judgement:
ON: Civil Appeal Nos.
1938 39 of 1987.
From the Order dated 1.10.1985 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos.
ED (SR) T. 1415/82 Al and 1533/84 A. 357 M.K. Banerjee, Solicitor General, A.K. Ganguli and P. Parmeshwaran for the Appellant.
A.T.M. Sampath for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These are appeals under section 35L(b) of the (hereinafter called 'the Act ').
The respondents T.I. Millers Ltd. and T.I. Diamond Chain manufacture cycle lamps and automative chains.
Both these goods are assessable under Item 68 of the Central Excise Tariff.
The said respondents filed price lists for the sale of the goods through their distributors, namely, M/s. T.I. and M Sales Ltd., M/s. Charmvel Agencies and M/s. Ambadi Enterprises Pvt.
Ltd. quoting their price to the distributor as assessable value.
However, subsequently following the decision of the Madras High Court in a valuation case, the respondents required that the price charged by them from buyers at the factory gate should be accepted as the assessable value and not the price to the distributors.
The question is whether the price charged by the respondents from buyers at the factory gate should be accepted as the assessable value for the levy of duty under section 3 of the Act.
The Assistant Collector found from the sales pattern of the respondents that the distributors were 'related persons ' as per section 4 of the Act and the price at which the distributors sold the goods should, therefore, be the assessable value.
The respondents went up in appeal before the Appellate Collector.
The Appellate Collector held that in order to establish mutuality of business interests, direct and indirect between manufacturer and buyer, it should be shown that they have been promoting the business of each other in their own interest and that in the absence of such a finding in the Assistant Collector 's order, these could not be held to be related persons.
Section 4 of the Act provides that where the duty of excise is chargeable on any excisable goods with reference to value, such value should be determined on the basis of the normal price thereof, that is to say, the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, where the buyer is not a related person and the price is the sole consideration for the sale.
We are not concerned for the purpose of these appeals with the provisos nor with sub section (2) or sub section (3) of section 4 of the Act.
Sub section 4(c) of section 4 defines 'related person ' to mean a person who is so 358 associated with the assessee that they have interest, direct or indirect, in the business of each other and includes a holding company, a subsidiary company, a relative and a distributor of the assessee, and any sub distributor of such distributor.
The explanation provides that 'holding company ', 'subsidiary company ' and 'relative ' have the same meanings as in the .
The words "related person" have been considered by this Court in Union of India and others vs Atic Industries Limited, ; Bhagwati, J., as the learned Chief Justice then was, speaking for the Court held that the first part of the definition of "related person" in clause (c) of sub section (4) of section 4 defines "related person" to mean "a person who is so associated with the assessee that they have interest directly or indirectly in the business of each other".
It is not enough, the Court observed, that the assessee has an interest, direct or indirect in the business of the person alleged to be a related person has an innough, that the person alleged to be a related person has an interest, direct or indirect in the business of the assessee.
To attract the applicability of the first part of the definition, it was observed, the assessee and the person alleged to be a related person must have interest, direct or indirect in the business of each other.
Each of them must have a direct or indirect interest in the business of the other.
The quality and degree of interest which each has in the business of the other may be different, the interest of one in the business of the other may be direct while the interest of the latter in the business of the former may be indirect.
That would not make any difference so long as each has got some interest, direct or indirect in the business of the other.
In the notice issued by the Central Government seeking to review the Appellate Collector 's order, the Central Government indicated that there was an agreement existing between the respondents and their distributors according to which they were the company 's distributors for the sale of their goods.
Major portion of the sales were effected through M/s. T.I. and M Sales Ltd. who were the main distributors of M/s. Tube Investments of India Ltd. and its subsidiary companies and rest of the sales through the other two distributors.
M/s. Tube Investment of India was the holding company of M/s. T.I. Millers Ltd. The agreement between the assessee and the T.I. and M Sales Ltd. was registered under the MRTP Act.
The Government of India also found that there was a territorial earmarking for the operation of the distributors, who also undertook advertisements and helped the sub dealers for maintaining show rooms in dealer 's pre 359 mises.
The distributors did not deal with competitor 's goods.
The Government of India also noted that the assessee granted mark up to the distributors to cover their establishment expenses, travelling expenses, advertisement and sundry expenses.
On these grounds, the Government of India tentatively considered that it was a fit case for reversing the order of the Appellate Collector who had held that the distributors were not related persons under section 4 of the Act.
The question is, whether the distributors in this case were related persons of the respondents and secondly, whether the expenses incurred for maintaining the show room, advertisements etc.
should also be added to the assessable value.
How the value should be computed has been examined by this Court in Union of India and others etc.
vs Bombay Tyre International Ltd. etc.
; , There, Pathak, J. as the learned Chief Justice then was, held that the definition of the words "related person" did not suffer from any constitutional infirmity.
This Court reiterated that on a true construction of its provisions in the context of the statutory scheme the old section 4(a) should be considered as applicable to the circumstances of the particular assessee himself and not of manufacturers generally.
The Court further reiterated that pursuant to the old section 4(a) the value of an excisable article for the purpose of the excise levy should be taken to be the price at which the excisable article is sold by the assessee to a buyer at arm 's length in the course of whole sale trade at the time and place of removal.
Where, however, the excisable article is not sold by the assessee in wholesale trade, but for example, is consumed by the assessee in his own industry the case is one where under the old section 4(a) the value must be determined as the price at which the excisable article or an article of the like kind and quality is capable of being sold in wholesale trade at the time and place of removal.
This Court analysed the position under the Central Excise and Salt Act, 1944 as amended by Act XXII of 1973 that if the price at which the excisable goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal as defined in sub section (4)(b) of section 4 is the basis for determination of excisable value provided, of course, the buyer is not a related person within the meaning of sub section (4)(c) of section 4 and the price is the sole consideration for the sale, that would be the value.
The proposition is subject to the terms of the three provisos to subsection (1)(a) of section 4.
Where the wholesale price of any excisable goods for delivery at the place of removal is not known and the value thereof is determined with reference to the wholesale price for delivery at a place other than the place of removal, the cost of transportation from the place of removal to the place of delivery should be 360 excluded from such price.
It was further held that these principles could not apply where the tariff value had been fixed in respect of any excisable goods under sub section (2) of section 3.
The Court also dealt with the interpretation of definition of 'related person '.
The Court further held that the expenses incurred on account of the several factors which have contributed to its value upto the date of sale, which apparently would be the date of delivery, are liable to be included.
Consequently, where the sale is effected at the factory gate, expenses incurred by the assessee upto the date of delivery on account of storage charges, outward handling charges, interest on inventories (stocks carried by the manufacturer after clearance), charges for other services after delivery to the buyer, namely, after sales service and marketing and selling organisation expenses including advertisement expenses marketing and selling organisation expenses and after sales service promote the marketability of the article and enter into its value in the trade.
Where the sale in the course of wholesale trade is effected by the assessee through its sales organisation at a place or places outside the factory gate, the expenses incurred by the assessee upto the date of delivery under the aforesaid heads cannot, on the same grounds, be deducted.
The assessee will be entitled to a deduction on account of the cost of transportation of the excisable article from the factory gate to the place or places where it is sold.
The cost of transportation will include the cost of insurance on the freight for transportation of the goods from the factory gate to the place or places of delivery.
The new section 4(4)(d)(i) has made express provision for including the cost of packing in the determination of "value" for the purpose of excise duty.
The review application, by the change of law, was forwarded to the Tribunal.
It was contended before the Tribunal on behalf of the appellant that the distributors were related persons in terms of the judgment of this Court in Bombay Tyre International case (supra).
Our attention was drawn to a letter dated 10th September, 1981 from the respondents to the Assistant Collector that the mark up allowed to the distributors was to cover their establishment expenses, advertisement, travelling expenses and he pointed out that this mark up included certain elements which have to be included in the assessable value.
The Tribunal held that according to the judgment of this Court in Bombay Tyre International case (supra) where the sale is effected at the factory gate, expenses incurred on account of charges for services after delivery to the buyer, namely after sale service and marketing and selling organisation expenses, including advertisement expenses could not be deducted from the assessable value.
It was further urged 361 on behalf of the appellant that other features like division of territory amongst the distributors and the marginal quantity of direct sales otherwise, as well as the fact that the distributors did not deal in competitor 's goods, clearly indicated that these are related persons.
Learned Counsel drew our attention to the meaning of the term 'ordinarily ' given in K.G. Iyer 's Judicial Dictionary at page 704 and explained that it meant 'habitually ', or 'usually ', or 'normally '.
In this case, ordinarily sales are only through distributors and the sales are made by them on behalf of the manufacturer.
Learned Counsel pointed out that this was a case where it was an extension of the manufacturer 's self to the point of sale by the distributor.
Learned Counsel for the revenue urged that it was a case of indirect relationship and came within the ratio of the aforesaid decision of this Court in Bombay Tyre International case (supra).
In this case, it was highlighted that manufacturer had interest in the buyer who were their distributors and the distributors were only charging limited commission, maintained showrooms, and did not deal in the products of competitors of the manufacturer.
It was further contended that sales of their products as original equipment, could not be considered as sales in the ordinary course of wholesale trade.
It was further highlighted that the norm of inter connected undertakings found in MRTP Act is not relevant to decide 'related persons ' in the Act.
It was further argued that mere area restriction is not relevant for proving mutuality of interests, but it has to be shown that the sale was not at an arms length and but a principal to principal transaction.
It appears from the letter dated 10th September, 1981 from the appellants to the Department that the distributors paid for their own advertisements.
In some case, the manufacturer might release advertisements through the distributors.
It was also urged that even a sole distributor could be an independent buyer on behalf of the manufacturer and the distributor and in this connection reliance was placed on the observations of this A.K. Roy 's case S.C.).
After sales service undertaken by the distributors was more in the nature of replacement of defective goods sold, which any manufacturer was bound to do and that is a normal essential service of a distributor.
Regarding the 'mark up ' allowed by the manufacturer to the distributor as indicating special relationship, it was contended that it was provided for in the context of the requirement to indicate maximum selling price to be marked on the goods, and in fact, it was in this context that the appellants had made a reference to the MRTP Commission.
The Tribunal held that the distributors were not related persons and in the light of the observations of this Court in Atic In 362 dustries case (supra) set out hereinbefore.
We are of the opinion that what was necessary to find out, was whether the buyer is holding company or subsidiary company or relative of the manufacturer.
From the explanation of the relationship furnished in this case, such is not the position.
It appears that the link between the respondents T.I.Miller Ltd. company and T.I. & M. Sales Ltd., is the main distributors of M/s. Tube Investments of India Ltd., who are the holding company of the respondents.
This relationship does not satisfy the criteria for establishing the related persons concept.
These were limited companies at the material time, and it will be difficult to say that a limited company has any interest direct or indirect in the business carried on by one of its shareholders.
It has been explained that the mark up in the price was allowed in connection with the requirement to display the maximum sale price.
The sales pattern shows also sales to other than distributors and it is not restricted only to the appointed distributors of T.I. India Limited.
In the premises the Tribunal 's upholding the order of the Appellate Collector, was right and correct.
In the background of the facts mentioned hereinbefore and in the light of the decisions of this Court in Bombay Tyre International and Atic Industries cases (supra), we are of the opinion that the Tribunal was right and there is no cause for interference with the order of the Tribunal.
In the premises, we decline to admit the appeals.
H.S.K. Appeals dismissed.

summary/full:
% The respondents manufactured goods which were assessable under Item 68 of the Central Excise Tariff.
The respondents filed price lists for the sale of the goods through their distributors one of them being M/s. T.I & M Sales Ltd., quoting their price to the distributors as assessable value.
Subsequently the respondents required that the price charged by them from buyers at the factory gate should be accepted as the assessable value and not the price to the distributors.
The Assistant Collector found that the distributors were related persons as per section 4 of the and the price at which the distributors sold the goods should therefore be the assessable value.
On appeal by the appellant revenue, the Appellate Collector held that these could not be held to be the related persons.
The Revenue had found that there was an agreement existing between the respondents and their distributors according to which they were the company 's distributors for the sale of their goods.
Major portion of the sales were effected through M/s. T.I. & M. Sales Ltd. who were the main distributors of M/s. Tube Investments of India Ltd. and its subsidiary companies and rest of the sales through the other two distributors.
M/s. Tube Investment of India was the holding company of M/s. T.I. Millers Ltd. The agreement between the assessee and the T.I Revenue had further found that there was a territorial earmarking for the operation of the distributors, who also undertook advertisements and helped the sub dealers for maintaining show rooms in dealer 's premises.
The distributors did not deal with competitor 's goods.
The Revenue had also noted that the assessee granted mark up to the distributors to cover their establishment expenses, travelling expenses, advertisements and 356 sundry expenses.
In view of this the revenue filed a review petition, but the Appellate Tribunal rejected the review petition and upheld the finding of the Appellate Collector.
Hence these appeals under section 351(b) of the Act.
The question was whether the distributors were related persons of the respondents and secondly whether the expenses incurred for maintaining the show room, advertisements etc.
should also be added to the assessable value.
Dismissing the appeals this Court, ^ HELD: To find out whether the distributors were related persons of the manufacturers it is necessary to find out whether the buyer is holding company or subsidiary company or relative of the manufacturer.
From the explanation of the relationship furnished in this case, such is not the position.
It appears that the link between the respondents T.I. Miller Ltd. Company and T.I. & M. Sales Ltd., is that the latter are the main distributors of M/s. Tube Investments of India Ltd., which is the holding company of the respondents.
This relationship does not satisfy the criteria for establishing the related persons concept.
These were limited companies at the material time, and it will be difficult to say that a limited company has any interest direct or indirect in the business carried on by one of its shareholders.
[362A C] The mark up in the price was allowed in connection with the requirement to display the maximum sale price.
The sales pattern shows also sales to other than distributors and it is not restricted only to the appointed distributors of T.I. India Limited.
In the background of the facts mentioned hereinbefore and in the light of the decisions of this Court in Bombay Tyre International and Atic Industries cases we are of the opinion that the Tribunal was right and there is no cause for interference with the order of the Tribunal.
[362C E] Union of India and others vs Atic Industries Limited, ; and Union of India and Others etc.
vs Bombay Tyre International Ltd. etc.
, [1984] 1 S.C.R. 347, referred to.


judgement:
Special Leave Petition (Civil) No. 4557 of 1988.
From the Judgment and Order dated 21.3.88 of the Bombay High Court in Appeal No. 306 of 1988.
F.S. Nariman, B.D. Sharma and R.P. Kapur for the Petitioner.
Soli J. Sorabjee, Harsh Mittre, Harish N. Salve, Jeel Peres, D.N. Mishra and Mrs. A.K. Verma for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This petition under Article 136 of the Constitution challenges the judgment and order of the Division Bench of the High Court of Bombay dated 21st March, 1988.
The petitioner in this case on 23rd June, 1961, had agreed to sell to the predecessor of respondent raw petroleum coke.
There was a second agreement on 22nd April, 1971.
The said agreement was arrived at between the parties whereunder it was provided that in case the respondent failed to lift raw petroleum coke as agreed, the petitioner would have right to shift raw petroleum coke at the risk and expense of the respondent.
There was a third agreement providing that in case of delay in payment, the respondent would pay interest at 4 per cent over the I.O.C. Bank borrowing rate, on the value of the stock not uplifted.
It appears that on 5th August, 1982, the respondent wrote a letter to the petitioner showing inability to pay the arrears of the price against delivery of raw petroleum coke.
On 4th October, 1982 there was a stock of about 13,760 M.T.S. Of saleable raw petroleum coke lying at Gauhati Refinery.
The petitioner on 18th October, 1982 wrote to the 429 respondent that unless the outstandings as on 1st September, 1982 and interest were paid, the petitioner would not make further supplies.
Thereafter the petitioner filed Suit No. 2187 of 1982 for payment and for attachment before judgment.
On 21st December, 1982, it appears that there was an order of attachment of stocks of raw petroleum coke to the extent of Rs.6 crores of the respondent.
The order was confirmed after notice.
Respondent filed Appeal No. 858 of 1983.
Thereafter respondent on 20th ostler, 1983 filed an application for stay of the suit under section 34 of the (hereinafter called 'the Act ').
The petitioner on 11th July, 1983 terminated the agreement with effect from 31.8.83.
The respondent thereafter filed Suit No. 122 of 1983 and applied for an order compelling the petitioner to make supplies.
The learned District Judge passed an order on 28th April, 1984 for restoration of supplies.
On 7th May, 1984 in petitioner 's appeal viz., Civil Appeal No. 2476 of 1984, this Court stayed the above order.
On 24th May, 1984 this Court 's order setting aside the order of the learned District Judge dated 28th April, 1984 and recorded the compromise terms.
Pursuant to the compromise, all proceedings were withdrawn by the parties.
On 11th December, 1984 matter relating to the petitioner 's claims in respect of interest on stocks held from 1st October, 1982 onwards and expenses of shifting raw petroleum coke from 1st October, 1982 upto 31st August, 1983, were referred to arbitration of Shri A.K. Sarkar, a former Chief Justice of India.
On 21st August, 1986 an interim award was passed by the learned arbitrator.
Interim award was filed in the High Court of Bombay and the petitioner challenged the said award.
The learned single Judge of the High Court dismissed the petition challenging the interim award.
The Division Bench of the High Court of Bombay upheld the order of the learned single Judge.
Hence this petition under Article 136 of the Constitution.
The main contention urged before us was that it was necessary in the present trend of law for the learned arbitrator to have given a reasoned award.
The Arbitration Act, 1979 in England so enjoins.
The arbitrator, according to the petitioner has failed to do so.
Hence the award was bad and as such the decision of the High Court was wrong and leave should be granted from the said decision and the matter be referred to the Constitution Bench as several cases are pending on this point.
The learned single Judge of the High Court in his decision had observed that the award was undoubtedly not an elaborately reasoned award setting out all the reasons which prompted the learned arbitrator to arrive at the conclusion he did reach, but it was a speaking 430 award.
The learned Judge however, held that it was not necessary to examine this aspect since even if it was a speaking order, it was not bad in law.
It is true that the law as it stands upto date since the decision of Champsey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd., A.I.R. 1923 P.C. 66 that it was not necessary that all awards should be speaking awards.
See in this connection the observations of this Court in Hindustan Steelworks Construction Ltd. vs Shri C.Rajasekhar Rao, 3 S.C. 239.
Previously the law both in England and India was that an arbitrator 's award might be set aside for error of law appearing on the face of it, though the jurisdiction was not lightly to be exercised.
Since question of law could always be dealt with by means of a special case this is one matter that could be taken into account when deciding whether the jurisdiction to set aside an award on this ground should be exercised or not.
The jurisdiction was one that existed at common law independently of statute.
In order to be a ground for setting aside the award, an error in law on the face of the award must be such that there could be found in the award, or in any document actually incorporated with it, some legal proposition which was the basis of the award and which was erroneous.
See Halsbury 's Laws of England, 4th edition.
paragraph 623, page 334.
The law has undergone a sea change in England.
It is obligatory in England now after the Arbitration Act, 979, that the award should give reasons.
In the instant case.
the arbitrator has set out the history in the interim award.
The arbitrator has stated that the agreement dated 22nd April.
1970 provided that I.C.L. will uplift all available coke produced at the Gauhati Refinery by which name also the Noonmati Refinery was called.
the said upliftment being so regulated that the quantity uplifted every week was equivalent to the production of coke at the refinery in the previous week and that whereas it was thereby further provided that the upliftment by I.C.L. shall also be as regulated that the accumulated quantity of coke in the refinery coke yard does not fall below 2500 tons and does not exceed 4500 tons.
The other history of the matter, it was recited that the order dated 24th May, 1984 was passed by consent of the parties by this Court that the claim of the Indian oil Corporation for interest on stocks said to have been held in the Gauhati Refinery from 1st October, 1982 onwards and its claim for expenses of shifting the coke from 1st October, 1982 upto 3 1st August, 1983 would be referred to the arbitration of a retired Judge of the Supreme Court mutually acceptable to the parties.
Two preliminary issues, the arbitrator framed were, namely, (1) Is the 431 claimant entitled to charge any interest on unlifted stock of raw petroleum coke in view of its letter dated October 18, 1982? and (2) Is the claimant entitled to any shifting charges in view of its letter dated 18th October, 1982? The gist of the letter dated 18th October, 1982 is set out in the arbitration agreement.
The arbitrator in his award pro to observe as follows: "And whereas it is not in dispute between the parties that since the said letter of 18th October, 1982, I.O.C. had not delivered or offered to deliver any raw petroleum coke for I.C.L. Now, therefore, having heard counsel for the parties and perused the documents and statements filed by them, the despatch and receipt of none of which is disputed, and having considered thereafter, I adjudge, hold and award as follows: The letter dated 18th October, 1982 is no bar to Indian oil Corporation 's claim for shifting charges and interest in respect of the period from 1st October, 1982 to 17th October, 1982.
Because of the said letter which has been admittedly acted upon by the Indian oil Corporation Ltd. which had not delivered any coke to Indian Carbon Ltd. Or made any offer to do so the Indian oil Corporation Ltd. is not entitled to the interest claimed in respect of the period from 18th October, 1982 onwards nor to shifting charges in respect of any shifting done on or after 18th October, 1982.
" The aforesaid grounds are the reasons of the arbitrator for making the award.
The award is that the Indian oil Corporation is not entitled to any interest nor any shifting charges.
The reasons for the said conclusion are the aforesaid three factors mentioned by the arbitrator.
How the arbitrator has drawn inference is apparent from the reasons.
It is to be noted that this Court has been insisting on the arbitrators to give some indications to indicate how the mind of the arbitrator acts.
This Court in the case of Siemens Engineering and Manufacturing Company of India Ltd. vs Union of India, was concerned with the decision of the Collector of Customs.
This Court observed that where an authority makes an order 432 in exercise of a quasi judicial function, it must record its reasons in support of the order it makes.
This Court observed further that every quasi judicial order must be supported by reasons.
In Rohtas Industries Ltd. and Another vs Rohtas Industries Staff Union and others; , where this Court was concerned with an award under section 10A of the .
This Court observed that there was a need for a speaking order where considerable numbers are affected in their substantial rights.
It was further reiterated that in such a situation a speaking order may well be a facet of natural justice or fair procedure.
In Dewan Singh vs Champat Singh, ; , this Court reiterated that it was an implied term of the arbitration agreement that the arbitrators must decide the dispute in accordance with the ordinary law and they cannot decide disputes on the basis of their personal knowledge.
The proceedings, it was held, before the arbitrators were quasi judicial proceedings and they must be conducted in accordance with the principles of natural justice.
It was, therefore, obligatory to give reasons.
As mentioned hereinbefore there has been since then trend that reasons should be stated in the award and the question whether the reasons are necessary in ordinary arbitration agreement between the parties has been referred to the Constituion Bench.
In this case, however, we are in agreement with the High Court of Bombay that reasons were stated in the award.
We have set out hereinbefore the three grounds, namely, (1) The letter dated 18th October, 1982 is no bar to Indian oil Corporation 's claim for shifting charges and interest in respect of the period from 1st October, 1982 to 17th October, 1982.
(2) The inference drawn from the contents of the letter and (3) Because of the said letter which has admittedly been acted upon by the Indian oil Corporation Ltd., and which had not delivered any coke to the Indian Carbon Ltd. Or made any offer to do so.
For these reasons, the arbitrator held that the Indian oil Corporation Ltd., is not entitled to interest claimed in respect of the period from 18th October, 1982 onwards nor to shifting charges from 18th October, 1982.
These are the reasons for giving the award.
No error of law was pointed out in those reasons.
Indeed no proposition of law was stated in the aforesaid reasons, which could be objected to as an error of law.
There was, however, no error of fact.
It was a possible view to take.
It could not be urged that it was an impossible view to take.
The arbitrator has made his mind known on the basis of which he has acted that, in our opinion, is sufficient to meet the requirements even if it be reasons should be stated in the award.
It is one thing to say that 433 reasons should be stated and another thing to state that a detailed judgment to be given in support of an award.
Even if it be held that it is obligatory to state the reasons, it is not obligatory to give a detailed judgment.
This question was considered by the Court of Appeal in England in Bremer Handelsgesellschaft vs Westzucker, [1981] 2 Lloyd 's Law Reports 130.
There Lord Donaldson speaking for the court at pages 132 and 133 of the report observed as follows: "It is of the greatest importance that trade arbitrators working under the 1979 Act should realize that their whole approach should now be different.
At the end of the hearing they will be in a position to give a decision and the reasons for that decision.
They should do so at the earliest possible moment.
The parties will have made their submissions as to what actually happened and what is the result in terms of their respective rights and liabilities.
All this will be fresh in the arbitrators ' minds and there will be no need for further written submission by the parties.
No particular form of award is required.
Certainly no one wants a formal "Special Case".
All that is necessary is that the arbitrators should set out what, on their view of the evidence, did or did not happen and should explain succinctly why, in the light of what happened, they have reached their decision and what that decision is.
This is all that is meant by a "reasoned award".
For example, it may be convenient to begin by explaining briefly how the arbitration came about "X sold to Y 200 tons of soyabean meal on the terms of GAFTA Contract 100 at US.
$Z per ton c.i.f.
Bremen.
X claimed damages for non delivery and we were appointed arbitrators".
The award could then briefly tell the factual story as the arbitrators saw it.
Much would be common ground and would need no elaboration.
But when the award comes to matters in controversy, it would be helpful if the arbitrators not only gave their view of what occurred, but also made it clear that they have considered any alternative version and have rejected it, e.g., "The shippers claimed that they shipped 100 tons at the end of June.
We are not satisified that this is so", or as the case may be.
"We are satisfied that this was not the case".
The arbitrators should end with their conclusion as to the resulting rights and liabilities of the parties.
There is nothing about 434 this which is remotely technical, difficult or time consuming.
It is sometimes said that this involves arbitrators in delivering judgments and that this is something which requires legal skills.
This is something of a half truth.
Much of the art of giving a judgment lies in telling a story logically, coherently and accurately.
This is something which requires skill, but it is not a legal skill and it is not necessarily advanced by legal training.
It is certainly a judicial skill, but arbitrators for this purpose are Judges and will have no difficulty in acquiring it.
Where a 1979 Act award differs from a judgment is in the fact that the arbitrators will not be expected to analyse the law and the authorities.
It will be quite sufficient that they should explain how they reached their conclusion, e.g., "We regarded the conduct of the buyers, as we have described it, as constituting a repudiation of their obligations under the contract and the subsequent conduct of the sellers, also as described, as amounting to an acceptance of that repudiatory conduct putting an end to the contract".
It can be left to others to argue that this is wrong in law and to a professional Judge, if leave to appeal is given, to analyse the authorities.
This is not to say that where arbitrators are content to set out their reasoning on questions of law in the same way as Judges, this will be unwelcome to the Courts.
Far from it.
The point which I am seeking to make is that a reasoned award, in accordance with the 1979 Act, is wholly different from an award in the form of a special case.
It is not technical, it is not difficult to draw and above all it is something which can and should be produced promptly and quickly at the conclusion of the hearing.
That is the time when it is easiest to produce an award with all the issues in mind.
" See the observations in Russel on Arbitration, 20th Edn., page 291 Reasons for the Award and the decision referred to therein.
" In a case of this nature, issues are simple, points are fresh and facts are clear, the reasons given by the arbitrator, in our opinion, meet the requirements of a reasoned award.
It is apparent that the arbitrator has not acted irrelevantly or unreasonably.
Arbitration procedure should be quick and that quickness of the decision can always be ensured by insisting that short intelligible indications of the grounds 435 should be available to find out the mind of the arbitrator for his action.
This was possible in the instant case.
In the instant case the arbitrator has spoken his mind, and he is clear as to how he acted and why he acted in that manner.
The purpose of section 12 of the English Tribunal and Inquiries Act which required the statutory tribunal to furnish a statement of the reasons if requested to do so before it gave its decision was to enable a person whose property or whose interests were affected to know if the decision was against him what the reasons were.
Justice R.S. Bachawat in his Law of Arbitration, First Edition 1983, pages 320 and 321 states that the provision was read as meaning that proper and adequate reasons must be given.
The reasons that are set out must be reasons which will not only be intelligible but also deal with the substantial points that have been raised.
When the arbitration clause required the arbitrator to give a reasoned award and the arbitrator does give his reasons in the award, the sufficiency of the reasons depend upon the facts of the particular case.
He is not bound to give detailed reasons.
The Court does not sit in appeal over the award and review the reasons.
The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous.
Judges in that light, the award in question was unassailable in the instant case.
In the aforesaid view of the matter, we are of the opinion that the High Court was right in the view it took.
The special leave petition fails and is accordingly dismissed.
G.N. Petition dismissed.

dataset_name: IN-Abs

summary/full:
% In respect of sale of raw petroleum coke by petitioner to respondent there were three agreements, providing for sale, petitioner 's right to shift raw petroleum coke at the risk and expense of the respondent in case of failure of Respondent to shift the same as agreed, and the Respondent 's liability to pay interest on the value of stock not uplifted.
There was default in payment and petitioner stopped supplies to respondent, filed a suit and obtained an order of attachment of stocks of raw petroleum coke, to the extent of Rs.6 crores, of the Respondent.
The respondent filed an appeal as also an application for stay of the suit under Section 34 of the .
Meanwhile the petitioner terminated the agreement.
Thereafter the respondent filed a suit and the Court passed an order for restoration of supplies.
On an appeal by the petitioner, this Court stayed the order of restoration of supplies, and recorded the compromise terms, pursuant to which all proceedings were withdrawn by the parties.
The petitioner 's claim were referred to an Arbitrator, who passed an interim award, according to which the petitioner was not entitled to any interest nor any shifting charges.
The petitioner challenged the said award, when it was filed in High Court.
The High Court dismissed the petition and this special leave petition is against the High Court 's order.
It was contended before this Court that the Arbitrator has failed to give a reasoned award and so it is bad in law.
Dismissing the special leave petition, this Court, ^ HELD: 1.
It is obligatory in England now after the Arbitration , that the award should give reasons.
The purpose of Section 12 of the Act requiring the tribunal to furnish a statement of reasons if requested to do so before it gave its decision is to enable the person whose property or whose interests were affected, to know, if the decision was against him, what the reasons were.
[435B C] 'Law of Arbitration ' by Justice R.S. Bachawat.
First Edition 1983 pp.
320 and 321, referred to.
2.1 In India, there has been a trend that reasons should be stated in the award.
The reasons that are set out must be reasons which will not only be intelligible but also deal with the substantial points that have been raised.
When the arbitration clause required the arbitrator to give a reasoned award, the sufficiency of the reasons depend upon the facts of the particular case.
He is not bound to give detailed reasons.
[435C D] 2.2 The Court does not sit in appeal over the award and review the reasons.
The Court can set aside the award only if it is apparent from the award that there is no evidence to support the conclusions or if the award is based upon any legal proposition which is erroneous.[435D E] 2.3 The award in question is unassailable.
According to the Arbitrator, because of the letter dated 18th October, 1982 of the petitioner addressed to the Respondent stating that if the outstandings and interest are not paid, further supplies would not be made, has been acted upon by the petitioner, which had not delivered any coke to the respondent, or made any offer to do so, the petitioner was not entitled to the interest in respect of the period from 18th October, 1982 onwards, nor to shifting charges in respect of any shifting on or after 18th October, 1982.
On this reasoning, he had given the award.
How the Arbitrator has drawn inference is apparent from the reasons.
No proposition was stated in the aforesaid reasons, which could be objected to as an error of law.
The reasons given by the Arbitrator meet the requirements of a reasoned award.
It is apparent that the arbitrator has not acted irrelevantly and unreasonably.
[432E G; 434G H] 2.4 Arbitration procedure should be quick and that quickness of the decision can always be ensured by insisting that short intelligible indications of the grounds should be available to find out the mind of the arbitrator for his action.
This was possible in the instant case where the arbitrator has spoken his mind, and he is clear as to how he acted 428 and why he acted in that manner.[434H; 435A] Champsey Bhara and Company vs Jivraj Balloo Spinning and Weaving Company Ltd., AIR, ; Hindustan Steelworks Construction Ltd. vs Shri C. Rajasekhar Rao, 3 S.C. 239; Siemens Engineering and Manufacturing Company of India Ltd. vs Union of India, [1976] Suppl.
S.C.R. 489; Rohtas Industries Ltd. and Another vs Rohtas Industries Staff Union and others; , and Dewan Singh vs Champat Singh, ; , referred to Bremer Handelsgesellschaft vs Westzucker, [1981] 2 Lloyd 's Law Reports 130, referred to.


judgement:
ivil Appeal Nos.
1500 01 of 1988.
From the Judgment and Order dated 26.10.1987 of the Bombay High Court in Appeal No. 1207 and 1206 of 1987.
Y.P. Rao for the Appellants.
H.N. Salve, Hardeep Singh and Raian Karanjawala for the Respondent.
The Judgement of the Court was delivered by SABYASACHI MUKHARJI, J. Special leave granted and the appeals are disposed of by the judgment herein.
These two appeals are directed against the judgment and order of the Division Bench of the High Court of Bombay confirming the decision of the learned single Judge dismissing the application for setting aside the award.
It appears that there was a Charter Party Agreement entered into between the parties in December, 1981 signed by the representative of the President of India and the respondent Shipping Company for transportation of bulk cargo from Australia to 368 India.
Thereafter in February, 1982 the agreement was sent to the President 's representative at New Delhi for signing the same.
The said cargo was delivered at the port of Tuticorin and not at Calcutta.
The respondent company raised disputes regarding several items and claimed an amount of Rs.9,06,854.86 as demurrage and Rs.7881.43 against over time charges.
As per the said agreement, the disputes were referable to arbitration by joint arbitration of two Arbitrators one each to be appointed by each of the parties.
The appellant appointed one Shri J.L. Puri as its arbitrator with a specific condition that he shall give reasons for the award.
The respondent company appointed one Shri P.S. Gokhale as its arbitrator.
Thereafter the award was made and the same was signed by Shri Gokhale at Bombay on 11th June, 1986 and Shri J.L. Puri at Calcutta on 18th of June, 1986.
The award did not speak.
As such there is no reason apparent from the award.
The award, however, directed the appellant Corporation to pay lumpsum amount of Rs.6,22,589 to the respondent company.
The award was filed in the High Court of Bombay.
Notice of such filing was received by the appellant Corporation at Delhi.
The appellants filed objection petition before the High Court of Bombay for setting aside the award.
It was contended that the High Court of Bombay had no jurisdiction to entertain the filing of the award since no cause of action arose at Bombay.
The appellants contended that the award was liable to be set aside for reasons of misconduct, irregularity and lack of competence.
In both the appeals similar claims have been made.
It appears, however, that there is a specific finding made by the learned single Judge that the agreement was signed at Bombay which was affirmed by the Division Bench.
We find no material to impeach this finding.
It was next contended as it has been contended before the Division Bench that there was a mandate given to the arbitrators to state reasons for the award but it was not complied with.
It is true that the appellants had written a letter to their arbitrator stating that he should record reasons for the award.
Copies of this letter were also sent to the arbitrator appointed by the respondents.
There was, therefore, no mandate given by both parties to the arbitration agreement to both arbitrators to state reasons.
The arbitrators could not act on the mandate of one of the parties.
This contention of the appellants cannot be accepted.
It was next contended that the arbitrators should have given reasons.
Unreasoned award is bad.
It is true that the recent trend is to have reasoned awrds.
Indeed a matter is pending in this Court on this aspect.
The appointed arbitrators were men of commerce and they 369 arrived at a consensual figure.
Though the recent trend is that the award should be a reasoned award and that would be in consonance with the principles of natural jusice, in a case of this nature where two men of commerce in respect of money claim under Charter Party Agreement entered into arbitration and the award has awarded a lumpsum amount, it appears to us, that the reasons are not far to seek.
It is really an accounting of the rival claims of the parties.
In that view of the matter and in the facts of this case, we find that there is no legal misconduct as such in not giving reasons.
In the premises, the High Court was right in dismissing the objections.
Both the appeals are disposed of accordingly.
There will be no order as to costs.
N.P.V. Appeals dismissed.

summary/full:
% A Charter Party agreement was entered into between the appellant Food Corporation of India, and the respondent Shipping Company for transportation of bulk cargo from Australia to India.
After the cargo was delivered, the respondent Company raised disputes regarding certain items and claimed demurrage and overtime charges.
As per the agreement, the disputes were referred to joint arbitration by two Arbitrators, one each appointed by each of the parties.
The appellant appointed its Arbitrator with a specific condition that he should give reasons for his award, and sent a copy of this letter to the arbitrator appointed by the respondent.
The award was made and duly signed by the two Arbitrators at Calcutta and Bombay respectively.
The award, which was a non speaking one and did not contain reasons for the award but directed the appellant Corporation to pay a lump sum amount to the respondent Company, was filed in the High Court of Bombay.
The High Court rejected the objection petition filed by the appellants for setting aside the award.
In the appeals, by special leave, it was contended that the High Court of Bombay had no jurisdiction to entertain the filing of the award since no cause of action arose in Bombay and that the Arbitrators had not complied with the mandate given to them to state the reasons and, therefore, the award was liable to be set aside for reasons of misconduct, irregularity and lack of competence.
Dismissing the appeals, by special leave, 367 ^ HELD: There was no mandate given by both the parties to the arbitration agreement to both the arbitrators to state reasons.
The arbitrators could not act on the mandate of one of the parties.
[368G] Unreasoned award is bad.
Though the recent trend is that there should be a reasoned award, and that would be in consonance with the principles of natural justice, in a case where two men of commerce entered into arbitration in respect of money claim under the Charter Party Agreement and the award has awarded a lump sum amount, the reasons are not far too seek.
It is really an accounting of the rival claims of the parties.
[368H, 369A B] Therefore, on the facts of the case, there is no legal misconduct as such in not giving reasons.
[369B C] There is a specific finding by the Single Judge of the High Court that the agreement was signed at Bombay which was affirmed by the Division Bench.
Hence the High Court had the jurisdiction to entertain the filing of the award.
[368E F]


judgement:
Civil Appeal No. 1449 of 1987.
From the Judgment and Order dated 25.2.1987 of the Bombay High Court in W.P. No. 6028 of 1986.
V.M. Tarkunde and S.C. Birla for the Appellant.
V.B. Joshi and Janardan for the Respondent.
The Judgment of the Court was delivered by 463 KANIA, J.
This is an Appeal by a tenant against a decree for eviction passed against him at the instance of the Respondent who is the landlord.
The Appeal has been preferred pursuant to Special Leave granted by this Court under Article 136 of the Constitution.
In view of the short controversy before us, the relevant facts can be very briefly stated.
The Appellant took the tenancy of the premises in question, namely, shop in a house bearing CTS No. 168, Bhavant Peth, Satara City in Maharashtra on an agreed rent of Rs.22 per month.
Apart from the rent, a sum of Rs.2.20 per month was payable on account of Education Cess.
The Respondent purchased the said house on December 3, 1976 and on the next day the previous owner of the said house informed the Appellant that the property was sold to the Respondent and the tenancy was attorned and further stated that the Appellant was in arrears of rent from 1.6.1976 to 30.11.1976.
On January 11, 1977, the Appellant received a notice from the Respondent dated January 10, 1977 demanding the arrears of rent from the Appellant.
On January 17, 1977, the Appellant sent a money order to the Respondent for the arrears of rent but the money order stated that the payment was being made to the Respondent as the Muktyar or agent of the previous landlord.
This money order was refused by the Respondent.
On February 14/15, 1977, the Appellant filed a standard rent application in the Trial Court for fixing the standard rent of the premises under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 which we shall refer to hereinafter as "the Bombay Rent Act".
The Respondent filed a suit, being Regular Civil Suit No. 123 of 1977, in the Court of Civil Judge Junior Division, Satara claiming arrears of rent and possession of the suit premises on the ground of non payment of arrears of rent and bona fide requirement as contemplated under Section 12(3) and Section 13(1) respectively of the Bombay Rent Act.
The issues in the said suit were framed by the Trial Court on September 12, 1978, and that is accepted as the first day of hearing of the suit.
Although the Appellant made applications on 24 12 1977, 15 1 1980, 9 12 1980 and 27 1 1981 for fixation of interim rent, the Trial Court passed an order only on January 27, 1981 fixing the interim rent at Rs.20 per month and gave directions to the Appellant to pay all the arrears of rent on or before February 10, 1981.
The Appellant deposited all the arrears of rent at the rate fixed by the Court for the period from 1 6 1976 to 31 1 1981 in the Trial Court on January 29, 1981, that is, within two days from the date of order fixing the rent.
The Appellant thereafter deposited the rent in the Trial Court as set out in the following manner: 464 ____________________________________________________________ 'C 'No. Receipt Date Amount Particulars No. ____________________________________________________________ 1269 1094 29 1 81 1158.60 June 1976 to Feb '1981 1416 1208 25 2 81 20.00 March, 1981 13 12 2 4 81 60.00 April, May, June, 1981 409 366 8 7 81 60.00 July,Aug., Sept ', 1981 849 755 5 10 81 60.00 October, November Dec., 1981 1322 1166 11 1 82 60.00 January, February, March, 1982 54 51 8 4 82 60.00 April, May, June,1982 682 630 10 8 82 60.00 July,August Sept, 1982 1153 1055 1 11 82 60.00 October, November, Dec., 1982 1728 1596 7 2 83 40.00 January, February, 1983 107 100 12 4 83 60.00 March,April May 1983 528 484 14 7 83 40.00 June,July, 1983 998 910 28 9 83 40.00 August, Sept., 1983 1213 1203 7 11 83 40.00 October, Nov.1983, 1689 1603 11 1 84 20.00 December, 1983 1635 1551 5 1 84 20.00 January, 1984 2079 1952 15 3 84 100.00 February to June,1984 354 316 26 6 84 120.00 July to Dec,1984 434 256 18 12 84 240.00 January to Dec ', 1985 456 290 17 12 85 240.00 January to Dec ', 1986 The Trial Court held that the Respondent had failed to prove that he was in bona fide need of the suit premises but passed a decree for 465 eviction on the ground that the Appellant had committed default in payment of rent as contemplated under section 12(3)(b) of the Bombay Rent Act.
On an appeal by the Appellant, these findings were confirmed by the Additional District Judge, Satare and the appeal was dismissed.
Being aggrieved, the Appellant filed a writ petition, being Writ Petition No. 6028 of 1986, in the High Court of Bombay.
This writ petition was dismissed by a learned Single Judge of the High Court by a short order taking the view that the Appellant was in arrears and had committed default in payment of rent and there was no reason for the High Court to interfere with the decisions of the courts below.
The present Appeal is directed against this decision.
It was submitted by Mr. Tarkunde, learned counsel for the Appellant that the Appellant had deposited well within time the entire arrears of rent on the basis of the interim rent fixed by the Trial Court and had thereafter deposited the amount of accruing rent in court with substantial regularity and in view of this, no decree for eviction could be passed against the Appellant under the provisions of Section 12(3)(b) of the Bombay Rent Act read with the other provisions contained in Section 12.
It was, on the other hand, contended by Mr. Joshi, learned counsel for the Respondent, that there was irregularity in the deposit of the interim rent after the initial deposit of arrears was made by the Appellant, and he was not entitled to the protection of the Bombay Rent Act and was liable to be evicted on the ground of default in payment of the rent.
In order to appreciate these arguments, we have to consider the relevant provisions of Section 12 of the Bombay Rent Act.
The material portion of Section 12 runs as follows: "12.
(1) 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.
(2) No suit for recovery of possession shall be instituted by a landlord against tenant on the ground of non payment of the standard rent or permitted increases due, until the expiration of one month next after notice in writing of the demand of the standard rent or permitted increases has been served upon the tenant in the manner provided in section 106 of the .
466 (3)(a) Where the rent is payable by the month and there is no dispute regarding the amount of standard rent or permitted increases, if such rent or increases are in arrears for a period of six months or more and the tenant neglects to make payment thereof until the expiration of the period of one month after notice referred to in sub section (2), the Court shall pass a decree for eviction in any such suit for recovery of possession.
(b) In any other case no decree for eviction shall be passed in any such suit if, on the first day of hearing of the suit or on or before such other date as the Court may fix, the tenant pays or tenders in Court the standard rent and permitted increases then due and thereafter continues to pay or tender in Court regularly such rent and permitted increases till the suit is finally decided and also pays costs of the suit as directed by the Court.
x x x x x x" The provision of Section 12(1) has already been set out.
In the present case, the provisions of clause (a) of sub section (3) of Section 12 have no application as there was a dispute regarding the amount of standard rent.
Hence the provisions which we have to consider are those contained in clause (b) of sub section (3) of Section 12 of the Bombay Rent Act.
This clause read in the context makes it clear that no decree for eviction can be passed in a suit for recovery of possession on the ground of non payment of standard rent or permitted increases instituted by the landlord against the tenant, if on the first day of the hearing of the suit or on or before such a date, as the court may fix, the tenant pays or deposits in court the standard rent and permitted increases then due and thereafter continues to pay or deposits in court regularly such rent and permitted increases till the suit is finally decided and also pays the costs of the suit as directed by the court.
In the present case, both sides accepted the position that the Appellant had deposited in Court the entire arrears of rent on the basis of interim rent fixed well within time as directed by the court.
It is common ground that until the application of standard rent made by the tenant is finally decided, the interim rent fixed by the court must be regarded as the standard rent.
The only question, therefore, is whether it can be said that the Appellant, after the first deposit, of the arrears of rent, continued to deposit in court the rent and the permit 467 ted increases "regularly" till the suit was finally decided as contemplated under Section 12(3)(b) of the Act.
In Mranalini B. Shah and another vs Bapalal Mohanlal Shah, a Division Bench of this Court was called upon to consider the very provisions of Section 12(3)(b) of the Bombay Rent Act which fall for consideration in the present case before us.
In dealing with these provisions, Sarkaria, J., speaking for the Court stated as follows: "The above enunciation, clarifies beyond doubt that the provisions of clause (b) of Section 12(3) are mandatory, and must be strictly complied with by the tenant during the pendency of the suit or appeal if the landlord 's claim for eviction on the ground of default in payment of rent is to be defeated.
The word 'regularly ' in clause (b) of Section 12(3) has a significance of its own.
It enjoins a payment or tender characterised by reasonable punctuality, that is to say, one made at regular times or intervals.
The regularity contemplated may not be a punctuality, of clock like precision and exactitude, but it must reasonably conform with substantial proximity to the sequence of times or intervals at which the rent falls due.
Thus, where the rent is payable by the month, the tenant must, if he wants to avail of the benefit of the latter part of clause (b), tender or pay every month as it falls due, or at his discretion in advance.
If he persistently defaults during the pendency of the suit or appeal in paying the rent, such as where he pays it at irregular intervals of 2 or 3 or 4 months as is the case before us the Court has no discretion to treat what were manifestly irregular payments, as substantial compliance with the mandate of this clause, irrespective of the fact that by the time the judgment was pronounced all the arrears had been cleared by the tenant.
" If we examine the chart of deposits made by the Appellant in the court set out earlier, it shows that during the period 29 1 1981 to 17 12 85 the Appellant has been depositing the rents in court for two or three months at a time.
In respect of some months, there are undoubtedly a few defaults in the sense that the deposits have been made a few days later than directed.
In this connection, it must be noticed that Trial Court directed that in respect of accruing rent after the order for deposit of arrears was passed, the monthly rent must be deposited on the fifth day of each month which, it is undisputed, must mean the fifth day of each succeeding month.
On this basis there are 468 undoubtedly a few defaults committed by the Appellant in the sense that in respect of the first month to which the deposit relates, there is some delay amounting to from two or three days upto a maximum of 23 days.
But, on the other hand, the rent for most of the months has been deposited in advance.
In these circumstances, applying the principle laid down in the aforesaid decision referred to, we are of the view that the rent has been deposited by the Appellant with reasonable punctuality and hence the Appellant/tenant can be regarded as having deposited the rent 'regularly ' as contemplated in clause (b) of subsection (3) of Section 12 of the Bombay Rent Act.
We are of the view that the courts below were in error in taking the view that exact or mathematical punctuality was required in the deposit of rent by a tenant to take advantage of the provisions of Section 12(3)(b) of the Bombay Rent Act.
In these circumstances, we set aside the decree for eviction passed by the courts below and order that the suit filed by the Respondent shall stand dismissed.
So far as the costs of this Appeal are concerned, however, that is a different question.
It has been pointed out to us by the learned counsel for the Respondent that the Appellant has been persisting in his unjustified stand that the Respondent was not his landlord in respect of the premises in question and on that ground he opposed the withdrawal by the Respondent of the amount deposited by the Appellant in the Trial Court.
We agree that this stand was unjustified.
Mr. Tarkunde, however, made it clear that the Appellant unconditionally accepts the title of the Respondent to the suit building and also accepts that he is the landlord of the Appellant and that the Respondent is entitled to recover the amount of rent from the Appellant.
If any rent remains deposited by the Appellant in the Trial Court, the Respondent shall be at liberty to withdraw the same forthwith.
In these circumstances, we direct that the entire costs throughout shall be borne and paid by the Appellant.
G.N. Appeal disposed of.

summary/full:
% Appellant took the tenancy of the premises in question on an agreed monthly rent of Rs.22 + Rs.2.20 per month on account of Education Cess.
Respondent purchased the house on December 3, 1976.
Appellant was in arrears of rent from 1.6.1976 to 30.11.76.
In response to the notice issued by the Respondent, appellant sent a money order to Respondent treating him as the Muktyar or agent of the previous landlord.
The respondent refused the money order.
Thereafter the appellant filed an application in the trial court for fixing the standard rent of the premises under the provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947.
The Respondent filed a suit claiming arrears of rent and possession of the suit premises on the ground of non payment of arrears of rent and bona fide requirement under section 12(3) and section 13(1) of the Act.
Trial Court passed an order fixing the interim rent of Rs.20 and directed the appellant to pay all arrears of rent and future rent accordingly.
Appellant deposited the arrears and thereafter made payment not monthly but at some irregular intervals.
The Trial Court held that the respondent had failed to prove that he was in bona fide need of the suit premises, but passed a decree for eviction on the ground that the Appellant had committed default in payment of rent as contemplated under section 12(3)(b) of the Act.
On appeal these findings were confirmed by the Additional District Judge.
The Appellant filed a Writ Petition in the High Court, which was dismissed.
In the appeal by special leave, it was contended on behalf of the appellant that payments of rents were made with substantial regularity and that no decree for eviction could be passed against the Appellant.
The contention of the Respondent was that there was irregularity in the deposit of the rent and that the appellant was liable to be evicted on the ground of default in payment of rent.
462 Disposing of the appeal this Court, ^ HELD: 1.
Section 12(3)(a) of the Act will not be applicable since there was dispute regarding the amount of standard rent.
Section 12(3)(b) is applicable, which makes it clear that no decree for eviction can be passed in a suit for recovery of possession on the ground of non payment of standard rent or permitted increases instituted by the landlord against the tenant, if on the first day of the hearing of the suit or on or before such a date, as the court may fix, the tenant pays or deposits in court the standard rent and permitted increases then due and thereafter continues to pay or deposits in court regularly such rent and permitted increases till the suit is finally decided and also pays the costs of the suit as directed by the court.
[466E F] 2.
As ordered by the Trial Court, the monthly rent should have been deposited on the fifth day of each succeeding month.
There were a few defaults committed by the Appellant varying from 2 to 3 days into a maximum of 23 days.
On the other hand, rent for most of the months had been deposited in advance.
In the circumstances of the case the Appellant had been depositing the rent with reasonable punctuality and can be regarded as having deposited the rent 'regularly ' as contemplated in Section 12(3)(b) and it is incorrect to say that exact or mathematical punctuality was required in the deposit of rent by a tenant to take advantage of the provisions of Section 12(3)(b).
[467G H; 468A C] (Mranalini B Shah and another vs Bapalal Mohanlal Shah, , followed.
[The decree for eviction was set aside and the court directed that the suit filed by the Respondent shall stand dismissed.]


judgement:
Appeal No. 77 of 1954.
Appeal from the judgment and decree dated August 25, 1949, of the former Nagpur High Court in First Appeal No. 91 of 1945 arising out of the judgment and decree dated July 31, 1945, of the Court of Second Additional District Judge, Akola in Civil Suit No. 7 B of 1944.
C. B. Agarwala and Ratnaparkhi A. G. for the appellant.
Veda Vyasa and Ganpat Rai, for the respondent.
February 18.
The following Judgment of the Court was delivered by BHAGWATI J.
This appeal with a certificate under section 109(a) read with section 110 of the Code of Civil Procedure (Act V of 1908) is directed against the judgment and decree passed by the Nagpur High Court dismissing the appeal of the appellant and confirming the dismissal of his suit by the learned Second Additional District Judge, Akola.
The appellant, who was the plaintiff in the trial court filed in the Court of the First Additional District Judge, Akola, Civil Suit No. 2 B of 1944 against the 7 B respondent, a limited company incorporated under the Indian Companies Act of 1882, which owned a 1333 Ginning and Pressing Factory and carried on business of ginning and pressing cotton at Akot in District Akola.
The appellant alleged that he was one of the creditors of the company which used to borrow money, from him for about 35 years past.
He claimed to have acted as Banker of the company and the sums borrowed from him were entered in the account books of the company in two khatas, one known as current account or " chalu khata " and the other described as ,,fixed deposit khata ".
An account used to be made up at the end of ' every year and the amount found due at the foot of the account was entered in the balance sheet of the company which was adopted at the Annual General Meeting of the company.
Deposit receipts also used to be passed for the amounts standing in the fixed deposit khata from time to time and at the end of the year ending July 1939, a sum of Rs. 79,519 12 9 was found due by the company to him on both these accounts.
On January 15, 1940, the company passed a deposit receipt in his favour for this amount which he demanded from the company by his letters dated May 10, 1941 and May 17, 1941.
The company failed and neglected to pay the said amount with the result that he filed on June 16,1944, a suit against the company for recovery of a sum of Rs. 1,03,988 made up of Rs. 79,519 12 9 for principal and Rs. 24,468 as interest from August 1, 1939, to January 15, 1944.
The claim as laid in the plaint was that all these amounts which had been borrowed by the company from him were payable on demand to be made by him as creditor and they were deposits with the company, but in order that the company may not be compelled to pay a big sum, on demand, items in the current account were being transferred to the fixed deposit account from time to time.
The amounts of these deposits being thus payable on demand the cause of action accrued to him on May 17, 1941, and limitation for the suit expired on May 17, 1944.
But, as the courts were closed on that day, the suit was filed on 1334 the first opening day i. e., June 16, 1944, and limitation was therefore saved by section 4 of the Limitation Act.
He also relied upon the acknowledgments of his debt made by the company in (a) the resolution passed by the Board of Directors on May 20, 1941, (b) the balance sheet of the company for the year 1940 41 dated October 10, 1941, and for the years 1941 42 and 1942 43, and (c) the entry in the khata of the plaintiff in the books of the company made on or about July 31, 1941, and signed by the Chairman of the company.
He further relied upon an application made under section 162 of the Companies Act to liquidate the company on June 16, 1941, which application was however dismissed by the court on June 16, 1944, stating that as he was bona fide prosecuting this application for the same relief as claimed in the suit and as the court was unable to entertain the application because the debt was disputed by the company, he was entitled to deduct from the period of limitation, the time spent by him under section 14 of the Limitation Act.
This claim of the appellant was contested by the respondent mainly on the ground that the suit was barred by the law of limitation.
Both the courts below negatived his claim.
The trial court dismissed his suit and the High Court, on appeal, dismissed his appeal and confirmed the dismissal of his suit by the trial court; hence this appeal.
The only question which arises for our consideration in this appeal is whether the appellant 's suit was barred by limitation.
The appellant, in the first instance, relied upon the deposit receipt which was passed by the company in his favour on January 15, 1940.
This receipt (exhibit P 1) evidenced a deposit of Rs. 79,519 12 9 for 12 months from August 1, 1939, to July 31, 1940, and the amount at the foot thereof became due and payable by the respondent to him on July 31, 1940.
The appellant, however, sought to extend the commencement of the period of limitation to May 17, 1941, on the ground that the monies, the subject matter of that deposit receipt, were payable to him on demand, that such demand was made by him 1335 on May 17, 1941, and that therefore that was the date for the commencement of the period of limitation.
No express agreement in this behalf could be proved by him nor could an agreement be implied from the course of dealings between him and the company for the period of 25 years during which the dealings continued between the parties.
As a matter of fact, such an agreement, either express or implied, was negatived by the very terms of the deposit receipt which, apart from mentioning that the monies were received by the company as deposit for 12 months from August 1, 1939, to July 31, 1940, contained on the reverse a note that interest would cease on due date.
This was sufficient to establish that the amount due at the foot of the deposit receipt became due and payable on the due date mentioned therein and that there was no question of the amount being payable at any time thereafter on demand being made in this behalf by the creditor.
The course of dealings between the parties also negatived any such agreement because it appears from the record that such deposit receipts were passed by the company in his favour from time to time, each of such receipts being for a fixed period in the same terms as the deposit receipt in question and the receipts containing similar notes on the reverse that interest would cease on due date.
Both the courts below were therefore right in coming to the conclusion that there was no agreement of the kind put forward by the appellant that the monies due at the foot of the deposit receipt in question were repayable on demand and that monies due at the foot thereof became due and payable by the company to him on July 31, 1940.
The next question to consider is whether the bar of limitation which set in on July 31, 1943, was saved by reason of the circumstances set out in the plaint for avoidance of the same.
Out of the three acknowledgments of debt pleaded by the appellant the third was abandoned by him in the course of the hearing and the only two acknowledgments which were pressed were (a) the resolution passed by the Board of Directors on May 20, 194 1, and (b) the balance sheet of the company for the year 1940 41 dated October 10, 1336 1941.
It may be noted that he made no attempt at all to prove the balance sheets of the company for the years 1941 42 and 194 2 43.
In regard to the resolution passed by the Board of Directors on May 20, 1941, the position is that at that meeting one Pandurang Narsaji Hadole, who was one of the Directors of the company.
made a reference to a:proposed settlement of the claim of the appellant for a sum of RIB.
67,939 as found due at the end of July 1936, which had been resolved upon by the Board of Directors on December 22,1936, but had not been accepted by the appellant.
The resolution then requested the appellant to inform the company again if even then he was prepared to abide by the terms of that proposed settlement which would be placed before the general meeting of all the share holders of the company if a reply was received from him in the affirmative.
This resolution of the Board of Directors was alleged by the appellant to be an acknowledgment of a subsisting liability in regard to the debt due by the company to him at the foot of the deposit receipt in question '.
We do not see how it could ever be spelt out as such acknowledgment.
The contents of the resolution only referred to a past liability of the company to the appellant and there was nothing therein which could by any stretch be construed as referring to the liability of the company, to him at the foot of the deposit receipt dated January 15, 1940.
Our attention was drawn to the deposit receipts which had been passed by the company in favour of the appellant on May 30, 1935, October 18, 1936, and November 30,1938, each of which was for a sum of Rs. 47,500.
No connection was, however, established between the sum of Rs. 47,500, the subject matter of these receipts, and the sum of Rs. 79,519 12 9, the subject matter of the deposit receipt in question and in the absence of any such connection 'having been established the appellant could not avail himself of the alleged acknowledgment of liability contained in the resolution of the Board of Directors dated May 20, 1941, 1337 even if it could perchance be construed as an acknowledgment of a subsisting liability.
This resolution of the Board of Directors dated May 20, 1941, could not, therefore, avail the appellant as an acknowledgment of his debt.
In regard to the balance sheet of the company for ' the year 1940 41 dated October 10, 1941, it is to be noted that, even though the appellant applied before the trial court for filing the balance sheet of 1940 41 on April 28, 1945, he expressly stated that he did not want to adduce any oral evidence to prove it.
He was, however, allowed to file the same.
But it was realised later that the balance sheet did not prove itself and he therefore made another application on July 11, 1945, for permission to file a copy from the Registrar of Companies and contended that this proved itself.
This document was, however, rejected by the trial court as filed too late.
When the appeal came up for hearing before the High Court, it was contended on behalf of the appellant that the copy which was adduced from the office of the Registrar was admissible in evidence but that evidence was rejected by the High Court on a consideration of sections 65 and 74(2) of the Evidence Act.
The attention of the High Court was evidently not drawn to the Commercial Documents Evidence Act (XXX of 1939) which has amended the Law of Evidence with respect to certain commercial documents.
Section 3 of that Act enacts that " for the purposes of the , and notwithstanding anything contained therein, a Court: (a). . . . . . . . . . (b) may presume, within the meaning of that Act, in relation to documents included in Pt.
11 of the Schedule : That any document purporting to be a document included in or of the Schedule, as the case may be, and to have been duly made by or under the appropriate authority, was so made and that the statements contained therein are accurate.
" Item No. 21 in Pt.
11 of the Schedule mentions: 1338 " Copy, certified by the Registrar of Companies of the Balance Sheet, Profit and Loss Account, and audit i report of a company, filed with the said Registrar under the Indian Companies Act, 1913 and the rules made thereunder.
If the attention of the High Court had been drawn to this provision of law, we are sure, it would not have rejected the copy of the balance sheet obtained by the appellant from the office of the Registrar of Companies.
We are of the opinion that the copy should have been admitted in evidence and we do hereby admit the same.
The appellant contends that that balance sheet which was signed by the Directors contained an acknowledgment of the debt due by the company to the appellant for the sum of Rs. 67,939 as and by way of fixed deposit and that was sufficient to save the bar of limitation.
The question therefore arises whether any presumption can be raised as regards the balance sheet having been duly made by or under the appropriate authority or in regard to the accuracy of the statement contained therein under section 3(b) of the Commer cial Docuinents Evidence Act (XXX of 1939).
It is to be noted that this presumption is not compulsory as in the case of section 3(a) of the Act; it is discretionary with the court.
The difficulty in the way of the appellant here is however insuperable because we find that there were factions in the company at or about the relevant time.
A Directors ' meeting was held on April 27, 1941, and the resignation of the appellant as the Chairman was accepted and another person was appointed in his place.
A second meeting was called for May 17, 1941, but it had to be adjourned for want of a quorum.
The adjourned meeting was held on May 20,1941, but no balance sheet was passed at that meeting.
There is nothing on the record to show that there was another meeting of the Board of Directors for passing the balance sheet of the company for the year 1940 41.
A general meeting of the Shareholders was called for November 16, 1941, to pass the balance sheet.
This also had to be adjourned to the following day for want of a quorum.
At the 1339 adjourned meeting the shareholders then present refused to pass the accounts and it was not till some five weeks later, namely on December 30, 1941, that the rival faction met and passed the accounts.
But this meeting only purported to be a continuation of the meeting which bad to be adjourned for want of a quorum and that clearly was irregular because the adjourned meeting had to be called within twentyfour hours.
It did not purport to be a fresh meetino, convened after due notice, etc.
Under the circumstances,it could not be urged that the balance sheet was duly passed.
Even if the attention of the High Court had been drawn to the provisions of section 3 (b) of the Commercial Documents Evidence Act, (XXX of 1939) it would have been perfectly justified in not, raising the presumption in regard to the balance sheet having been duly made by or under the appropriate authority and in regard to the accuracy of the statement contained therein.
We are, therefore, of the opinion that this alleged acknowledgment also is of no avail to the appellant.
In regard to section 14 of the Indian Limitation Act which was sought to be relied upon by the appellant, it may be shortly stated that the liquidation proceedings had not been filed in the courts below and there is nothing to show that the requirements of section 14 were at all satisfied.
No cogent argument has been advanced before us on behalf of the appellant which would induce us to hold that the conclusion reached by the High Courtin this behalf was incorrect in any manner whatever.
On all the above grounds we have come to the conclusion that the appellant 's claim was clearly timebarred and the dismissal of his suit by the trial court as well as the dismissal of his appeal by the High Court were in order.
This appeal will therefore stand dismissed with costs.
Appeal dismissed.

summary/full:
The appellant advanced various sums of money to the res pondent, in lieu of which the respondent passed a deposit receipt for 12 months from August 1, 1939 to July 31, 1940 On June 16, 1944 the appellant filed a suit to recover the amount with interest on the allegation that the amount became due on May 17, 1941 when the demand for the amount was made and limitation for the suit expired on May 17, 1944 and the suit was filed on the reopening day of the Court thereafter.
The appellant also relied upon the acknowledgments of his debt by the respondent in the resolu tion passed by the Board of Directors on May 2o, 1941 and in the balance sheet of the respondent for the year 1940 41 dated October 10, 1941 : Held, that the suit was barred by limitation as the monies due under the deposit receipt became payable on July 31, 1941 and as no agreement had been proved that the monies due under the deposit receipt were re payable on demand.
Held further, that limitation was not saved by the alleged acknowledgments.
The resolution of the Board of Directors merely proposed a settlement of a claim of the appellant, which, if accepted by the appellant, was to be placed before a general meeting of the shareholders.
The resolution only referred to a past liability of the respondent to the appellant and it could.
not be construed as an 169 1332 acknowledgment of the liability of the respondent under the deposit receipt in question.
A copy of the balance sheet of 1940 41 obtained from the Registrar of Companies which was filed in the case was wrongly rejected by the High Court as inadmissible on the ground that no evidence was adduced to prove it.
This copy was admissible under section 3(b) of the Commercial Documents Evidence Act.
Under that section the Court could also raise a presumption as regards the balance sheet having been duly made by or under the appropriate authority or in rggard to the statements contained therein.
The presumption was not compulsory but was discretionary with the Court.
In the circumstances of this case, where there were factions in the Company and the regularity of the meeting at which the balance sheet was passed was in dispute, the High Court would have been perfectly justified in not raising the presumption.
Consequently, the acknowledgment in the balance sheet was of no avail to the appellant.