judgement:
Civil Appeal No. 239 of 1985.
S.H. Sheth for the Appellant.
P.H Parekh, and Miss Indu Malhotra for the Respondents The Judgment of the Court was delivered by TULZAPURKAR, J.
The short question raised in this appeal is whether a pending appeal would be governed by the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 (for short the Act) upon the Part II of the Act being made applicable to the area in which the suit premises were situate during its pendency ? The material facts giving rise to the question are these: By a registered lease dated 3.6.1957 (Exb. 75) the respondents plaintiffs gave a lease of an open plot admeasuring about 7,500 sq.
forming part of a non agricultural land bearing Survey No. 70/4/1 situated in village Kalwada in Valsad District, Gujarat State to the appellant defendant for a period of 10 years for the purpose of running a flour mill after making necessary construction thereon at an yearly rent of Rs. 101/ .
There was a clause for the renewal of the term but if it was not renewed the lessors were given the right to recover vacant possession on removal of construction at the expiry of the initial term.
Admittedly, there was no renewal of the term and therefore on the expiry of 10 years the lessors became entitled to recover vacant possession on 3.6.1967 but the appellant defendant was permitted to hold over.
By a notice under section 106 of the Transfer of Property Act issued on 2.12.1970 the respondents plaintiffs called upon the appellant defendant to vacate and hand over vacant possession of the suit plot after midnight of 2.6.1971 that is to say on 3 6.1971 but as the notice was not complied with a suit in ejectment was filed against the appellant defendant on 12.7.1972.
Since the suit premises were not governed by any rent legislation eviction on the ground of determination of tenancy under Transfer of Property Act was available to the respondents plaintiffs.
The trial court negatived all the defenses that were raised by the defendant 1055 appellant and decreed the suit for ejectment in favour of the respond A dents plaintiffs on 28.2.19?7.
On 20.61977 the appellant defendant challenged the decree by filing an appeal to the District Court, Navsari being Civil Appeal No. 60 of 1977.
While aforesaid appeal was pending in the District Court the State of Gujarat by its Notification dated 26th March, 1980 applied Part 11 of the Act to village Kalwada where the suit premises were situated.
Thereupon the defendant appellant with the permission of the court raised the contention that he was entitled to the protection of Part II of the Act and since none of the grounds on which eviction could be had by the landlord under Part II had been made out by the respondents plaintiffs they were not entitled to recover possession of the suit plot by virtue of the decree passed by the trial court.
That contention was refuted on behalf of the respondents plaintiffs on the ground that in view of the proviso to section 50 of the Act and particularly the latter part thereof Part I I of the Act had no retrospective operation so far as pending appeals were concerned and such appeals had to be disposed of as if Part II of the Act was not applicable.
The learned Assistant Judge who heard the appeal took the view that the proviso to section 50 read with the latter part thereof expressly enacted that pending appeals arising out of decrees or orders passed before the coming into operation of the Act had to be disposed of as if the Act had not been passed and therefore the appellant defendant was not entitled to any protection as claimed by him and the respondents plaintiffs were entitled to the decree for possession; he therefore dismissed the appeal.
The High Court confirmed the view taken by the learned Assistant Judge by dismissing the appellant defendant 's second appeal summarily The appellant defendant has challenged before us the aforesaid view taken by the courts below in this appeal.
In support of the plea that his client 's appeal pending in the district Court was governed by Part II of the Act no sooner that Part was made applicable to Village Kalwada, Counsel for the defendant appellant raised two contentions In the first place he urged that a section could be prospective in one part and retrospective i n another and that it has been so held in regard to section 12 occurring in Part II of the Act by this Court; he pointed out that in Chandrasingh Manibhai and others vs Surjit Lal Ladhamal Chhabda and others(l) this Court has taken the view that (1) 1056 sub secs.
(2) and (3) of sec.
12 are, having regard to the language employed therein prospective in operation and therefore would apply to suits filed after the Act has come into force while in Shah Bhojraj Kuverji Oil Mills and Ginning factory vs Subhash Chandra Yograj Sinha(1) it has been held that sub sec.
(1) of sec 12, by reason of the words used therein, is retrospective in operation and covered even suits pending on the date when the Act is brought into force or is made applicable to an area and all such pending suits would have to be decided as if the protection afforded by sub sec.
(l) is available to the tenants who are parties to such suits; he urged that such protection against eviction under sec.
12 (l) of the Act would be available to the tenant independently of sec.
50 of the Act.
Further according to the learned Counsel since an appeal is a continuation of a suit the protection of sub sec.
( I ) would be available to the tenant in the pending appeal He therefore, urged that since Civil Appeal No. 60 of 1977 was nothing but a continuation of the suit which was pending at the time when sec.
12 was made applicable to Village Kalwada the defendant appellant was entitled to the protection of sec.
12(1) of the Act and the trial court 's decree for eviction obtained by the respondents plaintiffs was of no avail to them.
Secondly, he contended that sec.
50 and the proviso thereto did not apply to the present case at all; according to him that the proviso is not an independent provision but is linked with the substantive enactment contained in sec.
50 which deals with the repeal of two earlier enactments, namely, Bombay Rent Restriction Act, 1939 and the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944 and since the present suit was one under the Transfer of Property Act and was not under either of the two repealed Acts there would be no question of applying the proviso to such a suit or to any appeal arising out of a decree in such suit.
According to P him such suits and appeals arising from decrees in such suits would be governed by sec 12(1) of the Act which has retrospective operation, and since protection was available to his client in the pending appeal the decree for ejectment ought to have been set aside by the lower courts.
The question thus raised requires proper construction being placed on the two relevant and connected provisions of the Act, namely section 12(1) and section 50.
These provisions run thus: (1) ; 1057 12.
(1) no ejectment ordinarily to be made if tenant A pays or is ready and willing to pay standard permitted increases.
A landlord shall not be entitled to the recovery of possession of any premises so long as the tenant pays, or is ready and willing to pay, the amount of the standard rent and permitted increases, if any and observes and performs the other conditions of the tenancy, in so far as they are consistent with the provisions of this Act.
Repeal.
The Bombay Rent Restriction Act, 1939, and the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1944, are hereby repealed; Provided that all suits and proceedings between a landlord and a tenant relating to the recovery or fixing of rent or possession of any premises to which the provisions of Part II apply and all suits and proceedings by a manager of a hotel or an owner of a lodging house against a lodger for the recovery of charges for, or possession of, the accommodation provided in a hotel or lodging house situate in an area to which Part III applies, which are pending in any Court, shall be transferred to and continued before the Courts which would have jurisdiction to try such suits or proceedings under this Act or shall be continued in such Courts, as the case may be, and all the provisions of this Act and the rules made thereunder shall apply to all such suits and proceedings.
Nothing in this proviso shall apply to execution proceedings and appeals arising out of decrees or orders, passed before the coming into operation of this Act; and such execution proceedings and appeals shall be decided and disposed of as if this Act had not been passed.
So far as section 12 of the Act is concerned, having regard to the two decisions mentioned earlier it is clear that this Court has ruled that sub secs.
(2) and (3) of s 12 are prospective but sub sec.
(1) thereof is retrospective in operation and in that behalf the Court in Shah Bhojraj 's case (supra) has relied upon the difference in the language employed in sub sec.
(2) and (3) on the one hand and sub sec.
(1) on the other.
Since sub sec.
(2) commences with the words, "no suit for recovery of possession shall be instituted . ." and since sub sec.
(3) as it then stood commenced with the words "no decree for eviction shall be passed in any such suit . " the 1058 Court took the view that such language plainly indicated that these provisions w re intended to operate prospectively, that is to say would apply to suits instituted after the coming into force of the Act.
but so tar as sub sec (l) is concern the court pointed out that the point of time when sub sec.
( t) operates is when the decree for recovery of possession has to be passed and that the language of that sub section, which provides that the landlord is not entitled to recover possession if the tenant pays or shows his willingness to pay the standard rent and to observe the other conditions of the tenancy, is such that it applied equally to suits pending when Part II comes into force and those to be filed subsequently and is not limited only to suits filed after the Act comes into force in a particular area and in fact the Court in that case granted the benefit of the protection of sub sec.
(1) of sec.
12 to the tenant who was a party to a suit which was already pending when Part II of the Act was made applicable.
to the area in which the suit premises were situated.
the decision in Shah Bhojraj 's case therefore is a clear authority for the proposition that sec.
12(1) of the Act has retrospective operation and would apply to a suit which is pending when Part II comes into force or is made applicable to a particular area where the suit premises are situated but it must be observed that the question whether the protection of sec.
12(1) of the Act would be available in regard to a pending appeal when Part II is made applicable to the particular area did not arise for consideration nor was decided in that case.
Counsel for the appellant defendant has however, urged that on the well accepted principle that an appeal is nothing but a continuation of the suit the retrospective operation of s 12(i) must be extended to such pending appeal especially as the languages thereof must receive the same interpretation in regard to a pending appeal.
We have no doubt that by itself the provision would apply to pending appeals but the provision has to be considered in the light of the other provision to be found in s 50 and the proviso thereto read with the latter part thereof which expressly deals differently with the aspect of applicability of the Act especially Part II thereof to pending suits and original proceedings on the one hand and pending execution proceedings and appeals on the other.
That is why counsel for the appellant defendant raised the second contention that section 50 and the proviso thereto read with the latter part thereof did not apply to the present case at all and in that behalf urged that the proviso M together with the latter part thereof is not an independent provision 1059 but is linked with the substantive enactment contained in s 50 that A is to say the proviso has been inserted merely with a view to qualify or create an exception to what is state in the main provision .
The manner in which the two contentions were put forward by counsel for the appellant defendant clearly showed that he realized that unless the present case was taken out of the purview of s 50 and the proviso thereto read with the latter part thereof his client would not be able to claim the benefit of the protection of section 12(1) of the Act.
Therefore, the two contentions being inter dependent it will be desirable to deal with the second contention first.
Of course, we shall also deal with his contention that the defendant.
appellant would be entitled to the protection of section 12(1) independently of and irrespective of whether his client 's case is covered by section 50 and the proviso thereof read with the latter part thereof or not.
Turning then to the second contention of counsel for the appellant defendant it is obvious that the question whether the present case falls within or outside the purview of the proviso to section 50 depends upon what is true nature and scope of the proviso introduced at the end of s 0 ? Is it introduced merely with a view to quality or create exceptions to what is contained in the main provision of section 50) or does it g; beyond that purpose and enact a substantive law of its own by way of providing for special savings following upon the repeal of the two earlier enactments, the 1939 Act and the 1944 Act ? That a proviso could be of either type was not disputed before us by counsel for the appellant defendant.
In fact in Shah Bhojraj 's case (supra) this is Court after referring to two English decisions and a passage in Caries on Statute Law (5th edition) at page 166 of the Report has observed thus: "The law with regard to provisos is well settled and well understood As a general rule, a proviso is added to enactment to qualify or create an exception to what is in the enactment and ordinarily a proviso is not interpreted as stating a general rule But provisos are often added not as exceptions or qualifications to the main enactment but as savings clauses, in which cases they will not be considered as controlled by the section.
" The question is in which category the instant proviso together with latter part thereof fall .
It may be stated that this very question 1060 Was hotly debated before the Court in that case but was not decided and kept open because of the view taken by the Court on the contention pertaining to proper interpretation of s 12(1) of the Act and since the Court held that section 12(1) is retrospective in operation and covers suits pending on the date when Part II was applied to the particular area it granted relief to the tenant appellant against eviction.
We might observe, however, that the same result would have obtained even if the case were considered under the proviso to s 50 because under it suits and proceedings pending at the date when Part II is made applicable are required to be decided by applying the 1947 Act to them.
Since the question raised before us relates to the applicability of the 1947 Act to a pending appeal we shall have to decide the question pertaining to the true nature and scope of the proviso to sec.
50 in this case.
Before we deal with that question we might indicate that the said proviso to section 50 as it originally stood has undergone certain amendments effected by Bombay Act 3 of 1949.
The proviso as it originally stood ran thus (omitting unnecessary parts): "Provided that all suits and proceedings (other than execution proceedings and appeals between a landlord and a tenant relating to recovery or fixing of rent or possession of any premises to which the provisions of part II apply . . . which are pending in any Court, shall be transferred to and continued before the Courts which h would have jurisdiction to try such suits or proceedings under this Act; and thereupon all the preprovisions of this Act and the Rules made thereunder shall apply to all such suits and proceedings.
" By the Bombay Act 3 of 1949 three changes were made by the legislature.
(i) it deleted the words "other than execution proceedings and appeals" appearing in brackets from the proviso and inserted a new paragraph at the end of that proviso dealing separately with executions proceedings and appeals, (ii) it inserted the words "or shall be continued in such Courts as the case may be" in the proviso and (iii) it deleted the word "thereupon" from the proviso.
The object of amendments made at (ii) and (iii) was to remove the judicial confusion caused by Courts taking conflicting views on the question whether the Act ( 1947 Act) applied only to transferred cases and not others Previously the proviso stated that all suits and proceedings of a certain category mentioned there.
1061 in "shall be transferred to and continued" before the Courts which A would have jurisdiction to try them under the Act and "thereupon" the provisions of the Act shall apply to them and therefore some Courts took the view that the provisions of the Act (1947 Act) will apply only to suits and proceedings which were so transferred and continued and others held to the contrary. 'This conflict was set at rest by these amendments.
By the amendment made at (i) what was there in the body of the proviso was relegated to a new separate paragraph and no change was effected except that the effect of the wide expression "all suits and proceedings" was re emphasised and further clarified by using the words "execution proceedings and appeals arising out of decrees and orders, passed before the coming into operation of this Act" in the new paragraph.
Bearing in mind the aforesaid legislative amendments we shall proceed to consider the question as to what is the true nature and scope of the proviso.
For that purpose it will be necessary to read as a whole the entire provision, namely, the substantive part of section 50.
the proviso thereto and the new paragraph added at the end of the proviso.
So read, two aspects stand out very clearly.
In the first place, it is clear that under the substantive part of section 50 on the coming into force of the Act (the 1947 Act) the two earlier enactments (1939 Act and the !944 Act) stand repealed.
If nothing more was said then section 7 of the Bombay General Clauses Act, 1904 would have come into play and would have had the effect of saving the legal proceedings or remedies in respect of any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactments.
In other words, all suits and proceedings including education proceedings and appeals arising therefrom which were pending on the relevant date and which were governed by the provisions of these respective repealed Acts would have been saved and the rights and obligations of the parties thereto would have been worked out under the relevant provisions of the repealed Acts.
But here a clear intention to deviate from the normal rule which applies to the repeal of enactments is clearly evinced by the Legislature by the manner in which the proviso w s enacted initially or as it now stands after the amendments.
Either under the proviso as it originally stood or under the new separate paragraph enacted by way of an amendment the legislative intent was and is quite clear that only suits and original proceedings between a landlord and a tenant (of the description or categories specified 1062 therein) which were pending on the relevant date are required to be decided and disposed of by applying the provisions of the 1947 Act while execution proceedings and appeals arising out of decrees or orders passed before the coming into operation of the Act are denied the benefits of the provisions of the Act and have been directed to be decided and disposed of as if this Act had not been passed, that is to say, such execution proceedings and appeals would be continued to be governed by and shall be disposed of in accordance with the law that was then applicable to them In other words, it is clear that the proviso was and has been enacted to provide for special savings which suggests that it has not been introduced merely with a view to qualify or create exceptions to what is contained in the substantive part of section 50.
Secondly, it does appear that the Legislature while framing the Act (the 1947 Act) was enacting certain provisions for the benefit of tenants which conferred larger benefits on them than were in fact conferred by the earlier enactments which were repealed, (and this would be clear if regard be had to the wider definition of the expression 'tenant ' adopted in section 5(11) of the Act) and therefore, the legislature thought it advisable that in regard to pending suits and original proceedings also (of course of the description or categories specified therein) in which the decrees and orders were not passed to provisions of the Act should be made applicable.
It is with this intention that the proviso to section 50 has been enacted in the manner it has been done.
What is more, while so extending the larger benefits of the Act (the 1947 Act) to tenants the Legislature has used a very wide expression, namely, "all suits and proceedings between a landlord and a tenant" so as to include within that category suits and proceedings filed under the repealed Acts as also under the general law or Transfer of Property Act.
Deliberate use of such wide expression clearly shows that the benefit of the Act was intended to be given to all tenants who were parties to all suits and proceedings filed either under the repealed Acts or under the general law or Transfer of Property Act and were pending at the relevant date.
It is therefore, clear that the proviso read with the separate paragraph added thereto will have to be regarded as an independent provision enacting a substantive law of its own by way of providing for special savings and (Counsel 's contention that the same has been added merely with a view to qualify or to create an exception to what is contained in the main provision of section 50 has to be rejected.
We might refer to a Bombay High Court decision in Shankarlal 1063 Ramratan vs Pandharinath Vishnu(1) where a similar view of the proviso to section 50 of the Act has been taken and we approve the same.
Having regard to the aforesaid conclusion which we have reached on the true nature and scope of the proviso to section 50 of the Act it would be clear that the present case, in which an appeal (arising out of a decree passed in a suit filed under the Transfer of Property Act) was pending when Part II of the Act was made applicable to village Kalwada, would be directly covered by the proviso read with the separate paragraph added thereto and the appeal was liable to be decided and disposed of as if the 1947 Act had not been passed, that is to say, had to be disposed of in accordance with the law that was then applicable to it In this view of the matter, we are of the opinion that the learned Assistant Judge as well as the High Court were right In coming to the conclusion that the appellant plaintiff was not entitled to any protection of the 1947 Act as claimed by him.
Counsel for the appellant defendant however, faintly urged before us that his client would be entitled to the protection of section 12(1 ) of the Act, (which has been held to be retrospective in operation) independently of and irrespective of whether his case was covered by the proviso to section 50 read with the latter part thereof or not.
It is impossible to accept this contention for the simple reason that 8.
12(1) of the Act would unquestionably be a general provision whereas the proviso to section 50 read with the new paragraph added thereto, which has now been held to be an independent provision enacting substantive law in itself and which expressly deals with pending matters (suits and other proceedings in contradistinction with execution proceedings and appeals) would be a special provision contained in the Act and obviously under the normal rule of interpretation the special provision must prevail over the general and therefore if a case is covered by the special provision the general provision will not be attracted to it The Contention has therefore to be rejected Before parting with the case we would like to point out that Chandrasingh Manibhai 's case (supra) was also a case dealing (1) 53 Bom.
L.R 319 1064 with an appeal (arising out of a decree passed on a date prior to the coming into force of the 1947 Act in a suit filed under the Transfer of Property Act) which was pending at the relevant date and the question was whether on the principle that the appeal was in the nature of a rehearing of the suit the same should be decided in accordance with the provisions of the 1947 Act which had come into force during its pendency and this Court took the view that having regard to the proviso to section 50 as it originally stood the Act was given retrospective operation only to a limited extent and execution proceedings and appeals were excluded from this effect and were to be governed by the law in force at the time when the decrees were passed and therefore, the tenant was not entitled to the protection of the 1947 Act and was liable to be evicted.
Really speaking this decision had concluded the point raised before us in the present appeal But since in Shah Bhojraj 's case (supra) a distinction was made between sub sec.
(1) of section 12 on the one hand and sub secs.
(2) and (3) on the other and it was held that the former provision was retrospective in operation and the latter prospective, Counsel for the appellant defendant made valiant attempt to brings his client 's case within the purview of section 12(1) by putting forward the plausible contention that his case was not covered by the proviso to section 50 read with the separate paragraph added thereto at all on the ground that the said proviso together with the new separate paragraph added thereto was not an independent provision enacting any substantive law therein but was linked with the main provision contained in section 50 and had been introduced merely with a view to qualify or create an exception to what is contained in the main provision but that attempt has failed in view of our conclusion on the true nature and scope of the said proviso read with the Dew separate paragraph added to it.
In the result, the appeal fails and is dismissed but in the circumstances there will be no order as to costs.
N.V.K. Appeal dismissed.

summary/full:
The respondents plaintiffs gave a lease of an open plot lo the appellant defendant for a period of 10 years for the purpose of running a flour mill after making necessary construction thereon at a yearly rent.
In the lease deed there was a clause for the renewal of the term, and also that if it was not renewed, the lessors were given the right to recover vacant possession on removal of construction at the expiry of the initial term.
There was no renewal of the term on the expiry of 10 years lease period and the appellant defendant was permitted to bold over.
Later by a notice nuder section 106 of the Transfer of Property Act the respondent called upon the appellant defendant to vacate and hand over vacant possession As the notice was not complied with a suit in ejectment was filed against the a appellant defendant The trial court negatived all the daffiness that were raised by the appellant defendant and decreed the suit for ejectment in favour of the respondents plaintiffs.
The appellant defendant challenged the decres by an appeal to the District Court and while the appeal was pending the State by a Notification dated 26th March, 1980 applied Part II of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 to the village where the suit premises were situated.
The appellant defendant with the permission of the court raised the contention in the appeal that he was entitled to the protection of Part II of the Act and since none of the grounds on which eviction could have been made under Part II had been made out by the respondents plaintiffs they were not entitled to recover possession.
This contention was refuted ml behalf of The respondents plaintiffs on the ground that in view of the proviso to s 50 of the Act and particularly the latter part thereof Part II of the Act had no retrospective operation so far as 1052 pending appeals were concerned and such appeals had to be disposed of as if Part II of the Act was not applicable.
The Assistant Judge took the view that the proviso to section 50 read with the latter part thereof expressly enacted that pending appeals arising out of decrees or orders passed before the coming into operation of the Act had to be disposed of as if the Act had not been passed and therefore the appellant defendant was not entitled to any protection as claimed by him and the respondents plaintiffs were entitled to the decree for possession and dismissed the appeal.
The second appeal of the appellant defendant to the High Court was summarily dismissed.
In the appeal to this Court on the question: whether a pending appeal would be governed by the Bombay Rents, Hotel Rates and Lodging House Rates (Control) Act, 1947 Upon the Part II of the Act being made applicable in the area in which the suit premises were situated during its pendency .
Dismissing the Appeal, ^ HELD: 1.
Having regard to the two decisions in Chandrasingh Manibhai and others vs Surjit lal Ladhamal Chhaabda and others, and Shah Bhojraj Kuverji Oil Mills and ginning factory v, Subhash Chandra Yograj Sinha; , it is clear that sub secs.
(2) and (3) of section 12 are prospective but sub sec.
(1) thereof is retrospective in operation.
[1056B] 2.
By the Bombay Act 3 of 1949 three changes were made by the legislature, (i) it deleted the words other than execution proceedings and appeals" appearing in brackets from the proviso and inserted a new para graph at the end of that proviso dealing separately with execution proceedings and appeals, (ii) it inserted the words 'or shall be continued in such Courts as the case may be" in that proviso, and (iii) it deleted the word "thereupon" from the proviso.
the object of amendments made at (ii) and (iii) was to remove the judicial confusion caused by Courts taking conducting views on the question whether the Act (1947 Act) applied only to transferred cases and not others.
By the amendment made at i i) what war there in the body of the proviso was relegated to a new separate paragraph and no change was effected except that the effect of the wide expression ' all suits and proceedings" was re emphsised and further clarified by using the words "execution proceedings and appeals arising out orders, passed before the coming into operation of this Act" in the new paragraph.
[1060G H; 1061B C] 3.
(i) The substantive part of section 50, the proviso thereto and the new paragraph added at the end of the proviso has to be read as a whole to know the true nature and scope of the proviso.
[1059B] (ii) Under the substantive part of section 50 on the coming into force of 11 the Act (the 1947 Act) the two earlier enactments (the 1939 Act and the 1053 1944 Act) stand repealed.
If nothing more was said then section 7 of the A Bombay General Clauses Act, 1904 would have come into play and would have had the effect of saving the legal proceedings or remedies in respect of any right, privilege, obligation or liability acquired, accrued or incurred under the repealed enactments.
In other words, all suits and proceedings including execution proceedings and appeals arising therefrom which were pending on the relevant date and which were governed by the provisions of the repealed Acts would have been saved and the rights and obligations of the parties thereto would have been worked out under the relevant provisions of the repealed Acts.
But the proviso which provides for special savings clearly indicates that pending suits and original proceedings in which decrees and orders have not been passed alone should be governed by the provisions of the Act and not execution proceedings and appeals arising out of such decrees and orders passed before the coming into operation of the Act.
[1061E G; 1062A B] (iii) The proviso was and has been enacted to provide for special savings which suggests that it has not been introduced merely with a view to qualify or create exceptions to what is contained in the substantive part of section 50.
Secondly, it does appear that the Legislature while framing the Act (the 1947 Act) was enacting certain provisions for the benefit of tenants which conferred larger benefits on them than were in fact conferred by the earlier enactments which were repealed, this is clear if regard be had to the wider definition of the expression tenant ' adopted in section S (II) and therefore, the Legislature thought it advisable that in regard to pending suits and original proceedings of the description or categories specified therein, in which the decrees and orders were not passed the provisions of the Act should be made applicable.
It is with this intention that the proviso to section 50 has been enacted in the manner it has been done.
[1062C E] (iv) While extending the larger benefits of the 1947 Act to tenants the Legislature has used a very wide expression, namely, "all suits and proceedings between a landlord and tenant" so as to include within that category suits and proceedings filed under the repealed Acts as also under the general law or Transfer of Property Act [1062F] (v) The proviso read with the separate paragraph added thereto will have to be regarded as an independent provision enacting a substantive law of its own by way of providing for special savings.
[1062G] Shankarlal Ramrotan vs Pandharinath Vishnu, 53 Bom.
L. R. 319, approved.
In the instant case, an appeal (arising out of a decree passed in a suit filed under the Transfer of Property Act) was pending when Part II of the Act was made applicable to village Kalwada, (where the suit property was situated) would be directly covered by the proviso read with the separate paragraph added there(o and the appeal was liable to be decided and disposed of as if the 1941 Act had not been passed, that is it had to 1054 be disposed of in accordance with the law that was then applicable to it.
The Assistant Judge as well as the High Court were therefore right in coming to the conclusion that the appellant defendant was not entitled to any protection of the 1947 Act as claimed by him.
[1063B Dl


judgement:
Appeal No. 179 of 1954.
Appeal from the judgment and order dated March 12, 1953, of the Bombay High Court in Income tax Reference No. 43 of 1952.
C. K. Daphtary, Solicitor General of India, G. N. Joshi and B. H. Dhebar, for the appellant.
N. A. Palkhivala, D. H. Dwarkadas, J. B. Dadachanji, section N. Andley and Rameshwar Nath, for the respondent.
May 15.
The Judgment of the Court was delivered by section K. DAS J.
This is an appeal on a certificate granted by the High Court of Judicature at Bombay under sub section
(2) of section 66A of the Indian Income tax Act (hereinafter referred to as the Act).
The appellant is the Commissioner of Income tax, Bombay, and the respondent is the Provident Investment Co., Ltd., Bombay, hereinafter referred to as the assesses company.
The short question which falls for consideration in this appeal is whether a particular transaction, details 1143 whereof we shall presently state, entered into by the assessee company in 1946 resulted in capital gains within the meaning of section 12B of the Act.
The question which was referred to the High Court under section 66(1) of the Act was this: " Whether the assessee company made a capital gain amounting to Rs. 81,81,900 within the meaning of section 12B of the Indian Income tax Act?" The High Court answered the question in the negative.
The appellant being dissatisfied with the judgment and order of the High Court asked for and obtained a certificate from the said High Court that the case is a fit one for appeal to the Supreme Court.
The material facts may be very shortly stated.
The assessee company is a private limited company, the shares of which were held by the then Maharaja Scindia of Gwalior and his nominees.
At the material time, the assessee company was the managing agent of Madhowji Dharamsi Manufacturing Co., Ltd., hereinafter briefly referred to as the Dharamsi Company, and Sir Shapurji Broacha Mills Ltd., briefly referred to as the Shapurji Broacha Company.
The assessee company held all the " conversion " shares of the Dharamsi Company and a substantial majority of the " conversion" shares of the Shapurji Broacha Company.
The Dalmia Investment Company Limited, which will hereinafter be briefly referred to as the Dalmia Company, wrote two letters to the assessee company on September 14, 1946.
In these two letters, the Dalmia Company offered to purchase 28,328 " conversion " shares of the Dharamsi Company at Rs. 500 per share together with the managing agency, and also 75,212 " conversion " shares of the Shapurji Broacha Company, together with the managing agency.
We are not concerned with the other details mentioned in the two letters, except this that the Dalmia Company made it clear that it would purchase both the mills or neither, and a time limit till September 23, 1946, 3 p. m. was imposed during which the offer would remain open.
This time limit was, however, extended later up to September 30, 1946.
The letter further stated 1144 " On your accepting the offer, we will pay to you Rs. 20 lakhs in the case of the Dharamsi Company, Rs. 30 lakhs in the case of the Shapurji Broacha Company as and by way.
of earnest money.
You shall have to arrange to get the transfer of the managing agency sanctioned by the general body of the shareholders within a period of 40 days from the date of acceptance.
As Boon as the transfer is sanctioned, we will pay the balance of the purchase price.
" On September 26, 1946, there was a meeting of the Board of Directors of the assessee company.
At that meeting, the Board considered the offers made by the Dalmia Company and resolved to accept the offers.
The Board further stated in its minutes that out of the total amount received from the sale of the shares, a sum of Rs. 1 crore should be paid to the assessee company as compensation for ' the loss of the managing agency of the two mills.
On September 30, 1946, the assessee company wrote to the Dalmia Company accepting the offers made, subject to a condition which is not material for our purpose.
On the same date, the Dalmia Company received the acceptance of the offers made by it and sent two drafts, one for Rs. 20 lakhs and the other for Rs. 30 lakhs.
On October 7, 1946, the Dalmia Company wrote a very important letter to the assessee company.
This letter said inter alia: " With reference to the interview our Solicitor Mr. Tanubhai had with your Mr. Wadia, we beg to record that it is now being agreed upon as follows in modification of the arrangement previously made between yourselves and ourselves: (1)In our letters of offer which have been accepted by you, it was arranged that the managing agency will be transferred either to us or to our nominees.
Now, instead of doing so by you, you as the present managing agents will give their (sic) resignation, so that at the time of delivery of the shares and payment of moneys, your managing agency will have come to an end.
In view of the above, it is not necessary to obtain any sanction of general meeting.
1145 (2) 1.
Mr. Shriyans Prasad Jain 2.
Mr. Jaidayal Dalmia 3.
Mr. Shanti Prasad Jain and 4.
Mr. Vishnu Hari Dalmia will be appointed Directors of both the Mills Companies and thereafter all the present directors will tender their resignation.
(3) Qualification shares in the names of the above proposed Directors will be transferred by you and the balance of the shares will be delivered to us along with the transfer deeds duly signed against payment.
(4) You may communicate by a circular to the shareholders that you have resigned the managing agency.
You may further mention in the circular that in accordance with the offer we are prepared to take up the deferred shares held by the shareholders which may be offered to us at the rate of Rs. 25 and Rs. 7 8 0 of Madhowji Dharamsi Manufacturing Co. Ltd. and Sir Shapurji Broacha Mills Ltd. Mills respectively within two months of the date of letter of offer which we would also send.
" The assessee company accepted the modified arrangement suggested by the Dalmia Company, and on October 19, 1946, the assessee company wrote to the Dharamsi Company and the Shapurji Broacha Company that it had decided to resign the office of the managing agency and accordingly tendered its resignation on that date.
The balance of the consideration money was then paid to the assessee company, and it was not disputed that the. value of the managing agency was computed at Rs. 1 crore, nor was there any dispute that the managing agency was a capital asset.
Out of the said sum of Rs. 1 crore, the Income tax Officer computed the capital gains at Rs. 81,81,900 and asked the assessee company to pay tax thereon.
The Appellate Assistant Commissioner held that the assessee company had sold the managing agency and therefore the profits or gains arising from that sale were capital gains within the meaning of section 12B of the Act.
The Income tax Appellate Tribunal, Bombay Bench 'A ', held, however, that there was no sale of the managing agency, because the original contract of 147 1146 purchase was varied by the new contract embodied in the letter of October 7, 1946.
The Tribunal, however, held as follows: " The assessee company was the owner of the shares and the managing agencies.
It sold the shares to the Dalmia Co. and handed back the managing agencies to the managed companies.
This handing back, in our opinion, constitutes a transfer of the managing agencies.
" On that footing the Tribunal held that section 12B of the Act applied.
On an application by the assessee company, the Tribunal on being satisfied that a question of law did arise out of its order, referred the question which we have already set out in an earlier paragraph of this judgment, to the High Court of Bombay.
The High Court answered the question in the negative on the ground that there was neither a sale nor a transfer of the managing agency within the meaning of section 12B of the Act.
The point for our consideration is whether the High Court has correctly answered the question.
We must first read sub section
(1) of section 12B of the Act as it stood at the material time.
The sub section, so far as it is relevant for our purpose, was in these terms: " The tax shall be payable by an assessee under the head 'Capital gains ' in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946; and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place.
" It is worthy of note that 'capital gains ' were charged for the first time by the Income tax and Excess Profits Tax (Amendment) Act, 1947, which inserted section 12B in the Act.
It taxed 'capital gains ' arising after March 31, 1946, and the levy was virtually abolished by the Indian Finance Act, 1949, which confined the operation of the section to 'capital gains ' arising before April 1, 1948.
The Finance (No. 77 of 1956) re introduced the section in wider terms so as to bring within 'capital gains ' any profits or gains arising from the sale, exchange, relinquishment or transfer of a 1147 capital asset effected after March 31, 1956, etc. ' We are not, however, concerned with the question whether the transaction under our consideration, which took place in 1946, resulted in capital gains within the meaning of section 12B as it stands after the enactment of the Finance (No. 77 of 1956).
The question before us is whether the transaction under consideration resulted in capital gains within the meaning of section 12B as it originally stood.
Two other points must be stated at the outset in order to clear the ground for a consideration of the relevant arguments advanced before us.
The first point is that there is no question here of the assessee company trying to circumvent the provisions of section 12B of the Act by deliberately modifying the original agreement (by its letter dated October 7, 1946) so as to put the transaction outside the scope of that section.
The agreement was modified in October, 1946, before even the insertion of section 12B in the Act.
Therefore, no question of deliberate or fraudulent evasion arises in this case.
The second point is that in construing fiscal statutes and in determining the liability of a subject to tax, one must have regard to the strict letter of the law and the true legal position arising out of the transaction in question.
The Bombay High Court has referred to a large number of English decisions on this point.
We consider it unnecessary to examine those decisions in the present case.
The point was considered very recently by this Court in A. V. Fernandez vs The State of Kerala (1), where the following observations made are very pertinent: " If the Revenue satisfies the Court that the case falls strictly within the provisions of the law, the subject can be taxed.
If, on the other hand, the case is not covered within the four corners of the provisions of the taxing statute, no tax can be imposed by inference or by analogy or by trying to probe into the intentions of the legislature and by considering what was the substance of the matter.
We must of necessity, therefore, have regard to the actual provisions of the Act and the rules made thereunder before we can come (1) (1957] S.C.R. 837.
to the conclusion that the appellant was liable to assessment as contended by the Sales Tax authorities.
" Those observations were made in a case dealing with sales tax but are equally applicable to the case under our consideration.
Two conditions must be fulfilled before the transaction under our consideration can come within the purview of section 12B of the Act.
The first condition is that the profits or gains must arise from the sale, exchange or transfer of a capital asset; and the second condition is that the sale, exchange or transfer must be effected after March 31, 1946.
There is no doubt that the transaction before us was effected after March 31, 1946.
There is also no dispute that the managing agency of the two mills which the assessee company held was a capital asset.
Therefore, the question boils down to this did the profits or gains, namely, the sum of Rs. 1 crore which was computed as the value of the managing agency, arise from the sale or transfer of the managing agency ? The Income tax authorities held that there was a sale of the managing agency; but the Appellate Tribunal held that there was no sale in the strict sense but only a transfer of the managing agency to the managed companies, that is, the Dharamsi Company and the Shapurji Broacha Company.
The High Court held that there was neither a sale nor a transfer, because the letter of October 7, 1946, substituted a different contract for the original contract entered into by the parties, and the true legal position with regard to the substituted contract was that the assessee company resigned the managing agency, or, in other words, the managing agency was relinquished by the assessee company.
The learned Solicitor General, who has appeared for the appellant, has contested the correctness of the view of the Bombay High Court and has submitted a twofold argument before us.
His first argument is that there was a concluded contract of sale as a result of the letters, dated September 14, 1946, and September 30,1946, exchanged between the parties, and the sale having taken place, the letter of October 7, 1946, which merely changed the mode of performance of the 1149 contract, did not affect the true legal character of the ,transaction which was a sale of the managing agency.
We are unable to accept this argument.
The true legal effect of the letters dated September 14, 1946, and September 30, 1946, which contained an offer and an acceptance, was merely this: the Dalmia Company offered to purchase (1) certain shares in the two mills and (2) the managing agency, on payment of a certain consideration, and the assessee company accepted that offer.
In law, this was merely an agreement to sell and purchase the shares together with the managing agency on payment of the consideration, etc.
The two letters did not by themselves amount to a sale of the shares or the managing agency, in the sense of a transfer of the property in them.
Before any such sale could take place, the agreement was modified by the letter of October 7, 1946, and instead of " selling " the managing agency the assessee company agreed to resign or relinquish the managing agency.
We are unable to agree with the learned Solicitor General that the letter of October 7, 1946, merely changed the mode of performance, and did not constitute a now contract.
In our opinion, the Bombay High Court correctly held that whereas under the original contract the Dalmia Company wanted the managing agency to be transferred, which meant that it wanted the benefit of that contract to be vested in it and was also prepared to accept the burden of the obligations that went with that contract, under the substituted contract, the Dalmia Company did not want the managing agency to be assigned to it; on the contrary, it wanted the assessee company to relinquish its rights in the managing agency of the two mills by resigning.
On a true interpretation, the letter of October 7, 1946, substituted a new contract, a contract of relinquishment rather than a contract of sale, so far as the managing agency was concerned.
The second argument of the learned Solicitor General is that there was one indivisible consideration for the whole transaction, including the sale of the shares and of the managing agency.
So far as the shares were concerned, the sale did take place and the entire 1150 consideration was paid; there was therefore a sale within the meaning of section 12B of the Act, and the consideration being one and indivisible, the transaction did result in capital gains within the meaning of that section.
At the first blush, the argument has an apparent merit of plausibility, though it was not urged before the Bombay High Court in the manner in which it has been urged before us.
On a closer scrutiny, however, it appears to us that this argument is not really available to the learned Solicitor General.
The parties and the Income tax authorities, including the Appellate Tribunal, proceeded on the footing that part of the consideration, namely, the sum of Rs. 1 crore, was the consideration for the sale or relinquishment of the managing agency, the Department contending that the transaction was a sale or transfer and the assessee company contending that it was neither a sale nor a transfer but a mere relinquishment.
In the agreed statement of the case, it was stated : " The value of the managing agencies was computed by the assessee company at Rs. 1 crore and there is no dispute on this point.
The Income tax Officer thereupon computed capital gain at Rs. 81,81,900 and again there is no dispute on this point.
The question which the Tribunal had to determine was whether the transactions between the Dalmia Company and the assessee company resulted in a capital gain of Rs. 81,81,900.
It is obvious that the entire assessment proceedings proceeded on the basis that the sum of Rs. 1 crore was the consideration for the sale or relinquishment of the managing agencies, and the dispute between the parties was whether the transaction with regard to the managing agencies, in its true legal character, was a sale or transfer or relinquishment.
That being the position, it is not now open to the learned Solicitor General appearing for the Revenue to go behind the agreed statement of the case and to ask us to give an answer to the question of law raised in the case on different assumptions or in a different set of circum stances.
The answer must be given on the basis of 1151 the facts and circumstances as stated in the agreed statement of the case.
We are of opinion that the answer was correctly given by the High Court of Bombay.
The transaction in its true legal character was a relinquishment of the managing agency and was neither a sale nor a transfer thereof.
Therefore, the High Court correctly answered, the question in the negative.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The respondent company was the managing agent of two other companies holding certain shares therein.
D wrote two letters to the respondent on September 14, 1946, offering to purchase some of those shares together with the managing agency and agreeing to pay certain sums as earnest money on the acceptance of the offer and to pay the balance after the transfer of the managing agency was sanctioned by the general body of shareholders.
By a letter dated September 30, 1946, the respondent accepted the offer on condition of a sum of Rs. 1 crore being paid out of the consideration as compensation for the loss of the managing agency, and on receipt of the letter, D paid the earnest money.
Subsequently, D wrote a letter on October 7, 1946, whereby, in modification of the arrangement previously made, it was agreed that instead of the managing agency being transferred by the respondent, the latter would resign the office of managing agents and certain individuals would be appointed Directors of the two companies.
Accordingly, the respondent relinquished the managing agency and thereupon the balance of consideration money was paid to it.
The Income tax Officer considered that section 12B of the Indian Income tax Act, 1922, was applicable to the transaction and on the footing that the managing agency, which was valued at Rs. 1 crore, was a capital asset, he computed the capital gains at Rs. 81,81,900.
The Income tax Appellate Tribunal held that the respondent, as the owner of the shares and the managing agency, sold the shares to D and handed back the managing agency to the managed companies, and that this handing back constituted a transfer.
On a reference to the High Court by the Tribunal, the agreed statement of the case proceeded on the basis that the dispute between the parties was whether the transaction with regard to the managing agency resulted in capital gains and the High Court held that there was neither a sale nor a transfer of the managing agency within the meaning Of section 12B of the Act.
On appeal to the Supreme Court by the Commissioner of Income tax, it was contended for him (1) that there was a concluded contract 1142 of sale as a result of the letters of September 14, 1946, and September 30, 1946, and a sale having taken place, the letter of October 7, 1946, merely changed the mode of performance of the contract and did not affect the true legal character of the transaction which was a sale of the managing agency, and (2) that as there was one indivisible consideration for the whole transaction, including the sale of the shares and of the managing agency, the sale of the shares having taken place and the entire consideration having been paid, there was a sale within the meaning of section 12B of the Act and the transaction resulted in capital gains.
Held (1) that on a true construction of the letters there was originally only an agreement to sell the shares together with the managing agency and before the sale could take place the letter of October 7, 1946, substituted a new contract, a contract of relinquishment rather than a contract of sale, so far as the managing agency was concerned, and (2) that it was not open to the appellant to go behind the agreed statement of the case and raise a question of law based on different facts and circumstances.
Accordingly, the transaction in question was a relinquishment of the managing agency and was neither a sale nor a transfer within the meaning of section 12B of the Indian Income tax Act.


judgement:
ion No. 13508 of 1983 (Under Article 32 of the Constitution of India) C. section Vaidyanathan for the Petitioner.
Krishan Dayal, N.C. Talukdar, R.N. Poddar, Y P. Rao, A.K Sanghi and R. K. Mehta for the Respondents.
The Judgment of the Court was delivered by KHALID, J.
This is representative action brought on behalf of the Contract 'Labourers, working with the Food Corporation of India, the first respondent in the writ petition, distressed by the unhelpful attitude of both the Central and the State Government in not redressing their grievances for either departmentalising them or in the alternative extending to them the benefit of the (for short 'The Act ').
153 The petitioners complaint is that the Central and the State Governments play hide and seek, one pointing to the other as the appropriate Government under the provisions of the Act and thus denying to them what is their dues.
The first respondent is the Food Corporation of India (herein after called 'The Corporation '); the second respondent: Union of India, the third respondent: Chief Labour Commissioner (Central) and respondents 4 to 22, various State Governments.
The Corporation has been entrusted by the second respondent with the duty of procuring food grains and its movement and distribution throughout the country.
The corporation employs for the discharge of this work three types of labourers: (1) departmentalised labour who are its regular employees; (2) direct paid labour; and (3) contract labour who are employed by the Corporation through the intermediery of contractors.
The petitioners have been trying to pursuade the Corporation for progressive departmantalisation of its labour.
They, however, did not succeed.
Their grievance is that even the limited benefits available to them under the provisions of the Act have not been extended to them.
By this writ petition they pray, for a writ of mandamus either to the Union Government or to the State Governments, to extend to them the benefits of the Act, for a direction to the Corporation to pay them the same wages as are paid to the departmentalised labour and for other reliefs.
In a detailed counter affidavit, the Corporation has pleaded that the appropriate Government for the propose of the claims of the petitioners is the State Government and not the Central Government, and that it is not practicable for the Corporation to employ the labour whom the petitioner represent as departmental labour since the nature of the operations are seasonal, sporadic and varied from region to region, that the work of the Corporation fluctuates in volume at different places and at different points depending upon the procurement, movement and off take of food grains.
It is farther stated that it is not easy for abolition of Contract labour employed by the Corporation since other like organisations connected with the Government of India also empley contract labourers and hence abolition af contract labour cannot be consideder in isolation for the Corporation alone.
Among the State Governments:, the 15th respondent (the State of Madhya Pradesh) and the 21st respondent (the State of Punjab) have filed their respective counter affidavits.
154 4.
In its counter affidavits the State of Madhya Pradesh has stated that the said Government have framed rules under the Act (which came into force on 10.2 1971) for implementation of its provisions, that the Act is being implemented in its entirety in the said State, that it has constituted an independent State Advisory Contract Labour Board which was advising the State Government on such matters as are referred to it, that it has also constituted a committee on 31st March 1981 in exercise of the powers conferred on it under Section 5 of the Act, and that in the case of 22 branches, prosecutions were launched for non compliance with the provisions of the Act 5 In the Counter affidavit filed on behalf of respondent No. 21, (the State of Punjab) it is stated that the appropriate Government for the purpose of the Act for the regional office of the Corporation in the Punjab State, is the State Government.
Before considering the claims of the petitioners, we will have a look at some of the provisions of the Act, which if properly implemented would have, in some measure at least, satisfied the labour.
Section 10 of the Act reads as follows: " 10.
Prohibition of employment af contract labour (1) Notwithstanding anything contained in this Act, the appropriate Government may, after consultation with the Central Board or, as the case may be, a State Board, prohibit, by notification in the Official Gazette, employment of contract labour in any process operation or other work in any establishment.
(2) Before issuing any notification under sub section (l) in relation to an establishment, the appropriate Government shall have regard to the conditions of work and a benefits provided for the contract labour in that establishment and other relevant factors.
such as (a) whether the process, operation or other work is incidental to or necessary for the industry, trade, business, manufacture or occupation that is carried on in the establishment; 155 (b) whether it is of perennial nature, that is to say, it is so of sufficient duration having regard to the nature of industry, trade, business, manufacture or occupation carried on in that establishment; (c) whether it is done ordinarily through regular workmen in that establishment or an establishment similar thereto; (d) whether it is sufficient to employ considerable number of whole time workmen.
Explanation If a question arises whether any process or operation or other work is of perennial nature, the decision of the appropriate Government thereon shall be final. ' This section enables the appropriate Government by a suitable notification after making a study of the conditions laid down therein 1) to prohibit employment of contract labour in any 'process, operation or other work ' in any establishment.
The petitioners grievance is that despite several disputes and representations made to all the State Governments as well as the Union of India, nothing has so far been done to give the benefit of Section 10 to be contract labour in the Corporation.
This complaint appears to be justified.
We will now examine the relevant provisions of the Act to find out as to which are the industries or establishments to which the Act applies and which is the appropriate Government in its contemplation, on whom is entrusted the duty to ameliorate the conditions of labour.
We read Section 1(4) (a), (b) and Proviso and Section 1(5) (a) and (b) and the Explanation: "1(4) It applies: (a) to every establishment in which twenty or more workmen are employed or were employed on any day of the preceding twelve months contract labour; (b) to every contractor who employs or who employ ed on any day of the preceding twelve months twenty or more workmen; 156 Provided that the appropriate Government may.
after giving not less than two months ' notice of its intention so to do, by notification in the Official Gazette, apply the provisions of this Act to any establishment or contractor employing such number of workmen less than twenty as may be specified in the notification.
(5)(a) It shall not apply to establishments in which work only of an intermittent or casual nature is performed.
(b) If a question arises whether work performed in an establishment is of an intermittent or casual nature, the appropriate Government shall decide that question after consultation with the Central Board or, as the case may be, a State Board, and its decision shall be final.
Explanation: For the purpose of this sub section, work per formed in an establishment shall not be deemed to be of an intermittant nature.
(i) if it was performed for more than one hundred and twenty days in the preceding twelve months, or (ii) if it is of a seasonal character and is performed for more than sixty days in a year." Section 1(4) deals with the application of the Act to establishments and contractors answering to the description given therein.
It was not disputed before us that the establishment in question and the contractors it employs come within the ambit of the provisions of this Act.
However, an investigation is necessary to collect factual details to ascertain whether the Corporation comes within the exemption indicated in clause 1(5) quoted above.
Section 3 speaks of a Central Advisory Board to advise the Central Government on matters arising out of the administration of the Act and Section 4 speaks similarly of State Advisory Boards.
Section 5 confers on the Central Board or the State Boards as the case may be the power to constitute committees for the proper implementation of the provisions of the Act.
Section 7 requires registration of establishments to which the Act applies.
On such registration, the principal employer will get a certificate of 157 registration containing the necessary particulars.
Chapter IV deals with the licence of a contractor and Chapter V. with the welfare and health of the contract labour.
Chapter VI deals with penalties and procedure.
The petitioners case is that though the Act came into force on 10 2 1971 no contractor has complied with the provisions of the Act and each of them has by infringement of the provisions of the Act rendered themselves liable to be prosecuted.
Since the contractors have not got themselves licenced, the labourers find it difficult to invoke the relevant provisions of the Rules to secure the benefits to them under the Act.
Now the question as to which is the appropriate Government for the implementation of the provisions of the provisions of the Act can be considered.
A decision on this question is necessary before any direction can be issued in this writ petition.
The State Governments, except those of State of Madhya Pradesh and Punjab, have not filed their counter affidavits.
In the writ petition the petitioners have indicated that the Central and the State Governments have taken up conflicting stand on this question.
11. 'Appropriate Government ' is defined in Section 2(1) (a) of the Act to read as under: "2(1) (a) "Appropriate Government means,: (1) in relation to (1) any establishment pertaining to any industry carried on by or under the authority of the Central Government, or pertaining to any such controlled industry as may be specified in this behalf by the Central Government, or (ii) any establishment of any railway Cantonment Board, major port, mine or oil field, or (iii)any establishment of a banking or insurance company, (2) the Central Government, 158 in relation to any other establishment the Government of the State in which that other establishment is situated.
" A bare reading will show that sub cls.
(ii) and (iii) of sec.
2(1) (a) are not attracted in this case.
The question then is whether various establishments of the Corporation spread all over the country could be said to be establishments pertaining to any industry carried on by or under the authority of the Central Government or pertaining to any such controlled industry as may be specified in this behalf by the Central Government.
Before we determine the width and ambit of sub cl.
(i) of sub sec.
(I) of sec.
2 (1) (a), it would be advantageous to refer to the definition of 'establishment ' set out in sec.
2 (I)(e).
It reads as under: "2(1) (e) Establishment means (i) any office or department of the Government or a local authority, or (ii) any place wher e any industry, trade, business, manufacture or occupation is carried on.
" We would be concerned with sub cl (ii) of Sec. 2 (1) (e) which provides that the establishment would be an establishment where any industry, trade, business, manufacture or occupation is carried on.
Thus various warehouses, godowns and place alike set up by the Corporation would be establishments where the trade of the Corporation is being carried on.
Could these establishments be said to be pertaining to an industry carried on by or under the authority of the Central Government ? Before we find out correct meaning of the expression 'any industry carried on by or under the authority of the Central Government ', it is necessary to draw attention to the definition of appropriate Government ' as set out in Section 2(a) (1) of the , which provides that 'appropriate Government ' means: (i) in relation to any industrial dispute concerning any industry carried on by or under the authority of Central Government (omitting the words not necessary for the present purpose.
Or in relation to an industrial dispute concerning the Food Corporation Or India established under section 3.
Or a Board of Management established for two or more 159 contiguous States under Section 16 of the Food Corporation Act, 1964.
. , the Central Government.
Obviously, therefore, for the purpose of , in relation to any industrial dispute concerning the Food Corporation of India, the Central Government is the appropriate Government, There is an express reference to the Food Corporation of India.
If the Food Corporation of India was an establishment in an industry carried on by or under the authority of the Central Government, it would be tautologous to specifically refer it and include it.
It is a well established canon of statutory construction that legislature is known to avoid tautology and redundancy.
If Food Corporation of India was an industry carried on by or under the authority of the Central Government, it would have been comprehended in the first part of sub section (1) but that being not the position, it was specifically referred to by name.
Having examined this definition, it is necessary to bring to fore the contra distinction between the definition of the expression 'appropriate Government ' in the and the definition in the Act under examination.
It may be pointed out that the expression in the Act does not include by name the Food Corporation of India as the one in respect of which the appropriate Government would be the Central Government, while it is mentioned so in the definition in the even though both the statutes use the general expression 'any industry carried on by or under the authority of the Central Government.
Having noticed this contra distinction, let us examine the width and content of the expression 'any industry carried on by or under the authority of the Central Government '.
The matter is no more resintegra.
In Heavy Engineering Mazdoor Union vs The State of Bihar and Ors.(1) this Court held that the expression 'any industry carried on by or under the authority of the Central Government ' as used in the definition of expression 'appropriate Government ' in Section 2(a) (i) of the , would mean 'pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master. ' This Court took notice of the fact that the entire share capital of the Heavy Engineering Corporation Ltd, was contributed by the Central Government and extensive powers were conferred on it and (1) [1969] 3 SCR 995 160 yet the Corporation was none other than a company and could not be said to be an industry carried on by or under the authority of the Central Government.
Therefore, the case would be covered by the residuary clause and the appropriate Government was held to be the State Government and the reference under Section 10 made by the State of Bihar was held valid and competent.
Looking to the placement of the expression in the definition clause of the Act and the purpose for which it is enacted, the expression 'any industry carried on by or under the authority of the Central Government ' must receive the same interpretation as was done in the aforementioned case.
In a recent decision of this Court in Rashtriya Mills Mazdoor Sangh, Nagpur vs The Model Mills, Nagpur and Anr.
,(l) to which both of us were parties, while interpreting more or less an identical expression occurring in Section 32(IV) of the Bonus Act, 1965, this Court held that in relation to an undertaking in textile industry in respect of which an authorised controller was appointed under the provisions of the Industrial (Development and Regulation) Act, 1951, the appropriate Government was the State Government and not the Central Government observing that even where an authorised controller is appointed by the Central Government.
it merely substitutes Board of Director of a company managing the industrial undertaking by an authorised controller appointed by the Central Government, but the undertaking none the less remains an under taking managed under the provisions of the , and it could not be said to be an undertaking in any industry carried on by or under the authority of the Central Government.
The same approach holds good for the purpose of construction of the expression 'any industry carried on by or under the authority of the Central Government ' under the Act.
Let it be made clear that it was not suggested that the various establishments of the Corporation pertain to any controlled industry. 'therefore, sub clause (i) of Sub section (1) of Section 2(a) of the Act is not attracted and therefore, the case would be governed by the residuary provision in sub section (2) and the State Government would be the appropriate Government.
The question as to which is the 'appropriate Government has been briefly dealt with in the counter affidavits filed by the Corporation, State of Madhya Pradesh and the State of Punjab.
In the counter affidavit filed by the Corporation, it is stated that this (1) 161 question was examined by the Labour Ministry and that the said Ministry had clarified that the respective State Governments are the 'appropriate Governments ' for the Corporation 's establishments situated in the States.
The Union of India, the second respondent, in its counter affidavit has also taken the stand that the 'appropriate Government ' for the purpose of the Zonal establishments situated in the respective States is the State Government and not the Central Government.
The State of Punjab and the State of Madhya Pradesh have also stated in their respective counter affidavits that the 'appropriate Government ' for the purpose of the Act for the regional offices of the Corporation in their respective States is the State Government.
These pleadings are indicative of the fact that the State Governments understood them to be the 'appropriate Government ' for the Zonal offices in their respective State.
On the interpretation of the relevant Sections extracted above, we hold that the 'appropriate Government ' for the purpose of this case pertaining to the regional offices and the warehouses in the respective States is the State Government and not the Central Government.
However, we are of the opinion that it may not be possible or proper for us to grant the reliefs prayed for by the petitioner in full on the materials on record.
The materials are scanty and insufficient for a comprehensive adjudication of the claims of the petitioners and to grant them reliefs as prayed for.
The Act contains provisions enabling the 'appropriate Government ' to get reports as to how to implement the provisions of the Act.
The machinery provided for by the Act has not been brought into action in any State except the State of Madhya Pradesh.
Under these circumstances.
the only course open to us is to issue appropriate direction to the State Governments to constitute committees under Section 5 of the Act, to make necessary enquiries, and to submit a report as to whether it would be possible to abolish contract labour in the Corporation altogether In so doing, we will have to exclude the State of Madhya Pradesh because the counter affidavit filed by that State shows that necessary action is being taken under the Act.
Accordingly a writ of mandamus will be issued to all the State Governments except the State of Madhya Pradesh for appointing a committee under Section 5 of the Act within three months from 162 today to enquire whether contract labour in the Corporation should be abolished.
The committee shall submit a report within four months of its constitution and the Government is directed to take action on such report within two months thereafter.
The necessary expenses for the committees will be borne by the Corporation.
Since the Madhya Pradesh Government has already constituted committees under Section 5, the said State is directed to ask the committees so appointed to make its report expeditiously and to take appropriate action on the report as indicated above.
The Corporation will be at liberty to place materials before the committees whether it comes within the exemption clause.
The writ petition is allowed as indicated above with costs to the petitioner quantified at Rs. 2,000 pay able by the Corporation.
S.R. Petition allowed.

summary/full:
The Food Corporation of India has been entrusted with the duty of procuring foodgrains and its movement and distribution throughout the country.
The Corporation employs for the discharge of this work three types of labourers; (1) departmentalised labour who are its regular employees; (2) direct paid labour; and (3) Contract labour who are employed by the Corporation through the intermediary of contractors.
The petitioners who come under the third category have been trying to pursuade the corporation for progressive departmentalisation of its labour Or in the alternative extending to them the benefits of the .
By this writ petition they prayed for a writ of mandamus either to the Union Government or to the concerned State Governments, to extend to them the benefits of the Act, for a direction to the corporation to pay them the same wages as are paid to the departmentalised labour and other reliefs.
The Corporation pleaded that the appropriate Government for the purpose of the claims of the petitioners working in its establishment in a State a is the concerned State Government and not the Central Government, which stand was adopted by ihe 15th Respondent State of Madhya Pradesh and the 21st Respondent State of Punjab through their respective affidavits and therefore disowned its responsibility.
The other States did not file their counter at all.
Allowing the petition, the Court, 151 ^ HELD: 1 Section 10 of the enables the appropriate Government by a suitable notification after making a study of the conditions laid down therein to prohibit employment of contract labour in any 'process, operation, or other work ' in any establishment.
The petitioners, complaint that despite several disputes and representations made to all the State Governments as well as the Union of India, nothing has so fare been done to give the benefit of Section 10 to the contract labour in the Corporation by playing hide and seek, one pointing to the other as the appropriate Government for redressal of their grievances is justified.
[155D E] 2.1 On the interpretation of the relevant sections namely, I (4), 1 (5), 2 (1) (a) and 2 (a) (e) of the Contract Labour Act, 1970 read with section 2 (a) (1) of the "appropriate Government" for the purpose of this case pertaining to the regional offices and warehouses of the Food Corporation of India in the respective States is the State Government and not the Central Government.
[161D] 2.2 Section 1(4) deals with the application of the Act to establishments and contractors answering to the description given therein and certainly the establishment of the Food Corporation and the contractors it employs come within the ambit of the provisions of this Act.
[156F] 2.3 Various warehouses, godowns and places alike sot up by the Corporation would be establishments where the trade of the corporation is being carried on and within the meaning of the term "establishment" in section 2 (1) (e) (ii) of the Act.
[158EI 2.4 It is a well established canon of statutory construction that legislature is known to avoid tautology and redundancy.
If Food Corporation of India was an industry carried on by or under the authority of the Central Government, it would have been comprehended in the first part of sub section (1) of Section 2 of the , but that being not the position, it was specifically referred to by name.
However, the expression 'appropriate Government ' in the Contract Labour Act, 1970 does not include by name the Food Corporation of India as the one in respect of which the appropriate Government would be the Central Government, while it is mentioned so in the definition in the even though both the statutes use the general expression 'any industry carried on by or under the authority of the Central Government. ' [169C E] 2.5 Looking to the placement of the expression in the definition clause of the Contract Labour Act and the purpose for which it is enacted, the expression 'any industry carried on by or under the authority of the Central Government ' mean 'pursuant to the authority, such as where an agent or a servant acts under or pursuant to the authority of his principal or master ' Since the various establishments of the Corporation do not pertain to any 152 controlled industry, sub clause (1) of sub section (1) of section 2 (a) of the Act is not attracted and therefore, the case would be governed by the residuary provision in sub section (2) and the State Government would be the appropriate Government.
Further in the counter affidavit filed by `the Corporation it is stated that this question was examined by the Labour Ministry which had clarified that the respective State Governments are the 'appropriate Governments ' for the corporation 's establishments situated in the State.
The Union of India has correctly taken a similar stand and the States of Punjab and Madhya Pradesh have also affirmed it.
[160B; F;G; 161A B] Heavy Engineering Mazdoor Union vs The State of Bihar and Ors., 11969] 3 SCR 995; Rashtriya Mills Mazdoor Sangh, Nagpur vs The Model Mills, Nagpur and Anr., , applied.
3 In the instant case, it will not be possible or proper for the Court to grant the reliefs prayed by the petitioner in full on the materials on record, the materials being scanty and insufficient for a comprehensive adjudication of the claims of the petitioners.
The Act contains provisions enabling the appropriate Government to get reports as to how to implement the provisions of the Act.
The machinery provided for by the Act has not been brought into action in any State except the State of Madhya Pradesh.
Therefore the course open lo the Court is to issue appropriate direction to the State Governments except Madhya Pradesh State to constitute committees within three months, under section 5 of the Act to make necessary enquiries, and to submit a report within four months of its constitution as to whether it would be possible to abolish contract labour in the Corporation altogether.
[161 F G]