judgement:
XXXVII of 1950.
Application under article 32 of the Constitution of India for a writ of certiorari and prohibition.
The facts are set out in the judgment.
B. Banerji for the petitioner.
M.C. Setalvad, Attorney General for India (Gyan Chand, with him) for the opposite party.
522 1950.
May 26.
The following judgments were delivered: KANIA C.J. This is an application for a writ of 'certiorari and prohibition under article 32 of the Constitution of India.
The petitioner who is the President of the All India Hindu Mahasabha since December, 1949, was served with an order of externment dated the gist of March, 1950, that night.
By that order he is directed by the District Magis trate, Delhi, not to remain in the Delhi District, and immediately to remove himself from the Delhi District and not to return to the District.
The order was to continue in force for three months.
By another order of the Madhya Bharat Government he was directed to reside in Nagpur.
That order has been recently cancelled.
The petitioner disputes the validity of the first order on the ground that the East Punjab Public Safety Act, 1949, under which the order was made, is an infringement of his fundamental right given under article 19 (1) (d) of the Constitution of India.
He further contends that the grounds of the order served on him are vague, insufficient and incomplete.
According to him the object of the externment order passed by the District Magistrate, Delhi, was to suppress political opposition to the policy of the Government in respect of Pakistan and the Muslim League.
It is alleged that because the petitioner and the Hindu Mahasabha are against the Government policy of appeasement this order is served on him.
It is therefore mala fide and illegal.
In support of his contention about the invalidity of the East Punjab Public Safety Act and its provisions as regards externment, counsel for the petitioner relied on the recent unreported judgments of the Patna High Court in Miscellaneous Judicial Case No. 29 of 1950, Brij nandan vs The State of Bihar, and of the High Court of Bombay in Criminal Application No. 114 of 1950, re Jai singhbhai Ishwarlal Modi.
It is necessary first to ascertain the true meaning of article 19 (1) (d) read with clause (5) of the same article.
There is no doubt that by the order of extern 523 ment the right of the petitioner to freedom of movement throughout the territory of India is abridged.
The only question is whether the limits of permissible legislation under clause (5) are exceeded.
That clause provides as follows: "19.
(5) Nothing in subclauses (d), (e) and (f) of the said clause shall affect the operation of any exist ing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe.
" It is clear that the clause permits imposition of reasonable restrictions on the exercise of the right conferred by sub clause (d)in the interests of the general public.
The rest of the provision of clause (5) is not material and neither side relies on it.
Two interpretations of the clause are put before the Court.
It is argued that grammatically understood the only question before the Court is whether the impugned legislation imposes reasonable restrictions on the exercise of the right.
To put it in other words, the only justiciable issue to be decided by the Court is whether the restrictions imposed by the legislation on the exercise of the right are reasonable.
If those restrictions on the exercise of the right are reasonable, the Court has not to consider whether the law imposing the restrictions is rea sonable.
The other interpretation is that while the Consti tution permits a law laying down reasonable restrictions on the exercise of the rights mentioned in sub clause 19 (1) (d), the reasonableness has to be of the law also.
It is submitted that in deciding whether the restrictions, on the exercise of the right are reasonable, the Court has to decide not only on the extent and nature of the restric tions on the exercise of the right but also as to whether the conditions under which the right is restricted are reasonable.
The majority judgments of the Patna and the Bombay High Courts, although the impugned Acts of the State Legislatures before them were materially different on cer tain important points, have given clause (5) of article 19 the latter meaning.
524 In my opinion, clause (5) must be given its full mean ing.
The question which the Court has to consider is wheth er the restrictions put by the impugned legislation on the exercise of the right are reasonable or not.
The question whether the provisions of the Act provide reasonable safe guards against the abuse of the power given to the executive authority tO administer the law is not relevant for the true interpretation of the 'clause.
The Court, on either inter pretation, will be entitled to consider whether the re strictions on the right to move throughout India, i.e,, both as regards the territory and the duration, are reasonable or not.
The law providing reasonable restrictions on the exercise of the right conferred by article 19 may contain substantive provisions as well as procedural provisions.
While the reasonableness of the restrictions has to be considered with regard to the exercise of the right, it does not necessarily exclude from the consideration of the Court the question of reasonableness of the procedural part of the law.
It is obvious that if the law prescribes five years externment or ten years externment, the question whether such period of externment is reasonable, being the substan tive part, is necessarily for the consideration of the Court under clause (5).
Similarly, if the law provides the proce dure under which the exercise of the right may be restrict ed, the same is also for the consideration of the Court, as it has to determine if the exercise of the right has been reasonably restricted.
I do not think by this interpretation the scope and ambit of the word "reasonable" as applied to restrictions on the exercise of the right, is in any way unjustifiably enlarged.
it seems that the narrow construc tion sought to be put on the expression, to restrict the Court 's power to consider only the substantive law on the point, is not correct.
In my opinion this aspect of the construction of article 19 (5) has escaped the minority judgment in the two matters mentioned above.
I am not con cerned with the conclusions of the two Courts about the invalidity of the provisions of the Acts they were asked to consider.
To the extent they help in the interpretation of article 19 (5) only they are helpful.
525 The next question is whether the impugned Act contains reasonable restrictions on the exercise of the right given under article 19 (1)(d)or (e).
It was argued on behalf of the petitioner that under section 4 the power to make the order of externment was given to the Provincial Government or the District Magistrate, whose satisfaction was final.
That decision was not open to review by the Court.
On that ground it was contended that there was an unreasonable restriction on the exercise of the citizen 's right.
In my opinion, this argument is unsound.
This is not legislative delegation.
The desirability of passing an individual order of externment against a citizen has to be left to an offi cer.
In the Act such a provision cannot be made.
The satisfaction of the officer thus does not impose an unrea sonable restriction on the exercise of the citizen 's right.
So far as the Bombay High Court is concerned Chagla C.J. appears to have decided this point against the contention of the petitioner.
It was next urged that under section 4 (3) the order made by the District Magistrate shall not, unless the Pro vincial Government by special order otherwise direct, remain in force for more than three months.
It was argued that the period of three months itself was unreasonable as the ex ternee had no remedy during that time.
It was contended that when the Provincial Government directed the renewal of the order no limit of time was prescribed by the legislature for the duration of the order.
The order therefore can be in operation for an indefinite period.
This was argued to be an unreasonable restriction on the exercise of a citi zen 's right.
In this connection it may be pointed out that in respect of preventive detention, which is a more severe restriction on the right of the citizen, the Constitution itself under article 22 (4) to (7) permits preventive deten tion for three months without any remedy.
The period of three months therefore prima facie does not appear unreason able.
Under the proviso to section 4 (5) the Provincial Government is not permitted to direct the exclusion or removal from the Province of a person ordinarily residing in the Province, and similarly 526 the District Magistrate is not permitted to order the exclu sion or removal of a person ordinarily resident in his district from that district.
This is a great safeguard provided under the East Punjab Public Safety Act.
The further extension of the externment order beyond three months may be for an indefinite period, but in that connec tion the fact that the whole Act is to remain in force only up to the 14th August, 1951, cannot be overlooked.
More over, this whole argument is based on the assumption that the Provincial Government when making the order will not perform its duty and may abuse the provisions of the sec tion.
In my opinion, it is improper to start with such an assumption and decide the legality of an Act on that basis.
Abuse of the power given by a law sometimes occurs; but the validity of the law cannot be contested because of such an apprehension.
In my opinion, therefore, this contention of the petitioner cannot be accepted.
was next argued that there is no provision in the Act for furnishing grounds of externment to the citizen.
Section 4 (6) provides that when an externment order has been made its grounds may be communicated to the externee by the authority making the order and in any case when the order is to be enforced for more than three months he shall have a right of making a representation which shall be referred to the advisory tribunal constituted under section 3 (4).
While the word "may" ordinarily conveys the idea of a discretion and not compulsion, reading it with the last part of the clause it seems that when an externment order has to be enforced for more than three months an absolute right is given to the cxternee to make a representation.
He cannot make a representation unless he has been furnished grounds for the order.
In no other part of the Act a right to obtain the grouuds for the order in such a case is given to him.
Therefore, that right has to be read as given under the first part of section 4 (6).
That can be done only by reading the word "may" for that purpose as having the mean ing of "shall" If the word "may" has to be so read for that purpose, it appears to be against the well recognised canons of construction to 527 read the same "may" as having a different meaning when the order is to be in force for less than three months.
I do not think in putting the meaning of "shall" on "may" in the clause, I am unduly straining the language used in the clause.
So read this argument must fail.
It was next argued that there is no provision in the Act showing what the advisory board has to do when it receives a representation.
A reference to the advisory board neces sarily implies a consideration of the case by such board.
The absence of an express statement to that effect in the impugned Act does not invalidate the Act.
It was finally contended on behalf of the petitioner that the grounds for the externment order supplied to him are vague, insufficient and incomplete.
The grounds are stated as follows : "Your activities generally and particularly since the recent trouble in East and West Bengal have been of a communal nature tending to excite hatred between communities and whereas in the present composition of the population of Delhi and the recent communal disturbances of Delhi feelings are roused between the majority and minority communities, your presence and activities in Delhi are likely to prove prejudicial to the maintenance of law and order, it is considered necessary to order you to leave Delhi.
" These grounds cannot be described as vague, insufficient or incomplete.
It is expressly stated that the activities of the petitioner, who is the President of the Hindu Maha sabha, since the recent disturbances between two communities in the East and West Bengal have particularly been of a communal nature which excites hatred between the communi ties.
It is further stated that having regard to the recent disturbance in Delhi, the population of which is composed of both these communities, the excitement of such,hatred is likely to be dangerous to the peace and maintenance of law and order.
Apart from being vague, I think that these grounds are specific and if honestly be lieved can support the order.
The argument that the order 528 was served to stifle opposition to the Government policy of appeasement has little bearing because the District Magis trate of Delhi is not concerned with the policy of the Government of appeasement or otherwise.
The order is made because the activities of the petitioner are likely to prove prejudicial to the maintenance of law and order and the grounds specified have a direct bearing on that conclusion of the District Magistrate.
I therefore think that this contention of the petitioner must be rejected.
The result is that the petition fails and is dismissed.
FAZL ALI J.
I agree.
PATANJALI SASTRI J.
I agree that this application must fail.
As I share the views expressed by my Lord in.the judgment just delivered by him on the reasonableness of the restrictions imposed by the impugned legislation whichever construction of article 19 (5) of the Constitution is adopt ed, I consider it unnecessary to express any opinion on the true scope of the judicial review permitted under that article, and I hold myself free to deal with that point when it becomes necessary to do so.
MAHAJAN J. I concur in the judgment which my brother Mukh erjea is delivering and for the reasons given by him I allow the petition and quash the order of externment.
MUKHERJEA J. This is an application under article 32 of the Constitution, praying for quashing of an externment order made by the District Magistrate of Delhi, against the petitioner Dr. N.B. Khare, on 31st March, 1950, by which the latter was directed to remove himself immediately from the Delhi District and not to return to that District so long as the order remained in force.
The order is for three months at present.
Complaint was also made in the petition in respect of another and a subsequent order passed by the Government of Madhya Bharat which was served on the peti tioner on his way to Nagpur and which 529 directed him to reside within the limits of the Nagpur Municipality and not to leave that area without the permis sion of the District Magistrate of that place.
This order of the Government of Madhya Bharat, we are told, has since been withdrawn and we are not concerned with that order or the Act under which it was passed in the present proceeding.
The substantial contention raised on behalf of the petitioner is that the particular provision of the East Punjab Public Safety Act, 1949, under which the District Magistrate of Delhi purported to make the externment order, became void and ceased to be operative after the new Consti tution came into force, by reason of these provisions being inconsistent with the fundamental rights guaranteed under article 19 (1) (d) of the Constitution read with clause (5) of the same article.
The argument is that any order passed under such void legislative provisions must necessarily be void and of no effect in law.
In order to appreciate the merits of this contention, it may be convenient to advert to the material provisions of the East Punjab Public Safety Act which are alleged to have become void as well as to the articles of the Constitution, upon which reliance has been placed by the learned counsel for the petitioner.
The East Punjab Public Safety Act came into force on 29th March, 1949, and its object, as stated in the preamble, is to provide for special measures to ensure public safety and maintenance of public order.
Section 4 (1) of the Act provides: "The Provincial Government or the District Magistrate, if satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudi cial to the public safety or the maintenance of public order it is necessary so to do, may, by order in writing, give anyone or more of the following directions, namely that such person . . . . . . . . . (c) shall remove himself from, and shall not return to, any area that may be specified in the order." , 530 Sub section (3) of the section lays down that "An order under sub section (1) made by the District Magistrate shall not, unless the Provincial Government by special order otherwise directs, remain in force for more than three months from the making thereof." The contention of the petitioner is that the restrictive provisions mentioned above, under which a person could be removed from a particular area or prohibited from returning to it are inconsistent with the fundamental right guaranteed by article 19 (1) (d) of the Constitution under which all citizens shall have the right "to move freely throughout the territory of India.
" This right indeed is not absolute and the extent to which it could be curtailed by legislation is laid down in clause.(5)of article 19 which runs as follows: "Nothing in sub clauses (d), (e) and (f) of the said clause shall affect the operation of any existing law in so far as it imposes, or prevent the State from making any law imposing, reasonable restrictions on the exercise of any of the rights conferred by the said sub clauses either in the interests of the general public or for the protection of the interests of any Scheduled Tribe." Thus the primary question which requires consideration is, whether the impugned legislation which apparently seems to be in conflict with the fundamental right enunciated in article 19 (1) (d) of the Consitution is protected by clause (5) of the article, under which a law would be valid if it imposes reasonable restrictions on the exercise of the right in the interests of the general public.
It is not disputed that the question of reasonableness is a justiciable matter which has to be determined by the Court.
If the Courts 'hold the restrictions imposed by the law to be reasonable, the petitioner would certainly have no remedy.
If, on the other hand, they are held to be unreasonable, article 13 (1)of the Constitution imposes a duty upon the Court to pronounce the law to be invalid to the extent that it is inconsistent with the fundamental rights guaranteed under Part III of the Constitution.
531 It has been urged, though somewhat faintly, by the learned Attorney General that the right of free movement throughout the Indian territory as enunciated in article 19 (1) (d) of the Constitution contemplates nothing else but absence of inter State restrictions, which might prevent citizens of the Indian Union from moving from one State to another.
A law which does not impose barriers of this kind, it is said, cannot be inconsistent with the fundamental right secured by this clause.
Such a restricted interpreta tion is, in my opinion, not at all warranted by the language of the sub clause.
What article 19 (1) (d) of the Constitu tion guarantees is the free right of all citizens to go wherever they like in the Indian territory without any kind of restriction whatsoever.
They can move not merely from one State to another but from one place to another within the same State and what the Constitution lays stress upon is that the entire Indian territory is one unit so far as the citizens are concerned.
Clause (c) of section 4 (1) of the East Punjab Public Safety Act, 1949, authorises the Provin cial Government or the District Magistrate to direct any person to remove himself from any area and prohibit him from entering the same.
On the face of it such provision repre sents an interference with the.
fundamental right guaran teed by article 19 (1) (d) of the Constitution.
The contro versy, therefore, narrows down to this, whether the impugned legislation is saved by reason of its being within the permissible limits prescribed by clause (5) of article 19.
With regard to clause (5), the learned AttorneyGeneral points out at the outset that the word "reasonable" occur ring in the clause qualifies "restrictions" and not "law '".
It is argued that in applying the clause, all that we have to see is whether the restrictions that are imposed upon the exercise of the right by law are reasonable or not and we have not to enquire into the reasonableness or otherwise of the law itself.
The reasonableness of the restrictions can be judged, ' according to the learned Attorney General, from the nature of the restrictions themselves and not from the manner in which or the authorities by which they are 532 imposed.
The question whether the operation of the law produces hardship in individual cases is also a matter which is quite irrelevant to our enquiry.
I do agree that in clause (5) the adjective 'reasonable ' is predicated of the restrictions that are imposed by law and not of the law itself; but that does not mean that in deciding the reasonableness or otherwise of the restric tions, we have to confine ourselves to an examination of the restrictions in the abstract with reference merely to their duration or territorial extent, and that it is beyond our province to look up to the circumstances under which or the manner in which the restrictions have been imposed.
It is not possible to formulate an effective test which would enable us to pronounce any particular restriction to be reasonable or unreasonable per se.
All the attendant cir cumstances must be taken into consideration and one cannot dissociate the actual contents of the restrictions from the manner of their imposition or the mode of putting them into practice.
The question of reasonableness of the restric tions imposed by a law may arise as much from the substan tive part of the law as from its procedural portion.
Thus, although I agree with the learned Attorney General that the word "reasonable" in clause (5) of article 19 goes with "restrictions" and not with "law," I cannot accept his suggestion as regards the proper way of determining the reasonableness of the restrictions which a legislation might impose upon the exercise of the right of free movement.
Coming now to the provisions of the impugned Act, Mr. Baner jee 's main contention is that section 4 (1) (c)of the East Punjab Public Safety Act, which provides for passing of orders removing a person from a particular area, on the satisfaction of the Provincial Government or the District Magistrate, cannot be a reasonable piece of legislation inasmuch as the only pre requisite for imposition of the restrictions is the personal satisfaction of certain indi viduals or authorities, the propriety or reasonableness of which cannot be tested by the application of any external rule or standard.
It is said that any law which places the liberty 533 of a subject at the mercy of an executive officer, however high placed he might be and whose action cannot be reviewed by a judicial tribunal, is an arbitrary and not a reasonable exercise of legislative powers.
The contention requires careful examination.
It is not disputed that under clause (5) of article 19, the reasonableness of a challenged legislation has to be determined by a Court and the Court decides such matters by applying some objective standard which is said to be the standard of an average prudent man.
Judged by such standard which is sometimes described as an external yard stick, the vesting of authority in particular officers to take prompt action under emergent circumstances, entirely on their own responsibility or personal satisfaction, is not necessarily unreasonable.
One has to take into account the whole scheme of the legislation and the circumstances under which the restrictive orders could be made.
The object of the East Punjab Public Safety Act is to pro vide for special measures to ensure public safety and maintenance of public order.
Under section 4 (1) (c) of the Act, the Provincial Govern ment or the District Magistrate may make an order directing the removal of a certain person from a particular area, if they are satisfied that such order is necessary to prevent such person from acting in any way prejudicial to public safety or maintenance of public order.
Preventive orders by their very nature cannot be made after any judicial enquiry or trial.
If emergent steps have got to be taken to prevent apprehended acts which are likely to jeopardise the inter ests or safety of the public, somebody must be given the power of taking the initial steps on his own responsibility; and no reasonable objection could be taken if the authority, who is given the power, is also entrusted with the responsi bility of maintaining order and public peace in any particu lar district or province.
The preventive provisions of the Criminal Procedure Code are based on similar principle.
In my opinion, therefore, the provision of section 4 (1) (c) of the East Punjab Public Safety Act cannot be pronounced to be unreasonable, simply because the order could be passed by the Provincial Government 534 or the District Magistrate on their own personal satisfac tion and not on materials which satisfy certain objective tests.
But though certain authorities can be invested with powers to make the initial orders on their own satisfaction in cases of this description, the position would certainly be different if the order thus made is allowed to continue for any indefinite period of time without giving the ag grieved person an opportunity to say what he has got to say against the order.
I have already set out the provisions of sub section (3) of section 4 which deals with duration of the orders made under the various clauses of sub section (1).
It will be seen from this sub section that there is absolutely no limit as to the period of time during which an externment order would remain in force if the order is made by the Provincial Government.
The Provincial Government has been given unlimited authority in this respect and they can keep the order in force as long as they chose to do so.
As regards orders made by a District Magistrate, the period indeed has been fixed at three months, but even here the Provincial Government is competent to extend it to any length of time by means of a special order.
The law does not fix any maximum period beyond which the order cannot continue; and the fact that the Act itself would expire in August, 1951, is, in my opinion, not a relevant matter for consideration in this connection at all.
I have no hesi tation in holding that the provision of sub section (3) of section 4 is manifestly unreasonable and cannot be supported on any just ground.
One could understand that the exigen cies of circumstances might justify the vesting of plenary powers on certain authorities which could pass orders on their ' own personal satisfaction temporarily and for a short period of time; but if these orders are to continue indefi nitely, it is only fair that an opportunity should be given to the person against whom such order is made to say what he has to say in answer to the allegations made against him.
There may not be an investigation by a regular Court but it is necessary that the aggrieved person should be given a fair hearing and that by an 535 impartial tribunal.
The provision of the impugned Act which has bearing on this point is contained in sub section (6) of section 4 and it runs as follows: "When an order has been made in respect of any person under any of the clauses under section 4, sub section (1), or sub section (2) the grounds of it may be communicated to him by the authority making the order and in any case, when the order is to be in force for more than three months, he shall have a right of making a representation which shall be referred to the Advisory Tribunal, constituted under section 3, sub section (4).
" It will be noted that the first part of the subsection makes it entirely optional with the authorities to communi cate the grounds, upon which the order is made, to the person affected by it.
The grounds need not be communicated at all if the authorities so desire.
As regards the right of representation the latter part of the sub section seems to imply that when the order is to remain in force for more than three months, the right of representation should be given to the aggrieved person and the representation shall be referred for consideration to the advisory tribunal constituted under section 3, sub section (4), of the Act.
The right, however, is purely illusory as would appear from the fact that even in cases where the order is to be opera tive for more than three months, there is no obligation on the part of the authorities to communicate to the person the grounds upon which the order was made.
The aggrieved person consequently may not at all be apprised of the allegations made against him and it will be impossible for him to make any adequate or proper representation, if he is not told on what grounds the order was passed.
In my opinion, this is an equally unreasonable provision and neither sub section (3) nor sub section (6) of section 4 of the Act can be said to have imposed restrictions which are reasonable in the inter ests of the general public.
My conclusion, therefore, is that under article 13 (1) of the Indian Constitution, these provisions of the Act became void and inoperative after the Constitution came into 536 force, and consequently the order made by the District Magistrate in the present case cannot stand.
I would, therefore, allow the application and quash the externment order that has been passed against the petition er.
Petition dismissed.
Agent for the petitioner: Ganpat Rai.
Agent for the opposite party: P.A. Mehta.

summary/full:
Section 4, sub section
(1) (c), of the East Punjab Public Safety Act of 1949 which was passed on the 29th March, 1949, and was to be in force until the 14th August, 1951, provided that "The Provincial Government or the District Magistrate, if satisfied with respect to any particular person that with view to preventing him from acting in any manner prejudicial to the public safety or the maintenance of public order it is necessary to do so, may, by order in writing, give a direction that such person shall remove himself from, and shall not return to, any area that may be specified in the order.
" Sub section (3) of section 4 provided that "an order under sub section
(1) made by the District Magistrate shall not, unless the Provincial Goverment by special order otherwise directs, remain in force for more than three months from the making thereof," and sub section
(6) laid down that "when an order has been made in respect of any person under any of the clauses under section 4, sub section
(1) or sub section
(9.), the grounds of it may be communicated to him by the authority making the order, and in any case when the order is to be in force for more then three months, he shall have a right of making a representation which shall be referred to the Advisory Tribunal constituted under section 3, sub section
" The petitioner, against whom an order under (1) (c) of the Act was passed applied to the Court under article 39, of the Constitution for a writ of certiorari contending that the order was illegal inasmuch as the provisions of the above mentioned Act under which the order was made infringed the fundamental right to move freely throughout the territo ry of India which was guaranteed by article 19 (1) (d) of the Constitution and were accordingly void under article 13 (1) of the Constitution: Held, per KANIA C.J., FAZL ALl and PATANJALI SASTRI, J3.
(MAHAJAN and MUKHERJEA, JJ.
dissenting) (i) that there was nothing unreasonable in the provision contained in sub section
(1) (c) empowering the Provincial Government or the Dis trict Magistrate to make an externment order, and making their satisfaction as to the necessity of making such an order final, or in the provisions contained in sub section
(3) of section 4 that an order of a District Magistrate may remain in force for three months and that the Provincial Government may make an order, or keep alive an order made by a District Magistrate, for a period exceeding three months without fixing any time limit; (ii) with regard to sub section
(6), the word "may" in the expression "may communicate" must, in the context, be read as meaning "shall" and under the sub sec tion it is obligatory on the authority making an order to communicate the grounds to the externee;.(iii) the restric tions imposed by the above mentioned provisions of the Act upon the fundamental right guaranteed by article (19) (1) (d) were not, therefore, unreasonable restrictions within the meaning 01 article 19 (5) and the provisions of the Act were not void under article 13 (1), and the order of externment was not illegal.
Per MUKHERJEA J. (MAHAJAN J. concurring) Though certain authorities can be invested with power to make 521 initial orders on their own satisfaction in cases of this description, and section 4 (1) (c) of the East punjab Public Safety Act cannot be pronounced to be unreasonable simply because an order I could be passed by the Provincial Gov ernment or the District Magistrate on their own personal satisfaction and not on materials, which satisfy certain objective tests, yet, the position would be different if the order thus made is allowed to continue for any indefinite period of time without giving the aggrieved person an oppor tunity to say what he has got to say against the order; and inasmuch as sub section
(3) of section 4 prescribes no limit to the period of time during which an externment order would remain in force if it is made by the Provincial Government, and the Provincial Government is also given power to keep an order made by a District Magistrate in force for an indefinite period, the provisions of sub section
(3) are manifestly unrea sonable.
The provisions of sub section
(6)of section 4 are also unreasonable as they make it entirely optional with the authorities to communicate to the person affected, the grounds upon which the order is made.
Neither sub section
(3) nor sub section
(6) of section 4 can, therefore, be said to have imposed restrictions which are reasonable in the interests of the general public within the meaning of article 19 (5) and these provisions of the Act were consequently void and inoperative under article 13 (1)of the Constitution, and the externment order was illegal.
Held also, per KANIA C.J., FAZL ALI, MAHAJAN and MUKH ERJEA JJ.
Whether the restrictions imposed by a legislative enactment upon the fundamental right guaranteed by article 19 (1) (d) are reasonable within the meaning of article 19 (5) of the Constitution would depend as much on the procedural portion of the law as the substantive part of it] and in considering whether such restrictions are reasonable the Court is not therefore bound to confine itself to an exami nation of the reasonableness of the restrictions in the abstract with reference to their duration and territorial extent.
The Court can also consider the reasonableness of the procedural part of the law and the circumstances under which, and the manner in which, the restrictions have been imposed.
[PATANJALI SASLUP, I J. did not express any opin ion on this point.]


judgement:
Appeal (Criminal Appeal No. 3 of 1950) from a judgment of the High Court of Judica ture at Patna dismissing a petition to revise an order of the Sessions Judge, Patna, convicting the appellant for an offence under section 186, Indian Penal Code: The facts of the ease appear in the judgment.
N.C. Chatterjee (Rameshwar Nath, with him) for the appellant.
S.K. Mitra (K. Dayal, with him) for the respondent.
S.M. Sikri for the Intervener.
305 1951.
March 5.
The judgment of the Court was delivered by PATANJALI SASTRI J.
This is an appeal from a judgment of the High Court of Judicature at Patna dismissing a revi sion petition against the conviction of the appellant for an offence under section 186 of the Indian Penal Code.
The appellant was at all material times the General Manager of the Jagdishpur Zamindary Company (hereinafter referred to as the company) who were the lessees of a sugar factory referred to in these proceedings as the Bhita Sugar Factory.
He was prosecuted for obstructing the then District Magistrate and the Special Officer incharge of Rationing, Patna, in the discharge of their official functions when they went to the factory on 6th December, 1947, to remove 5,000 maunds of sugar which had been seized out of the stock held by the company pursuant to an order of the Government of Bihar dated 5th December, 1047.
The case for the prose cution was as follows: The company had deliberately failed to comply with the orders for supply of sugar issued from time to time under the provisions of the Sugar and Sugar Products Control Order, 1047, by officers of the Government duly authorised in that behalf.
and, in consequence, the Government made the following order on 5th December, 1947 : "In exercise of the powers conferred on the Central Government by cl.
(1) of sub section (2) of section 3 of the Essential Supplies (Temporary Powers) Act, 1946, which have been delegated to the Provincial Government in relation to foodstuffs in the notification of the Government of India, Department of Food, No. PY 603 (2) 1 dated 21st October, 1946, the Governor of Bihar is pleased : (1) to authorise the District Magistrate, Patna, and/or the Special Officer in charge of Rationing, Patna, to search the stock of sugar held by Messrs. Jagdishpur Zamind ary Company, Bhita, in the District of Patna, which is about to commit a contravention of 306 the order of the Chief Controller of Prices and Supplies, Bihar, made under cl. 7 (1) (ii) of the Sugar and Sugar Products Control Order, 1947, and issued in order No. 1613 P.C.R. dated 27th September, 1947, in so far as the said order relates to the said Company, and (2) to direct that 5,000 maunds of sugar held in stock by the said Company shall be seized.
By order of the Governor of Bihar Sd.
T.P. SINGH, Secretary to Government.
" On the 6th December, 1947, when the officers named went to the factory to carry cut the aforesaid order, they were told by the appellant that he would do everything possible to obstruct the removal of the sugar, and accordingly it was found that the sugar godowns had been locked and the road leading to them blocked by heaps of coal, firewood and tins placed across, so as to make vehicular traffic impos sible.
A railway siding leading to the godowns had also been rendered unserviceable by the removal of some of the rails and fishplates.
As a result of such obstruction, the officers had to seek the aid of armed police to break open the locks, repair the railway line and clear the road block before the sugar could be removed from the factory.
The appellant 's main defence was that on a proper con struction of section 3 of the Essential Supplies (Temporary Powers) Act, 1946, hereinafter referred to as the Act) it was not competent for the Government to pass the order of 5th December, 1947, which was consequently illegal and void, and that obstruction to the execution of that order could not constitute an offence under section 186 of the Indian Penal Code.
The contention was rejected and the appellant was convicted and sentenced to simple imprisonment for a term of three weeks.
On appeal, the Sessions Judge, Patna, confirmed the conviction and sentence, agreeing with the findings of the trial court, and a Revision Petition preferred by the appel lant was rejected by the High Court, 307 which, however, granted a certificate under article 134 (1) (c) of the Constitution that the case was a fit one for appeal to this court as it involved a point of "sufficient public importance" as to the interpretation of section 3 of the Act.
Section 3, so far as it is material here, runs as follows : "3.
(1) The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increas ing supplies of any essential commodity, or for securing their equitable distribution and availability at fair prices, may, by notified order, provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce therein.
(2) Without prejudice to the generality of the powers conferred by sub section (1), an order made thereunder may provide (j) for any incidental and supplementary matters, in cluding in particular the entering, and search of premises, vehicles, vessels and aircraft, the seizure by a person authorised to make such search of any articles in respect of which such person has reason to believe that a contravention of the order has been, is being, or is about to be commit ted, the grant or issue of licences, permits or other docu ments, and the charging of fees therefor.
" It was contended that an order under sub section (1) should be in the nature of a rule or regulation of general application, like the Sugar and Sugar Products Control Order, 1947, issued by the Central Government on 4th August, 1947, as the sub section confers on the Central Government only the power to "provide for regulating or prohibiting" the production, supply, distribution, etc., of essential commodities, and does not authorise the making of ad hoc or special orders with respect to any particular person or thing.
We see no reason to place such a restricted con struction on the scope of the power conferred on the Central Government.
The term "notified order" which is defined as meaning "an 40 308 order notified in the official Gazette" is wide enough to cover special as well as general orders relating to the matters specified in section 3.
The power to provide for regulating or prohibiting production, distribution and supply conferred on an executive body may well include the power to regulate or prohibit by issuing directions to a particular producer or dealer or by requiring any specific act to be done or forborne in regard to production, etc., and the provisions of section 4 lend support to that view.
The Central Government is empowered under the latter section to delegate its power to make orders under section 3, sub ject to conditions to be specified, to any officer or subor dinate authority either of the Central or a Provincial Government.
It would be strange, if, as contended for the appellant, a subordinate officer in charge, say, of a small area, should, by delegation, exercise powers of a legisla tive character in relation to the matters specified in section 3, but should not have the power of issuing special orders concerning specific individuals or things.
We do not think that such a situation could have been contemplated.
The power delegated under section 4 must, in our opinion, include the power of issuing directions to any producer or dealer in relation to production, etc., of any specified essential commodity.
If so, the delegating authority itself must possess such power under section 3.
For instance, section 7 of the Sugar and Sugar Products Control Order, 1947, made by the Central Government empowers the" Control ler" "to issue directions to any producer or dealer to supply sugar or sugar products" to specified areas, persons or organisations.
This delegation is expressed to be made "in exercise of the powers conferred by sections 3 and 4" of the Act, but unless the Central Government itself had the power of issuing such directions under section 3, it could not delegate that power to the Controller under section 4.
This view is reinforced by the language of section 15, which contemplates orders under section 3 being made against a particular person, for it speaks of "an order made under section 3 which prohibits him (that 309 is, the person prosecuted for its contravention) from doing any act or being in possession of a thing without lawful authority etc.
" The restricted construction of section 3 contended for by the appellant 's counsel would render the scheme of the Act largely unworkable, and we have no hesita tion in rejecting it.
Even so, it was argued, an order for seizure could be made only subject to the conditions and limitations speci fied in clause (j) of sub section (2) of section 3, that is to say, only where the person authorised in that behalf "has reason to believe that a contravention of the order [an order made under sub section (1)] has been, is being, or is about to be committed ".
In the present case, the order of 5th December, 1947, directing the seizure of 5,000 maunds of the company 's sugar, in the execution of which the appellant has been found to have obstructed the officers of the Pro vincial Government, recited that the company was "about to commit a contravention of the order of the Chief Controller of Prices and Supplies, Bihar, made under cl. 7.
(1) (ii) of the Sugar and Sugar Products Control Order, 1947, and issued in order No. 1613 P.C.R. dated 27th September, 1947, in so far as the said order relates to the said company".
The latter 'order, while it directed the company, among others, "to supply sugar at the prices fixed to the approved dealers of certain Districts", left it to the District or Sub divi sional Officer to fix quotas for the approved dealers of his District or Sub division from the District or Sub divisional allotment and to inform the company when and where the supplies are to be made.
It has been found by the courts below that the total quantity of sugar which the order required to be supplied was varied from time to time, and no quotas to approved dealers were ever fixed nor information sent to the company as to when and where supplies were to be made.
The order of the 27th September, 1947, having thus remained inchoate and incomplete and so incapable of being carried out or contravened till the 5th December, 1947, it was submitted that no seizure and removal could be lawfully ordered on the basis of an anticipated contravention 310 of such an order, and that the officers concerned in the illegal and unauthorised removal of the sugar were not acting in the discharge of their public functions.
Reference was made in this connection to the decisions of the Calcutta High Court in Lilla Singh vs Queen Empress(1) and Queen Empress vs Jogendra Nath Mukerjee(2) where it was held that the public function in the discharge of which a public servant was obstructed must be a legal or legitimately authorised function, in order that the obstruction might constitute an offence under section 186 of the Indian Penal Code.
On the other hand, counsel for the respondent main tained that for an offence under that section it was not necessary that the act which was obstructed must be duly authorised and otherwise lawful if it was being done or was sought to be done by a public servant honestly and in good faith believing that it was part of his public functions, and reliance was placed in support of this view on the decisions of the Madras High Court in Queen Empress vs Poomalai Udayan(3), Public Prosecutor vs Madava Bhonjo Santos(4) and Peer Masthan Rowther vs Emperor(5).
We think it is unnecessary for the purpose of this appeal to pro nounce on the true scope of section 186 of the Indian Penal Code as we are of opinion that the appellant 's argument must fail on another ground.
It is manifest that sub section (2) of section 3 confers no further or other powers on the Central Government than what are conferred under sub section (1), for it is "an order made thereunder" that may provide for one or the other of the matters specifically enumerated in sub section (2) which are only illustrative, as such enumeration is "without prejudice to the generality of the powers conferred by sub section (1)" Seizure of an article being thus shown to fall within the purview of sub section (1), it must be competent for the Central Government or its delegate, the Provincial Government, to make an order for seizure under (1) I.L.R. 22.
(4) (2) I.L.R. (5) (3) I.L.R. 311 that sub section apart from and irrespective of the antici pated contravention of any other order as contemplated in clause (j) of sub section (2).
The order ' of 5th December, 1947, must, therefore, be held to be a valid order, notwith standing its reference to the order of the 27th September, 1947, as being about to be contravened.
If the latter order was incomplete and inoperative and consequently there could be no question of its contravention, as contended for the appellant, the reference to it in the order dated the 5th December, 1947, would be an immaterial redundancy and could not affect the validity of the latter order.
The seizure of the company 's sugar must, therefore, be regarded as duly authorised and lawful, and the appellant by ob structing its removal, committed an offence under section 186 of the Indian Penal Code even on the stricter construc tion placed on that provision by the Calcutta High Court.
The view we have expressed above receives support from the decision of the Privy Council in Sibnath Banerjee 's case(1).
Section 2(1) of the Defence of India Act, 1939, as amended by section 2 of the Defence of India (Amendment) Act, 1940, empowered the Central Government to make rules for securing the defence of British India, the public safe ty, the maintenance of public order, etc., and sub section (2) enacted "without prejudice to the generality of the powers conferred by sub section (1), the rules may provide for all or any of the following matters . ".
Among such matters was the detention of any person "reasona bly suspected" of having acted etc.
in a manner prejudicial to the public safety etc.
[clause (x)].
Rule 26 of the Rules made under the section, however, authorised the Gov ernment to detain a person "if it is satisfied" that it was necessary to detain him with a view to prevent him from acting prejudicially. ' . .The
Federal Court held (2) that this rule was ultra vires as it Went beyond the scope of clause (x) in that it left it to the satisfaction of the Government to decide whether or not it was necessary to detain a (1) ; 72 I. A.241, 248.
(2) 312 person, The decision was reversed and Lord Thankerton, delivering the judgment of the Board, observed: "In the opinion of their Lordships, the function of subsection(2) is merely an illustrative one; the rule making power is con ferred by sub section (1), and "the rules" which are re ferred to in the opening sentence of subsection (2) are the rules which are authorised by, and made under, sub section (1); the provisions of sub section (2) are not restrictive of sub section(1), as, indeed is expressly stated by the words "without prejudice to the generality of the powers conferred by sub section (1)".
"There can be no doubt as the learned Judge himself appears to have thought that the general language of sub section (1) amply justifies the terms of rule 26, and avoids any of the criticisms which the learned Judge expressed in relation to subsection (2)".
This accords with our view of the effect of subsections (1) and (2) of section 3 of the Act.
The appeal is dismissed.
The appellant 's bail bond is cancelled and he is ordered to surrender.
Appeal dismissed.
Agent for respondent and Intervener: P.A. Mehta.

dataset_name: IN-Abs

summary/full:
Section 3 of the Essential Supplies (Temporary Powers) Act, 1946, provided as follows: (1) The Central Government, so far as it appears to it to be necessary or expedient for maintaining or increasing supplies of an essential commodity, or for securing their equitable distribution and availability at fair prices, may by notified order, provide for regulating or prohibiting the production, supply and distribution thereof, and trade and commerce therein.
Without prejudice to the generality of the powers conferred by sub section
(1) an order made thereunder may provide . (j) for any incidental and supplementary matters.
including in particular the entering, and search of premises, vehicles, vessels and aircraft, the seizure by a person authorised to make such search of any articles in respect of which such person has reason to believe that a contravention has been, is being, or is about to be commit ted. " In exercise of the powers conferred on the Central Government by cl.
(j) of sub section
(2) of section (3) of the above said Act, which had been delegated to the Provincial Govern ment in relation to food stuffs, the Governor of Bihar made an order authorising the District Magistrate, Patna, and the Special Officer in charge of rationing, Patna, to search the stock of sugar held by a company of which the appellant was the General Manager and directing the seizure of 5,000 maunds of sugar held in stock by the said company, on the ground that the company was about to commit a contravention of an order of the Chief Controller of Prices and Supplies made under the Sugar and Sugar Products Control 304 Order, 1947.
The appellant obstructed the officers who went to search and seize the goods and was convicted under section 186, Indian Penal Code.
Held, (i) the power "to provide for regulating or prohib iting production, supply and distribution" conferred by the Act on the Central Government included the power to regu late or prohibit by issuing directions to a particular producer or dealer or by requiring any specific act to be done or foreborne in regard to production etc., and the order of the Governor was not therefore invalid on the ground that it was not a rule or regulation of general application but an order concerning a particular company alone; (ii) sub section (2) of section 3 conferred no further or other powers than what were conferred by sub section
(1) and the enumeration of certain matters in sub section
(2) was merely illustrative, as such enumeration was "without prejudice to the generality of the powers conferred by sub section
(1) "; (iii) seizure of an article being within the purview of sub section
(1) of section 3 it was therefore competent to the Cen tral Government, and its delegate the Provincial Government, to make an order for seizure under sub section
(1) apart from and irrespective of the anticipated contravention of any other order as contemplated in el.
(j) of sub section (2); (iv) even assuming that the order of the Chief Control ler of Prices under the Sugar Control Order was incomplete and inoperative and there could be no question of its con travention, the reference to that order in the order made by the Governor would be a mere redundancy and would not affect the validity of the latter order, and the appellant was rightly convicted under section 186, Penal Code.
Quaere: Whether for an offence under section 186, Penal Code, it is necessary that the act which was obstructed must be duly authorised and otherwise lawful.
King Emperor vs Sibnath Banerjee applied.


judgement:
Appeal No. 61 of 1953.
Appeal from the Judgment and Decree dated the 16th day of May, 1952 of the High Court of Judicature at Calcutta in Appeal from Original Decree No. 124 of 1951 arising out of the decree dated the 25th day of May, 1951 of the High Court of Calcutta in its Ordinary Original Civil Jurisdiction in Suit No. 3614 of 1950.
M. C. Setalvad, Attorney General for India, (P. Mandaland section P. Varma, with him), for the appellant.
N. C. Chatterjee, (A. N. Sinha and P. C. Dutta, with him), for the respondent.
December 3.
The Judgment of the Court was delivered by BHAGWATI J.
This appeal with certificate from the High Court of Judicature at Calcutta arises out of the suit filed on the original side of the High Court by the appellant against the respondent to recover a sum of Rs. 1,25,962 2 0 with interest and costs, 1073 The appellant entered into three contracts, two dated the 8th August 1949 and the third dated the 17th August 1949 with the respondent agreeing to purchase 1,80,000 bags of 'B ' twills at the price of Rs. 134/4/ per 100 bags, 1,80,000 bags at the rate of Rs. 135/4/ per 100 bags and 90,000 bags at the rate of Rs. 138/ per 100 bags respectively for October, November and December 1949 deliveries in equal monthly instalments on terms and conditions contained in the relative contract forms of the Indian Jute Mills Association.
In September 1949 the respondent expressed its inability to deliver the goods under the said contracts and requested the appellant to settle the same by selling back the goods under the said contracts to the respondent at the price of Rs. 161 8 0 per 100 bags.
Three settlement contracts were accordingly entered into between the parties on the 28th September 1949 whereby the appellant agreed to sell the goods under the original contracts to the respondent at the rate of Rs. 161 8 0 per 100 bags on the terms and conditions contained in the relative contract forms of the Indian Jute Mills Association.
The appellant duly submitted to the respondent his bills for the amounts due at the foot of the said contracts aggregating to Rs. 1,15,650 which the respondent accepted but failed and neglected to pay in spite of repeated demands of the appellant.
The appellant therefore filed the suit for recovery of the said sum with interest and costs.
The respondent filed its written statement contesting the appellant 's claim on the main around that the three settlement contracts above mentioned were illegal and prohibited by the West Bengal Jute Goods Future Ordinance, 1949.
The respondent contended that it never dealt in the sale and/or purchase of jute goods involving actual delivery of possession thereof, nor did it possess or have control over any godown and other means or equipments necessary for the storage and supply of jute goods and that therefore the said settlement contracts were void and not binding upon it and that the appellant was not entitled to any relief as prayed.
The Trial Court negatived the contention of the respon 1074 dent and decreed the appellant 's claim.
The learned Judges of the Appeal Court however came to the conclusion that the said settlement contracts were contracts relating to the purchase of jute goods made on a forward basis by the respondent not being a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof and were therefore void and unenforceable.
The only right which the appellant had against the respondent was to have the said original contracts settled on the basis of the last closing rate in a notified market which was Rs. 146/14/ per 100 bags.
No such claim was however made by the appellant.
A further contention which was raised by the respondent, viz. that the Ordinance was ultra vires was negatived by the Court.
But in view of its finding on the main issue the Appeal Court dismissed the appellant 's suit with costs.
The relevant provisions of the West Bengal Jute Goods Future Ordinance, 1949 were as under: Section 2.
In this Ordinance, unless there is anything repugnant in the subject or context: (1) 'Contract relating to jute goods futures ' means a contract relating to the sale or purchase of jute goods made on a forward basis (a)providing for the payment or receipt, as the case may be, of margin in such manner and on such dates as may be specified in the contract, or (b) by or with any person not being a person who, (i)habitually deals in the sale or purchase of jute goods involving the actual delivery of possession thereof, or (ii)possesses, or has control over, a godown and other means and equipments necessary for the storage and supply of jute goods:. . . . . . 3.(1) The Provincial Government may, from time to time, if it so thinks fit, by notification in the Official Gazette prohibit the making of contracts, relating to jute goods futures and may, by like notification, withdraw such prohibition . . . . . . . 1075 (2)When the making of contracts relating to jute goods futures is prohibited by a notification under sub section (I), (a)no person shall make any such contract or pay or receive any margin except, in the case of any such contract made prior to the date of the notification, to the extent to which the payment or receipt, as the case may be, of margin is allowable on the basis of the last closing rate in a notified market:. . . (c)notwithstanding anything contained in any other law for the time being in force, (i)every such contract made, and every claim in respect of margin, in contravention of the provisions of clause (a), shall be void and unenforceable, and (ii) every such contract made prior to the date of publication of the notification shall be varied and settled on the basis of the last closing rate in a notified market.
Explanation In this sub section, (a)"last closing rate" means the rate fixed by the Directors of a notified market to be the closing rate of such market immediately preceding the date of publication of the notification under sub section (1) prohibiting the making of contracts relating to jute goods futures: and (b)"notified market" means a jute goods futures market recognised by the Provincial Government by notification in the Official Gazette.
The Ordinance came into force on.
the 22nd September 1949.
In pursuance of the power conferred under section 3(1) of the Ordinance the Government of West Bengal issued a notification, being notification No. 4665 Com.
dated the 23rd September 1949 prohibiting the making of contracts relating to jute goods futures on and from the date of publication of the notification in the Official Gazette and by another notification No. 4666 Com.
of the same date recognised certain jute goods futures markets for the purpose of Para.
(b) of the Explanation to section 3(2) as notified markets.
These notifications were published in the 138 1076 Calcutta Gazette on the same day, the 23rd September 1949.
The relevant terms and conditions of the standard form of the Indian Jute Mills Association contracts may be conveniently set out here: (1)Buyers to give 7 Clear Working days ' notice to place goods alongside. . . . . . . . (3)Payment to be made in cash in exchange for Delivery Orders on Sellers, or for Railway Receipts, or for Dock 's Receipts or for Mate 's Receipts (which Dock 's Receipt or Mate 's Receipts are to be handed by a Ship 's or Dock 's officers to the Sellers ' representatives).
(4)The Buyers hereby acknowledge, that so long as such Railway Receipts or Mate 's or Dock 's Receipts (whether in Sellers ' or Buyers ' names) are in the possession of the Sellers, the lien of the sellers, as unpaid vendors, subsists both on such Railway Receipts Dock 's or Mate 's Receipts and the goods they represent until payment is made in full.
There were other terms and conditions appertaining to the delivery of goods under the contracts including inspection by the buyers, insurance, tender, etc.
The settlement contracts were also practically in the same form except that in the body of the contracts it was mentioned that the particular contract represented settlement of an original contract which had been already entered into between the parties and that the buyers in the settlement contract would pay to the sellers the difference at the particular rate on due date.
In respect of the goods deliverable under the contracts the mills would, in the case of goods sent by them alongside the vessel in accordance with the shippers ' instructions in that behalf, obtain the mate 's receipts in respect of the same and such mate 's receipts would be delivered by the mills to their immediate buyers who in their turn would pass them on to their respective buyers in the chain of contracts resting with the ultimate shipper.
If the mills held the goods in their godown they would issue 1077 delivery orders on the due date, which delivery orders would be dealt with in the same manner as the mate 's receipts aforesaid.
Both these sets of documents would represent the goods and would be passed on from seller to buyer against payment of cash.
As a matter of fact on the evidence the learned Trial Judge held that in the Calcutta jute trade mills ' delivery orders are ordinarily issued by the mills against cash payment and pass from hand to hand by endorse ment and are used in the ordinary course of business authorising the endorsee to receive the goods which they represent and that they are dealt with in the market as representing the goods.
The Appeal Court accepted this position and further found that in the instant case "the mills who held the goods sold them to A, A to B, B to the defendant to the plaintiff to C and C to the shipper.
This is what is known as a chain contract.
It is admitted by the plaintiff, that the mills give the delivery order to A. A endorses it to B, B to the defendant, defendant to the plaintiff and so on".
The question that falls to be determined on these facts and circumstances is whether the settlement contracts mentioned above could be called contracts between the appellant and the respondent involving the actual delivery of possession of the goods.
It was common ground that the contracts did not provide for the payment or receipt of margin.
It was also common ground that the respondent did not possess or have control over a godown and other means and equipments necessary for the storage and supply of jute goods.
The only point at issue was whether the respondent was a person who habitually dealt in the sale or purchase of jute goods involving the actual delivery of possession thereof and the contention which was vehemently urged on behalf of the respondent in the Courts below was that the transactions were purely speculative, that mere delivery orders passed between the parties, which delivery orders did not represent the goods and the transfer thereof did not involve as between the intermediate parties actual delivery of possession of the goods but 1078 differences in rates were only paid or received by the parties.
The appellant on the other hand contended that the delivery orders represented the goods, that each successive buyer paid to his immediate seller the full price of the goods represented by the delivery order in cash before the relative delivery order was endorsed in his favour and thus obtained not only the title to the goods but actual delivery of possession thereof and that in any event when the goods were delivered alongside the vessel or actual delivery was taken by the ultimate buyer there was the giving and taking of actual delivery of possession of the goods all along the chain at the same moment.
The Trial Court accepted the contention of the appellant that the delivery orders are dealt with in the market as representing the goods and that they pass from hand to hand by endorsement being received by the successive buyers against cash payment land are used in the ordinary course of business authorising the endorsee to receive the goods which they represent.
The learned Trial Judge further observed: "Now visualize the long chain of contracts in which the defendant 's contract is one of the connecting links.
The defendant buys from its immediate seller and sells to its immediate buyer.
As seller it is liable to give and as buyer it is entitled to take delivery.
As seller it receives and as buyer it shipping instructions.
Similar shipping instruction is given by each link until it reaches the mills.
The mills deliver the goods alongside the steamer.
Such delivery is in implement of the contract betweenthe mills and their immediate buyer.
But eo instanti it is also in implement of each of the chain contracts including the contract between the defendant and its immediate buyer and the contract between the defendant and its immediate seller.
Not only does the mill give and its immediate buyer take actual delivery but eo instanti each middleman gives and takes actual delivery.
Simultaneously the defendant takes actual delivery of possession of the jute goods from its immediate seller and gives actual delivery of possession 1079 of jute goods to its immediate buyer.
Prima facie at the moment of the delivery alongside the steamer there is appropriation and the passing of the property in the goods and the giving and taking of actual delivery of possession thereof all along the chain at the same moment".
The learned Trial Judge then referred to the following observations of Lord Wright in Nippon Yusen Kaisha vs Ramjiban(1) in regard to the standard form of the Indian Jute Mills Association contract: "This is a form under which the entire export business in gunnies in Calcutta is conducted. .
In the present case the sale being free alongside, the property prima facie passes when the goods are appropriated by delivery alongside in implement of the contracts," and added: "The sale and purchases of the defendant where there is actual shipment and delivery of possession of the goods alongside the vessel involves actual delivery of possession of the jute goods.
The delivery of the goods alongside the vessel is physical delivery of the goods and necessarily changes the actual custody of the goods.
It is said that there is no actual physical delivery of the goods by the defendant himself.
The Legislature, however, does not say that the dealer must himself give actual delivery of the goods.
I cannot read in the statute words which are not there and say that the dealer must himself give delivery of the goods in order to come within the definition in sub section 2 (1) (b) (i) of the Ordinance.
The Legislature simply insists that the sales and purchases of the dealer involve actual delivery of possession of the jute goods.
I do not see why the sales and purchases do not involve actual delivery if such actual delivery is given not by the dealer but by a third party in performance of and in relation to the sales and purchases of the dealer.
Even the buyer and the seller of jute goods over the counter rarely takes and gives manual delivery of the goods.
Very often such manual delivery is given and taken not by the buyer and (1) [1938] L. R. 65 1.
A. 263.
1080 seller but by their respective servants and agents.
I do not see why instead of the buyers ' and sellers ' employees and servants giving and taking delivery of the goods somebody else on their behalf gives and takes delivery; such delivery is not actual delivery of possession of the goods".
The learned Judges of the Appeal Court however did not accept this view and misdirected themselves both in regard to the facts and the position in law.
They took it that none of the parties in the chain contracts paid the actual price of the goods except the shipper who took delivery of the goods from the mills against payment.
They wrongly assumed that A endorsed the delivery order over to B and took the difference, B in his turn endorsed the delivery order to the defendant and took the difference and so on and concluded that nobody was concerned to pay the actual price or take delivery of the goods except the shipper who took the goods and paid the price to the mills.
This assumption was absolutely unwarranted, the evidence on record being that each of the successive buyers paid to his immediate seller the full price of the goods represented by the delivery order in cash against the endorsement of the relative delivery order in his favour by the seller.
The learned Judges of the Appeal Court also laid unwarranted emphasis on the words "actual delivery of possession" and contrasted actual delivery with symbolical or constructive delivery and held that only actual delivery of possession meaning thereby physical or manual delivery was within the intendment of the Ordinance.
Delivery has been defined in section 2(2) of the Indian as meaning voluntary transfer of possession from one person to another and if nothing more was said delivery would not only include actual delivery but also symbolic or constructive delivery within the meaning of the term.
The use of the word "actual" in section 2 (1) (b) (i) of the Ordinance was considered by the Appeal Court as indicative of the intention of the Government to include within the scope of the exemption only cases of actual delivery of possession as 1081 contrasted with symbolical or constructive delivery.
This construction in our opinion is too narrow.
Even if regard be had to the mischief which was sought to be averted by the promulgation of the Ordinance, the Government intended to prevent persons who dealt in differences only and never intended to take delivery under any circumstances, from entering into the market.
Provided a person habitually dealt in the sale or purchase of jute goods involving delivery of the goods, he was not to be included in the ban.
This could be the only intendment of the Ordinance, because otherwise having regard to the ordinary course of business in jute goods would become absolutely impossible.
The manufacturer of jute goods does not come normally into direct contact with the shipper.
It is only through a chain of contracting parties that the shipper obtains the goods from the manufacturer and if only actual delivery of possession as contrasted with symbolical or constructive delivery were contemplated it would be impossible to carry on the business.
If the narrow construction which was put by the Appeal Court on the expression "actual delivery of possession" was accepted it would involve each one of the intermediate parties actually taking physical or manual delivery of the goods from their sellers and again in their turn giving physical or manual delivery of the goods which they had thus obtained to their immediate buyers.
Such an eventuality could never have been contemplated by the Government and the only reasonable interpretation of the expression "actual delivery of possession" can be that actual delivery as contrasted with mere dealings in differences was within the intendment of the Ordinance and such actual delivery of possession included within its scope symbolical as well as constructive delivery of possession.
Once this conclusion is reached it is easy to visualise the course of events.
The mate 's receipts or the delivery orders as the case may be, represented the goods.
The sellers banded over these documents to the buyers against cash payment, and the buyers obtained these documents in token of delivery of 1082 possession of the goods.
They in turn passed these documents from hand to hand until they rested with the ultimate buyer who took physical or manual delivery of possession of those goods.
The constructive delivery of possession which was obtained by the intermediate parties was thus translated into a physical or manual delivery of possession in the ultimate analysis eliminating the unnecessary process of each of the intermediate parties taking and in his turn giving actual delivery of possession of the goods in the narrow sense of physical or manual delivery thereof.
It is necessary to remember in this connection that the words used in section 2(1) (b) (i) are "involving the actual delivery of possession thereof".
The word "involving" in the context means resulting in and this condition would be satisfied if the chain contracts as entered into in the market resulted in actual delivery of possession of goods in the ultimate analysis.
The Appeal Court was therefore clearly in error when it put a narrow construction on the expression "actual delivery of possession" and held that the transactions were purely speculative and the parties in no event.
contemplated actual delivery of possession of the goods.
The learned Trial Judge was in our opinion correct in his appreciation of the whole position on facts as well as in law and in negativing the contention of the respondent.
In view of this conclusion it is unnecessary to consider the argument which was submitted before us based upon the definition of "documents of title" in section 2(4) and the provisions of section 30, proviso to section 36(3) and the proviso to section 53(1) of the Indian that all the documents of title enumerated in section 2(4) were assimilated to a bill of lading and a mere transfer of the documents of title in favour of a buyer was tantamount to a transfer of possession of the goods represented thereby.
The contention that the Ordinance was ultra vires was not seriously pressed before us.
We may however add that the Appeal Court rightly held that the 1083 Ordinance came within Head 27 of List 2 of the Seventh Schedule of the Government of India Act: "Trade and commerce within the Province; markets and fair; money lending and money lenders", and that the Provincial Legislature was competent to legislate on that topic.
The result therefore is that the appeal will be allowed, the decision of the Appeal Court will be reversed and the decree passed by the Trial Court in favour of the Appellant will be restored with costs throughout.
Appeal allowed.

summary/full:
Delivery has been defined in section 2 (2) of Indian , as meaning voluntary transfer of Possession from one per 1072 son to another and it includes not only actual delivery but also symbolical or constructive delivery within the meaning of the term.
The expression "actual delivery of possession" in section 2(1)(b)(i) of the West Bengal Jute Goods Future Ordinance, 1949 means actual delivery as contrasted with mere dealings in differences within the intendment of the Ordinance and such actual delivery of possession included within its scope symbolical as well as constructive delivery of possession.
The word "involving" in the expression "involving the actual delivery of possession thereof" in section 2(1)(b)(i) of the Ordinance means in the context resulting in and this condition would be satisfied if the chain contracts in the present case, as entered into in the market resulted in actual delivery of possession of goods in the ultimate analysis.
The Ordinance came within Head 27 of List 2 of the Seventh Schedule of the Government of India Act, 1935: "Trade and commerce within the Province; markets and fair; money lending and money lenders" and the Provincial Legislature was competent to legislate on that topic.
Nippon Yussen Kaisha vs Ramjiban ([1938] L.R. 65 I.A. 263), referred to.


judgement:
Appeals Nos. 2093 and 2084 of 1970.
Appeals from the judgment and order dated January 28, 1964 of the Calcutta High Court in Income tax Reference No. 104 of 1960.
B. P. Maheshwari, for the appellant (in both the appeals).
S.T. Desai, P. L. Juneja and R. N. Sachthey, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Khanna,J.
This judgment would dispose of two Civil Appeal.s Nos. 2083 and 2084 of 1970 which have been filed on certificate 972 granted by the Calcutta High Court and are directed against the Judgment of that Court whereby it answered the questions referred to the Court under Section 66(1) of the, Indian Income tax Act, 1922 (hereinafter referred to as the Act) for two assessment years against the assessee appellant and in favour of the respondent.
The assessee is a Limited Company and the matter relates to the assessment years 1956 57 and 1957 58, the corresponding accounting years for which ended on June 30, 1955 and June 30, 1956 respectively.
The appellant Company was appointed as the Managing Agent of Shree Ramesh Cotton Mills Ltd., Morvi (hereinafter referred to as the managed company), as per agreement dated 30 12 1946.
The managed company was a 100% subsidiary of the appellant company.
Under the terms of the agreement, the appellant company was entitled to receive a fixed office allowance of Rs. 1,000/ per mensem plus a commission at the rate of 121/2% of the net profits, an additional commission of 1 % on all purchases of cotton and an equal amount on all sales of cloth and yarn.
In the relevant years, the managed company suffered losses and congruently the commission payable at 121/2% of the net profits was nil but the commission on purchase of cotton at the rate of 1 1/2% and on sales of cloth and yarn at the same rate, aggregated to Rs. 38,719/ for the assessment year 1956 57 and Rs. 1,963/ for the following year.
Besides these amounts, the appellant was entitled to Rs. 12,000/ per annum for each of the two years as fixed office allowance.
The total amounts which the appellant was entitled to receive from the managed company were Rs. 50,719/ and Rs. 13,963/ for the two years.
The managed company 's accounting year closed on the 30th day of December and that of the appellant company on the 30th day of June every year.
Clause 2(e) of the Managing Agency Agreement dated 30th ember 1946 contained the following term as to when the commission would be due and payable " (e) The said commission shall be due to the Agents yearly on the thirty first day of December or any other date on which the Company 's yearly account close in each and every year during the continuance of this Agreement and shall be payable and be paid immediate after annual accounts of the said Company has been passed by the Board of Directors and Auditors of the Company and by the company in, General Meeting".
According to the above clause, the commission was due on the 31st day of December every year and it was payable imme diately after the annual accounts of the managed company had 973 been passed in the General Meeting.
The Annual General Meetings of the managed company were held to adopt the accounts on November, 24, 1955 and July 21, 1956 respectively with regard to the assessment years in question.
The amounts of commission in terms of the above clause were "due" on 31st December, 1954 and 31st December, 1955 and were "payable " immediately after the 24th of November, 1955 and 21st of July, 1956 respectively.
The appellant company relinquished the managing agency commission for the assessment year 1956 57 as per resolution dated 4th of April, 1955 of the Board of Directors and for the following year as per resolution dated 19th June, 1956.
The amounts of the commission were thus relinquished after they had become "due" but before they were "payable" in terms of clause 2(e) of the agreement.
On behalf of the appellant, it was stated that the managed company had been suffering heavy losses in the past years and, therefore, the appellant did not consider it proper to charge any commission or the fixed office, allowance and had consequently relinquished the same.
The Income tax Officer included the sums of Rs. 50,719/ and Rs. 13,963/ in the total income of the appellant for the two assessment years in question.
The Income Tax Officer took the view that in so far as the fixed office allowance was concerned, it had been given to the appellant to enable it to recoupe the expenses incurred on behalf of the managed company and the relinquishment was, therefore made ex gratia.
As regards the commission, the Income tax officer held that it had become due to the appellant at the end of the accounting year of the managed company, and if the commission had been foregone after it had become due, it was taxable on accrual basis.
The Appellate Assistant Commissioner and the Income tax Appellate Tribunal affirmed the order of the Income tax Officer.
According to the Tribunal, the commission became due to the appellant yearly on the last day of the accounting year of the managed company, though the actual payment was deferred to a later date.
Postponement of the actual payment after the income had accrued was held to be inconsequential.
Likewise, the relinquishment of the income after it had become due in the opinion of the Tribunal, was inconsequential.
Claim was ten made by the appellant that the amount relinquished should be treated as a permissible expenditure under section 10(2) (xv) of the Act.
The above claim was rejected and it was observed that the total loss carried over at the end of year 1955 of the managed company was Rs. 14,95,221/ .
As a result of foregoing the amounts of the managing agency commission, according to the Tribunal, the financial position of the managed company did not 974 become stronger while that of the appellant company became weaker.
The relinquishment was consequently held to be not for the benefit of the appellant.
At the instance of the appellant, the Tribunal referred the following two questions to the High Court : " (1) Whether on the facts and in the circumstances of the case, the sums of Rs. 50,719/ and Rs. 13,963/foregone by the assessee by its Directors ' resolution dated 4 4 1955 and 19 6 1956 respectively, were liable to be included in its total income for the accounting years ending 30 6 1955 and 30 6 1956 ?" "(2) If the answer to question No. 1 be in the affirmative, whether the assessee is entitled to claim an allowance of an equivalent amount as expenditure under the provisions of Section 10 (2) (xv) of the Indian Income Tax Act ?" The High Court agreed with the view taken by the Tribunal.
It was observed that the accrual of income was complete within the accounting year of the managed company and as no relinquishment had been done before the amount became due, the case strictly came within the ambit of section 4 (1) (b) (i) of the Act. 'no relinquishment, it was further observed, was a unilateral act of the appellant.
As regards the second question, the High Court found that the relinquishment had not been made for the purpose of facilitating the legitimate commercial undertaking or by way of commercial expediency.
The appellant 's case was thus held to be not covered by section 10(2) (xv) of the Act, Mr. Maheshwari has assailed the findings of the High Court.
Regarding the first question, the learned counsel contends that as the amounts in question were never received by the appellant but were relinquished, there arose no tax liability for those amounts.
As regards the second question, Mr. Maheshwari submits that the relinquishment of the amounts should be construed as permissible expenditure under section 10(2) (xv) of the Act.
There is, in our opinion, no substance in any of the above contentions.
So far as the first question is concerned, we find that according to clause 2(e) of the Managing Agency Agreement reproduced above, the commission for the two years in question became due to the appellant on the 31st day of December, 1954 and 31st day of December, 1955.
The appellant also became entitled to receive fixed office allowance of Rs. 12,000/ for each of the two years.
It, therefore, can be said that the income of Rs. 50,719/ had accrued to the appellant on 31st December, 1954 and of 975 Rs. 13,973/ on 31st December, 1955.
The fact that the pay ment of the managing agency commission was deferred till after the accounts had been passed in the meetings of.
the managed company did not affect the accrual of the income of those amounts on December 31, 1954 and December 31, 1955 respectively.
According to Section 4 (1) (b) (i) of the Act, subject to the provisions of this Act, the total income of any previous year of any person includes all income, profits and gains from whatever source derived which if such person is resident in the taxable territories during such year accrue or arise or are deemed to accrue or arise to him in the taxable territories during such year.
The dictionary meaning of the word "accrue" is "to come as an accession, increment, or produce : to fall to one by way of advantage : to fall due".
The income can thus be said to accrue when it becomes due.
The postponement of the date of payment has a bearing only in so far as the time of payment is concerned, but it does not affect the accrual of income.
The moment the income accrues, the assessee gets vested with the right to claim that amount even though it may not be payable immediately.
There also arises a corresponding liability of the other party from whom the income becomes due to pay that amount.
The further fact that the amount of income is not subsequently received by the assessee would also not detract from or efface the accrual of the income, although the non receipt may, in appropriate cases, be a valid ground for claiming deductions.
The accrual of an income is not to be equated with the receipt of the income.
That the two, accrual and receipt of income, have different connotations is also clear from the language of Section 4 of the Act.
Clause (a) of sub section (1) of Section 4 of the Act deals with the receipt of income while the, accrual of income is dealt with in clause (b) of that sub section.
The appellant company admittedly was maintaining its account according to the mercantile system.
It is well known that the mercantile system of accounting differs substantially from the cash system of book keeping.
Under the cash system, it is only actual cash receipts and actual cash payments that are recorded as credits and debits; whereas under the mercantile system credit entries are made in respect of amounts due immediately they become legally due and before they are actually received; similarly, the expenditure items for which legal liability has been incurred are immediately debited even before the amounts in question are actually disbursed.
Where accounts are kept on mercantile basis, the profits or gains are credited though they are not actually realised, and the entries thus made really show nothing more than an accrual or arising of the said profits at the material time.
The same is the position 976 with regard to debits made.
[See Indermani Jatia V. Commis sioner of Income Tax, U.P. (1)] In the case of Commissioner of Income Tax, Bombay City I vs Messrs Shoorji Vallabhdas and Co.(2) Hidayatullah, J (as he then was) speaking for the Court observed,: "Income tax is a levy on income.
No doubt, the Income tax takes into account two points of time at which the liability to tax is attracted viz. the accrual of the income or its receipt; but the substance of the matter is the income.
If income does not result at all, there cannot be a tax, even though in book keeping, an entry is made about a "hypothetical income", which does not materialise.
Where income has, in fact, been received and is subsequently given up in such circumstances that it remains the income of the recipient, even though given up, the tax may be payable.
Where, however, the income can be said not to have resulted at all, there is obviously neither accrual nor receipt of income, even though, an entry to that effect might, in certain circumstances, have been made in the books of account".
The assessee firm, who was the managing agent of two shipping companies in that case, gave up 75% of the managing agency commission with a view to get the managing agency transferred to two private companies.
It was held that this was not a case of a gift by the assessee to the managed companies of a portion of income which had already accrued, but an agreement to receive a lesser remuneration than what had been agreed upon.
In the present case, the amounts of income for the two years in question were given up unilaterally after they had accrued to the appellant company.
As such, the appellant could not escape the tax liability for those amounts.
Coming to the second question we find that the appellant could claim deduction of the amounts under section 10(2) (xv) of ' the Act if the amounts had represented an expenditure laid out or expended wholly and exclusively for the business of the appellant.
There is, however, nothing to show that the amounts were relinquished for the purpose of the appellant 's business.
The present is not a case wherein the amounts due to the assessee were given up on grounds of commercial expediency or for advancing the business interest of the assessee.
The conclusion of the learned Judges of the High Court in this respect, in our opinion, is well founded.
The result is that the appeals fail and ire dismissed but, in the circumstances, without costs.
Appeals dismissed.

summary/full:
The appellant, a limited company, was managing agent of another company.
Under the terms of the agreement the appellant company was entitled to receive a fixed monthly sum as office allowance and commission at fixed rates on net profits and purchases and sales of cotton and yarn.
The managed company 's accounting year closed on the 30th day of December every year and that of the appellant company on the 30th day of June every year.
Under cl. 2(e) of the managing agency agreement the commission was due on the 31st day of December every year and it was payable immediately after the annual accounts of the managed company bad been passed in the General meeting.
The Annual General meetings of the managed company were held to adopt the accounts for the relevant accounting years on November 24, 1955 and July 21, 1956, The amounts of commission in terms of the cl.
2(e) were thus 'due ' on 31st December 1954 and 31st December 1955 and were 'payable ' immediately after 24th November 1955 and 21st July 1956 respectively.
Since the managed company had suffered losses in the preceding years the appellant relinquished the commission as well as the office allowance by resolutions of the Board of Directors dated April 4, 1955 and June 19.
On these dates the amounts of commission relinquished had become 'due ' but not 'payable '.
The Income tax Officer in making the assessments for the 1955 56 and 1956 57 did not make any allowance for the amounts relinquished and included them in the total income of the appellant.
According to the Income tax Officer the office allowance had been relinquished ex gratia and the commission had been relinquished after it had accrued.
The Appellate Assistant Commissioner and the Appellate Tribunal confirmed the order of the Income tax Officer.
In ,reference the High Court held : (i) that the accrual of income was complete within the accounting year of the managed company and as no relinquishment had been done before the amount became due, the case came within the ambit of section 4(1)(b)(i) of the Income tax Act, 1922, (ii) that the relinquishment had not been made for the purpose of facili tating the legitimate commercial undertaking or by way of commercial expediency and the case was not then fore covered by section 10(2)(xv).
In ;appeal to this Court, HELD : (i) According to s, 4(1) (b) (i) of the Act, subject to the provisions of this Act the total income of any previous year of any person includes all income profits and gains from whatever source derived which if such a person is resident in the taxable territories during 971 such year accrue or arise of the deemed to accrue or arise to him in the taxable territories that year.
The dictionary meaning of the word 'accrue ' is to come as an accession, increment, or produce; to fall to one by way of advantage; to fall due. ' The income can thus be said to accrue when it becomes due.
The postponement of the date of payment has a bearing only in so far as the time of payment is concerned, but it does not affect the accrual of income.
The moment the income accrues, the assessee gets vested with the right to claim that amount, even though it may not be payable immediately.
There also arises a corresponding liability of the other party from whom the income becomes due to pay that amount.
The further facts that the amount of income is not subsequently received by the assessee would also not detract front or efface the accrual of the income, although the non receipt may, in appropriate cases, be a valid ground for claiming deductions.
The accrual of an income is not to be equated with the receipt of the income.
That the two, accrual and receipt of income, have different connotations is also) clear from the language of section 4 of the Act.
Clause (a) of sub section '(1) of section 4 of the Act deals with the receipts of income while the accrual of income is dealt with in cl.
(b) of that sub section. [975 B E] In the present case the accounts of the appellant company were maintained on a mercantile basis.
Under this system the profits and gains are credited though not immediately realised, and the entries thus made really show nothing more than an accrual or arising of the said profits, at the material time.
Further, the amounts of income for the two years in question were given up unilaterally after they had accrued to the appellant company.
As such the appellant could not escape the tax liability for those amounts.
[975 G H; 976 E] Indermani Jatia V. C.I.T., U.P., and C.I.T., Bombay City I vs M/s. Shoorji Vallabhdas & Co., 46 I.T.R. 144, applied.
(ii) The appellant could claim deduction of the amounts under section 10(2)(xv) of the Act if the amounts had represented an expenditure laid out or expended wholly and exclusively for the business of the, appellant.
There was however nothing to show that the amounts were relinquished for the purpose of the appellant 's business or on grounds of commercial expediency.
The High Court therefore rightly rejected the claim under section 10 (2) (xv)[976 F G]