judgement:
ition No. 1232 of 1982.
Under Article 32 of the Constitution of India.
Mukesh Advani Petitioner.
(Not present) A.V. Rangam, Ravindra, Bana, A.K. Sanghi, Ms. H. Khatun and R.N. Paddar for the Respondent.
128 The Judgment of the Court was delivered by DESAI, J.
One Mukesh Advani, Advocate practising in this Court addressed a letter to one of the Judges of this Court on September, 23, 1982 annexing thereto a cutting from the 'Indian Express ' dated September 14, 1982 depicting the horrid plight of the bonded labour working in stone quarries at Raisen in Madhya Pradesh.
Broadly stated the allegations were that the contractors who operate the mines recruit labour force from Tamilnadu.
Everyone recruited to work was paid roughly an advance of Rs. 1,000 and then brought to work at the mines.
This amount of Rs. 1,000 reimbursible by deductions spread over from month to month from the wages payable to the bonded labourers, but the method of accounting is so manipulated that the debt of Rs. 1,000 is never wiped out, and on the contrary it increases by geometrical proportion.
The workman goes deeper into the mire of indebtedness with the result that the octopus hold of the contractor becomes all enveloping and the workmen becomes a bonded labour.
The working conditions, to say the least, were of the 18th century vintage.
There is no weekly holiday.
Sanitary conditions are in deplorable state.
During the rainy season the operation of the mines is shut off and consequently the workmen are not paid wages.
Not a single legislation enacted for the welfare of labour is implemented or respected.
No workman can leave the employment until the entire debt is repaid which is beyond the reach of the workmen.
The only way to escape the clutches of the contractor is for the workman to change the master who by a paper advance pays off the former contractor and the cycle is repeated.
It was alleged that the functionaries of the Labour Department of the Centre and the State by sheer inaction if not active collaboration on their part help in exploitation of the labour.
It was specifically alleged that in the absence of a notification specifying minimum wages for the labour force employed in the mines the payment is paultry and meagre and there is naked and unabashed exploitation of workmen.
As part of social action litigation this letter was treated as a writ petition under article 32 of the Constitution and by the Order dated October 7, 1982 notice was ordered to be issued to the Deputy Commissioner/Collector, Bhopal.
The District Judge Bhopal was directed to proceed to the site of stone quarries at Raisen and 129 ascertain the existence of bonded labour and to submit a detailed report of the working conditions in the mines.
A further direction was given that the District Judge may take assistance of Mr. N.K. Singh who had exposed and portrayed the plight of the bonded labour in the 'Indian Express '.
The Committee for Implementing Legal Aid Schemes was directed to deposit Rs. 1,000 with the Registrar of the Supreme Court to meet the expenses of the District Judge in carrying out his assignments.
Pursuant to the aforementioned order, the District Judge submitted a detailed report in which it was pointed out that the labour force recruited from Tamil Nadu had made a complaint on May 24, 1980 to the Secretary, Labour Department, Government of Madhya Pradesh that the quarry contractor (Abdul Rehman) was giving inhuman treatment to Tamil labourers working in Surai mines.
This complaint was forwarded to the Superintendent of Police, Raisen to enquire into the matter.
He submitted a report that 48 workmen from Tamilnadu have been released and they have returned to Tamilnadu.
On September 8, 1980 a written report was lodged at Police Station by seven workmen six of whom were from Tamilnadu, in which it was alleged that the quarry contractor (Hamid Khan) was harassing them by making a claim that each one had to repay Rs. 15,000 to Rs. 16,000 towards the advances taken by them.
It was not possible to ascertain how this huge amount was worked out.
One additional complaint was that the workmen were paid less than what was agreed at the time of recruitment and that whenever a voice of protest was raised the workmen were physically be laboured.
It was alleged that their movements were circumscribed and that they were not free to leave the employment or to move away from the habitat.
In short they lived a captive life.
The District Judge pointed out that on this complaint an offence was registered at the Police Station under .
At the time of the report, the case was pending.
The dilemma which the District Judge faced in the course of enquiry was vividly described when he pointed out that when the workman is taken into confidence and is assured of protection he gives out a story of harassment and torture by the quarry contractor but when officially questioned he is afraid of making necessary disclosures.
But apart from this dichotomy, the District Judge noticed that Labour Enforcement Officer instituted two cases against the quarry contractor for recovery of Rs. 11,000 and odd for short payment and at the time of the report the cases were pending.
130 The District Judge further pointed out that there is a piece rate method of paying wages.
The piece rate ranges from Rs. 10 to Rs. 20 for a standard 'Khanti ' which is of the size 10 'x10 'x1 ' (depth).
A pair consisting of a male and a female is assigned to a 'Khanti ' and after a hard day 's toil the average earning ranges between Rs. 5 to Rs. 10 per day out of which unauthorized and impermissible deductions are made leaving the workman very little to survive.
The chances of not earning any thing even after a hard day 's work were very high in as much as after the 'Khanti ' is dug, the flagstone appears and that stone is to be cut nicely into slabs of specified sizes.
If the slabs are not properly severed from the stone, the workman is not paid anything.
The total earning also depends upon the number of slabs cut by the workman.
The rate is usually around Rs. 2 per cubic foot.
Though the Labour Department was of the view that unofficially a workman could earn Rs. 650 per fortnight, in practice this, was shown to be a paper figure.
On the enquiry by the District Judge, the contractor admitted that advance payment is made to every workman and it is recovered by deduction from the wages earned by each workman at the time of payment.
It also transpired that workmen from Tamilnadu were so harassed that on a complaint received by the Tamilnadu Government, a team of the police force arrived from Tamilnadu, liberated the workmen and repatriated them to Tamilnadu.
The District Judge also found that restraints were put on the workmen leaving the job but once a quarry contractor on being subjected to detailed enquiry, gave up any claim to recover the advances made by him, the restraints disappeared with the result that according to the District Judge, at the relevant time of the enquiry, there was no bonded labour.
The District Judge concluded that the newspaper publicity had a very salutary and desired effect in as much as various contractors have given up efforts to recover the advances and according to the District Judge it was a good achievement.
A note of caution is sounded that if the appropriate follow up action is not taken by the District Vigilance Committee and District Magistrate to ensure that quarry contractors who were then making an oral announcement of giving up of advances debts of the workmen without executing documents evidencing valid discharge, a sinister attempt may 131 be made to go back upon discharge of debts and one may return to square one.
The District Judge also pointed out that there is total absence of implementation of the labour laws applicable to these quarries.
It was pointed out that as the Central Government is the appropriate Government it has appointed only one inspector for II districts with the result that provisions of several laws beneficial to workmen are flouted with impunity.
A glaring case pointed out was that provisions of the would apply to some of the quarries proprio vigor but there is no whisper of its implementation.
The District Judge concluded that the follow up action as indicated by him will relieve harassment of workmen and ameliorate the working conditions.
The State of Madhya Pradesh in its counter affidavit broadly admitted the findings of the learned District Judge and it is pointed out that in respect of flagstone mines, the appropriate Government is the Central Government.
It was also pointed out that the Central Government has taken no steps to prescribe minimum wages under the Minimum wages Act.
As the report of the District Judge showed that the workmen who were complaining of harassment and torture were already released and discharged and at the relevant time there was no bonded labour the Court concentrated on giving direction for taking suitable steps for implementation of the labour laws.
In this connection the Court gave high priority to the statutory prescription of minimum wages that the quarry contractor would be bound to pay and which would also simultaneously provides shield against unauthorised deductions or exploitation by paying less than the minimum.
With this end in view the Court directed by its order dated November 23, 1982 to serve notices of the petition on the State of Tamil Nadu and the Union of India.
One Thirumati J. Anjani Dayanand, Commissioner and Secretary, Social Welfare Department, Government of Tamilnadu filed an affidavit in response to the notice issued by this Court.
The recitals therein are blood curdling.
It was pointed out that instances of kidnapping families of gullible illiterate rural poor from various parts in Tamilnandu to Madhya Pradesh under the guise of providing 132 them lucrative employment on attractive remuneration and then unlawfully confining them as bonded labour in Raisen and other districts in Madhya Pradesh came to the notice of Tamilnadu Police.
A police team thereupon from Pudukottai visited Raisen and rescued II persons including 5 females during July.
The police found that the workmen were held in bondage and that there was no adequate provision for food and shelter and that they were forcibly detained and effectively prevented from communicating with their relations by tampering with their mails.
The police staff which went to enquire in the matter received hostile treatment from the quarry contractors.
Another police team visited Raisen on August 20, 1982 and rescued 20 persons including 8 females belonging to 6 families from the quarries in Raisen district.
It transpired that one A.L. Subramaniam and Chokkalingam of Tamilnandu, assisted by his relations and in collusion with quarry contractors systematically carried on this trade of enticing gullible poor people drawing rosy picture of employment and then torturing them by exploiting them.
Ultimately a team of two police Inspectors, 3 sub inspectors, 2 head constables and 2 police constables from the Crime Branch, C.I.D. assisted by Armed Escort Party from Madurai were deputed with a demi official letter from the Deputy Inspector General of Police, C.I.D. Crime Branch Madras to his counterpart in Madhya Pradesh seeking assistance to break this cell of slavery.
We need not further describe the gory details but ultimately it was pointed out that after these workmen were released it transpired that the inhuman quarry contractors had bled them white.
Being victims of total exploitation, the Chief Minister of Tamilnadu sanctioned a sum of Rs. 1,000 per family for the rehabilitation and till the date of the affidavit, Rs. 63,000 were spent in this behalf.
By our order dated February 18, 1983 the Union of India was directed to come out with proposals setting out concrete steps to prescribe minimum wages on piece rate basis for various occupations in flagstone mines and also suggest effective steps for improving the life style of workmen working in these mines, as also the machinery for effective implementation.
As the progress was analogous to slow motion news, Mr. K. G. Bhagat, Additional Solicitor General of India appeared and assured us that Union of India would extend all co operation to help the workmen and take up necessary follow up steps.
133 As the thing moved very slowly, the Court directed Union of India as appropriate Government to issue a preliminary notification under Sec.
5 of the setting out its proposal for information of persons likely to be affected thereby and specifying a date not less than two months from the date of the notification on which proposals will be taken into consideration.
After taking a number of adjournments, one Bishamber Nath, Under Secretary to the Government of India in the Department of Labour filed his affidavit in reply on behalf of the Union af India specifically stating therein that the question of issuing of notification under Sec. 5 is under active consideration by the Ministry of Labour and Rehabilitation, Department of Labour.
It was further pointed out that as minimum wages are likely to be piece rate wages, it may become necessary to appoint a Committee or pre publication of the proposals.
It was stated that some data has to be collected and for this purpose on a priority basis a team of officers is being sent to Raisen to collect the required information.
When the matter came up before this court on September 26, 1983, Mr. Gujral, learned counsel who appeared on behalf of the Union of India made a statement that a preliminary notification would be issued by the end of the first week of November, 1983.
The Union of India did take the promised action and a preliminary notification dated October 31, 1983 was placed on record.
The schedule to the notification sets out minimum piece rate of wages for various occupations in flagstone mines.
On April 16, 1980, a copy of the notification dated March 24, 1982 issued by the Government of India, Ministry of Labour and Rehabilitation specifying the minimum wages for various occupations in flagstone mines was submitted to the Court.
There ends the first step to be taken as part of a vigorous campaign to eschew exploitation by person who on account of money power exploit the poor and the needy.
This is not the end of the journey.
It is just a beginning.
This petition must now stand disposed of because the report of the District Judge referred to in the earlier part of this judgment clearly shows that there is no bonded labour working in flagstone mines at Raisen.
Undoubtedly, mines have to work in larger public and national interest.
Therefore, in the very nature of things, there will be contractors and the workmen.
Contractor as is his wont, to augment 134 his profit which motivates him to take contract and who is not shown to be altruistic, is bound to exploit the workmen.
The notorious method of exploitation is, pay as much less as possible despite all pretensions of Minimum Wages and Payment of Wages Act, take work for longer hours, prohibited by beneficent statutes like the Mines Act, the Factories Act and like statutes.
Both these when jointly practised enlarges the profit.
The State in discharge of its obligation under articles 38, 41, 42 and 43 must extend the umbrella of protection to these poor and needy and unprotected workmen who are unable to negotiate on terms of equality and who may accept any terms to stave off hunger and destitution.
It is the State which must interpose between these two unequals to eschew exploitation.
As a first step, the notification prescribing minimum wages has been issued.
The law which need not be restated is that no employer can pay less than the minimum wages.
But this remains a paper promise unless an offective implementation machinery not overawed by these wealthy and generally unscrupulous contractors who can spread their tentacles over officials, is set up.
We conclude with a hope that such a machinery would be set up jointly by the Union of India and the Government of the State of Madhya Pradesh.
With these observations, the petition stands disposed of.

summary/full:
Pursuant to an investigative report in the "Indian Express" dated September 14, 1982, one of the advocates practising in the Supreme Court addressed a letter to one of the Judges of the Supreme Court depicting the horrid plight of bonded labour from Tamil Nadu working in the stone quarries at Raisen in Madhya Pradesh.
It was alleged: (a) Everyone recruited were paid a reimbursible advance of Rs. 1,000/ but the method of accounting is so manipulated that the debt instead of getting wiped out, increased in geometrical proportion and no workmen can have the employment until the entire debt repaid which is beyond the reach of the workmen; (b) The working conditions were bad.
There was no weekly holiday.
Sanitary conditions were in deplorable state.
The workmen were not paid any wages during rainy seasons, since the mines were shut off; (c) Not a single legislation enacted for the welfare of labour is implemented or respected and (d) Due to the inaction of the Labour Department of the Centre and the State like absence of a notification specifying minimum wages for the labour force employed in the mines, resulting in poultry and meagre payment there is naked and unabashed exploitation of workmen.
The report called for by the Supreme Court from the District Judge Bhopal confirmed the said allegations and further revealed that (a) on a complaint preferred 48 labourers were released by the Labour Department of Madhya Pradesh; (b) a complaint has been lodged with the police under the ; (c) two or three cases against the Contractors were instituted in fact and the said cases were pending; (d) the piece rate method of paying wages for digging a standard 'Khanti ' has resulted sometime to no payment at all for both the male and female labour employed; (e) a team of police force arrived from Tamil Nadu and liberated the workmen and repatriated them to Tamil Nadu and (f) the newspaper publicity had a very salutary and desired effect in as much as various contractors have given up efforts to recover the advances which was a good achievement.
The State of Madhya Pradesh admitted the findings of the District Judge, Bhopal and pointed out that in respect of flagstone mines, the appropriate Government is the Central Government under the payment of 127 Bonus Act, 1965 and the .
The Tamil Nadu Government have clarified as to how the labourers were duped and taken to Madhya Pradesh and confirmed the release of the labourers by their State Police.
The Court in the circumstances directed the Union of India as appropriate Government to issue a preliminary notification under section 5 of the setting out its proposal for information of persons likely to be affected thereby and specifying a date not less than two months from the date of the Notification on which proposals will be taken into consideration.
The Union of India accordingly issued necessary notification dated March 24,1982 and October 31, 1983 setting out the minimum piece rate of wages for various occupations in flagstone mines.
Disposing of the petition, the Court ^ HELD: 1.
Undoubtedly, mines have to work in larger public and national interest.
Therefore, in the very nature of things, there will be contractors and the workmen.
Contractor as is his wont, to augment his profit which motivates him to take contract and who is not shown to be altruistic, is bound to exploit the workmen.
The notorious method of exploitation is, pay as much less as possible despite all pretensions of Minimum Wages and Payment of Wages Act, take work for longer hours, prohibited by beneficent statutes like the Mines Act, the Factories Act and like statutes.
Both these when jointly practised enlarges the profit.
The law is that no employer can pay less than the minimum wages.
But this remains a paper promise unless an effective implementation machinery not overawed by these wealthy and generally unscrupulous contractors who can spread their tentacles over officials is set up.
[133 H; 134 A B; D] (The court expressed the hope that such a machinery would be set up jointly by the Union of India and the Government of the State of Madhya Pradesh.) [134 E] 2.
The State in discharge of its obligation under Articles 38, 41, 42 and 43 must extend the umbrella of protection to these poor and needy and unprotected workmen who are unable to negotiate on terms of equality and who may accept any terms to stave of hunger and destitution.
It is the State which must interpose between these two unequals to eschew exploitation.
[134 B C]


judgement:
Civil Appeals Nos. 2585 and 2586 of 1978.
From the Judgment and Order dated 14.2.1978 of the Kerala High Court in T.R. C. No. 6 and 9 of 1977.
V.J. Francis for the Appellant.
S.T. Desai (A.C.) for the Respondent.
The Judgment of the Court was delivered by 138 PATHAK, J.
These appeals by special leave are directed against the judgment and order dated February 14, 1978 of the High Court of Kerala dismissing two tax revision petitions arising out of assessments made under the Kerala General Sales Tax Act, 1963.
The respondent, Messrs. K. Kelukutty is a partnership firm dealing in timber.
It consists of six partners.
It filed returns of its taxable turnover for the assessment years 1968 69 and 1969 70 under the Kerala General Sales Tax Act, 1963, and the assessments were completed by the Sales Tax Officer.
Subsequently, the Sales Tax Officer discovered that the partners of the respondent firm owned a Saw Mill, and the Saw Mill was run by a partnership firm Messrs. K.K.K. Sons Saw Mills which consisted of the same partners as the respondent firm.
He found that during the assessment years 1968 69 and 1969 70 they had sold saw dust from the mill, but had not been assessed to sales tax on that turnover.
The Sales Tax Officer took the view that as both Messrs. K. Kelukutty and Messrs. K.K.K. Sons Saw Mills consisted of identical partners, the two businesses carried on respectively by them had to be treated as the business of a single partnership firm and, therefore, the turnover of the sale of saw dust had to be included in the earlier assessments made on the respondent firm.
The assessment orders were upheld by the Appellate Assistant Commissioner, Sales Tax.
Thereafter, the appeals filed by the respondent firm before the Sales Tax Appellate Tribunal were allowed by its order dated March 30, 1976 and the cases were remanded for fresh consideration.
The Revenue applied to the High Court in revision, Tax Revision Cases Nos. 6 and 9 of 1977, on the following two questions: (a) Was the Appellate Tribunal justified in law in holding that the reasoning in the decision reported in is applicable to the instant case and directing a further investigation and denovo disposal of the matter, in the light of the observations contained in paragraph 15 of the order ? (b) In the light of admitted or proved fact that the partners of the assessee 's firm and that of the firm K.K.K. Saw Mills are the same, was the Appellate Tribunal justified in its view that there is no bar in there being two firms with the same partners, carrying on business independently ? Is not the said 139 approach and view against the principles of Partnership Act, and the ratio of the decision reported in 21 STC 72 and ? On February 14, 1978, the High Court of Kerala dismissed the two revision petitions in the view that Messrs. K.K.K. Sons Saw Mills was a partnership firm distinct from the respondent firm for the purposes of sales tax assessment and the turnover of one could not be included in the turnover of the other.
Reliance was placed by the High Court on the decision of this Court in State of Punjab vs M/s Jullunder Vegetables Syndicare.(1) The word "dealer" has been defined by cl.
(viii) of section 2 of the Kerala General Sales Tax Act to mean "any person who carries on the business of buying, selling, supplying or distributing goods. " and the word "person" has been defined by cl.
(vvi A) of section 2 of the Act as including a firm.
Therefore, a partnership firm must be regarded under that Act as an assessable entity separate and distinct from its individual partners.
That would be in line with the view taken by this Court respecting a partnership firm as an assessable entity under the Income Tax Act.
See Commissioner of Income Tax, West Bengal vs A. W. Figgies and Company and Others(2).
The question remains, however, whether when the partners constituting a partnership firm carrying on one business constitute thereafter another partnership firm carrying on a separate and distinct business are there two distinct partnership firms in whose hand the turnover of the two businesses falls to be respectively assessed or is there in law only a single partnership firm liable to assessment on the turnover of both businesses ? Before we proceed to examine this question, reference may be made to some relevant decisions of the Courts.
In Vissonji Sons & Company vs Commissioner of Income Tax, Central,(3) a case under the Indian Income Tax Act, 1922, Beaumont C.J., speaking for the Bombay High Court, expressed the view that in law a firm had no existence independently of its partners, and that if there are two firms consisting of exactly the same partners and they carry on separate businesses, the real position in law is that there is only one firm.
140 Subsequently, however, in Jesingbhai Ujmashi vs Commissioner of Income Tax, Bombay Mofussil, (1) the same High Court speaking through Chagla C.J., observed that the observations of Beaumont C.J. were obiter merely, and that it was perfectly permissible in law that the same partners should constitute two different firms for the purpose of the Income tax law leaving the question open as one of fact whether there are two separate firms or only one firm or whether one of the businesses carried on by one firm was in fact a business carried on by the other firm.
That view was reaffirmed by the Bombay High Court in Jeshingbhai Ujamshi vs Commissioner of Income Tax, Bombay(2) where it was explained that there can be two separate firms in the eyes of the Income tax Act even if the partners are the same in both the firms provided the businesses carried on by the firms are different.
It was further observed that the correct test to determine whether the businesses are the same or different businesses is whether there is any interlocking or interlacing between the two businesses.
The point was considered by the High Court of Punjab and Haryana in R.N. Oswal Hosiery and Mahabir Woollen Mills vs Commissioner of Income Tax, Punjab, (8) which after considering the earlier authorities on the point concurred with the opinion of the Bombay High Court in Jeshingbhai Ujamshi (supra).
A contrary view was taken by a Division Bench of the High Court of Andhra Pradesh in Addl.
Commissioner of Income Tax, A.P. vs M. Venkata Narasimha Rao & Co.(4) but that decision was over ruled by a Full Bench of the same High Court in Commissioner of Income Tax, A.P. III vs G. Parthasarathy Naidu & Sons.(5) where the learned Judges agreed with the view expressed by the High Court of Bombay in Jeshingbhai Ujamshi (supra) and by the High Court of Punjab and Haryana in R.N. Oswal Hosiery and Mahabir Woollen Mills (supra).
This Court in The State of Punjab vs Jullunder Vegetables Syndicate (supra) declared that although under the partnership law a firm is not a legal entity and only consists of the individual partners for the time being, it was a legal entity for the purposes of the Income tax law as well as the Sales tax law.
That was a case where this Court was called upon to consider whether an assessment could be made on a firm under the Punjab Sales tax Act after its dissolution on the turnover of sales affected during its existence.
In our opinion, that question cannot 141 be identified with the one before us.
The Revenue has invited our attention to Mahendra Kumar Ishwarlal & Company vs The State of Madras,(1) but in that case the Madras High Court has assumed that the same partners cannot constitute two different partnership firms, and on that assumption has concluded that no sale transaction could take place between the two firms.
Except for the observations of Beaumont C.J. in Vissonji Sons Company (supra) and the overruled decision of the High Court of Andhra Pradesh in M. Venkata Narasimha Rao & Co. (supra) the High Courts, in the cases mentioned earlier, have proceeded to hold that in the eyes of the tax law you can have two partnership firm composed of the same partners carrying on different businesses.
The corner stone of that view is that for the purposes of the income tax law each partnership firm must be regarded as an assessable entity separate and distinct from its partners.
The approach proceeds upon a conceptual perspective of the tax law and apparently assumes that otherwise, under the partnership law, the conclusion would have been that there is only one partnership firm carrying on two different businesses.
It seems to us that the approach adopted by the High Courts is not sound, and that the true solution has to be found not in the tax law but in the partnership law.
We are concerned here with the Kerala General Sales tax Act.
There is no doubt that under that Act a partnership firm must be regarded as an assessable entity.
What precisely is the significance of that concept ? Does the tax law clothe a partnership firm with juristic personality ? How far does the tax law depart from the fundamental concept embodied in the partnership law that a business carried on by a partnership firm is, in its material essence, a business carried on by individual members in partnership, and that a name given to a partnership firm is nothing more than a compendious description of the partners carrying on the business ? As long ago as Watson and Everitt vs Blundan,(2) Romer L.J. said that for taxing purposes "a partnership firm is treated as an entity distinct from the persons who constituted the firm".
This 142 dictum was approved by the House of Lords in Income Tax Commissioners for City of London vs Gibbs,(1) and was accepted as good law in India in respect of a partnership firm under the Indian Income tax Act, 1922 in A. W. Figgies and Co. (supra).
What that implies is that for the purposes of assessment to tax the income of the partnership firm has to be assessed in the hands of the firm as a single unit, the firm itself being treated as an assessable entity separate and distinct from the partners constituting it.
The firm is an assessable unit separate and distinct from the individual partners, who as individuals constitute assessable units separate and distinct from the firm.
It is on that basis that the provisions of the tax law are structured into a scheme providing for the assessment of partnership income.
We do not think the principle goes beyond the purposes of that scheme.
It does not confer a corporate personality on the firm.
Beyond the area within which that principle operates, the general law, that is to say, the partnership law holds undisputed domain.
Now in every case when the assessee professes that it is a partnership firm and claims to be taxed in that status, the first duty of the assessing officer is to determine whether it is, in law and in fact, a partnership firm.
The definition in the tax law defines an "assessee" or a "dealer" as including a firm.
But for determining whether there is a firm, the assessing officer will apply the partnership law, subject of course, to any specific provision in that regard in the tax law modifying the partnership law.
If the tax law is silent it is the partnership law only to which he will refer.
Having decided the legal identity of the assessee, that it is a partnership firm, he will then turn to the tax law and apply its relevant provisions for assessing the partnership income.
The Kerala General Sales tax Act contains no provision which bears on the identity of a partnership firm.
Therefore, recourse must be had for that purpose to the partnership law alone.
Where it is claimed that they are not one but two partnership firms constituted by the same persons and carrying on different businesses, the assessing authority must test the claim in the light of the partnership law.
It is only after that question has been first determined namely, whether in law there is only one partnership firm or two partnership firms, that the next question arises : whether the turnover is assessable in the hands of the partnership firm as a taxable entity separate 143 and distinct from the partners ? There is first a decision under the law of partnership; thereafter, the second question arises, the question as to assessment under the tax law.
It is clear, therefore, that reference must be made first to the partnership law.
The has, by s.4, defined a "partnership" as "the relation between persons who have agreed to share the profits a business carried on by all or any of them acting for all".
The section declares further that the persons who have entered into partnership with one another are called individually "partners" and collectively "a firm".
The components of the definition of "partnership", and therefore of "a firm" consist of (a) persons, (b) a business carried on by all of them or any of them acting for all and (c) an agreement between those persons to carry on such business and to share its profits.
It is the relationship between those persons which constitutes the partnership.
The relation is founded in the agreement between them.
The foundation of a partnership and, therefore, of a firm is a partnership agreement.
A partnership agreement is the source of a partnership; it also gives expression to the other ingredients defining the partnership, specifying the business agreed to be carried on, the persons who will actually carry on the business, the shares in which the profits will be divided, and the several other considerations which constitute such an organic relationship.
It is permissible to say that a partnership agreement creates and defines the relation of partnership and therefore identifies the firm.
If that conclusion be right, it is only a further step to hold that each partnership agreement may constitute a distinct and separate partnership and therefore distinct and separate firms.
That is not to say that a firm is a corporate entity or enjoys a juristic personality in that sence.
The firm name is only a collective name for the individual partners.
But each partnership is a distinct relationship.
The partners may be different and yet the nature of the business may be the same, the business may be different and yet the partners may be same.
An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the profits therein.
The intention may be to constitute two separate partnerships and therefore two distinct firms.
Or to extend merely a partnership, originally constituted to carry on one business, to the carrying on of another business.
It will all depend on the intention of the partners.
The intention of the partners will have to be decided with reference to the terms of the agreement and all the surrounding circumstances, including evidence as to the interlacing or 144 interlocking of management, finance and other incidents of the respective businesses.
In the present case, there are two businesses, a business in timber and a business in saw dust.
Both businesses are carried on by the same partners, one as a partnership firm called K. Kelukutty, and the other under the name Messrs. K.K.K. Sons Saw Mills, said to be a separate partnership firm.
On the material before us it is not possible to say, in the light of the considerations to which we have adverted, whether there is one firm or two.
That is a question which appropriately falls for examination by the authorities constituted under the Kerala General Sales Tax Act.
While, therefore, we maintain the orders of the High Court dismissing the Tax Revision Cases 6 and 9 of 1977 and confirm the orders of the Sales Tax Appellate Tribunal remanding the cases, we do so for the considerations and upon the reasons set forth in this our judgment.
In order to abridge the time which inevitably will be further taken in disposing of this already protracted litigation, we direct that instead of the cases going back to the assessing officer they shall stand remanded to the Appellate Assistant Commissioner, Sales Tax for taking up the appeals before him again, permitting the parties to lead evidence in the light of the considerations mentioned by us and disposing of those appeals in accordance with law.
These appeals are disposed of accordingly.
There is no order as to costs.
N.V.K. Appeals dismissed.

dataset_name: IN-Abs

summary/full:
The respondent in the appeal was a partnership firm dealing in timber and consisted of six partners.
It filed returns of its taxable turnover for the assessment years 1968 69 and 1969 70 under the Kerala General Sales Tax Act, 1963 and the assessments were completed by the Sales Tax Officer.
Subsequently, the Sales Tax Officer discovered that the respondent firm owned a Saw Mill and that the Saw Mill was run by another partnership firm which consisted of the same partners as the respondent firm.
It was further noticed that during the relevant assessment years the Saw Mill firm had sold saw dust but had not been assessed to sales tax on that turnover.
The Sales Tax Officer took the view that both she respondents timber firm and the Saw Mill firm consisted of identical partners, the two businesses carried on respectively, by them had to be treated as the business of a single partnership firm and, therefore, the turnover of the sale of saw dust had to be included in the earlier assessments made on the respondent Timber firm.
The assessment orders were upheld by the Appellate Assistant Commissioner.
The appeals filed by the respondent Timber firm before the Sales Tax Appellate Tribunal were allowed and the cases were remanded for fresh consideration.
The Revenue applied to the High Court, but the revision petitions were dismissed.
The High Court relying on the decision of this Court in State of 136 Punjab vs M/s. Jullundur Vegetables Syndicate, [1966] 17 STC 326 held that the Saw Mill partnership firm was a partnership firm distinct from the respondent Timber firm for the purposes of sales tax assessment and the turnover of the one could not be included in the turnover of the other.
Dismissing the Appeals to this Court, ^ HELD: 1.
The approach adopted by the High Court is not sound.
The true solution has to be found not in the tax law but in the partnership law.
The orders of the High Court dismissing the Tax Revision Cases are maintained.
The orders of the Sales Tax Appellate Tribunal remanding the case are confirmed.
Instead of the cases going back to the assessing officer they shall stand remanded to the Appellate Assistant Commissioner.
[144 D E] State of Punjab vs M/s. Jullundur Vegetables Syndicate [1966] 17 S.T.C. 326, distinguished.
In every case when the assessee professes that it is a partnership firm and claims to be taxed in that status, the first duty of the assessing officer is to determine whether it is, in law and in fact, a partnership firm.
For determining whether there is a firm, the assessing officer will apply the partnership law, subject of course, to any specific provision in that regard in the tax law modifying the partnership law.
If the tax law is silent, it is the partnership law only to which he will refer.
Having decided the legal identity of the assessee, that it is a partnership firm, he will then turn to the tax law and apply its relevant provisions for assessing the partnership income.
142 D F] Commissioner of Income Tax, West Bengal vs A. W. Figgies and Company and Others, , Jesingbhai Ujamshi vs Commissioner of Income Tax, Bombay Mofussil, , Jeshingbhai Ujamshi vs Commissioner of Income Tax, Bombay, , R.N. Oswal Hosiery and Mahabir Woollen Mills vs Commissioner of Income Tax, Punjab, , Commissioner of Income Tax, A.P. III vs G. Parthasarathy Naidu & Sons.
, , Income Tax Commissioner for City of London vs Gibbs, 10 I.T.R. Suppl.
121, referred to.
In the instant case, there are two businesses, a business in timber and a business in saw dust.
Both businesses were carried on by the same partners, one as a partnership firm called K. Kelukutty, and the other under the name M/s. K.K.K. Sons Saw Mills, said to be a separate partnership firm.
On the material before the Court, it is not possible to say, whether there is one firm or two.
That is a question which appropriately falls for examination by the authorities constituted under the Kerala General Sales Tax Act, 1963.
144 B C] 3.
Having regard to the definitions of "dealer" and "person" in sections 2 (viii) and 2 (xvi A) of the Kerala General Sales Tax Act, 1963 a partnership firm must be regarded under that Act as an assessable entity separate and distinct from its individual partners.
However, the Act contains 137 no provision which bears on the identity of a partnership firm.
Therefore, recourse must be had for that purpose to the partnership law alone.
Where it is claimed that there are not one but two partnership firms constituted by the same persons and carrying on different businesses, the assessing authority must test the claim in the light of the partnership law.
It is only after that question has been determined namely, whether in law there is only one partnership firm or two partnership firms, that the next question arises: whether the turnover is assessable in the hands of the partnership firm as a taxable entity separate and distinct from the partner ? There is first a decision under the law of partnership, thereafter the second question arises, the question as to assessment under the tax law.
[139 C D; 142 G H; 143 A] 4.
Persons who have entered into partnership with one another are called individually "Partners", and collectively "a firm".
The relationship between those persons constitutes the partnership, and is founded in the agreement between them, the partnership agreement.
A partnership agreement is the source of a partnership, it also gives expression to the other ingredients defining the partnership, viz. specifying the business agreed to be carried on, the persons who will actually carry on the business, the shares in which the profits will be divided etc.
Each partnership agreement may constitute a distinct and separate partnership, and therefore distinct and separate firms.
The firm name is only a collective name for the individual partners but each partnership is a distinct relationship.
The partners may be different and yet the nature of the business may be the same.
An agreement between the partners to carry on a business and share its profits may be followed by a separate agreement between the same partners to carry on another business and share the profits therein.
The intention may be to constitute two separate partnerships and therefore two distinct firms.
Or to extend merely a partnership originally constituted to carry on one business to the carrying on of another business.
It will all depend on the intention of the partners.
The intention of the partners will have to be decided with reference to the terms of the agreement and all the surrounding circumstances, including evidence as to the interlacing or interlocking of management, finance and other incidents of the respective businesses.
[144 C H]


judgement:
Appeal No. 185 of 1952.
Appeal from the judgment and order dated December 15, 1948, of the Madras High Court in Appeal No. 155 of 1946 arising out of the decree dated October 27, 1945, in Original Suit No. 132 of 1944.
Alladi Kuppuswami and M. section K. Sastri, for the appellants.
T. V. R. Tatachari and T. M. Sen, for respondent No. 4. 1957.
May 10.
The Judgment of the Court was delivered by GAJFNDRAGADKAR J.
This is an appeal by defendants 47 and 48 and the principal question which is raised for our decision in the appeal is whether the properties in suit are the subject matter of public charitable trust or are merely burdened or charged with the obligation in favour of the specified charities.
The suit from which this appeal arises was filed with the sanction of the Collector under section 92 of the Cc de of Civil Procedure and the plaintiffs alleged that the properties in suit were the subject matter of a public charitable trust and that a scheme may be framed for the ad ministration of the said trust.
The present, appellants who are in possession of a substantial portion of the properties in suit as alienees have resisted this claim.
They conceded that the properties in their hands were subject to the charge in favour of the charities but they denied that the said properties were the subject matter of a charitable trust.
Several other pleas were made by the parties but the principal question in dispute between them was in regard to the character of the properties in suit.
Both the learned 1125 trial judge and the High Court of Madras have upheld the plaintiffs ' plea.
It has been declared that the properties in question are trust properties and a direction has been issued that a scheme of management should be framed in respect of the trust with a view to carry out the charitable intentions of the settlor.
It is this decree which is challenged before us by Mr. Alladi Kuppuswami on behalf of defendants 47 and 48 and his argument is that the view taken by the Courts below about the character of the properties is based upon a misconstruction of the decree in question.
In the plaint, it was alleged that one Purushottam had been earning and purchasing large properties and endowing and dedicating them for public charitable purpose since 1896.
In about 1919 Purushottam who had then become old wanted to place the charities which he had been till then personally administering on a permanent and enduring basis.
That is why he executed and registered a deed of trust on March 17, 1919.
By this document, a trust in respect of his properties was created and three trustees were appointed to administer the trust.
Purushottam himself was one of these trustees and two Advocates, Mr. Reballa Subbarayudu and Mr. C. Viswanadha Rao, were his co trustees.
It would appear that Purushottam 's son Ramakrishnayya did not approve of this arrangement and he began to obstruct the administration of the trust.
As a result of this obstructive attitude adopted by Ramakrishnayya, two suits had to be filed by the trustees against Ramakrishnayya and his associates who interfered with the management of the trust.
These two suits were O.S. No. 599 of 1919 and O.S. No. 68 of 1920 on the files of the District Munsiff 's Court, Kavali, and the District Court, Nellore, respectively.
They were subsequently transferred to the Sub Court, Nellore, and numbered as O.S. No. 39 of 1921 and O.S. No. 67 of 1921 in the said Court.
Pending the hearing of these suits, the two advocates trustees withdrew from the suits leaving the conduct of the suits solely in charge of Purushottam.
Ultimately the two suits ended in a compromise.
According to the plaint in the present suit out of the which this 1126 appeal has arisen, this compromise decree was fraudulent and collusive the object of the parties being to efface the character of the trust properties completely and to create individual rights in Purushottam, his son Ramakrishnayya and the other defendants who claimed to be alienees from Ramakrishnayya.
The plaint even alleged that, in persuading the Court to pass the said compromise decree, the parties effectively played fraud on the Court and the trust.
Since the compromise was thus null and void, it cannot affect the original trust created by Purushottam in 1919.
That is why the plaint alleged that the properties mentioned in sch.
A which were covered by the original deed of trust of 1919 were trust properties and asked in substance for the framing of a scheme for the administration of the said trust.
At the date of this suit both Purushottam and his son Ramakrishnayya were dead.
Ramakrishnayya 's son Ramalingeswara Rao was therefore impleaded as defendant No. 1.
A large number of defendants had to be impleaded to the suit because the properties had been alienated both by Ramakrishnayya and Ramalingeswara Rao to several purchasers.
Defendants 47 and 48 were two of such purchasers.
On June 7, 1942, an agreement of sale by defendant No. 1 in favour of defendants 47 and 48 was executed and a decree for specific performance was ultimately passed in their favour.
It was then that defendants 47 and 48 were impleaded to this suit on January 3, 1944.
These defendants substantially adopted the defence raised by the other contesting defendants who were already on the record.
The principal contention raised on their behalf was that the compromise decree was not fraudulent or collusive, that it represented a fair and bona fide family settlement between Purushottam and his son Ramakrishnayya and as such the decree was binding against Purushottam and the trust alleged to have been created by him in 1919.
On the pleadings of the parties, the learned trial judge framed ten issues.
He found that the suit was competent, that the compromise decree was not shown to be collusive or fraudulent and it was binding on the 1127 trust.
Even so, the said compromise decree itself created a trust in favour of public charities and in respect of the properties which had been allotted by" the compromise decree to the share of Purushottam.
It would be noticed that according to the plaint the trust for the administration of which a scheme was claimed by the plaintiffs was the trust created by Purushottam in 1919.
Since the learned trial judge held that this trust deed had been effectively substituted by the arrangement evidenced in the compromise decree, he proceeded to consider the effect of this compromise decree and since he thought that this compromise decree itself created a trust in substitution of the original trust of 1919 he proceeded to pass a decree in favour of the plaintiffs in respect of the substituted trust.
This decree was passed on October 27, 1945.
The matter was taken to the High Court of Madras by defendants 47 and 48.
On December 15, 1948, the appeal preferred by defendants 47 and 48 was dismissed and the decree passed by the trial Court was confirmed.
The learned Judges of the High Court of Madras dealt substantially with the question of the construction of the compromise decree and, since they came to the conclusion that the said decree constituted a public charitable trust in respect of the properties assigned to the share of Purushottam, they saw no reason to interfere with the decree under appeal.
Two other points were raised before the High Court.
They were, whether the obligation arising out of the trust is annexed to the property that fell to the share of Purushottam under the compromise decree and whether the said decree was collusive and not binding on the trust.
The High Court took the view that, since the.
compromise decree itself created a trust and it was possible to give relief to the plaintiffs on that view, it was not necessary to consider the said two points.
Defendants 47 and 48 then preferred the present appeal to this Court.
By our interlocutory judgment on March 30, 1955, we sent the case back to the High Court of Andhra with the direction that they should record their findings on the two additional points which were urged before them but on which they thought it 1128 unnecessary to make findings.
In pursuance of this interlocutory judgment, the High Court of Andhra to whom the proceedings were transferred owing to the creation of the new State of Andhra have now recorded their findings on the two issues in question.
They have held that the obligation in question is annexed to the property that fell to the share of Purushottam under the compromise decree and they have found that the said compromise decree was not collusive and was binding on the trust.
That is how the principal question which we have to consider in the present appeal is the construction of the compromise decree in question.
The principles of Hindu Law applicable to the consideration of questions of dedication of property to charity are well settled.
Dedication to charity need not necessarily be by instrument or grant.
It can be established by cogent and satisfactory evidence of conduct of the parties and user of the property which show the extinction of the, private secular character of the property and its complete dedication to charity.
On the other hand, in many cases Courts have to deal with grants or gifts showing dedication of property to charity.
Now it is clear that dedication of a property to religious or charitable purposes may be either complete or partial.
If the dedication is complete, a trust in favour of public religious charity is created.
If the dedication is partial, a trust in favour of the charity is not created but a charge in favour of the charity is attached to, and follows, the property which retains its original private and secular character.
Whether or not dedication is complete would naturally be a question of fact to be determined in each case in the light of the material terms used in the document.
In such cases it is always a matter of ascertaining the true intention of the parties; it is obvious that such intention must be gathered on a fair and reasonable construction of the document considered as a whole.
The use of the word "trust" or "trustee" is no doubt of some help in determining such intention; but the mere use of such words cannot be treated as decisive of the matter.
Is the private title over the property intended 1129 to be completely extinguished ? Is the title in regard to the property intended to be completely transferred to the charity ? The answer to these questions can be found not by concentrating on the significance of the use of the word "trustee" or "trust" alone but by gathering the true intent of the document considered as a whole.
In some cases where documents purport to dedicate property in favour of public charity, provision is made for the maintenance of the worshipper who may be a member of the family of the original owner of the property himself and in such cases the question often arises whether the provision for the maintenance of the manager or the worshipper from the income of the property indicates an intention that the property should retain its original character and should merely be burdened with an obligation in favour of the charity.
If the income of the property is substantially intended to be used for the purpose of the charity and only an insignificant and minor portion of it is allowed to be used for the maintenance of the worshipper or the manager, it may be possible to take the view that dedication is complete.
If, on the other hand, for the maintenance of public charity a minor portion of the income is expected or required to be used and a substantial surplus is left in the hands of the manager or worshipper for his own private purposes, it would be difficult to accept the theory of complete dedication.
It is naturally difficult to lay down a general rule for the solution of the problem.
Each case must be considered on its facts and the intention of the parties must be determined on reading the document as a whole.
In Maharani Hemanta Kumari Debi vs Gauri Shankar Tewari and Others (1), Sir George Rankin, who delivered the judgment of the Board has observed, "In the usual case of complete dedication made to an idol, for example, the property ceases altogether to belong to the donor, and becomes vested in the idol as a juristic person.
Complete relinquishment by the owner of his proprietary right is, however, by no means the only form of dedication known to Hindu law, and is (1) (1940) L.R. 68 I.A. 53, 63.
145 1130 very different from anything that could ordinarily be inferred from the public user of a highway.
From the standpoint of the Hindu law 'it is not essential to a valid dedication that the legal title should pass from the owner, nor is it inconsistent with an effectual dedication that the owner should continue to make any and all uses of the land which do not interfere with the uses for which it is dedicated ' per Mookerjee J. in Chairman of the Howrah Municipality vs Khetra Krishna Mitra (1).
" The learned Judge has further added that when the dedication is only partial the property in some parts of India might none the less in Common parlance be described as debotter, but whether it be charged with a sum of Money for the worship of an idol or be subjected to a right of limited user on the part of the public,it would descend and be alienable in the ordinary way.
The only difference, as Mr. Mayne observes, is that it passes with it a charge upon it.
In Jadu Nath Singh vs Thakur Sita Ramji (2) the Privy Council was dealing with a deed of dedication which provided that after the death of the grantor certain female members of his family should succeed him as managers, that half the income should be enjoyed by the managers without power of alienation, that upon the death of the named managers the Government should become manager and the whole net income should then be applied to the expenses of the temple.
The Privy Council held that the deed was a valid endowment of the whole property to the temple and that the donor had no rights in it against either the idol or the managers.
Dealing with the argument that in the hands of the female members of the grantor 's family liberty was given to the said members to enjoy half the income, Lord Haldane observed that " If the income of the property had been large, a ques tion might have been raised, in the.
circumstances, as throwing some doubt upon the integrity of the settler 's intention, but, as the entire income is only 800 rupees, it is obvious that the payment to these ladies is of the most trifling kind, and certainly not an amount which one would expect in a case of that kind." Lord (1) , 348.
(2) (1917) L.R. 44 I.A. 187, 190.
1131 Haldane then emphasized the clear expression of the initial intention of the donor to apply the whole estate of the donor to the benefit of the temple and he added that the rest is only a gift to the idol sub modo by a direction that of the whole which had already been given part is to be applied for the upkeep of the idol itself and the repair of the temple and the other is to go for the upkeep of the managers.
That is how in the end it was held that the document showed complete dedication in favour of the idol.
In Pande, Har Narayan vs Surja Kunwari (1), the Privy Council has observed that in determining whether the will of a Hindu gives the testator 's estate to an idol subject to the charge in favour of the heirs of the testator or makes the gift to the idol a charge upon the estate, there is no fixed rule depending upon the use of particular terms in the will.
The question depends upon the construction of the will as a whole.
In this particular case, though the will had provided that the property of the testator shall be considered to be property of a certain idol, there were further provisions which showed that the residue after defraying the expenses of, the temple shall be used by the testator 's legal heirs to meet their own expenses and it appeared that only a small proportion of the total income could be utilised for the idol whereas a large balance was available to the heirs.
On these facts, it was held by the Privy Council that the intention disclosed by the document was that the heirs should take the property subject to the charge for the performance of the religious purposes named in the will.
Lord Shaw, who delivered the judgment of the Board, cited with approval the earlier observations of Turner L. J. in Sonatun Bysack vs Sreemutti Juggutsoondree Dossee (2 ).
Turner L. J. had stated: " although the will purports to begin with an absolute gift in favour of the idol, it is plain that the testator contemplated that there was to be some distribution of the property according as events might turn out; and that he did not intend to give this property absolutely to the idol seems to their Lordships to be clear from the directions (1) (1921) L.R. I.A. 143.
(2) 8 Moo.
I. A. 66. 1132 which are contained in the various clauses of the will.
" Similarly, in Gopal Lal Sett vs Purna Chandra Basak(1), the Privy Council held that the will of the Hindu testatrix with which they were concerned in this case conferred the properties specified on the grandson charged with the maintenance of the worship but that no shebaitship was created.
The will in question had provided that out of the income of the specified property, her grandson should perform the worship of certain family idols and that he should be in charge of the worship.
The will contained no gift, express or implied, to the idols, and there was no provision for the worship after the death of the grandson.
It is in the light of these decisions that we will have to construe the compromise decree in the present case.
Before considering the terms of the compromise decree, however, it would be relevant to mention some more facts.
After Purushottam had executed a deed of trust in 1919, troubles arose in his own family.
His son apparently began to assert his share in the property which was the subject matter of the said trust and he actually started to alienate his alleged undivided share in the said property.
That indeed was the genesis of the two suits initially filed by the three trustees in 1919 1920.
In O.S. No. 30 of 1921 itself, an alternative claim appears to have been made by Purushottam when he was left in sole charge of the suit after the withdrawal from the suit by his co trustees.
He claimed a declaration that he was entitled to recover the possession of the property as mentioned in sch.
A and A 1 of the claim, or, in the alternative, that he should be declared to be entitled to the title of the property jointly with his son Ramakrishnayya and the partition in the two shares of the same may be directed and he may be put in possession of such property as would fall to his share.
In other words, the first claim was based on the validity of the original trust deed created by Purushottam and the second )#as based on the assumption that the trust was not valid, that the property, the subject matter of the said trust was liable to be divided between (1) (1921) L.R. 49 I.A. 100.
1133 Purushottam and his son and a prayer was made that Purushottam should be allotted his share by a partition of all the property by metes and bounds.
As a result of the compromise decree passed in this suit, the property over which Purushottam had created a trust in 1919 was divided between himself and his son Ramakrishnayya and some of the property which was not included in the trust deed of 1919 but which was also the subject matter of the suit itself was allotted to the share of Purushottam.
The property thus allotted to the share of Purushottam formed part of sch.
1 and it is in respect of this property that a public charitable trust has been created according to the findings of the Courts below.
For the appellants, it is urged before us that this view is erroneous.
We will now consider the relevant terms of the compromise decree.
Clause (1) of the decree provides that the property described in sch. 1 attached to the decree should go to the share of the third plaintiff, viz., Purushottam.
It appears that four items included in sch.
1 had been sold by defendant I to defendants 13 and 14.
These alienees, however, agreed to give up their claim in respect of these properties.
Clause (1) then reads as follows: "that as regards the aforesaid schedule property, the third plaintiff should be the ' sole trustee ' till his lifetime for the purpose of conducting the charities described in the trust deed, dated 17th March, 1919, and he should utilise the income derived therefrom, for the charities according to the necessity and should enjoy the said property till his lifetime without rights to gift, sale etc.
, therein; that after his death, the said entire property should pass on to his grandson Ramalingeswara Rao subject to the (performance of) the aforesaid kainkaryams (charities); that if the third plaintiff should die before the expiry of the minority of the aforesaid Ramalingeswara Rao arrangement should be made to have a guardian appointed through Court for the property made to pass to the said Ramalingeswara Rao the ,said guardian should take possession of the property 1134 and conduct the aforesaid charities and deliver possession of the same to the said Ramalingeswara Rao as soon as the minor attains majority; that, thereafter the said Ramalingeswara Rao should conduct the above mentioned charities and enjoy the properties;" Then cls.
(2) and (3) deal with the claims of defendant 1 and defendants 10, 11 and 12.
Clause (4) directs that the properties allotted to the share of the third plaintiff should be immediately delivered to him by the defendants; and el.
(5) provides that the third plaintiff should give up all other claims in respect of the suit and the parties should bear their own respective costs.
At this stage it may be relevant to refer to the particulars of charities for whose benefit admittedly the decretal provision in el.
(1) has been made.
These particulars are mentioned in para.
6 of the original deed of trust and it is not disputed that the burden imposed by cl.
(1) of the decree is in favour of the same charities.
These charities are nine in number and they are thus enumerated in the deed of trust: "(1) In the choultry constructed in the land in Survey No. 81, all persons who pass to and fro in Doranala Road, should be given drinks to quench thirst, everyday two brahmin travellers should be given food at noon.
(2) For the purpose of Mahanaivaidyam (food offering) taking place every night to Sree Malleswaraswami Varu enshrined in the aforesaid Damaramadugu village, 12 tooms of paddy and Rs. 6 in cash should be given to the trustee of the said Devasthanam.
(3) During the time of Brahmotsavam of Sri Malleswaraswami and Sri Kamakshi Thayi Garu, in Jonnavada which is taking place every year, Rs. 10 (rupees ten) should be paid every year in respect of the Ravana Seva Ubbayam that is being conducted by the Damaramadugu villagers.
(4) During the Brahmotsavam time of Sri Jonnavada Kamakshi Thayi that takes place every year, 1135 Rs. 40 (rupees forty) should be spent for 'Ekanthaseva ' and the trustees should be present and see that the said Ubbayam is properly conducted.
(5) Rs. 12 should be paid every year towards Deeparadhana expenses during nights to Sri Veeranjaneyaswami Varu enshrined in Pata Santhapeta, Nellore, to the trustee of the said Devasthanam.
(6) From out of the said fund, Rs. 42 per year should be paid to poor Brahmin boys reading in classes commencing from fourth form and upward in the High School, towards the school fees.
Now, this amount shall be paid to Amperayani Venkatakrishnayya who is reading in the Kurnool School, till he stops his study; and after he stops his study, the then trustees are hereby empowered to give the money to poor Brahmin boy whom they consider as the suitable recipient.
(7) If there should be difference of opinion, on any matter relating to the management of the aforesaid charities, the opinion of the majority trustees shall prevail and it will be given effect to.
(8) The trustees shall exercise all powers in the matter of the management of these charities, viz., to appoint the necessary staff; to remove them; to suspend them; to impose fine; and to make all arrangements for the staff to discharge their duties efficiently.
(9) The trustees are fully empowered to now and then grant cowles in respect of the schedule mentioned property to individuals and to have muchilikas executed and in the event of any disputes arising at any time through any person, in respect of the said property, to institute and conduct suitable proceedings in proper Courts, to get over such disputes; and also to incur the necessary expenditure from out of the income from the aforesaid endowments.
" It would be clear that el.
(1) of the compromise decree is the foundation of the theory, that a public trust had been created in respect of the properties allotted to the share of Purushottam.
In dealing with this clause, the High Court of Madras appears to have attached considerable importance to the fact that 1136 Purushottam had already, in unequivocal terms, expressed his intention to create a trust of his own properties in 1919.
There is no doubt that the document of 1919 creates a public charitable trust.
In construing cl.
(1) of the compromise decree, the learned Judges of the High Court of Madras appear to have assumed that this clause was really intended to confirm the earlier creation of the trust though in respect of different properties.
With respect, in making this assumption, the learned Judges appear to have over looked the sharp distinction between the words used in the trust deed of 1919 and in cl.
(1) of the compromise decree.
The trust deed had appointed three trustees and by cl.
(12) had specifically provided that the amounts described in the schedule and the income that will increase and accrue in future shall be utilised for the above charities only and it shall not be used for private purposes.
In other words, el.
(12) emphatically prohibits the use of the income from the property for any private purpose and in terms dedicates entirely the whole of the property and its income for public charitable purposes.
Clause (3) of the trust deed had appointed three trustees, had provided for the management of the trust and the keeping of the accounts.
Under this clause, all the trustees should join together and hold a meeting once a month in the choultry and examine the accounts and consider the other details of management.
The deed has further provided for the appointment of other trustees in case of vacancy occurring either by death or resignation.
Now let us look at cl.
(1) in the compromise decree.
It is true that the third plaintiff is described in this clause as the sole trustee till his lifetime.
It is also true that, as the sole trustee, he is allowed to enjoy the said property till his lifetime " without rights to gift, sale etc., in the same.
" The use of the word "sole trustee" is no doubt relevant and its full effect must be taken into account but its significance cannot be exaggerated.
It is really difficult to understand how a sole trustee could enjoy the property.
The enjoyment of the property inevitably suggests the right to enjoy the property in one 's right and this notion is not easily 1137 reconcilable with the theory of complete dedication of the property in favour of charity.
Even so, we will assume that the use of the word " sole trustee " is a factor in favour of the plaintiffs.
In the same clause, there is, however, another indication which is inconsistent with this theory of complete dedication.
The income of the property has to be utilised for charities according to the necessity.
The contrast between this provision and the provision in cl.
(12) of the earlier deed of trust is obvious.
Whereas, under the earlier deed the whole of the income had to be utilised only for the purpose of charity, under el.
(1) of the decree a part of the income is to be utilised according to the need of the charity.
Then, after the death of Puru shottam, the clause provides that the property should pass on to his grandson Ramalingeswara Rao subject to the purpose of the aforesaid charities.
The notion that the property has to pass from Purushottam to Ramalingeswara Rao is consistent with Purushottam 's title to the property and is inconsistent with the title of the idol in the said property.
This clause about the devolution of the title in favour of the grandson clearly and unequivocally suggests that all that Purushottam wanted to achieve by this clause was to leave his private title unimpaired except with the burden or charge in favour of charity.
This clause can be contrasted with cl.
(4) of the trust deed which provides for the subsequent appointment of trustees.
Then the provision about the appointment of the guardian of Ramalingeswara Rao during his minority is also inconsistent with the theory of complete dedication.
It is difficult to appreciate how a guardian of a minor trustee can be appointed in this way in respect of properties which do not belong to the minor but are trust properties.
It is, however, urged that Purushottam as the sole trustee is positively prohibited from making the gift of the property or selling the property by the first part of el.
(1) and that Prima facie indicates that Purushottam was not an absolute owner of the property; but in judging the effect of this prohibition, we cannot lose sight of the fact that a similar prohibition is not included in the decree when the decree deals 146 1138 with the rights of the grandson of Purushottam.
Reading the clause as a whole, it seems to us fairly clear that Purushottam wanted the property to devolve on his grandson and treated the property as his private property in that behalf.
Since that was the intention of Purushottam no restraint has been imposed on the absolute title of Ramalingeswara Rao and he has been apparently given full liberty to deal with the property as he likes except that he was under an obligation to the charity in question.
The last portion of the clause authorises Ramalingeswara Rao to conduct the above mentioned charities and to enjoy the property.
This clause again is wholly inconsistent with the theory of complete dedication and merely suggests that in the hands of Ramalingeswara Rao as well as in the hands of his successors or transferees the property would stand burdened with the obligation to perform the charities in question.
We have carefully considered the terms of cl.
(1) of this decree and we are satisfied that it is difficult to hold on these terms that the property allotted to the share of Purushottam under the decree was intended to be completely dedicated in favour of charities.
In our opinion, the learned Judges of the High Court of Madras were in error in construing this clause as evidencing the creation of a public charitable trust.
We are satisfied that the properties continue to be the properties of Purushottam until his death and on his death they devolved upon his grandson Ramalingeswara Rao subject always to the burden of performing the charities mentioned in the earlier deed of trust.
For the Advocate General of Andhra who has been allowed to represent charities in the present case after the death of the original plaintiffs, Mr. Tatachari has urged that even though the compromise decree may not indicate the creation of a public trust that would not necessarily defeat the plaintiffs ' claim.
He contends that the trust of 1919 which had been validly created by Purushottam cannot be effectively effaced by the subsequent compromise decree between Purushottam and his son and the alienees from his son.
Mr. Tata chari has referred us to the material allegations in the 1139 plaint where it has been suggested that in agreeing to the compromise decree Purushottam was in substance guilty of breach of trust.
We do not propose to consider the merits of this interesting argument because, in our opinion, it is too late for the plaintiffs to raise such a point.
We have already mentioned that one of the issues specifically raised between the parties in the present litigation was in regard to the nature and effect of the compromise decree.
In fact we have already indicated that, when we found that the learned Judges of the High Court of Madras had not considered this issue, by our interlocutory judgment we invited the High Court to consider this issue along with another.
The position now is that both the Courts below have found that the compromise decree was not collusive or fraudulent 'and it binds the trust.
The respondent has not filed any objection to the finding submitted by the High Court of Andhra in pursuance to our interlocutory judgment.
Indeed, if the plaintiffs had adhered to their original case they should have insisted upon obtaining a decree for a scheme of the original trust of 1919.
It is true that a decree for a scheme was passed in favour of the plaintiffs but this decree was passed on the assumption that a subsequent compromise decree had created a public trust.
It is clear from the plaint that the plaintiffs had not alternatively asked for a scheme of the subsequent trust.
That being so, it was really necessary for the plaintiffs to have preferred an appeal against the trial Court 's decree and urged that the original trust deed had not been effaced and that it was still subsisting not with standing the compromise decree and that a scheme should be framed in respect of the said original trust.
It appears that the plaintiffs were content to acquiesce in the finding that the subsequent compromise decree bound the original trust deed and, as matters then stood, it did not make any practical difference to the plaintiffs ' case because they got a scheme for the administration of the trust though new properties were substituted for the old to constitute the subject matter of the trust; but in law the conduct of the plaintiffs amounted to an admission that the compromise decree 1140 offaced the original trust in that the properties of the trust were changed in the manner indicated in the decree.
Before the High Court of Madras, the only point which the plaintiffs urged was that the compromise decree created a trust.
It is true that this compromise decree was intended for the benefit of the charities covered by the earlier deed of trust and the argument was that the properties which were allotted to the share of Purushottam by the compromise decree should be deemed to have been substituted for the original properties of the trust.
Having adopted this attitude it is now not open to the plaintiffs to contend that the terms of the compromise decree do not bind the trust, that the decree per se constituted a breach of trust and that the original trust is wholly unaffected by whatever Purushottam did in the subsequent litigation.
In our opinion, therefore, it is unnecessary to consider the merits of the contention which Mr. Tatachari attempted to raise before us.
Since we hold that the compromise decree had not created a public trust, it is unnecessary to consider any other point.
We wish to make it clear that Mr. Alladi Kuppuswami expressly told us that his clients have always agreed that the properties in their hands are burdened with the obligation to discharge the charities mentioned in the deed of trust executed by Purushottam in 1919.
We accordingly declare that the properties in the hands of the appellants are subject to the charge in favour of the said charities.
However since the plaintiffs ' case for a scheme has failed the appeal must be allowed and the plaintiffs ' suit dis missed.
As the Advocate General has appeared before us to support the case of the charities, we direct that the parties should bear their costs throughout.
Appeal allowed.

summary/full:
A Hindu father executed a registered deed of trust giving away his properties to public charities and appointed himself and two others as trustees.
The son in assertion by his right to a moiety share therein started to alienate them.
There was litigation between the trustees and the son which ultimately ended in a compromise decree for partition between the father and the son, the two other trustees having retired pending litigation.
After the death of both the father and the son a suit was brought under 1123 section 92 of the Code of Civil Procedure for the framing of a scheme for the administration of the trust.
The trial court held that the trust deed had been substituted by the compromise decree which itself created a trust and decreed the suit on that basis.
On appeal by two of the defendants who were transferees in possession of some of the properties in suit, the High Court affirmed the decision of the trial court holding that the compromise decree created a trust for public charities in respect of the properties allotted to the third plaintiff, meaning the father.
The said defendants appealed to this Court.
The principal question for decision was one of construction of the compromise decree, whether it created a trust or a charge.
The relevant terms of the compromise decree were as follows: " that as regards the aforesaid schedule property, the third plaintiff should be the 'sole trustee ' till his lifetime for the purpose of conducting the charities described in the trust deed, dated 17th March, 1919, and he should utilise the income derived therefrom for the charities according to the necessity and should enjoy the said property till his lifetime without rights to gift, sale etc.
, therein ; that after his death, the said entire property should pass on to his grandson Ramalingeswara Rao subject to the (performance of) the aforesaid kainkaryams (charities) ; that if the third plaintiff should die before the expiry of the minority of the aforesaid Ramalingeswara Rao arrangement should be made to have a guardian appointed through Court for the property made to pass to the said Rainalingeswara Rao, the said guardian should take possession of the property and conduct the aforesaid charities and deliver possession of the same to the said Ramalingeswara Rao as soon as the minor attains majority ; that, thereafter the said Ramalingeswara Rao should conduct the above mentioned charities and enjoy the properties :" Hald, that the courts below were in error in construing the compromise decree in the way they did and the appeal must succeed.
There can be no doubt from the terms of the compromise decree read as a whole that what was intended to be created was a charge and not a trust in respect of the properties allotted to the father which retained their private character.
The principles of Hindu Law applicable to questions relating to charitable trust are well settled.
Whether or not a dedication to charity is complete must depend on the intention of the donor which has to be gathered from the terms of the document in any particular case read as a whole.
If the dedication is complete, a trust is created, if not, a charge follows.
The mere use of the word 'trust ' or 'trustee ' cannot by itself be conclusive as to the intention of the donor and the real test is whether private title 1124 over the property is sought to be extinguished by a complete transfer of it to the charity.
Maharani Hemanta Kumati Debi vs Gauri Shankar Tewari, (1940) L. R. 68 I.A. 53, Jadu Nath Singh vs Thakur Sita Ramji, (1917) L.R. 44 I.A. 187, Pande Har Narayan vs Surja Kunwari, (1921) L.R. 48 I.A. 143, Sonatun Bysack vs Sreemutti juggul soondyee Dossee, 8 Moo.
I.A. 66 and Gopal Lal Sett vs Purna Chandya Basak, (1921) L.R. 49 I.A. 100, applied.