened and many a time administered the secular affairs of the Temple directly through one of its officers in whose favour the then Raja was made to execute a power of attorney divesting himself completely of all powers of management.
The case of the State further was that in view of the reported mismanagement of the Temple, the State legislature passed the Puri Shri Jagannath Temple (Administration) Act, (No. XIV of 1952) for the appointment of a Special Officer for the preparation of a record pertaining to the rights and duties of different sevaks and pujaris and such other persons connected with the seva, puja or management of the Temple and its endowments in order to put the administration of the Temple on a suitable basis.
A Special Officer was accordingly appointed who submitted his report on March 15, 1954, which disclosed serious mismanagement of the affairs of the Temple and in consequence the Act was passed in 1955.
The State contended that the Act was perfectly valid and constitutional and did not offend any constitutional provision.
When the matter came to be argued before the High Court, the appellant gave up the plea that the Temple was his private property and it was conceded that it was a public temple, the properties of which were the properties of the deity 35 and not the private properties of the Raja of Puri.
In view of this concession, the attack on the constitutionality of the Act was based mainly on the ground that it took away the, Raja 's perquisites which had been found to belong to him in the record of rights prepared under the Act of 1952.
It may be mentioned that the Raja of Puri had two fold connection with the Temple.
In the first place, the Raja is the adya sevak, i.e., the chief servant of the Temple and in that capacity he has certain rights and privileges.
In addition to that, he was the sole superintendent of the Temple and was incharge of the management of the secular affairs of the Temple.
The main contention of the appellant before the High Court was that the Act not only took away the management of the secular affairs of the Temple from the appellant but also interfered with his rights as adya sevak and was therefore unconstitutional.
The High Court repelled all the submissions ,on behalf of the appellant and held that the Act was valid and constitutional except for one provision contained in section 28(2)(f) thereof.
The High Court therefore struck down that provision and upheld the constitutionality of the rest of the Act.
Thereupon the appellant applied for a certificate which was granted; and that is how the appeal has come up before us.
Before we consider the attack on the constitutionality of the Act we should like to indicate briefly what the scheme ,of the Act is and what it provides with respect to the management of the Temple.
Section I provides for its commencement.
Section 2 provides for certain repeals.
Section 3 provides that the Orissa Act XIV of 1952 shall be deemed to be a part of the Act and delegates to the committee constituted under section 6 of the Act all powers of the State Government under the 1952 Act from such date as the State Government may notify.
Section 4 is the definition section.
Section 5 vests the administration and the governance of the Temple and its endowments in a committee called the Shri Jagannath Temple Managing Committee.
The Committee shall be a body corporate, having perpetual succession and a common seal and may by the said name sue and be sued.
Section 6 provides for the constitution of the committee with the Raja of Puri as its chairman.
No person who does not profess the Hindu religion shall be eligible for membership.
Besides providing for some ex officio members, the other members of the committee are all nominated by the State Government, one from among the persons entitled to sit on the mukti mandap, three from among the sevaks of the Temple recorded as such in the record of rights, and seven from among those who do not belong to the above two classes.
36 The Collector of the district of Puri is an ex officio member and is designated as the vice chairman of the committee.
Section 7 provides for the appointment of a chairman during the minority of the Raja of Puri or during the time when the Raja is suffering from any of the disabilities mentioned in section 10(1) clauses (a) to (e) and (g) thereof.
Section 8 lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja of Puri in respect of the Gajapati Maharaj Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being.
Section 9 provides for the terms of office of members and section IO gives power to the State Government to remove any member of the committee other than the ex officio members on the rounds specified in cls.
(a) to (g) thereof.
No member can be removed from his membership unless he has been given a reasonable opportunity of showing cause against his removal.
Section 11 provides for dissolution and supersession of the committee in certain contingencies, such as incompetence to perform the duties imposed upon it by ' the Act 'or making of default in performing such duties.
The committee is given an opportunity to show cause against any such action before it is taken, and provision is made for continuing the management during the time the committee is superseded or has been dissolved.
Section 12 provides for casual vacancies, section 13 for the meetings of the committee and section 14 for allowances to the members of the committee payable from the Temple fund, but no member of the committee other than the administrator is to be paid any salary or other re muneration from the Temple fund except such travelling and daily allowances as may be prescribed.
Section 15 provides for the duties of the committee and it may be quoted in full as it is the main target of attack: " 15.
Subject to the provisions of this Act and the rules made thereunder, it shall be the duty of the Committee (1) to arrange for the proper performance of sevapujah and of the daily and periodical Nitis of the Temple in accordance with the Record of Rights; (2) to provide facilities for the proper performance of worship by the pilgrims; (3) to ensure the safe custody of the funds, valuable securities and jewelleries and for the preservation and management of the properties vested in the Temple; (4) to ensure maintenance of order and discipline and proper hygienic conditions in the Temple and of proper standard of cleanliness and purity in the offerings made therein; 37 (5) to ensure that funds of the specific and religious endowments are spent accordi ng to the wishes, so far as may be known, of the donors; (6) to make provision for the payment of suitable emoluments to its salaried staff; and (7) to do all such things as may be incidental and conducive to the efficient management of the affairs of the Temple and its endowments and the convenience of the pilgrims.
" Section 16 provides a ban on the alienation of Temple properties subject to certain conditions.
Section 17 lays down that the committee shall have no power to borrow money from any person except with the previous sanction of the State Government.
Section 18 provides for an annual administration report to be submitted to the Government.
Section 18 A gives power to the committee with the prior approval of the State Government to delegate its functions to the Collector of the district or, as the case may be, to the officer who happens to be a member of the committee in place of such Collector.
Section 9 gives power to the State Government to appoint an administrator for the Temple.
Section 20 provides for the qualifications and conditions of service of the administrator and section 21 for the powers and duties of the administrator.
As this section is specially attacked we quote it here in full.
"S.21.
(1) The Administrator shall be Secretary of the Committee and its chief executive officer and shall subject to the control of the committee have powers to carry out its decision in accordance with the provisions of this act.
(2) Notwithstanding anything in sub section (1) or in section 5, the Administrator shall be responsible for the custody of all records and properties of the Temple, and shall arrange for proper collections of offerings made in the Temple and shall have power (a) to appoint all officers and employees of the Temple; (b) to lease out for a period not exceeding one year at a time the lands and buildings of the Temple which are ordinarily leased out , (c) to call for tenders for works or supplies and accept such tenders when the amount or value thereof does not exceed two thousand rupees; (d) to order for emergency repairs; (e) to specify, by general or special orders, such conditions and safeguards as he deems fit, subject to which any sevak, office holder or servant 38 shall have the right to be in possession of jewels or other valuable belongings of the temple; (f) to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public; (g) to decide disputes relating to the rights, privileges, duties and obligations of sevaks, office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature; (h) to require various sevaks and other persons to do their legitimate duties in time in accordance with the Record of Rights; and (i) in the absence of any sevak or his substitutes or on the failure on the part of any such person to perform his duties, to get the niti or seva performed in accordance with the record ofrights by any other person.
(3) The administrator may subject to such conditions, if any, as the committee may, by general or special order impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony, such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall be paid to the sevaks, office holders or servants of the Temple.
" Section 21 A provides that all sevaks, office holders and servants attached to the Temple or in receipt of any emolu ments or perquisites therefrom shall, whether such service is hereditary or not, be subject to the control of the administrator who may, subject to the provisions of the Act and the regulations made by the committee in that behalf, after giving the person concerned a reasonable opportunity of being heard withhold the receipt of emoluments or perquisites, impose a fine, suspend or dismiss any of them for breach of trust, incapacity, disobedience of lawful orders, neglect of or wilful absence from duty, disorderly behaviour or conduct derogatory to the discipline or dignity of the temple or for any other sufficient cause: Section 22 provides for extraordinary powers of the administrator who is directed to take action in emergency and report forthwith to the committee the action taken and the reasons therefor.
Section 23 provides for the establishment schedule and section 24 provides for an appeal to, the committee against an order of the administrator under section 21 (2)(f) or (g) or section 21 A. Sections 25 to, 27 provide for the preparation of annual budget and audit.
Section 28 provides for a Temple fund and how it is to be utilised.
Section 29 bars suits against 39 the State Government or against the committee or the administrator for anything done or purported to be done by any of them under the provisions of the Act.
Section 30 gives power of general superintendence of the Temple and its endowments to the State Government which may pass any orders for the proper maintenance or administration of the Temple or its endowments or in the interest of the general public worshipping in the Temple.
It also gives power to the State Government to examine the records of the administrator or of the committee in respect of any proceedings with a view to satisfy itself as to the regularity of such proceeding or the correctness, legality or propriety of any decision or order made therein; and if in any case it appears to the State Government that any such decision or order should be modified, annulled, reversed or remitted, for reconsideration, it may pass orders accordingly.
The State Government is also given the power to stay the execution of any such decision or order in the meantime.
Section 30 A creates an offence which is punishable on conviction with fine which may extend to Rs. 500 whenever any person having duties to perform in respect of the nitis of the Temple or sevapuja of the deity raises any claim or dispute and fails or refuses to perform such duties, knowing or having reasons to believe that the non performance of the said duties would cause delay in the performance of the niti or sevapuja or inconvenience or harassment to the public or any section thereof entitled to worship in the Temple and wilfully disobeys or fails to comply with the orders of the administrator directing him to perform his duties without prejudice to the results of a proper adjudication of such claim or dispute.
Section 31 gives power to the committee to frame regulations as to the conditions of service of office bearers and employees of the Temple, procedure for transfer of sevapuja, chuli or panti in the Temple, observance of nitis and other usages in the Temple in the absence of specific mention in the record of rights; and any other matters for which regulations are required to be made for the purposes of the Act.
Section 32 gives power to the State Government to frame rules.
Section 33 lays down that "the committee shall be entitled to take and be in possession of all movable and immovable properties, including the Ratna Bhandar and funds and jewelleries, re cords, documents and other assets belonging to the Temple" and also lays down the procedure to be followed in case of resistance in obtaining such possession.
Section 34 lays down that "all public officers having custody of any record, register, report or other documents relating to the Temple or any movable or immovable property thereof shall furnish such copies of or extracts from the same as may be required by the administrator".
Section 35 lays down that "no act or proceeding of the committee or of any person acting as a member of the committee shall be deemed to be invalid by reason only 40 of a defect in the establishment or constitution of the commitee or on the ground that any member of the committee was not entitled to hold or continue in such office by reason of any disqualification or by reason of any irregularity or illegality in his appointment or by reason of such act having been done or proceeding taken during the period of any vacancy in the office of member of the committee.
" Similar protection is given to an act or proceeding of the administrator.
Section 36 provides for the removal of difficulties by the State Government so long as the order passed in that behalf is not inconsistent with the Act or the rules made thereunder.
This review of the provisions of the Act shows that broadly speaking the Act provides for the management of the secular affairs of the Temple and does not interfere, with the religious affairs thereof, which have to be performed according to the record of rights prepared under the Act of 1952 and where there is no such record of rights in accordance with custom and usage obtaining in the Temple.
It is in this background that we have to consider the attack on the constitutionality of the Act.
We may first dispose of the attack based on article 14.
It is urged that inasmuch as this special Act has been passed for this Temple and the general Act, namely, the Orissa Hindu Religious Endowments Act No. 11 of 1952 no longer applies to this Temple, there has been discrimination inasmuch as the Temple has been singled out for special treatment as compared to other temples in the State of Orissa.
There is no doubt that the Act is in many respects different from Act 11 of 1952 and substitutes the committee for the Raja of Puri for the purpose of management of the Temple, and there would prima facie be discrimination unless it can be shown that the Temple stands in a class by itself and required special treatment.
As to that the affidavit on behalf of the State Government is that the Temple is a unique institution in the State of Orissa and is in a class by itself and that there is no comparison between the Temple and other temples in the State.
The averment on behalf of the State is that the Temple has been treated as a special object throughout the centuries because of its unique importance and that there is no other temple which occupies the unique place which this Temple occupies in the whole of India.
Also there is no other temple in Orissa with such vast assets or which attracts such a large number of pilgrims which pour into it from the whole of India.
It is also averred that it is absolutely incorrect that there are other temples in Orissa which are equal to it from the standpoint of assets or from the standpoint of their all India character or from the standpoint of the complicated nature of nitis and sevapuja affecting the lives, religious susceptibilities and senti ments of millions of people spread all over India.
There can be no doubt after this averment on behalf of the State that the Temple occupies a unique position in the State of Orissa and 41 is a temple of national importance and no other temple in that State can compare with it stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers it must be a subject of special consideration by the State Government.
In reply to these averments on behalf of the State, all that the appellant stated in his rejoinder was that these averments were not admitted.
There was no denial of the special importance of the Temple as averred on behalf of the State and we have no doubt therefore that this Temple stands in a class by itself in the State of Orissa and therefore requires special treatment.
We may in this connection refer to the decision of the Court in Tilkayat Shri Govindlalji vs State of Rajasthan(1) where in relation to the temple at Nathdwara with respect to which a special Act had been passed by the State of Rajasthan, this Court observed that "a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself".
The attack under article 14 on the constitutionality of the law with respect to the temple at Nathdwara was repelled on the ground that the temple had a, unique position amongst the Hindu Shrines in the State of Rajasthan and no temple could be regarded as comparable with it.
The same reasons in our opinion apply to the Temple in the present case and the Act cannot be struck down under article 14 because the Temple in the present case holds a unique position amongst the Hindu temples in the State of Orissa and no other temple can be regarded as comparable with it.
Next we come to the attack on the constitutionality of the Act on the ground that it has taken away the sole management of the temple which had so far been vested in the appellant or his ancestors.
The reasons why the Act was passed are to be found in the preamble thereof.
The preamble says that the ancient Temple of Lord Jagannath of Puri has ever since its inception been an institution of unique and national importance, in which millions of Hindu devotees from regions far and wide have reposed their faith and belief and have regarded it as the epitome of their tradition and culture.
It further says that long prior to and after the British conquest the superintendence, control and management of the affairs of the Temple have been the direct concern of successive rulers, governments and their officers and of the public exchequer.
it then says that by Regulation IV of 1809 and thereafter by other laws and regulations in pursuance of arrangements entered into with the Raja.
of Khurda, later designated as the Raja of Puri, the said Raja came to be entrusted hereditarily with the management of the affairs of the Temple and its properties as superintendent subject to the control and supervision of the ruling power.
It then goes on to say that in view of grave (1) [1964] 1 S.C.R. 561. 42 and serious irregularities thereafter the Government had to intervene on various occasions in the past.
Finally the preamble says that the administration under the superintendent has further deteriorated and a situation has arisen rendering it expedient to reorganise the scheme of management of the affairs of the Temple and its properties and provide better administration and governance therefor in supersession of all previous laws, regulations and arrangements, having regard to the ancient customs and usages and the unique and traditional nitis and rituals contained in the record of rights prepared under the 1952 Act.
So for all these reasons the appellant was removed from the sole superintendence of the Temple and a committee was appointed by section 6 of the Act for its management.
These statements in the preamble are not seriously in dispute as will be clear from the reports by G. Grome dated June 10, 1905 and by the Special Officer appointed under the 1952 Act dated March 15, 1954 and the correspondence which passed from time to time between the officers of the Government and the predecessors of the appellant.
In these circumstances if the secular management of the Temple was taken away from the sole control of the appellant and vested in a committee of which he still remains the chairman, it cannot be said that the provisions contained in the Act for that purpose are hit either by article 31(2) or by article 19(f).
There is in our opinion a complete parallel between the provisions of the Act and the Act relating to the temple at Nathdwara in Rajasthan, which came up for consideration before this Court in Tilkayat Govindlalji 's case(1).
If anything, the case of the appellant is weaker than that of Shri Govindlalji, for the appellant in the present case was conferred with the power of superintendence by Regulation IV of 1809 after the British conquered Orissa.
Whatever may have been his connection prior to 1809 with the Temple, the history of the Temple shows that the Muslim Rulers had removed him and were carrying on the management of the Temple directly through Hindu officers appointed by them.
The right of management was conferred on the appellant 's ancestor after the British conquest by virtue of the Regulation of 1809 and other laws passed thereafter.
All that the Act has done is to replace his sole right of management by appointing a, committee of which he is the chairman.
Further there can be in the circumstances no question of the application of article 31(2) in the present case.
In the first place the right of superintendence is not property in this case for it carried no beneficial enjoyment of any property with it, and in the second case, that right has not been acquired by the State which article 31(2) requires.
As was pointed out in Tilkayat Govindlalji 's case.(1), all that has happened in the present case is that the sole right of the appellant to (1) 1964 1 S.C.R. 561.
43 manage the property has been extinguished and in its place another body for the purpose of the administration of the property of the Temple has been created.
In other words the office of one functionary is brought to an end and another functionary has come into existence in its place.
Such a process cannot be said to constitute the acquisition of the extinguished office or the vesting of the rights in the person holding that office: (see Tilkayat Govindlalji 's case(1).
As we have already pointed out, the appellant and his predecessors always had two distinct rights with respect to this Temple.
In the first place, they were the adya sevaks and as such had certain rights and privileges and perquisites.
The rights as adya sevak as we shall show later have not been touched by the Act.
The Act has only deprived him of the second right i.e., the sole management of the Temple which carried no beneficial enjoyment of any property with it and has conferred that management on a committee of which he still remains the chairman.
In view of this clear dichotomy in the rights of the appellant and his predecessors there is no question of article 31(2) applying in the present case at all, insofar as this right of superintendence of the appellant is concerned.
The attack on the constitutionality of the Act on the ground that the sole right of superintendence has been taken away from the appellant and that is hit by article 19(1)(f) or article 31(2) must therefore fail.
This brings us to the other aspect of the rights of the appellant as adya sevak, and it is urged that those rights have been taken away by the Act, and insofar as the Act has done that it is unconstitutional in that the provisions with respect to those rights are unreasonable and cannot be protected under article 19(5).
Now we have already referred to the provisions of the Act, and if one looks at those provisions one finds nothing in them which takes away the rights of the appellant as adya sevak.
If anything, there are indications in the Act to show that his rights, other than those of superintendence remain intact.
When we say this we are not to be understood as saying that any rights which the appellant might have had in the capacity of adya sevak but which were of the nature of secular management of the Temple would still remain in him.
Because the appellant and his predecessors were holding a dual position of superintendent and adya sevak, there was in the past a mix up of his rights flowing from being an adya, sevak with his rights as a superintendent.
But apart from the rights which vested in him as the sole manager of the Temple with respect to its management and which have only been taken away from him by the Act, we find nothing in the Act which takes away his rights as an adya sevak (i.e. the chief servant) of Lord Jagannath in the matter of sevapuja, nitis etc.
These rights flow from his position as adya sevak, they (1) [1964] 1 S.C.R. 561. . 44 are religious in character and are referable to his status and obligations as sevak.
We may in this connection refer to section 8 of the Act which lays down that nothing in section 7 shall be deemed to affect the rights and privileges of the Raja in respect of Gajapati Maharaja Seva merely on the ground that the Raja has ceased to perform the duties of the chairman for the time being.
This provision clearly shows that even though the appellant may not be able to act as chairman of the committee because of his minority or because of certain disqualifications mentioned in section 7 read with section 10(1), his rights and privileges in respect of the Gajapati Maharaja Seva (i.e., the daily sevapuja of Lord Jagannath) remain unaffected, and these were the rights which he had as adya sevak.
Therefore section 8 preserves by the clearest implication the rights of the appellant as adya sevak in connection with the sevapuja of Lord Jagannath.
In this connection our attention was drawn to section 14 of the Act, which provides that it shall be within the power of the State Government by order to direct from time to time the payment from out of the Temple fund to the chairman of such allowances at times and in such manner as the State Government may consider reasonable and proper.
It is said that in view of section 14, the appellants rights and privileges as adya, sevak have gone.
We are of opinion that this is not so.
As we have already said, the position of the superintendent and of adya sevak were two different positions, which the appellant and his predecessors held in this Temple.
His position as a Superintendent has gone and in place of it he has become the chairman of the committee constituted under section 6.
When section 14 speaks of allowances to him, it refers to his position as a chairman, which replaces his position as superintendent before the Act.
It has nothing to do with his position as an adva sevak, which is safeguarded by section 8 of the Act inasmuch as rights and privileges in respect of the Gajapati Maharaja Seva are protected, even though he may cease to be the chairman on account of his minority or on account of some other reason.
Therefore, the provisions of section 14 refer to allowances only as a chairman and have nothing to do with the rights, privileges and perquisites as an adya sevak, for he remains as adya sevak even though he may not for certain reasons remain a chairman.
His rights, privileges and perquisites as adya sevak will remain protected under section 8 even though he may not be entitled to anything under section 14 if he ceases to be the chairman in view of section 7.
No provision in the Act has been pointed out to us, which expressly takes away his rights, privileges and perquisites as adya sevak; on the other hand there are other provisions which seem to indicate that even the rights and privileges of sevaks have not been affected by the Act.
If so it is hardly likely in the absence of any specific provision, that the Act would affect the privileges of the appellant as adya sevak.
For example, section 21 (2) (g) gives power to the 45 administrator to decide disputes relating to the rights, privileges, duties and obligations of sevaks , office holders and servants in respect of sevapuja and nitis, whether ordinary or special in nature.
This clearly postulates that the rights and privileges of sevaks remain intact, and if there is any dispute about them, the administrator has to decide it.
Again section 21(2)(f) provides that the administrator shall have power to decide disputes relating to the collection, distribution or apportionment of offerings, fees and other receipts in cash or in kind received from the members of the public.
This again postulates a right in some persons who could only be sevaks etc.
to a share of the offerings, fees and other receipts, and if there is any dispute about its distribution or apportionment, the administrator has been given the power to decide it.
Reading these two clauses together, there can be no manner of doubt that the Act does not affect even the rights, privileges and perquisites of sevakas.
If so, in the absence of express provision, it cannot possibly be argued that the Act affects rights, privileges and perquisites of adya sevak.
As we have already indicated, those rights, privileges and perquisities of adya sevak have also been safe ,guarded under section 8 of the Act.
Then we may refer to section 21 (3) which provides that "the administrator may subject to such conditions, if any, as the committee may, by general or special order 'Impose, afford facilities on payment of fees for special darshan or for any special service, ritual or ceremony such darshan, service, ritual or ceremony not being inconsistent with the custom and usage of the Temple and he shall have power to determine the portion, if any, of such fees which shall paid to the sevakas, office holders or servants of the Temple " This again postulates that the rights, privileges and perquisites of the sevaks are not to be affected by the Act but have to be governed by the record of rights or, as the case may be, by the order of the committee.
The argument that the Act is ultra vires because it takes away the rights, privileges and perquisites of the appellant as adya sevak, some of which may be property must therefore fail in view of the specific provision in section 8 and indications in other provisions of the Act to which we have referred.
Clause (1) of section 15 of the Act is however specially attacked as interfering with the religious affairs of the Temple.
The rest of the provisions of that section deal so obviously with secular matters that they have not been challenged.
This clause provides that it shall be the duty of the committee to arrange for the proper performance of sevapuja and of the daily and periodical nitis of the Temple in accordance with the record of Tights.
As we read this clause we see no invasion of the religious affairs of the Temple therein.
All that it provides is that it shall be the duty of the committee to arrange for the proper performance of sevapuja etc.
of the Temple in accordance with 46 the record of rights.
Sevapuja etc.
have always two aspects.
One aspect is the provision of materials and so on for the purpose of the sevapuja.
This is a secular function.
The other aspect is that after materials etc.
have been provided, the sevaks or other persons who may be entitled to do so, perform the sevapuja and other rites as required by the dictates of religion.
Clause (1) of section 15 has nothing to do with the second aspect, which is the religious aspect of sevapuja; it deals with the secular aspect of the sevapuja and enjoins upon the committee the duty to provide for the proper performance of sevapuja, and that is also in accordance with the record of rights.
So that the committee cannot deny materials for sevapuja if the record of rights says that certain materials are necessary.
We are clearly of the opinion that cl.
(1) imposes a duty on the committee to look after the secular part of the sevapuja and leaves the religious part thereof entirely untouched.
Further under this clause it will be the duty of the committee to see that those who are to carry out the religious part of the duty do their duties properly.
But this again is a secular function to, see that sevaks and other servants, carry out their duties properly; it does not interfere with the performance of religious duties themselves.
The attack on this provision that it interferes with the religious affairs of the Temple must therefore fail.
We may now briefly refer to some other sections of the Act which were attacked.
Apart from the main sections 5 and 6 by which the appellant was divested of the sole management, the first section so attacked is section 11 which deals with the dissolution and supersession of the committee.
We have not been able to understand how this section can be attacked once it is held that sections 5 and 6, constituting the committee in place of the Raja, are valid, as we have held that they are for they are the main provisions by which the management has been transferred from the sole control of the Raja to the control of the committee.
The next section in this group is section 19.
That section provides for the appointment of an administrator to carry on the day to day administration of the secular part of the affairs of the Temple.
We cannot see how this provision is liable to attack once sections 5 and 6 are held good, for the committee must have some officer under it to carry on the day to day administration.
The next provision that is attacked in this group is section 21, which deals with powers and duties of the administrator.
Again we cannot see how this provision can be attacked once it is held that the appointment of the administrator under section 19 is good, for section 21 only delimits the powers and duties of the administrator, and all powers and duties therein specified are with respect to the secular affairs of the Temple, and have no direct impact on the religious affairs thereof.
The next section in this group is section 21 A.
That section is clearly concerned with the secular management of the Temple, for the disciplinary 47 powers conferred thereby on the administrator are necessary in order to carry on the administration of the secular affairs of the Temple.
The next section which is attacked is section 30, which gives over all supervisory power to the State Government.
We cannot see how the control which the State Government is authorised to exercise by section 30 over the committee can be attacked once the appointment of the committee is held to be ,good.
The last section under this group is section 30A, which creates a criminal offence and makes sevaks etc.
liable to a fine on ,conviction.
We think it unnecessary for present purposes to consider the validity of this section.
The matter can be decided if and when a case of prosecution under that section ever arises.
This brings us to the contention relating to articles 26, 27 and 28 of the Constitution, which were referred to in the petition.
Articles 27 and 28 in our opinion have nothing to do with the matters dealt with under the Act.
The main reliance has however been placed on article 26(d) which lays down that subject to public order, morality and health, every religious denomination or any section thereof shall have the right to administer its property in accordance with law.
In the first place besides saying in the petition that the Act was bit by article 26 there was no indication anywhere therein as to which was the denomination which was concerned with the Temple and whose rights to administer the Temple have been taken away.
As a matter of fact the petition was filed on the basis that the appellant was the owner of the Temple which was his private property.
There was no claim put forward on behalf of any denomination in the petition.
Under these circumstances we are of opinion that it is not open to the appellant to argue that the Act is bad as it is hit by article 26(d).
The argument addressed before the High Court in this connection was that the worshippers of Lord Jagannath constitute a distinct religious denomination within the meaning of article 26 and that they had a right to administer the Temple and its endowments in accordance with law and that such administration should be only through the Raja of Puri as superintendent of the Temple assisted by the innumerable sevaks attached thereto.
But inasmuch as the Act has taken away this right of management from the religious denomination, i.e., the worshippers of Lord Jagannath, and entrusted it to the nominees of the State Government, there had been a contravention of the funda mental rights guaranteed under cl.
(d) of Art 26.
This argument was met on behalf of the State with the contention that the Temple did not pertain to any particular sect, cult or creed of Hindus but was a public temple above all sects, cults and, creeds, therefore, as the temple was not the temple of any particular domination no question arose of the breach of cl.(d) of article 26.
The foundation for all this argument which was 48 urged before the High Court was not laid in the writ petition.
In these circumstances we think it was unnecessary for the High Court to enter into this question on a, writ petition of this kind.
The High Court however went into the matter and repelled the argument on the ground that the Temple in the present case was meant for all Hindus, even if all Hindus were treated as a denomination for purposes of article 26, the management still remains with Hindus, for the committee of management consists entirely of Hindus, even though a nominated committee.
In view of the defective state of pleadings however we are not prepared to allow the argument under article 26(d) to be raised before us and must reject it on the sole ground that no such contention was properly raised in the High Court.
For these reasons we find there is no force in this appeal and it is hereby dismissed with costs.
Appeal dismissed.

summary:
A writ petition was filed in the Orissa, High Court by the father of the appellant challenging the validity of Shri Jagannath Temple Act, 1954.
The petition was dismissed by High Court which held that the Act was valid and constitutional except section 28(2)(f).
The High Court struck down that provision and upheld the constitutionality of the rest of the Act.
The appellant came to this Court after obtaining a certificate of fitness to appeal to Supreme Court.
The contentions raised before this Court were that the Act was discriminatory as the Jagannath Temple alone had been singled out for special treatment as compared to other temples in the State of Orissa.
The Act took away the sole management of the Temple which had so far been vested in the appellant or his ancestors.
section 15 (1) of the Act interfered with the religious affairs of the temple.
The validity of sections 11, 19, 21, 21A and 30 of the Act was also attacked.
Dismissing the appeal, Held: There is no violation of article 14 of the Constitution.
The Jagannath Temple occupies a unique position in the State of Orissa, and is a temple of national importance and no other temple in that State can compare with it.
It stands in a class by itself and considering the fact that it attracts pilgrims from all over India in large numbers, it could be the subject of special consideration by the State Government.
A law may be constitutional even though it related to a single individual if on account of special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself.
(ii) There was no violation of article 19(1) (f) or article 31 (2) of the Constitution.
All that the Act has done is that it has taken away the sole right of the appellant to manage the property of the Temple and another body has been set up in its place with the appellant as its Chairman.
Such a process cannot be said to constitute the acquisition of the extinguished office or of the vesting of the rights in the person holding that office.
The appellant occupied a dual position as Superintendent and Adya Sevak.
His position as Superintendent hers gone and in that place he has become the Chairman of the Committee set up under section 6.
The position of the applicant as Adya Sevak is safeguarded by section 8 of the Act inasmuch as the rights and privileges in respect of Gajapati Maharaja Seva axe protected even though he may cease to be Chairman on account of his minority or on account of some other reason.
(iii) section 15(1) of the Act does not interfere with the religious, affairs of the Temple.
Sevapuja of the Temple has two aspects.
One aspect is the provision of materials and that is a secular, 33 function.
The second aspect is the performance of the Sevapuja and other rights as required by religion.
section 15(1) has nothing to do with the second aspect which is the religious aspect of Seva Raj puja.
While section 15(1) imposes a duty on the committee to look after the secular aspect of the Sevapuja, it leave the religious part entirely untouched.
(iv) Ss. 11, 19 and 21 were valid provisions and could not be attacked sections 5 and 6 constituting the committee in place of the Raja, were valid.
21A and 30 were also valid.
articles 27 and.
28 had nothing to do with the matter dealt with under Act.
It was not open to the appellant to argue that the Act was bad as it was hit by article 26(d).
No such contention was _properly raised in the High Court.
Tilkayat, Shri Govindlal ji vs State of Rajasthan, A.I.R. , referred to.


judgement:
Appeals Nos.475 478 of 1963.
Appeal from the order dated July 14, 1961 of the Andhra Pradesh High Court in Writ Petition Nos.
516 to 519 of 1960.
D. Narsaraju, Advocate General, Andhra Pradesh, P. R. Ramchandra Rao and T. V. R. Tatachari, for the appellant (in all the appeals).
K. N. Rajagopala Sastri, Gopal Singh and R. N. Sachthey, for the respondents (in all the appeals).
Rajeshwari Prasad and section P. Varma, for Intervener No. 1 (in all the appeals).
B. Seri, section C. Bose and P. K. Bose, for Intervener No. 2 (in all the appeals).
M. C. Setalvad, section C. Bose and P. K. Bose, for Intervener No. 3 (in all the appeals).
19 March 5.
The judgement of the Court was delivered by GAJENDRAGADKAR, C.J.
These four appeals arise from four, writ petitions filed by the appellant, the Andhra Pradesh State Road Transport Corporation, in the High Court of Andhra Pradesh against the Income tax Officer, and the Appellate Assistant Commissioner of Income tax, Hyderabad, respondents 1 and 2 respectively, in which it claimed a writ of prohibition restraining them from collecting any tax, or taking any proceedings under the Indian Income Tax Act against them.
In its writ petitions, the appellant further claimed an order, writ, or other appropriate direction quashing the assessment orders passed by respondent No. 1 on the 29th February, 1960.
for the years 1958 59 and 1959 60.
For the first year, a tax of Rs. 13,60.963.86 nP. has been imposed for the period 11 1 1958 to the 31 3 1958, and for the latter year, a tax of Rs. 34,44,430.48 nP. has been levied for the period 1 4 1958 to 31 3 1959.
After hearing the parties, the High Court has dismissed the appellant 's writ petitions with costs.
The appellant then applied for and obtained a certificate from the High Court and it is with the said certificate that these four appeals have been brought to this Court.
It appears that the appellant was established under the (No. 64 of 1950) (hereinafter called the Act) by a notification issued by the Andhra Pradesh Government and it has been functioning with effect from the 11th January, 1958.
Before the formation of the appellant Corporation, the road transport was a depart ment of the Government of Hyderabad and after integration of Hyderabad with Andhra Pradesh, it was run by the Government of Andhra Pradesh.
During the whole of this period, the road transport was treated as exempt from income tax.
After the appellant Corporation was, however, formed the Income tax Department took the view that the income made by the appellant was liable to tax, and so, a notice under section 22 of the Income Tax Act was served on the appellant on the 29th January, 1959.
In pursuance of the proceedings which were taken after service of the notice, the impugned orders of assessment were passed.
Before the Income tax Officer, it was urged by the appellant that since the appellant was an independent body carrying on the business of road transport, it did not fall Linder any of the five categories of assessees under section 3 of the Income tax Act; it was neither an individual, nor a Hindu undivided family, nor a firm, nor a company, nor an association of persons, and as it was outside the said five categories of assessees, no tax could be levied against it.
It was further argued that the net income of the appellant ultimately goes to the State of Andhra Pradesh under section 30 of the Act, and is such it was immune from Union taxation under 20 article 289 of the Constitution.
Yet, another contention was raised in support of the plea that the noice issued by respondent No. 1 was invalid, and that was that the appellant was a local authority exempt from income tax.
All these contentions were rejected by respondent No. 1, with the result that the impugned orders of assessment came to be passed.
It is the validity of these orders that the appellant challenged before the Andhra Pradesh High Court.
The High Court has held that the appellant is not a State owned Corporation and that it is not carrying on business on behalf of the Government.
It has also observed that the trade or business which the appellant was carrying on was not incidental to the ordinary functions of government, and since no declaration had been made to that effect under article 289(3), the appellant could not rely on article 289(1).
The contention that the appellant was a local authority which was urged before the High Court was rejected, and the argument that the charging section of the Income tax Act was repugnant with the material provisions of the Act, such as sections 28, 29 and 30, was also held to be without any substance by the High Court.
Thus, since none of the arguments urged by the appellant before the High Court was accepted, the writ petitions filed by it were dismissed.
The main point urged before us by the learned Advocate General of Andhra Pradesh on behalf of the appellant is that the income in respect of which the impugned order of assess ment has been passed by respondent No. 1, is exempt from Union taxation under article 289(1) of the Constitution, and that raises the question about the construction and effect of the provisions of the three clauses of article 289.
Let us, therefore, read the said article: "289.
(1) The property and income of a State shall be exempt from Union taxation.
(2) Nothing in clause (1) shall prevent the Union from imposing, or authorising the imposition of, any tax to such extent, if any, as Parliament may by law provide in respect of a trade or business of any kind carried on by, or on behalf of, the Government of a State, or any operations connected therewith, or any property used or occupied or any income accruing or arising in connection therewith.
(3) Nothing in clause (2) shall apply to any trade or business, or to any class of trade or business, which Parliament may by law declare to be incidental to the ordinary functions of government." 21 The learned Advocate General concedes that the transport activity carried on by the appellant is strictly not inci dental to the ordinary functions of government.
It is true that in a modern democratic Welfare State, Government has to undertake several economic activities some of which are trade activities, while others are commercial activities, because the pursuit of the welfare policies inevitably requires that Government should help the process of economic improvement of its citizens.
However desirable these socioeconomic activities may be and however legitimate may be the attempt of the State Government to undertake them, there is no denying the fact that the ordinary functions of the Government to which clause (3) of article 289 refers must be distinguished from these socioeconomic activities.
The Advocate General, however, urges that though the trade activities of the appellant may thus be distinguishable from the ordinary functions of Government, they are nevertheless included in article 289(1) and income derived by the appellant from the said activities falls within the protection of article 289(1).
This argument proceeds on the assumption that clause (2) of article 289 is an exception or proviso to clause (1) and as such, whatever is included in clause (2) must be deemed to have been included also in clause (1); otherwise, the proviso cannot be logically explained.
It is because the trading or commercial activities of the government of a State to which the said clause refers were originally included in clause (1) that it became necessary to provide by clause (2) that the said trading or commercial activities carried on by the Government of a State would not claim the benefit of exemption prescribed by clause (1).
That is how the Advocate General seeks to include trading or business activities mentioned in cl.
(2) in cl.
(1) itself.
Logi cally, no exception can be taken to this approach.
The next stage in the argument urged by the Advocate General is that clause (2) is wide enough to include the trading activities carried on by the appellant and as a result of the width of its scope, the appellant 's activities can be treated as the commercial activities carried on by the Government of Andhra Pradesh itself.
It will be noticed that clause (2) refers to a trade or business of any kind carried on by or on behalf of the Government of a State.
The argument is that the first part of the clause refers to the trade or business carried on by the Government and that means, carried on by the Government either departmentally or by agents appointed by the Government in that behalf.
Whether the department carried on the business or an agent specifically and exclusively appointed for that purpose carries it on, it is the business carried on by the State.
The latter part of the clause refers to trade or business carried on on behalf of the Government of a State and it is 22 suggested that this part of the clause is intended to take in trade or business carried on by a Corporation like the appellant which is either State owned, or State controlle.
The appellant Corporation, says the Advocate General, ;Is undoubtedly State controlled and he would suggest that it is also owned by the State of Andhra Pradesh.
Therefore, the commercial activity carried on by the appellant must be deemed to be an activity carried on on behalf of the State of Andhra Pradesh, and it is with this postulate that the argument reverts to clause (1) of article 289 and urges that the income received by the appellant in respect of commercial activities carried on by it on behalf of the Government of Andhra Pradesh is exempt from Union taxation.
In support of this argument, the Advocate General has relied.
on a recent decision of this Court in Akadasi Padhan vs State of Orissa & Others(1) In that case, this Court had occasion to consider the scope and effect of the provisions contained in article 19(6).
It will be recalled that article 19(6) authorrises the State, inter (ilia, to make any law relating to the carrying on by the State or by a Corporation owned or controlled by the State, of any trade, business, industry or service, whether to the exclusion, complete or partial, of citizens or otherwise.
One of the points which fell to be considered in the Akadasi Padhan case was the effect of the words "a law relating to the carrying on by the State of any trade or business.
" Dealing with this question, this Court held that though normally, the trade specified in the clause would be carried on by the State departmentally or with the assistance of public servants appointed in that behalf, there may be cases of some trades or business in which it would be open to the State to employ the services of agents, provided the agents work on behalf of the State and not for themselves.
Relying upon this decision, the Advocate General argues that when clause (2) of article 289 refers to trade or business carried on by tile Government of a State, it includes trade or business carried on by the Government either departmentally or with the assistance of agents appointed in that behalf, and so, be argues that these two categories of carrying on business having been included in the first part, what the second part is intended to cover is trade or business carried on by the Government of a State through the instrumentality of a corporation like the appellant, and so.
the trade or business carried on by the appellant is trade or business carried on on behalf of the Government of Andhra Pradesh within the meaning of article 289(2) and that makes the income earned out of the said trade or business income of the State under article 289(1).
(1) [1963] Supp. 2 S.C.R. 691.
23 In substance, this argument is really based on the American doctrine of the immunity of State agencies or instru mentalities from Federal taxation.
When this doctrine was accepted by American decisions, it was normally confined to such State agencies as were concerned with functions which were essentially governmental in character.
But, says the Advocate General, since article 289(2) takes in trade activities carried, on by a corporation like the appellant, the question as to whether the trade is a function which is essentially governmental in character is irrelevant.
In support of his contention, the Advocate General has relied upon two American decisions; first of these is the decision in the case of Mark Graves.
John J. Merrill and John P. Hennessy vs People of the State of New York Upon the Relation of James B. O 'keefe(1).
In that case Stone J. who spoke for the Supreme Court of America.
has observed that when the national government lawfully acts through a corporation which it owns and controls, those activities are governmental functions entitled to whatever tax immunity attaches to those functions when carried on by the government itself through its departments.
In other words, this observation shows that the Court was inclined to take the view that for the purpose of claiming exemption from taxation, it did not make a material difference whether the operation was carried on by the State departmentally or with the assistance of a corporation.
In Clallan County vs United States of America, (2) it was held by the Supreme Court of America that a State cannot tax the property of a corporation organised by the Federal government to produce material for war purposes, the property of which is conveyed to it by, or bought with the money of, the United States, and used solely for the purposes of its creation.
Holmes J. who delivered the opinion of the Court emphasised the fact that in the case before the Court not only the agent was created, but all the agent 's property was acquired and used for the sole purpose of producing a weapon for the war.
"This is not like the case of a corporation," added the learned Judge, "having its own purposes as well as those of the United States, and interested in profit on its own account.
The incorporation and formal erection of a new personality was only for the convenience of the United States, to carry out its ends, and so, it is unnecessary to consider whether the fact that the United States owned all the stock and furnished all the property to the corporation, taken by itself, would be enough to bring the case within the policy of the rule that exempts property of the United States." ; ; , 331.
24 Both these decisions would not assist us in determining the question as to whether the income received by the appellant is the income of the State of Andhra Pradesh within the meaning of article 289(1), because the decision of the problem raised before us by the appellant must be reached not on any academic considerations of the claims for exemption from taxation which the State instrumentalities can put forward, but on the construction of article 289 itself.
article 289(1) exempts from Union taxation the property and income of a State, and the Advocate General can succeed only if he is able to establish that the income derived by the appellant in respect of which the impugned assessment order has been passed is the income of the State of Andhra Pradesh.
There fore, the American doctrine on which strong reliance was placed by the Advocate General would be of no assistance to his case.
If the trading activity carried on by the appellant is sought to be brought into article 289(1) solely as a result of the construction of article 299(2), the test on which the validity of the Advocate General 's argument must necessarily be judged, is whether or not the requirement of article 289(1) is satisfied and that requirement clearly is that the income like the property for which exemption from Union taxation is claimed must be the income or property of a State.
Besides, there is another reason why the Advocate General cannot derive any assistance from the American doctrine of the exemption from taxation in regard to State instru mentalities.
The said doctrine has been categorically rejected by this Court in State of West Bengal vs Union of India(1) Speaking for the majority of the Court, Sinha C. J. observed that "it was futile to attempt the resuscitation of the now exploded doctrine of the immunity of instrumentalities which originating from the observations of Marshall, C. J., in M ' Culloch vs Maryland,(2) has been decisively rejected by the Privy Council as inapplicable to the interpretation of the respective powers of the States and the Centre under the Canadian and Australian Constitutions (vide Bank of Toronto vs Lambel(3) and Webb vs Outrim(4) and has practically been given up even in the United States." Thus, it is necessary to revert to the construction of article 289 in deciding whether the appellant is right in claiming immunity from Union taxation.
We have already seen that article 289 consists of three clauses, the first clause confers exemption from Union tax ation on the property and income of a State.
In Special Reference No. 1 of 1962.
In re.
Sea Customs Act (1878), Section (1) [1964] 1 S.C.R. 371. 407.
(3) (2) ; at p. 436.
(4) 25 20(2),(1) a Special Bench of this Court by a majority as e that the immunity granted to the States in respect of Union taxation, under article 289(1) does not extend to duties of customs including export duties or duties of excise.
In that case, the question which directly arose for decisions was to determine the scope and effect of the nature of taxation from which exemption could be claimed by the property and income of a State under article 289(1).
With that aspect of the matter, however, we are not concerned in the present appeals.
The scheme of article 289 appears to be that ordinarily, the income derived by a State both from governmental and non governmental or commercial activities shall be immune from income tax levied by the Union, provided, of course, the in come in question can be said to be the income of the State.
This general proposition flows from clause (1).
Clause (2) then provides an exception and authorises the Union to impose a tax in respect of the income derived by the Government of a State from trade or business carried on by it, or on its behalf; that is to say, the income from trade or business carried on by the Government of a State or on its behalf which would not have been taxable under clause (1), can be taxed, provided a law is made by Parliament in that behalf.
If clause (1) had stood by itself, it may not have been easy to include within its purview income derived by a State from commercial activities, but since clause (2), in terms, empowers Parliament to make a law levying a tax on commercial activities carried on by or on behalf of a State, the conclusion is inescapable that these activities were deemed to have been included in cl.(1) and that alone can be the justification for the words in which cl.
(2) has been adopted by the Constitution.
It is plain that cl.
(2) proceeds on the basis that but for its provision, the trading activity which is covered by it would have claimed exemption from Union taxation under cl.
That is the result of reading clauses (1) and (2) together.
Clause (3) then empowers Parliament to declare by law that any trade or business would be taken out of the purview of cl.
(2) and restored to the area covered by cl.
(1) by declaring that the said trade or business is incidental to the ordinary functions of government.
In other words, cl.
(3) is an exception to the exception prescribed by cl.
Whatever trade or business is declared to be incidental to the ordinary functions of government, would cease to be governed by cl.
(2) and would then be exempt from Union taxation.
That, broadly stated, appears to be the result of the scheme adopted by the three clauses of article 289.
(1) 26 Reading the three clauses together, one consideration emerges beyond all doubt and that is that the property as well as the income in respect of which exemption is claimed under cl.
(1), must be the property and income of the State, and so, the same question faces us again: is the income derived by the appellant from its transport activities the income of the State? If a trade or business is carried on by the State departmentally and income is derived from it, there would be no difficulty in holding that the said income is the income of the State.
If a trade or business is carried on by a State through its agents appointed exclusively for that purpose, and the agents carry it on entirely on behalf of the State and not on their own account, there would be no difficulty in holding that the income made from such trade or business is the income of the State.
But difficulties arise when we are dealing with trade or business carried on by a corporation established by a State by issuing a notification under the relevant provisions of the Act.
The corporation, though statutory, has a personality of its own and this personality is distinct from that of the State or other shareholders.
It cannot be said that a shareholder owns the property of the corporation or carries on the business with which the corporation is concerned.
The doctrine that a corporation has a separate legal entity of its own is so firmly rooted in our notions derived from common law that it is hardly necessary to deal with it elaborately; and so, prima facie, the income derived by the appellant from its trading activity cannot be claimed by the State which is one of the shareholders of the corporation.
It may that the statute under which the notification has been issued constituting the appellant corporation may provide expressly or by necessary implication that the income derived by the corporation from its trading activity would be the income of the State.
The doctrine of the separate entity or personality of the corporation is always subject to the exceptions which statutes may create, and if there is a statutory provision which clearly indicates that despite the concept of the separate personality of the corporation, the trade carried on by it belongs to the shareholders who brought the corporation into existence and the income received from the said trade likewise belongs to them, that would be another matter.
It would then be possible to hold that as a result of the specific statutory provisions the income received from the trade carried on by the corporation belongs to the shareholders who have constituted the said corporation, and so, we must look to the Act to determine whether the income in the present case can be said to be the income of the State of Andhra Pradesh.
In this connection, we may usefully refer to the observa tions made by Lord Denning in Tamlin vs Hansaford: (1).
"In 27 the eye of the law," said Lord Denning, "the corporation is its own master and is answerable as fully as any other person or corporation.
It is not the Crown and has none of the immunities or privileges of the Crown.
Its servants are not civil servants, and its property is not Crown property.
It is as much bound by Acts of Parliament as any other subject of the King.
It is, of course, a public authority and its purposes, Po doubt, are public purposes, but it is not a government department nor do its powers fall within the province of government." These observations tend to show that a trading activity carried on by the corporation is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf.
That takes us to the provisions of the Act which will assist us in determining the question as to whether the income in question can legitimately be held to be the income of the State of Andhra Pradesh.
The Act was passed to provide for the incorporation and regulation of Road Transport Corpora tions.
Section 3 authorises the State Government to issue a notification in the Official Gazette establishing a Road Transport Corporation for the whole or any part of the State under such name as may be specified in the notification, after taking into account considerations specified by clauses (a), (b) and (c).
Section 4 then provides that every corporation shall be a body corporate by the name notified under section 3 having perpetual succession and a common seal, and shall sue or be sued by the said name.
Section 5 deals with the constitution of Road Transport Corporation; sub section (3) provides for the representation both of the Central Government and of the State Government in the Corporation in such proportion as may be agreed to by both the Governments and of nomination by each Government of its own representatives therein; it also contemplates that if capital is raised by the issue of shares to other parties, provision has to be made for the representation of such shareholders.
Section 17 authorises the appointment of Advisory Councils.
Section 18 prescribes the general duty of the corporation.
Section 23(1) provides for the capital of the corporation; under this sub section, the capital contributed by the Central Government and the State Government is in the proportion of I : 3.
Sub section (3) authorises the division of the capital of the corporation into such number of shares as the State Government may determine , and it provides that the number of shares which shall be subscribed by the State Government, the Central Government and other parties shall also be determined by the State Government in consultation with the Central Government.
This provision contemplates the possibility of other shareholders joining the State Government and the Central Government.
Section 24 permits additional capital of the corporation to be raised.
Section 25 requires that 28 the share of the corporation shall be guaranteed by the State Government as to the payment of the principal and the payment of the annual dividend at such minimum rate as may be fixed by the State Government.
Section 26 confers powers of borrowing on the corporation.
Section 27 constitutes a fund of the Corporation.
Section 28 provides for the payment of interest and dividend.
Section 29(1) requires the Corporation to make such provisions for depreciation and for reserve and other funds as the State Government may, from time to time, direct.
Section 29(2) provides that the management of the said funds, the sums to be carried from time to time to the credit thereof and the application of the moneys comprised therein shall be determined by the Corporation.
There is a proviso to this sub section which prohibits the utilisation of these funds for any purpose other than that for which it was created without the previous approval of the State Government.
Section 30 deals with the disposal of net profits: it says that after provi sion is made as required by sections 28 and 29, the Corpora tion may utilise such percentage of its net annual profits as may be specified in this behalf by the State Government for the purposes therein specified, and it adds that out of the balance, such amount as may, with the previous approval of the State Government and the Central Government, be specified in this behalf by the Corporation, may be utilised for financing the expansion programmes of the Corporation and the remainder, if any, shall be made over to the State Government for the purpose of road development.
Section 31 gives power to the Corporation to spend such sums as it thinks fit on objects authorised by the Act.
Section 32 deals with the budget; section 33 with accounts and audit; and section 34 provides that the directions issued by the State Government after consultation with the Corporation shall be followed by the Corporation, and it adds that such directions may include instructions relating to the recruitment, conditions of service and training of its employees, wages to be paid to the employees, reserves to be maintained by it and disposal of its profits or stocks.
Under Section 38, power is conferred on the State Government to supersede the Corporation for reasons specified by section 38(1).
On supersession, all property vested in the Corpora tion vests during the period of supersession, in the State Government; that is the effect of section 38(2)(c).
Section 39 deals with the liquidation of a Corporation and clause (2) of this section provides that in the event of such liquidation, the assets of the Corporation, after meeting the liabilities, if any, shall be divided among the Central and the State Government and such other parties, if any, as may have subscribed to the capital in proportion to the contribution made by each of them to the total capital of the Corporation.
That, in brief, is the position ,of the relevant provisions of the Act.
29 There is no doubt that the bulk of the capital is contribut ed by the State Government and a small proportion by the Central Government, and in that sense, the majority of shares, are at present owned by the State Government.
There is also no doubt that the Corporation is a State controlled corporation in the sense that at all material stages and in all material particulars, the activity of the Corporation is controlled by, the State , but it is clear that other citizens may be admitted to the group of shareholders, and from that point of view, the Act contemplates contribution of the capital for the Corporation not only by the Central and the State Governments, but also by the citizens.
The main point which we are examining at this stage is: is the income derived by the appellant from its trading activity, income of the State under article 289(1)? In our opinion, the answer to this question must be in the negative.
Far from making any provision which would make the income of the Corporation the income of the State, all the relevant provisions emphatically bring out the separate personality of the corporation and proceed on the basis that the trading activity is run by the corporation and the profit and loss that would be made as a result of the trading activity would be the profit and loss of the corporation.
There is no provision in the Act which has attempted to lift the veil from the face of the corporation and thereby enable the shareholders to claim that despite the form which the Organisation has taken, it is the shareholders who run the trade and who can claim the income coming from it as their own.
Section 28 which provides for the payment of interest clearly brings out the duality between the Corporation on the one hand, and the State and Central Governments on the other.
Take, for instance, the case of supersession of the corporation authorised by section 38.
Section 38(2)(c) emphatically brings out the fact that the property really vests in the Corporation, because it provides that during the period of supersession, it shall vest in the State Government.
Similarly, section 39(2) which deals with the distribution of assests in case of liquidation, brings out the same feature.
It has been urged before us by the Advocate General that section 50 contemplates that after provision is made as required by sections 28 and 29 and funds are utilised as prescribed by section 30, the balance has to be given to the State Government for the purpose of road development, and that, it is suggested, indicates that the income belongs to the State Government.
This argument is clearly not well founded.
When we are deciding the question as to whether the income derived by the Corporation is the income of the State, the provision made by section 30 for making over to the State Government the balance that may remain as indicated therein, is of no assistance.
The income is undoubtedly the income of the Corporation.
All that section 30 requires is that a part of that income may be entrusted to the 30 State Government for a specific purpose of road developmen nt is not suggested or shown that when such income is made over to the State, it becomes a part of the general revenue of the State.
It is income which is impressed with an obligation and which can be utilised by the State Government only for the specific purpose for which it is entrusted to it.
Therefore, we are satisfied that the income derived by the appellant from its trading activity cannot be said to be the income of the State under article 289(1), and if that is so, the fact that the trading activity carried on by the appellant may be covered by article 289(2), does not really assist the appellant 's case.
Even if a trading activity falls under cl.
(2) of article 289, it can sustain a claim for exemption from Union taxation only if it is shown that the income derived from the said trading activity is the income of the State.
That is how ultimately, the crux of the problem is to determine whether the income in question is the income of the State, and on this vital test, the appellant fails.
There is one more point which was faintly argued before us by the learned Advocate General.
He frankly told us that he did not propose to challenge the correctness of the conclusion recorded by the High Court that the appellant is not a local authority; but he was not prepared to give up his contention that there is repugnancy between the charging section of the Income tax Act and sections 29 and 30 of the Act.
He suggested that in view of the repugnancy on which he relied, the Act which is Act No. 64 of 1950 should prevail over the Income Tax Act which is an enactment of 1922.
None of the assumptions made by the learned Advocate General in support of this plea can be said to be valid.
Though the original Income tax Act was passed in 1922, as is well known, every year a fresh Finance Act is passed and it is by virtue of such successive Finance Acts that income tax is assessed from year to year, and so, the argument that the Act on which the appellant relies is later in point of time must fail.
Besides, there is really no repugnancy at all.
Basing himself on the provisions of sections 29 and 30, the Advocate General contends that these two provisions show that the Act did not contemplate the payment of income tax.
This argument is entirely misconceived.
It is hardly necessary for the Act to make a provision that tax, if chargeable, would be paid.
In fact, the Companies Act which deals with companies does not make such a specific provision, though no one can seriously suggest that there would be repugnancy between the provisions of the Companies Act and the Income Tax Act.
All that sections 29 and 30 purport to do is to provide for the administration of the funds vesting in the Corporation and their disposal.
It is clearly far fetched, if not fantastic, to suggest that these provisions are inconsistent with the liability to pay tax which is imposed by the Income Tax Act.
The Advocate General, no doubt, attempted to derive some support 31 to his argument by relying on section 43 of the ), as well as section 43 of the Damodar alley Corporation Act, 1948 (No. 14 of 1948).
Sec tion 43 which occurs in both the said Acts provides that the Corporation shall be liable to pay any taxes on income levied by the Central Government in the same manner and to the same extent as a company.
It is urged that where the legislature wanted to provide for the liability of the Corporation to pay the taxes on income levied by the Central Government, it has made specific provisions in that behalf and since no such provision has been made in the Act, it follows that the legislature intended that no tax should be levied on the income earned by the Corporation established under the Act.
We do not think there is any substance in the argument.
The whole object which section 43 is presumably intended to achieve is to provide that the tax should be levied on the basis that the Corporation is a company and nothing more.
If no such provision was made in the Act, that has no bearing on the liability of the Corporation to pay the tax on its income.
Therefore, we are satisfied that the High Court was right in rejecting the argument that by virtue of the repugnancy between the mater ial provisions of the Act and the charging section of the Income Tax Act, it should be held that the appellant was not liable to pay tax on its income.
The result is, the appeals fail and are dismissed with costs.
One hearing fee.
Appeals dismissed.

dataset_name: IN-Abs

summary:
The Income tax Officer (respondent No.(1) served a notice under section 22 of the Income tax Act on the appellant.
Upon the receipt of the notice, the appellant appeared before the Income tax Officer.
The appellant pleaded before the Income tax Officer that it did not fall under any of the five categories of assessees under section 3 of the Income tax Act.
The appellant also raised the contention that it was a local authority exempt from income tax.
All these contentions were rejected by respondent No. 1 with the result that the impugned orders of assessment came to be passed.
The appellant filed Writ Petitions before the High Court in which it challenged the impugned orders of assessment passed by respondent No. 1.
In its Writ Petitions, the appellant claimed an ,order, writ or other appropriate direction quashing the assessment orders passed by respondent No. 1.
The High Court dismissed these writ petitions.
The High Court held that the appellant could not claim the exemption under article 289(1) because it was not a state owned Corporation.
The High Court granted a certificate under article 133 of the Constitution and hence the appeal.
Held: (i) article 289 of the Constitution consists of three clauses.
The first clause confers exemption from union taxation on the property and income of a State.
Clause (2) then provides that the income from trade or busi ness carried on by the Government of a State or on its behalf which would not have been taxable under cl.
(1), can be taxed, provided a law is made by Parliament in that behalf.
In other words cl.
(2) is an exception to cl.
Clause (3) then empowers Parliament to declare by law that any trade or business would be taken out of the purview of cl.
(2) and restored to the area covered by cl.
(1) by declaring that the said trade or business is incidental to the ordinary functions of Government.
In other words, cl.
(3) is an exception to the exception prescribed by cl.
(ii) A trading activity carried on by the corporation (appellant) is not a trading activity carried on by the State departmentally, nor is it a trading activity carried on by a State through its agents appointed in that behalf because according to statute the Corporation has a personality of its own and this personality is distinct from that of the State or other shareholders.
All the relevant provisions of the impugned Act also emphatically bring out the separate personality of the Corporation.
Section 30 of the Act also does not suggest that the income of the 18 Corporation is the income of the State.
All that section 30 requires is that a part of that income may be entrusted to the State Government for a specific purpose of road development.
Therefore, the income derived by the appellant from its trading activity cannot be said to be the income of the State either under cl.
(1) or cl.
(2) of article 289.
The American doctrine of the immunity of State agencies or instrumentalities from Federal taxation has no application to the present case.
Akadasi Padhan vs State of Orissa [1963] Supp. 2 S.C.R. 691, distinguished.
Mark Graves, John J. Merrill and John P. Hennessy vs People of the State of New York Upon the Relation of James B.O 'keefe, ; and Clallan County vs United States of America, ; , no application.
State of West Bengal vs Union of India [1964] 1 S.C.R. 371, relied on.
M 'Culloch vs Maryland, ; , Bank of Toronto vs Lambe and Webb vs Outrim [1907] A.C. 81, referred to.
Tamlin vs Hansaford, , relied on.
(iii)It is hardly necessary for the Act to make a provision that tax,if chargeable would be paid.
In fact, the Companies Act which deals with companies does not make such a specific provision, though no one can seriously suggest that there would be repugnancy between the provisions of the Companies Act and the Income tax Act.
There is no repugnancy between the charging section of the Income tax Act and sections 29 and 30 of the Act.
All that sections 29 and 30 of the impugned Act purport to do is to provide for the administration of the funds vesting in the Corporation and their disposal.
These provisions are not inconsistent with the liability to pay tax which is imposed by the Income tax Act.