judgement:
Appeal No. 234/60.
Appeal from the judgment and order dated November 18, 1958, of the Bombay High Court at Nagpur in Special Civil Application No. 201 of 1958.
N. C. Chatterjee, M. N. Phadke, section A. Sonhi and Ganpat Rai, for the appellants.
A. V. Viswanatha Sastri, B. R. Mandekar and A. G. Ratnaparkhi, for respondent No. 1.
G. C. Mathur and R. H. Dhebar, for respondent No. 2. 1961.
January 27.
, J. This is an appeal against the jugdment and order of the High Court of Judicature of Bombay at Nagpur dismissing a petition under articles 226 & 227 of the Constitution challenging the legality of the imposition of the octroi tax under section 66(1)(e) of the C. P. & Berar Municipal Act (Act II of 1922) hereinafter termed the Act.
The appellants who were the petitioners in the High Court are some of the rate payers of the town of Akola in the erstwhile State of Bombay and respondent No. 1 is the Municipal Committee, Akola.
On November 11, 1957, respondent No. 1 passed a resolution to impose an octroi tax on animals and goods brought within the limits of the Akola Municipality.
This resolution and the draft Rules of Assessment and Collection were later on forwarded by the Akola Municipality to the State Government for publication.
A notification dated January 3, 1958, was published in the Bombay Government Gazette on January 16, 1958.
This Gazette Notification contained the draft rules, the schedule of goods liable to octroi duty and the rates to be charged.
This was in accordance with the requirements of section 67(2) of the Act.
Respondent 620 No. 1, the Municipal Committee, affixed on the Notice Board of the Committee and published in the local newspapers the proposed rules for the imposition of the tax, but the objection of the appellants is that they did not publish along with them the draft of the " System of Assessment ".
It is true that a pamphlet in Marathi language was distributed in the town of Akola and the proposals were also published in the local newspaper Jan Sewak.
Objections to the proposals were filed by some of the rate payers of the town of Akola and all of them were considered and a resolution was passed by the Municipal Committee on March 3, 1958, and that is the resolution which was challenged in the petition filed in the High Court by a petition dated April 14, 1958, p raying for the quashing of the resolution and for the issuing of a prohibitory order against the State Government against sanctioning the proposal sent by the Municipal Committee.
On April 18, 1958, a rule was issued by the High Court to the opposite parties calling upon them to show cause why the, order as prayed should not be made.
This notice was served on the Special Government Pleader on May 9, 1958, and the Special Government Pleader put in his appearance on June 17, 1958.
On June 23, 1958, an interim injunction was issued, but previous to that on June 19, 1958, a final notification was issued by the Government approving of the proposal to impose the octroi tax.
As a consequence of this the petition was allowed to be amended, but ultimately the High Court dismissed the petition and this appeal has been brought on a certificate of the High Court.
The sole question which has been debated before us is the legality of the imposition.
The ground on which the legality is challenged is that there was no full compliance with the mandatory requirements of section 67(2) of the Act.
It is, therefore, necessary to deal with the relevant provisions of the Act.
Chapter IX of the Act deals with Imposition, Assessment and Collection of taxes.
Section 66 provides for the taxes which can be imposed and section 67 deals with the mode of the imposition of the tax.
By section 71, the State 621 Government is empowered to make rules regulating the assessment of taxes and for preventing evasion of assessment.
Section 76 empowers the State Government to make rules regulating the collection of taxes and preventing evasion of payment.
Section 85 em Con powers the State Government to make rules regulating the refund of taxes.
But it was argued on behalf of the appellants that as the mandatory provisions of section 67 as to publication of the " System of Assessment " in accordance with the rules was not complied with, the imposition of the tax was illegal.
Reliance was placed on certain judgments, but it is not necessary to discuss those cases because in the circumstances of this case they are of little assistance.
The respondents, on the other hand, submitted that what was published was all that the section required and that the word assessment there did not mean anything more.
As section 67(2) has been mainly relied upon, it may be quoted.
It provides: " 67(2) When such a resolution has been passed, the committee shall publish in accordance with rules made under this Act, a 'notice defining the class of persons or description of property proposed to be taxed, the amount or rate of the tax to be imposed and the system of assessment to be adopted.
" The scheme of section 67 appears to be this: that when a Municipal Committee wishes to impose a tax it has to pass a resolution at a special meeting and then it has to publish its resolution for imposition of that tax so that the rate payers may be able to place their objections against the imposition.
This publication must appear in the Government Gazette and also locally as required by the rules.
The Municipal Committee has then to consider the objections, if any, of the rate payers and if the Committee does not consider it necessary to alter its original proposals, it has to send its proposals with the objections received and its decision thereon and any modifications of the original proposals to the State Government which, after considering the matter, may sanction them or refuse to sanction or sanction them with modifications, 622 The real objection of the appellants was that the system of assessment had not seen published as required.
The Rule relating to publication under section 67 is as follows : " 1.
A notice under section 67(2) of the intention of the municipal committee to impose a tax, or under section 68(3) of the proposal of the committee to increase the amount of rate of any tax, shall be forwarded to the State Government through the Deputy Commissioner for publication in the " Madhya Pradesh Gazette.
" The notice under section 67(2)shall be accompanied by draft rules for the assessment and collection of the tax.
After its publication in the Gazette the, notice shall be published by affixing copies thereof to a notice board at the municipal office and at conspicuous places in the town, and shall also be published in the local papers, if any.
As an alternative to its publication in local papers, the committee may circulate the notice in print in vernacular within the municipal limits.
Proclamation shall also be made by beat of drum throughout the municipality notifying the intention of the committee and calling the attention of the inhabitants to the notice in question and to the term of thirty days laid down in the law as that within which objections to the proposed imposition or increase must be submitted to the committee.
" According to this rule the notice under section 67(2) has to be accompanied by draft rules for the assessment and collection of the tax and after its publication in the Gazette the notice has to be published by affixing copies thereof to a notice board at the Municipal Office and at conspicuous places in the town and has to be published in the local papers, if any, or it may circulate the notice in print within the municipal limits.
It is admitted that in the Gazette dated January 16, 1958, the draft rules were published which contained the articles to be taxed, the rate or rates at which they were to be taxed and what articles were not to be taxed.
It also contained a brief statement of objects.
and reasons for the imposition of the tax.
This was 623 followed by draft rules as to how taxation was to be done.
In short what was published in the Gazette was admitted to conform to all the requirements of section 67(2).
But the contention raised is that in the Jan Sewak, a local Marathi newspaper, the rules which were published contained the articles to be taxed, the rate or rates at which they were to be taxed, but the draft rules in regard to " System of Assessment " were not published along with it.
The High Court has pointed out that what was done was a sufficient compliance with the provisions of section 67(2) and that the words " System of Assessment " meant only the stage of the imposition of the tax and not other stages as a whole.
Sections 71, 76 and 85, as has been said above, deal with rules for assessment and for preventing evasion of taxes, rules for collection of taxes and rules for refund respectively.
Read together these provisions of the Act support the decision of the High Court that the words " System of Assessment " do not necessarily mean the whole procedure of taxation, i.e., imposition, collection and procedure in regard to collection and refunds.
The rule also shows that what is to be affixed on the notice board and at conspicuous places of the town is the notice and not the draft rules relating to assessment and collection.
In our opinion there has been a compliance with the provision of section 67(2) and that the publication of the rules relating to the rates at which the tax had been imposed was sufficient to comply with the provisions of the Act and the rules made thereunder.
It is unnecessary to deal with the efficacy of sub sections
(7) and (8) of section 67.
In our opinion the judgment of the High Court was right and the appeal is therefore dismissed with costs.
Appeal dismissed.

summary/full:
The Municipal Committee, Akola, passed a resolution to impose an octroi tax and forwarded it along with the draft rules of assessment and collection to the State Government.
The State Government published a notification in the Gazette which contained the articles to be taxed, the rate or rates at which they were to be taxed and a brief statement of objects and reasons for the imposition of the tax.
This was followed by draft rules as to how taxation was to be done.
Thereafter the Municipal Committee affixed on its notice board and also published in the local newspapers the said proposed rules but the draft rules in regard to the " system of assessment " were not published along with other particulars.
It was alleged by the appellants that the Municipality by not publishing the draft rules of the " system of assessment ", failed to comply in full with the mandatory requirements of section 67(2) of the Act rendering the imposition of tax illegal.
Held, that the words " system of assessment " did not neces sarily mean the whole procedure of taxation, i.e. imposition, collection and procedure in regard to collection and refund.
The notice and not the draft rules relating to assessment and collection were required under the Rules to be affixed on the notice 619 board of the Municipality and at other conspicuous places of the town.
In the instant case the publication of the Rules relating to the rates at which the tax had been imposed was sufficient compliance with the provisions of Section 67(2) of the C. P. S Berar Municipal Act, 1922, and the rules made thereunder.


judgement:
minal Appeal No. 120 of 1960.
Appeal by special leave from the judgment and order dated February 28, 1958, of the Madhya Pradesh High Court (Gwalior Bench), in Criminal Appeal No. 3 of 1957.
I. N. Shroff, for the appellant.
The respondent did not appear.
January 25.
The Judgment of the Court was delivered by AYYANGAR, J.
This is an appeal by special leave by the State of Madhya Pradesh against the dismissal of an appeal preferred by it to the High Court of Madhya Pradesh (Gwalior Bench) which declined to reverse the order of acquittal passed by the Sessions Judge holding the respondent not guilty of an offence under section 302 of the Indian Penal Code.
The ground of acquittal by the Sessions Judge, which was concurred in by the High Court was that the respondent was of unsound mind at the time of the commission of the crime and so was entitled to an acquittal under section 84 of the Indian Penal Code.
There is very little dispute about the facts or even about the construction of section 84 of the Code because both the learned Sessions Judge as well as the learned Judges of the High Court on appeal have held that the crucial point of time at which the unsoundness of 585 mind, as defined in that section, has to be established is when the act was committed.
It is the application of this principle to the facts established by the evidence that is the ground of complaint by the appellant State before us.
Section 84 of the Indian Penal Code which was invoked by the respondent successfully in the Courts below runs in these terms: " Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act, or that he is doing what is either wrong or contrary to law.
" It is not in dispute that the burden of proof that the mental condition of the accused was, at the crucial point of time, such as is described by this section lies on the accused who claims the benefit of this exemption (vide section 105, Indian Evidence Act, Illustration (a)).
In order to appreciate the point raised for our decision it is necessary to refer to the findings of the Sessions Judge which were in terms approved by the learned Judges of the High Court.
Before we do so, however, we shall narrate a few facts regarding which there is no dispute: The deceased Bismilla was related to the accused respondent as the mother of his wife Jinnat whom he had divorced.
The accused nurtured a grievance against his mother in law for matters it is unnecessary to set out.
Bismilla went to bed in her own house on the night of September 28, 1954.
On the morning of the next day the body of Bismilla was found by her husband lying in a pool of blood on the cot on which she was sleeping with the head missing.
The First Information Report was immediately lodged by the son of the deceased.
The police were informed that the respondent bad borne ill will towards Bismilla and thereafter the Sub Inspector who was in charge of the investigation sent for the respondent.
The respondent admitted having committed the murder and stated that be had put the head of Bismila and the knife with which it had been severed from the body in a cloth bag which he had hid in an underground cell in the furniture shop 586 of his father.
The respondent was taken to that shop where he took out the articles in the presence of Panch witnesses.
He also took out a torch from the cash box of the shop and handed it over to the police with the statement that the torch had been used by him on the occasion of the murder to locate the deceased in the darkness.
The accused further stated the manner in which he managed to scale over the wall of the house of the deceased, how he gained entrance into the room, how he found her asleep on a cot and how he severed the head from the trunk and carried the former away and hid it at the place from which he took it out.
The respondent was produced before the District Magistrate before whom he made a confessional statement reciting all the above facts.
He was thereafter committed to stand his trial before the Court of Sessions Judge, Gwalior, for the offence under section 302 of the Indian Penal Code.
We have only to add that the confession which was substantially corroborated by other evidence was never withdrawn though in his answers to the questions put to him by the committing magistrate and by the Sessions Judge under section 342 of the Criminal Procedure Code he professed ignorance of everything.
On behalf of the defence, in support of the plea of unsoundness of mind three witnesses were examined, two of them being medical men.
The first witness Mahavir Singh was the District Civil Surgeon and Superintendent of the Mental Hospital.
He spoke of having treated the accused in August 1952 as a private patient.
His deposition was to the effect that the accused had an epileptic type of insanity, the last time that he saw him being in August 1952, i.e., over two years before the date of the occurrence.
His evidence therefore cannot be very material not to say decisive on the question as to whether at the moment when the offence was committed the accused was insane as defined by section 84 of tile Code or not.
The other medical witness examined for the defence was the Superintendent of the Mental Hospital who had examined the accused on and after November 18, 1954, i. e., nearly two months after the occurrence.
His 587 deposition also was to the effect that the accused was suffering from epileptic insanity.
The witness testified, that at the first stage of the attack of a fit the patient becomes spastic, that in the second stage the patient would have convulsions of hands and feet and in the tertiary stage becomes unconscious and at the last stage the patient might do acts like sleep walking.
Obviously this was expert evidence about the nature of the disease which the doctor stated the accused was suffering from, and not any evidence relating to the mental condition of the accused at the time of the act.
The other witness who spoke about the mental condition of the accused was his father.
In his evidence he stated : " The accused was in a disturbed state of mind in the evening of September 28, 1954.
He bad not taken food for two days.
When I went to the shop on the morning of September 29, 1954, at 7 30 or 7 45 I found the accused was unconscious and that his hands and feet were stiffened.
Just then the police came there and took away the accused.
" On the basis of this evidence the learned Sessions Judge after correctly stating the law that under section 84 of the Indian Penal Code the crucial point of time at which unsoundness of mind should be established, is the time when the act constituting the offence is committed and that the burden of proving that an accused is entitled to the benefit of this exemption is upon him, summarised the evidence which had been led in the case in these terms: " The next thing therefore to consider is whether the accused was incapable of knowing the nature of the act.
The fact that the accused went at night to the house of his mother in law, deliberately cut her head and brought it to his house is too obvious to show that the accused was capable of knowing the nature of the act.
To put it differently, the accused while killing Bismilla was not under the impression that he was breaking an earthen jar.
Even the learned counsel for the defence laid no stress on this aspect of insanity.
He, however, contended that the accused was incapable of knowing that what he was doing was either wrong or contrary to law.
" 588 The learned Judge, however, rested his decision to acquit the accused on the following reasoning: "There is the circumstance that soon after the crime the accused was admitted to the mental hospital and the Superintendent of the Hospital at least confirms that the accused suffers from epileptic fits.
Now epilepsy is a kind of disease which may cause insanity.
This is called epileptic insanity.
In this insanity the patient commits brutal murders without knowing what he was doing.
The accused who suffered from epilepsy has committed a brutal murder.
There is thus ground to believe that he may have committed this murder in a fit of epileptic insanity. . . These.
things give rise to the inference that the accused may have committed the crime in a fit of insanity and without knowing that what he was doing was either wrong or contrary to law.
1, therefore, find that the accused Ahmedullah did kill Bismilla by severing her head from the body with a knife but that by reason of unsoundness of mind he was incapable of knowing that what he was doing was wrong or contrary to law and that he is, therefore, Dot guilty of the offence of murder with which he is charged under section 302, Indian Penal Code and I direct that the said accused be acquitted.
" The learned Judge had definitely found that the accused knew the nature of the act he was doing, finding which as we shall presently point out, was concurred in by the learned Judges of the High Court.
In the face of it we find it rather difficult to sustain the reasoning upon which the last conclusion is rested on the facts of this case.
From this order of acquittal by the learned Sessions Judge the State filed an appeal to the High Court.
The learned Judges of the High Court also correctly appreciated the legal position that to invoke the benefit of the exemption provided by section 84 of the Indian Penal Code it would be necessary to establish that the accused was, at the moment of the act insane.
The learned Judges, on this aspect of the case, said : " About the mental condition immediately before and after the crucial moment, we have the 589 circumstances, the conduct of the respondent on the morning of the 29th and his confession given on that afternoon.
By themselves they do not support the theory of mental unsoundness necessary for Section 84, though they are explicable, consistently with epileptic insanity.
The murder itself has been committed with extraordinary cunning, and attention to the most minute detail It is certain the respondent knew at that time the physical nature of what he was doing; he did not believe that he was breaking a pot or cutting a cabbage, but was taking the life of a human being which he says within 16 hours, he did for vindicating his honour.
In fact, the condition at the time of the confession is one of elation rather than of depression or a black out . . .
The learned Sessions Judge has held that the respondent was in a fit of epileptic insanity on the 28th night, when he killed his mother in law; it is not clearly recorded, but it also seems to be his finding that this fit of epileptic insanity continued at least till the time of his confession.
This finding is not one without any evidence to support it, or one that can be called perverse; still, it is one that could properly be arrived at, only if it is consistent with the observation made on the respondent immediately after the 29th September, 1954.
" They proceeded to point out that there was no observation by medical experts soon after the act to enable an inference to be drawn as to the mental condition of the accused just prior thereto.
After detailing the arguments on either side the learned Judges concluded: " Thus we have no evidence pointing to that kind and degree of mental unsoundness at the time of the act as required by section 84 of the I.P.C. ; but on the defective material adduced, it would have been in my opinion, an unsatisfactory conclusion either way In a case like this when the proved facts would otherwise support a conviction for murder it was for the defence to adduce evidence and it should, in principle, reap the consequence of any omissions in this regard," 590 From these observations it would appear as if the learned Judges of the High Court were differing from the learned Sessions Judge in his conclusion as regards the application of section 84 to the facts of the present case.
They however, continued: " The Sessions Judge was satisfied that the defence has discharged the onus of proving that at the time of the commission of the offence the accused was mentally so unsound as not to know that the act was wrong and contrary to law.
Now it is for the State to establish in appeal that the finding is perverse and that there are compelling reasons why that decision should be reversed." and it is on this ground that the learned Judges dismissed the appeal by the State.
We find ourselves wholly unable to concur with this conclusion or with the reasoning on which it is rested.
The learned Judges failed to appreciate that the error in the judgment of the Sessions Judge lay not so much in the implicit acceptance of the testimony of the father of the accused because he was obviously an interested witness, and of this the appellant State could certainly and justifiably complain but in proceeding on a basis wherein inferences and probabilities resting on assumptions were permitted to do duty for proved facts, which the statute required to be established before the exemption under the section could be claimed.
Refusal to interfere with an acquital in such circumstances could hardly be justified under any rule as to " impelling reasons " for interference even assuming the existence of such a rule.
The error in the judgment of the High Court consisted in ignoring the fact that there was nothing on the record on the basis of which it could be said that at the moment of the act, the accused was incapable of knowing that what he was doing was wrong or contrary to law.
In this connection we might refer to the decision of the Court of Criminal Appeal in En, gland in Henry Perry(1) where also the defence was that the accused had been prone to have fits of epileptic insanity.
During the course of the argument Reading, C.J., observed : (z) 14 Cr.
Appeal Rep. 48.
591 " The crux of the whole question is whether this man was suffering from epilepsy at the time he committed the crime.
Otherwise it would be a most dangerous doctrine if a man could say, 'I once had an epileptic fit, and everything that happens hereafter must be put down to that '.
" In dismissing the appeal the learned Chief Justice said: " Every man is presumed to be sane and to possess a sufficient degree of reason to be responsible for his acts unless the contrary is proved.
To establish insanity it must be clearly proved that at the time of committing the act the party is labouring under such defect of reason as not to know the nature and quality of the act which he is committing that is, the physical nature and quality as distinguished from the moral or, if he does know the nature and quality of the act he is committing, that he does not know that he is doing wrong.
There is, however, evidence of a medical character before the jury, and there are statements made by the prisoner himself, that he has suffered from epileptic fits.
The Court has had further evidence, especially in the prison records, of his having had attacks of epilepsy.
But to establish that is only one step; it must be shown that the man was suffering from an epileptic seizure at the time when he committed the murders; and that has not been proved.
" We consider that the situation in the present case is very similar and the observations extracted apply with appositeness.
We consider that there was no basis in the evidence before the Court for the finding by the Sessions Judge that at the crucial moment when the accused out the throat of his mother in law and severed her head, he was from unsoundness of mind incapable of knowing that what he was doing was wrong.
Even the evidence of the father does not support such a finding.
In this connection the Courts below have failed to take into account the circumstances in which the killing was compassed.
The accused bore illwill to Bismilla and the act was committed at dead of night when he would not be seen, the accused 76 592 taking a torch with him, access to the house of the deceased being obtained by stealth by scaling over a wall.
Then again, there was the mood of exaltation which the accused exhibited after he had put her out of her life.
It was a crime committed not in a sudden mood of insanity but one that was preceded by careful planning and exhibiting cool calculation in execution and directed against a person who was considered to he the enemy.
The appeal is therefore allowed, the order of acquittal passed against the respondent set as de and in its place will be substituted a finding that the respondent is guilty of murder under section 302 of the Indian Penal Code.
In the normal course the proper punishment for the heinous and premeditated crime committed with inhuman brutality would have been a sentence of death.
But taking into account the fact that the accused has been acquitted by the Sessions Judgean order which has been affirmed by the High Court we consider that the ends of justice would be met if we sentence the accused to rigorous imprisonment for life.
It is needless to add that the State Government will take steps to have the accused treated in an asylum until he is cured of his illness, if this still continues.
Appeal allowed.

dataset_name: IN-Abs

summary/full:
The High Court affirmed an order of acquittal of the respondent on a charge of murder under section 302 of the Indian Penal Code passed by the Sessions judge on the ground that the accused was of unsound mind.
The prosecution case was that the accused committed the murder of his mother in law against whom he had borne ill will, by severing her head from her body while she was asleep at dead of night.
He made a confession of the crime but a plea of insanity was taken at the trial.
On appeal with special leave by the State : Held, that the crucial point of time at which unsoundness of mind should be established is the time when the crime is actually (1) I.L.R. [1938]2 Cal, 337.
75 584 committed, the burden of proving which lies on the accused in order to entitle him to the exemption provided under section 84 of the Indian Penal Code.
It is not sufficient only to prove that the accused suffered from an "epileptic type of insanity" before or after the commission of the crime.
Henry Perry, 14 Cr.
Appeal Rep. 48, followed.
There was nothing on the record of the instant case to show that at the moment when the crime was committed the accused was capable of knowing that what he was doing was wrong or contrary to law and as such he was not entitled to an acquittal under section 84 of the Indian Penal Code.
Refusal by the High Court to interfere with an acquittal in the proved circumstances of the case could not be justified under any rule as to " impelling reasons ".


judgement:
Appeal No. 221 of 1956.
Appeal from the judgment and decree dated August 5,1955, of the Bombay High Court in Appeal No. 128/X of 1954.
section N. Andley, J. B. Dadachanji, Rameshwar Nath and ,P. L. Vohra, for the appellants, 654 A V. Viswanatha Sastri and Tarachand Brij mohan Lal.
for the respondents.
January 31.
, J. This appeal which has come to this Court with a certificate issued by the Bombay High Court raises for our decision a short and interesting question about the scope and effect of the provisions contained in section 89 of the Indian Companies Act, 1913, in relation to the law of banking.
This question arises in this way.
The appellant, the Oriol Industries, Ltd. (hereafter called the company) was incorporated on May 15, 1945, and it appointed as its managing agents M/s. Poddar Chack & Co. Soon after its incorporation the company passed a resolution on May 21, 1945, whereby it decided to open an account with the respondent, the Bombay Mercantile Bank, Ltd. (hereafter called the bank) and in accordance with the said resolution an account was opened with it on May 28, 1945.
Twenty eight cheques were drawn on this account aggregating the total amount of Rs. 28,882 13 0 during the period between May 28, 1945 and July, 31, 1945.
These cheques were drawn by K. Poddar and M. J. Chacko in pursuance of the authority conferred on them by the company.
On September 28, 1948, by its liquidator the company brought the present suit claiming to recover from the bank the said amount of Rs. 28,882 13 0.
The case for the company as set out in the plaint was that the payment of the said amount had been made by the bank wrongfully and negligently and the amount drawn under the said cheques had been wrongfully debited to the company in its account kept by the bank.
It appears that the resolution for winding up of the company was held by the court to be null and void, and Bo the plaint was subsequently amended whereby the name of the liquidator was struck out and the suit then purported to be one which was instituted by the company itself The plea raised by the company that the cheques in question had been negligently 'and wrongfully honoured by the bank was 655 seriously disputed by the bank in its statement.
Mr. Justice Tendolkar, who tried the suit on the Original Side of the Bombay High Court, however, upheld the plea raised by the company and came to the conclusion that the cheques had been wrongfully B, honoured.
Even so, Mr. Justice Tendolkar held that out of the total amount in dispute an amount of Rs. 8,882 13 0 had been actually received by the company and so on equitable grounds he rejected the company 's claim in regard to the said amount.
The company 's claim was, however, decreed in respect of the balance of Rs. 20,000.
The decree thus passed by Tendolkar, J. was challenged by the bank in its appeal, whereas the rejection of the company 's claim in respect of Rs. 8,882 13 0 by the trial judge gave rise to cross objections by the company.
The Court of Appeal has reversed the finding of Tendolkar, J., and has held that the bank was not liable to repay any amount to the company since it had accepted and honoured the cheques issued on it in good faith.
It may be stated at this stage that the plea of negligence which had been originally urged by the company in its plaint was expressly given up at the trial.
Since the Appeal Court accepted the bank 's case on the principal question of law it did not think it necessary to consider the question of limitation or the question about the applicability of the equitable doctrine on which the trial judge had relied.
In the result the appeal filed by the bank was allowed, the cross objections preferred by the company were rejected, and the suit filed by the company was dismissed with costs.
The company then moved the High Court for a certificate, and on a certificate being granted it has come to this Court; and on its behalf Mr. Andley has urged that in coming to the conclusion that the company 's claim was unsustainable the Appeal Court has misjudged;the effect of the provisions of section 89 of the Indian Companies Act in relation to the conduct of the bank in the present case.
That is how the principal question which falls for our decision is about, the scope and effect of the provisions of s, 89 of the Indian Companies Act.
84 656 Before dealing with the said question of law it is necessary to dispose of a minor point raised by Mr. Andley.
He contends that the cheques issued by K. Poddar and M. J. Chacko and honoured by the bank had not been issued in the form required by the resolution which gave them authority to operate on the company 's account with the bank.
The relevant resolution passed by the company provided that "the banking accounts of the company be opened with the bank and another bank and that the said banks be and hereby authorised to honour cheques, bills of exchange and promissory notes, drawn, accepted or made on behalf of the company by the Managing Agents M/s. Poddar Chacko & Co., by both the Directors of the Managing Agents firm, namely, Mr. Keshavdeo Poddar and Mr. M. J. Chacko and to act on any instructions so given relating to the account whether the same be overdrawn or not or relating to the transactions of the company.
" The argument is that two conditions had to be satisfied before the bank could accept a cheque issued under this resolution; the cheque had to be signed by both the Directors of the Managing Agents firm, and it had to be drawn on behalf of the company.
In point of fact, all the cheques have been signed by the two individuals without describing themselves as Directors of the Manging Agents firm and without showing that they had drawn them on behalf of the company.
These defects, it is urged, made the cheques irregular and inconsistent with the mandatory requirements of the resolution, and the bank was there fore not justified in honouring the said cheques.
In our opinion, this argument is unsound.
On a fair and reasonable construction of the resolution it is difficult to uphold the contention that the resolution required the drawers of the cheques to specify on each cheque that they were made or drawn on behalf of the company.
The object of the resolution as well as its effect merely was to conform to the requirements of a. 89 of the Indian Companies Act to which we will presently refer.
It cannot be said that the resolution required that the drawers of the cheques had to comply with the said condition apart from the requirements of section 89 ; and so it would be unreasonable 657 to treat the said requirement as a condition prescribed by the resolution independently of section 89.
In this connection the subsequent resolution passed by the company is significant.
It appears that on October 22, 1945, a resolution was passed by the, company authorising M. J. Chacko to sign cheques for the company, and when this resolution was communicated to the bank it was told that the cheques on behalf of the company would thereafter be signed as: it For and on behalf of the Oriol Industries Limited, For Poddar Chacko & Co."; in other words, by this communication the bank was told that it is only cheques signed by M. J. Chacko in the manner specified in the communication that the bank should honour.
This communication affords an eloquent contrast to the communication made by the company to the bank in regard to the earlier resolution by which M/s. Poddar and Chacko were authorised to issue cheques on its behalf Therefore, in our opinion, the argument that the impugned cheques accepted by the bank were inconsistent with the specific mandatory requirements authorised by the resolution cannot be accepted.
That takes us to the principal question of law.
In dealing with the said question it is first necessary to refer to section 26 of the (26 of 1881).
This section provides that " every person capable of contracting according to the law to which he is subject, may bind himself and be bound by the making, drawing, acceptance, endorsements, delivery and negotiation of a promissory note, bill of exchange or cheque." This section further provides, inter alia, that " nothing herein contained shall be deemed to empower a corporation to make, indorse or accept such instruments except in cages in which, under the law for the time being in force, they are so empowered.
" This section does not purport to make any provision of substantive or procedural law.
The latter part of the section merely brings out that a company cannot claim authority to issue a cheque under its first part.
The law in regard to the company 's power to issue negotiable instruments has to be found in the relevant provisions of the Companies Act 658 itself We must, therefore, turn to section 89 of the said Act.
Section 89 provides that " a bill of exchange, hundi or promissory note shall be deemed to have been made, drawn or accepted or endorsed on behalf of a company if made, drawn, accepted or endorsed in the name of, or by or on behalf of, or on account of, the company by any person acting under its authority express or implied.
" It is clear that in order that a company may be bound by a negotiable instrument purporting to have been issued on its behalf two conditions must be satisfied; the instrument must be drawn, made, accepted or endorsed in the name of or by or on behalf of or on account of the company, and the person who makes, draws, endorses or accepts the instrument must have the authority given to him by the company on that behalf.
This authority may be either express or implied.
There is thus no doubt that before a company can be bound by a negotiable instru ment one of the essential conditions is that the instrument on its face must show that it has been drawn, made, accepted or endorsed by the company.
This may be done either by showing the name of the company itself on the instrument, or by the statement of the person making the instrument that he is doing so on behalf of the company.
In other words, unless the plain tenor of the negotiable instrument on its face satisfies the relevant requirement the instrument cannot be validly treated as an instrument drawn by the company.
This position is not disputed.
The importance and significance of the said requirement can be illustrated by reference to a decision of the Privy Council which had occasion to consider a similar requirement under section 27 of the .
The said section provides that "every person capable of binding himself or of being bound, as mentioned in Section 26, may so bind himself or be bound by a duly authorised agent acting in his name." In Sadasuk Janki Das vs Sir Kishan Pershad (1) the Privy Council held that the name of the person or the firm to be charged upon a negotiable document should be stated clearly on the face or on (1) Cal.
659 the back of the document so that the responsibility is made plain and can be instantly recognised as the document passes from hand to hand.
It is not sufficient that the name of the principal should be in some way disclosed; it must be disclosed in such a way that, on any fair interpretation of the instrument his name is the real name of the person liable on the bill. " According to the Privy Council " sections 26, 27 and 28 of the contained nothing inconsistent with the principles just set out, and there was nothing to support the contention urged before it that in an action on a bill of exchange or promissory note against a person whose name properly appears as a party to the instrument it is open either by way of claim or defence to show that the signatory was in reality acting for an undisclosed principal.
" This decision was no doubt given under section 27 of the , but the principles enunciated in it apply with equal force to a negotiable instrument issued under section 89 of the Indian Companies Act.
The inevitable consequence of this requirement is that wherever a negotiable instrument is issued without complying with the said requirement it would not bind the company and cannot be enforced against it.
In The Bank of Bombay vs H. R. Cormack (1) it was held by the Bombay High Court that in order to make a company liable on a bill or note it must appear on the face of such bill or note that it was intended to be drawn, accepted or made on behalf of the company, and no evidence dehors the bill or note is admissible under section 47 of the Indian Companies Act, X of 1866, equal to section 89 of the present Act.
In support of this decision Sargent, C.J., has cited the observations of Lord Justice James in Miles ' Claim (2) " that it is the law of this country, and always has been the law of this country, that nobody is liable upon a bill of exchange, unless his name, or the name of some partnership, or body of persons of which he is one, appears either on the face or the back of the bill.
" Thus there can be no doubt that the failure to comply with the essential requirements of section 89 must necessarily mean that the.negotiable instrument in question (1) Bom.
(2) 643. 660 defectively issued cannot be enforced against the company.
But the question which arises for our decision is whether this principle can be invoked in the present case where the action is not based on a negotiable instrument.
The present dispute is between the bank and its constituent the company, and the claim made 'by the latter proceeds on the assumption that in honouring the cheques irregularly drawn the bank has acted improperly and exposed itself to the charge that it has honoured the cheques wrongfully and improperly.
In considering this question it may be relevant to recall that both the courts below have found that the bank has acted bona fide and that the charge of negligence levelled against it by the company had been expressly given up.
It is also necessary to bear in mind that when the company opened its account with the bank it was furnished with a book of cheques and it is from the said book that the impugned cheques have been issued.
Evidence also shows that K. Poddar and M. J. Chacko had no other joint account with the bank so that it is clear that when the impugned cheques were issued the bank was justified in thinking that the said cheques must have been issued by the two drawers on behalf of the only account on which they could operate, and that the bank thought was done in pursuance of the authority conferred on them by the company by its resolution.
In such a case, if the bank honours the cheques can it be said that the company on whose behalf the cheques were purported ,to have been issued can contend that the cheques should not have been honoured and that the amount debited to the company by the bank in its accounts has been improperly and wrongfully debited? It would be noticed that the principle underlying section 89 which is a very healthy and salutary principle affords to the companies protection against claims made on negotiable instruments defectively or irregularly drawn; but, when we deal with a dispute between a company and the bank of which it is a constituent it is difficult to extend the said principle.
The said principle in terms is applicable only when a claim is made against a company on a negotiable instrument; in other words, 661 it is only in the matter of enforcement of negotiable instrument against a company that the principle comes into play.
It is, therefore, difficult to see how the principle enunciated in section 89 can be extended to a claim made by the company against the bank.
In our., opinion, therefore, the High Court was right in coming to the conclusion that section 89 cannot be invoked by the company against the bank in making the present claim.
The decisions on which the company relied are all decisions in cases where a negotiable instru ment was sought to be enforced against the company and had thus given rise to a cause of action.
No case has been cited before us in which section 89 has been extended to a claim like the present.
On the other hand, there is authority of the House of Lords in support of the view which the High Court has taken in the present case.
In Mahony vs East Holyford Mining Co. (1), a similar point arose for the decision of the House of Lords.
One of the two points in that case had reference to eight cheques which had been defectively or irregularly drawn on behalf of the company and honoured by the bank.
In reject ing the company 's claim against the bank in respect of the amount covered by the said cbeques Lord Chelmsford observed as follows: " With respect to the objection that the name of the company is not on eight of the cheques paid by the Bank, and therefore by the Companies Act, 1862, they are invalid, and the official liquidator is entitled, at all events, to the amount of these cheques the short answer is, that although the bankers might have perhaps required that these cheques should be made formally correct before they were paid; yet having paid them upon the demand of the only persons whom they knew as representing the company in the operations upon the account, there is not the slightes t pretence for insisting upon the liability of the Bank to repay the amount of these cheques on the ground of an unauthorised payment of them.
" The Lord Chancellor Lord Cairns disposed of the point in these words: " The question being merely as (1) (1875) 7 Eng.
& Irish Reports, 869, 662 to the authority given to the bankers to make the payment, it appears to me that when those who drew and those who honoured the cheque knew the account on which it was intended to operate, the result was ,the same as if the account had been mentioned on the face of the cheque, and that no distinction is to be made as to the money paid upon these cheques." Lord Penzance agreed with this opinion and observed that " looking at the way in which the cheques were drawn, and understood by those who drew them, and by those who paid them, they stand in no different way from the rest of the cheques in the case.
" It would thus be clear that the authority of this decision of the House of Lords is in favour of the view taken by the High Court that the principle enunciated by section 89 of the Indian Companies Act cannot be extended to a claim made by a company against its bank on the ground that the cheque which the bank accepted and honoured was defective in that it did not comply with the requirements of section 89 and could not have been enforced against it.
We ought to add that section 47 of the corresponding English Act of 1862 is exactly in the same terms as section 89 of the Indian Act.
It also appears that Chalmers has expressed the same opinion for he says, ,So, too, bankers may be justified in paying cheques out of the funds of a company, where clearly, by the form of the cheques the company would not be liable as drawers if they should not be paid " (1).
Similarly, Halsbury approves of the same principle in these words: " although documents omitting the name of the company therefore cannot be relied on as against the company, monies paid under them to persons known to represent the company are not on that account payable over again " (2).
The result is the appeal fails and is dismissed with costs.
Appeal dismissed.
(1) Chalmers on " Bills of Exchange ", P. 63.
(2) Halsbury 's Laws of England, 3rd Edn., Vol. , paragraph 830.

summary/full:
The Managing Agents of the appellant company withdrew certain sums of money from its a count with the respondent (1) Mad. 871.
(2) Lah.
(3) (4) I.L.R. (5) (6) Pat. 106 (7) (1953) I.L.R. K. All. 64.
(8) Pat.
653 Bank, which the company had by a resolution authorised the Managing Agents to operate on.
The Managing Agents had no other account with the said Bank.
The company brought the suit, out of which the present appeal arises, against the Bank for recovery of the said amounts on the ground that the cheques issued by the Managing Agents had been wrongfully honoured by the Bank in that they were signed by them without describing themselves as Directors of the Managing Agents firm and on behalf of the company, as required by the resolution.
The trial judge decreed the suit except with regard to a part of the claim which he found to have actually been received by the company.
The appeal court dismissed the suit holding that the Bank had paid in good faith and that the company was not entitled to rely on section 89 of the Indian Companies Act.
Held, that the court of appeal was right in holding that section 89 of the Indian Companies Act could not be invoked by the appellant in the present case.
There can be no doubt that before a negotiable instrument can be enforced against a company under section 89 of the Indian Companies Act, it must on the face of it show that it was drawn, made, accepted or endorsed by the company, and this may be done either by showing the name of the company itself on the instrument, or by statement of the person making the instrument that he was doing so on behalf of the company.
Sadasuk janki Das vs Sir Kishan Pershad, Cal.
663, applied.
The Bank of Bombay vs H. R. Cormack, Born, 275 and Miles ' claim, , referred to.
But the said principle is applicable only to the claim made against a company on a negotiable instrument and cannot be extended to a dispute between a bank and its constituent where the claim is not so based and proceeds on the basis that in honouring the cheques wrongfully drawn the bank acted improperly.
Mahony vs East Holiford Mining Co., (1875) 7 Eng.
& Irish Reports 869, referred to.
Held, further, that the object of the resolution as well as its effect was merely to conform to the requirements of section 89 of the Indian Companies Act, 1913, and not to prescribe any condition precedent independently of that section.


judgement:
l Appeal No. 313/1956.
Appeal from the judgment and decree dated July 25,1952, of the Allahabad High Court in Second Appeal No. 2547 of 1946.
B. Ganapathy Iyer and T. M. Sen for the appellant K. P. Gupta, for the respondent.
January 31.
The Judgment of the Court was delivered by SHAH, J.
On January 30, 1943, Bhola Nath Sambhu Ram as agent of the respondent L. Musaddilal delivered a bale of cloth to the railway administration E. 1.
at Agra railway station for carriage by railway to the Chola Station in the E. I. Rly.
The consignment was accepted by the railway administration and a railway receipt was issued in the name of the consignor Bhola Nath Sambhu Ram.
Bhola Nath Sambhu Ram endorsed the railway receipt in favour of the respondent and sent it by post to the respondent.
The bale of cloth did not reach Chola, and the railway administration was unable despite efforts to trace it.
There was correspondence between the railway administration and the respondent about the consignment.
Failing to obtain satisfaction 649 for the loss suffered by him, the respondent served a composite notice under section 77 of the Indian Railways Act and section 80 of the Civil Procedure Code on December 7, 1943, and thereafter on May 18, 1944, filed suit No. 283 of 1944 in the court of the 11 Munsif, Bulandshahr, for a decree for Rs. 782 3 6 being the " price of the bale " and Rs. 200 " for loss on account of nondelivery." The railway administration resisted the claim on the pleas among others that the suit was not maintainable without an effective notice under a. 77 of the Railways Act and that the suit was barred because at the date of the institution of the suit, the period of limitation prescribed by article 31 of the Limitation Act had expired.
The trial court decreed the suit.
In appeal, the Additional Civil Judge, Bulandshahr, reversed, the decree passed by the trial court and dismissed the suit.
A Full Bench of the High Court of Allahabad reversed the decree passed by the first appellate court and restored the decree of the trial court.
With certificate of fitness under article 133(1)(c) of the Constitution, this appeal has been preferred by the Union of India.
Section 77 of the Railways Act in so far as it is material provides: "A person shall not be entitled to compensation for the loss, destruction or deterioration of goods delivered to be carried, unless his claim to compensation has been preferred in writing by him or on his behalf to the railway administration within six months from the date of the delivery of the goods for carriage by railway.
" Section 77 manifestly prescribes a condition precedent to the maintainability of a claim for compensation for goods lost, destroyed or deteriorated while in the custody of the railway administration.
The notice prescribed was not served by the respondent upon the railway administration within six months from the date on which the goods were delivered for carriage, and prima facie the suit would be barred for non compliance of a statutory condition precedent.
But the respondent pleaded and the plea has found favour with the High Court that the suit filed by him 650 was for compensation not for loss, destruction or it deterioration of the goods, but " for non delivery of the goods.
" In the view of the High Court, a claim for compensation for non delivery of goods is a claim distinct from a claim for compensation for loss, destruction or deterioration of goods and to the enforcement of a claim of the former variety by action in a court of law section 77 is not a condition precedent.
The railway administration in India is not an insurer of goods: it is merely a bailee of goods entrusted to it for carriage.
Section 72 of the Railways Act, prescribes the measure of the general responsibility of a railway administration as a carrier of goods.
By that section, the responsibility of a railway administration for loss, destruction or deterioration of goods delivered to be carried by railway is subject to other provisions of the Act to be that of a bailee under section 152 and section 161 of the .
Sections 151 and 152 of the deal with the duties of a bailee.
If a bailee takes as much care of the goods bailed to him as a person of ordinary prudence would under similar circumstances of his own goods of the same bulk, quality and value as the goods bailed to him, in the absence of a special contract, he is not responsible for loss, destruction or deterioration of the goods bailed.
By sections 160 and 161 of the , the bailee is under an obligation to return or deliver according to the bailor 's direction the goods bailed as soon as the time for which the good were bailed has expired or the purpose for which the goods were bailed has been accomplished and if on account of default of the bailee the goods are not returned, delivered or tendered at the proper time, he is responsible to the bailor for any loss, destruction or deterioration of the goods, The railway administration being a bailee of the goods delivered for carriage to it is therefore a bailee during the period when the goods remain in its custody for the purpose and in the course of carriage and for the purpose of delivery after the goods are carried to the destination.
651 But the quantum of care which the railway administration is required to take is that care which it would take having regard to the bulk, quality and value of its own similar goods.
Section 77 of the Railways Act is enacted with a view to enable the railway administration to make enquiries and if possible to recover the goods and to deliver them to the consignee and to prevent stale claims.
It imposes a restriction on the enforcement of liability declared by section 72.
The liability declared by a. 72 is for loss, destruction or deterioration.
Failure to deliver is the consequence of loss or destruction of goods; it does not furnish a cause of action on which a suit may, lie against the railway administration, distinct from a cause of action for loss or destruction.
By the use of the expression, "loss, destruction or deterioration," what is contemplated is loss or destruction or deterioration of the goods and the consequent loss to the owner tbereof.
If because of negligence or inadvertence or even wrongful act on the part of the employees of the railway administration, goods entrusted for carriage are lost, destroyed or deteriorated, the railway administration is guilty of failing to take the degree of care which is prescribed by section 72 of the Railways Act.
There are undoubtedly two distinct articles, articles 30 and 31 in the first schedule of the Indian Limitation Act dealing with limitation for suits for compensation against carriers.
Article 30 prescribes the period of limitation for suits against a carrier for compensation against loss or injury to goods and article 31 prescribes the period of limitation for suits for compensation against a carrier for non delivery or delay in delivering the goods.
The period of limitation under each of these articles is one year but the points of time from which that period is to be reckoned are different.
But because the Indian Limitation Act provides different points of time from which the period of limitation is to run, it is not possible to infer that the claim covered by either article is not for compensation for loss, destruction or deterioration of the goods.
We are unable to project the provisions of Art, 30 and 31 652 of the Limitation Act upon sections 72 and 77 of the Railways Act and to hold that a suit for compensation for loss because of non delivery of goods does not fall within section 77.
The view we have expressed is supported by a large volume of authority in the courts in India for instance The Madras and Southern Mahratta Railway Co., Ltd. vs Haridoss Banmalidoss (1), Hill Sawyers and Co. vs Secretary of State (2), Martab Ali vs Union of India (s), Union of India vs Mitayagiri Pullappa (4), Assam Bengal Railway Co., Ltd. vs Radhika Mohan Nath (5) and Bengal Nagpur Railway Co. Ltd. vs Hamir Mull Chhagan Mull (6).
The view expressed to the contrary in the Allahabad High Court in Governor General in Council vs Mahabir Ram (7) and ;by the Patna High Court in Jais Ram Ramrekha Das vs G. 1.
P. Railway (8), is in our judgment erroneous.
This appeal will therefore be allowed and the respondent 's suit will stand dismissed.
As the Union of India was permitted to appeal for obtaining the decision of this Court which may settle the conflict of views even though the amount involved is small, we think that it is just and proper that there should be no order as to costs throughout.
Appeal allowed.

summary/full:
The respondent served on the Railway Administration a composite notice under s 77 of the Indian Railways Act and under section So of the Code of Civil Procedure and sued for price of goods and for loss on account of nondelivery.
The claim was resisted by the Railway Administration on pleas amongst others that the suit was not maintainable without an effective notice under section 77 of the Railway Act and that the suit was barred because at the date of the suit the period of limitation prescribed by article 31 of the Indian Limitation Act had expired.
A full bench of the Allahabad High Court upheld the decree of the trial court in favour of the respondent holding that a claim for compensation for non delivery of goods was a claim distinct from the claim for compensation for loss, destruction or deterioration of the goods, and to the enforcement of a claim of the former variety by action in a court of law under section 77 was not a condition precedent.
Held, that section 77 of the Indian Railways Act imposes a restriction on the enforcement of liability declared by section 72 of the Act and prescribes a condition precedent to the maintainability of a claim for compensation for goods lost, destroyed or deteriorated while in the custody of the railway Administration who are bailers and not insurer of goods.
The section is enacted with a view to enable the railway administration to make enquiries and if possible to recover the goods and deliver them to the consignee and to prevent stale claims.
Failure to deliver goods is the con sequence of loss or destruction and the cause of action for it is not distinct from the cause of action for loss or destruction, 83 648 Held, further, that merely because articles 30 and 3r of the Indian Limitation Act prescribe different points of time from which the limitation is to run for suits against carriers it cannot be inferred that the claim covered by either article is not for compensation for loss, destruction or deterioration of the goods; and the said articles 30 and 31 cannot be projected upon sections 72 and 77 of the Indian Railways Act for holding that suit for compensation for non delivery of goods does not fall within section 77.
The Madras and Southern Mahratta Railway Co. Ltd. vs Haridoss Banmalidoss, Mad. 871, Hill Sawyers and Co. vs Secretary of State,, Lah.
133, Martab Ali vs Union of India, , Union of India vs Mitayagiri Pullappa, I.L.R. [1958] A.P. 323, Assam Bengal Railway Co. Ltd. vs Radhika Mohan Nath and Others, and Bengal Nagpur Railway Co. Ltd. vs Hamir Mull Chhagan Mull and Another Pat. 106, approved.
Governor General in Council and Others vs Mahabir Ram and Another, (1953) I.L.R.
I All. 64 and Jais Ram Ramrekha Das V. G.I.P. Railway and Another (1929) I.L.R. 8 Pat.
545, overruled.