judgement:
iminal Appeal No. 8 of 1966.
Appeal by special leave from the judgment and order dated April 29, 1965 of the Punjab High Court, Circuit Bench at Delhi in Criminal Appeal No. 164 D of 1962.
Bishan Narain, K. K. Raizada and A. G. Ratnaparkhi, for the appellant.
Sardar Bahadur and Yougindra Khushalani, for respondent No. 1.
R. N. Sachthey, for respondent No. 2.
The Judgment of the Court was delivered by Ramaswami, J.
On August 29, 1960 Shri Sham Sundar Mathur, Municipal Prosecutor of the Delhi Municipal Corporation filed a complaint in the court of Magistrate First Class against the respondent, Jagdishlal under section 7 read with section 16 of the (37 of 1954).
In the said complain Shri Sham Sundar Mathur said that lie was competent to file the complaint under section 20 of the aforesaid Act in accordance with a resolution passed by the Corporation in its meeting held on December 23, 1968.
By his order dated April 30, 1962 the learned Magistrate acquitted the respondent.
The Delhi Municipal Corporation made an application to the High Court asking for special leave under section 417 of the Code of Criminal Procedure to appeal against the order of acquittal.
The application was ranted on September 3, 1962.
When the appeal came up for hearing a preliminary objection was raised on of the respondent that the only person competent to file the appeal was the complainant, Shri Sham Sundar Mathur.
But the leave application was not filed by him and, therefore, the Municipal Corporation was not competent to prosecute the appeal.
It was contended that only the complainant was competent to present an application for special leave under section 417(3) of the Code of Criminal Procedure.
As the complainant in this case was Shri Sham Sundar Mathur the appeal could not be filed by the Delhi Municipal Corporation.
The High Court upheld the preliminary objec tion of the respondent and dismissed the appeal by its order dated April 29, 1965.
This appeal is brought by special leave on behalf of the Delhi Municipal Corporation against the judgment of the High Court dated April 29, 1965 in Cr.
No. 163 D of 1962.
Section 20 of the states : 581 " (1) No prosecution for an offence under this Act shall be instituted except by, or with the written consent of, the Central Government or the State Government or a local authority or a person authorised in this behalf, by general or special order, by the Central Government or the State Government or a local authority : Provided that a prosecution for an offence under this Act may be instituted by a purchaser referred to in section 12, if he produces in court a copy of the report of the public analyst along with the complaint.
Section 417, sub sections
(1), (2) and (3) of the Code of Criminal Procedure after its amendment by Act 26 of 1955 provide : " (1) Subject to the provisions of sub section (5), the State Government may, in any case, direct the Public Prosecutor to present an appeal to the High Court from an original or appellate order of acquittal passed by any Court other than a High Court.
(2)If such an order of acquittal is passed in any case in which the offence has been investigated by the Delhi Special Police Establishment constituted under the (XXXV of 1946), the Central Government may also direct the Public Prosecutor to present an appeal to the High Court from the order of acquittal.
(3)If such an order of acquittal is passed in any case instituted upon complaint and the High Court, on an application made to it by the complainant in this behalf, grants special leave to appeal from the order of acquittal, the complainant may present such an appeal to the High Court.
The principal question to be determined is whether the com plaint dated August 29, 1960 was instituted by the Delhi Municipal Corporation.
It is argued on behalf of the respondent that the complaint petition was not made and signed by the person competent under the Delhi Municipal Corporation Act, 1957 to exercise powers of the, Corporation in the matter of institution of legal proceedings.
In our opinion there is substance in this contention.
The only provision under the Delhi Municipal Corporation Act, 1965 which confers power to institute legal proceedings is section 476(1) (h) which states 582 "(1) The Commissioner may (h)institute and prosecute any suit or other legal proceeding, or with the approval of the Standing Committee withdraw from or compromise any suit or any claim for any sum not exceeding five hundred rupees which has been instituted or made in the name of the Corporation or of the Commissioner; It is clear that the phrase "other legal proceedings" includes the power to institute a complaint before a Magistrate and hence it is the Commissioner alone who could exercise the power as there is no other provision in the Act which confers such power on anyone else.
This view is supported by the decision of this Court in Bailavdas Agarwala vs J. C. Chakravarty(1) in which it was pointed out that a complaint under The Calcutta Municipal Act, 1923 as applied to the Municipality of Howrah, would only be filed by the au thorities mentioned therein and not by an ordinary citizen.
Section 537 of that Act provided that the Commissioners may institute, defend or withdraw from legal proceedings under the Act; under section 12 the Commissioners can delegate their functions to the Chairman, and the Chairman may in his turn delegate the same to the Vice Chairman or to any municipal officer.
It was observed in that case that the machinery provided in the Act must be followed in enforcing its provisions, and it was against the tenor and scheme of the Act to hold that section 537 was merely enabling in nature.
The principle invoked in that case was that adopted by the Privy Council in Nazir Ahmad vs King Emperor (2) viz. : that where a power is given to do a certain thing in a certain way, the thing must be done in that way or not at all.
It was, therefore, held that if a legal proceeding was instituted under the Municipal Act in question, it must be done in accordance with the provisions of the Act and not otherwise.
But the question presented for determination in the present appeal is somewhat different.
Under section 20 of Act 37 of 1954 the prosecution for the offence may be instituted either (a) by the Central Government or the State Government or a local authority or (b) a person authorised in that behalf by general or special order by the Central Government or the State Government or a local authority.
Section 2(vii) of Act 37 of 1954 defines a "local authority" to mean "in the case of a local area which is a (1) ; (2) 63 I.A. 372 at 381.
583 pality, the municipal board or municipal corporation.
" A complaint under section 20 of the Act may, therefore, be instituted either by the Municipal Corporation or by a person authorised in its behalf by general or special order by the Municipal Corporation.
The Resolution of the Delhi Municipal Corporation dated December 23, 1958 reads as follows "Subject : Authorising the Municipal Prosecutor and the Assistant Municipal Prosecutor to launch Prosecutions under section 20 of the .
The area under the jurisdiction of the Delhi Municipal Corporation has been declared a "local area" under section 2(vii) of the vide Chief Commissioner 's Notification No, F.32(30) 58 M and PH(i) dated 13th June, 1958 published in the Delhi Gazette (Part IV) dated 26th June, 1959 and consequently the Municipal Corporation of Delhi is the Local Authority for that area within the meaning of section 2(vii) of the said Act.
Section 20 of the contemplates the appointment of persons who shall be authorised to institute prosecutions under this Act by the Local Authority concerned.
Shri Sham Sundar Mathur, M.A., LL.B., Municipal Prosecutor and Shri Bankey Behari Tawkley, Assistant Municipal Prosecutor were authorised by the erstwhile Delhi Municipal Committee tinder the above section." "Shri Vijay Kumar Malhotra moved the following resolution, which was seconded by Shri Prem Sagar Gupta Resolved that the recommendations of the Commissioner vide letter No. 139/Legal/58 dated 1 12 58 regarding authorising the Municipal prosecutor and the Assistant Municipal Prosecutor to launch prosecutions under section 20 of the be approved.
The resolution was carried.
" In the present case Shri Sham Sundar Mathur, Municipal Prosecutor filed the complaint under section 20 of Act 37 of 1954 under L14Sup.
C.I/69 8 584 the authority given to him by the resolution of the Municipal Corporation.
Since the Municipal Corporation, Delhi, is a local authority within the meaning of section 20 of Act 37 of 1954 and since it conferred authority on the Municipal Prosecutor the complaint was properly filed by Sham Sundar Mathur.
The question is whether the Delhi Municipal Corporation or Shri Mathur was the complainant within the meaning of section 417(3) of the Code of Criminal Procedure.
It was argued on behalf of the respondent that the complainant was Shri Sham Sundar Mathur, the Municipal Prosecutor and the Delhi Municipal Corporation was not competent to make an application for special leave under section 417(3), Cr.
P.C. We are unable to accept this argument as correct.
It is true that Shri Sham Sundar Mathur filed the complaint petition on August 29, 1960.
But in filing the complaint Shri Mathur was not acting on his own personal behalf but was acting as an agent authorised by the Delhi Municipal Corporation to file the complaint.
It must, therefore, be deemed in the contemplation of law that the Delhi Municipal Corporation was the complainant in the case.
The maxim qui per alium facit per seipsum facere videtur (he who does an act through another is Jeemed in law to do it himself) illustrates the general doctrine on which the law relating to the rights and liabilities of principal and agent depends.
We are, therefore, of opinion that Shri Mathur was only acting in a representative capacity and that the Delhi Municipal Corporation was the complainant within the meaning of section 417(3) of the Code of Criminal Procedure and the petition for special leave and the appeal petition were properly instituted by the Delhi Municipal Corporation.
For these reasons we allow the appeal, set aside the judgment of the High Court dated April 9, 1965 and direct that the appeal should be remanded to the High Court for being heard afresh and disposed of according to law.
G.C. Appeal allowed.

summary/full:
A complaint under section 7 read with section 16 of the Prevention of Food Adulteration Act, 1964 was filed against the respondent.
It was filed by the Municipal Prosecutor who had been authorised to file such complaints by a resolution passed by the appellant corporation under section 20 of the aforesaid Act.
On the respondent being acquitted the appellant corporation filed an application in the High Court for special leave to appeal under section 417 of the Code of Criminal Procedure.
The application was allowed.
When the appeal came up for hearing a preliminary objection was raised by the respondent that the complaint having been filed by the Municipal Prosecutor the corporation was not a 'complainant ' within the meaning of section 417(3) of the Code of Criminal Procedure and therefore special leave to appeal should not have been granted.
The High Court upheld the preliminary objection and dismissed the appeal.
By special leave the corporation appealed to this Court.
HELD : (i) Under section 476(1)(h) of the Delhi Municipal Corporation Act the person competent to institute legal proceedings is the Commissioner.
However the present case was governed not by that provision but by section 20 of the Prevention of Food Adulteration Act, 1964 which provides that a prosecution under that Act may be instituted "by the Central Government or the State Government or a local authority or a person authorised in this behalf, by general or special order by the Central Government or the State Government or a local authority".
Section 2(vii) of the Prevention of Food Adulteration Act defines a "local autho rity" to mean "in the case of a local area which is a municipality, the municipal board or municipal corporation".
The Delhi Municipal Corporation was a local authority within the meaning of section 20, [581 H; 582 C, G H; 584 A] (ii)The Municipal Prosecutor had filed the complaint against the respondent under authority given to him by the resolution of the Delhi Municipal Corporation under section 20 of the Prevention of Food Adulteration Act.
in filing the complaint the said prosecutor was not acting on his own personal behalf but was acting as an agent authorised by the Delhi Municipal Corporation to file the complaint.
It must therefore be deemed in law that the Delhi Municipal Corporation was the 'complainant ' in the case, for according to the Latin maxim.
"One who does an act through another is deemed in law to do it himself." [583 H; 584 C D] Being thus the complainant in the case the appellant Corporation could properly file the application under section 417 of the Code of Criminal Procedure.
[Case remanded to High Court for disposal according to law.] [584 E] 580 Ballavdas Agarwala vs J. C. Chakravarty, [1962] 3 S.C.R. 739 and Nazir Ahmad vs King Emperor, 63 I.A. 372 as 381, referred to.


judgement:
ON: Civil Appeal No. 652 of 1966.
Appeal by special leave from the judgment and order dated November 23, 1964 of the Kerala High Court in A.S. No. 502 of 1961.
S.V. Gupte, Anantha Krishna lyer, section Balakrishnan and R. Thiagarajan, for the appellant.
H.R. Gokhale, J.S. Arora and K. Baldev Mehta, for the respondent.
The High Land Bank Kottayam of which the.
appellant M.C. Chacko was the Manager, had an overdraft account with the Kottayam Bank.
K.C. Chacko, father of the appellant, had executed from time to time letters of guarantee in favour of the Kottayam Bank agreeing to pay the amounts due by the High Land Bank under the overdraft arrangement.
By the last letter of guarantee dated 22nd January 1953 K.C. Chacko agreed to hold himself liable for the amounts due by the High Land Bank to the Kottayam Bank on the overdraft arrangement subject to a limit of Rs. 20,000.
The Kottayam Bank Ltd. filed a suit in the court of the Subordinate Judge of Kottayam against the High Land Bank for a decree for the amount due in the account.
To this suit were also impleaded K.C. Chacko the guarantor, M.C. Chacko Manager of the High Land Bank, and M.C. Joseph, Kuriakose Annamma and Chinnamma, the last three being the son, daughter and wife respectively of K.C. Chacko.
Against the High Land Bank the claim was made on the footing of the overdraft account: against K.C. Chacko on the letter of guarantee and against M. C. Chacko, his brother, his sister and his mother as universal donees of the property of K. C. Chacko under a deed dated June 21, 1951 under which, it was claimed, a charge was created on the properties to which the deed related and against M.C. Chacko, also on the claim that he had personally agreed to pay the amount due by the High Land Bank.
During the pendency of the suit, K.C. Chacko died and the suit was prosecuted against his widow,.
660 daughter and sons who were described also as his legal representatives.
The trial court decreed the suit against the High Land Bank and also against M.C. Chacko, limited to the property received by him from his father under the deed dated June 21, 1951.
The claim of the Kottayam Bank to enforce the liability under the letter of guarantee personally against K.C. Chacko was held barred by the law of limitation and on that account not enforceable against his heirs and legal representatives.
The Court also rejected the claim that M.C. Chacko had personally agreed to pay the amount due under the overdraft arrangement.
In appeal to the High Court by M.C. Chacko the decree C passed by the trial court was confirmed and the cross objections filed by the State Bank of Travancore with which the Kottayam Bank was merged claiming that M.C. Chacko was personally liable were dismissed.
This appeal with special leave is preferred by M.C. Chacko against the decree of the High Court.
Two questions 'arise in this appeal: (1) whether under exhibit D 1 a charge is created in favour of the Kottayam Bank to satisfy the debt arising under the letter of guarantee and (2) whether the charge assuming that a charge arises is enfforceable by the Bank when it was not a party to the deed Ex.
D 1 is called a deed of partition: in truth it is a deed.
whereby K.C. Chacko gave the properties described in the Schedule A to M.C. Chacko and other properties described in Schs.
B to F to M. C. Chacko: M.C. Joseph, Annamma and Chinnamma.
In paragraph 17 it is recited: "I have no debts whatsoever.
If in pursuance of the ' letter given by me to the Kottayam Bank at the request of my eldest son, Chacko, for the purpose of the High Land Bank Ltd., Kottayam, of which he is the Managing Director, any amount is due and payable to the Kottayam Bank, that amount is to be paid from the High Land Bank by my son, Chacko.
If the same is not so done and any amount becomes payable (by me) as per my letter, for that my eldest son, Chacko and the properties in Schedule A alone will be answerable for that amount.
" The other paragraphs which deal with the properties in Schedule A may also be referred to.
Paragraph 10 of the deed recited: "The donees of the properties included in A, B and C schedules are, as from this.
date, to be in possession of their respective properties and to get mutation of 661 registry in their names, pay land revenue and enjoy the income save that from cocoanut trees.
" By paragraph 12 it was declared that notwithstanding the deed of partition, K.C. Chacko will take the income from the cocoanut trees standing on the properties included in Schedules A, B, C and F till his death and that the donees of the properties will take and enjoy the income from the cocoanut trees in their respective properties after his death.
In paragraph 13 it was recited that: "As it is decided that Chinnamma. . should receive and have for her maintenance the rent of the building in item 7 in the A schedule, as well as the rent of the building in item 18 of the B schedule, she is to be in possession of these buildings as from this date and is to let them out and enjoy the rent.
The respective donees will have possession and enjoyment after her death.
Chinnamma is to have full rights and liberty to reside in any of the houses included in A, B or C schedule and so long as she so resides in any of the houses, the donees of the respective houses is to meet all her expenses.
The rent collected by Chinnamma from the buildings given possession of to her is to be utilised by her for her private expenses as she pleases.
" In our judgment the various covenants in the deed.
were intended to incorporate an arrangement binding between the members of the family for ' satisfaction of the debt, if any, arising under the letter of guarantee.
We are unable to agree with the High Court that by cl. 17 of the deed it was intended to create a charge in favour of the Kottayam Bank for the amount which may fall due under the letter of guarantee.
The letter of guarantee created merely a personal obligation.
The deed exhibit D 1 was executed before the last letter of guarantee dated January 22, 1953.
By cl. 17 of exhibit D 1 it is merely directed that the liability if any arising under the letter of guarantee, shall be satisfied by M.C. Chacko and not by the donor, his son M. C. Joseph, his daughter Annamma and his wife Chinnamma.
The reason for the provision in the deed is clear.
M.C. Chacko was the Managing Director of the High Land Bank Ltd. and it was at the instance of M. C. Chacko that the letters of guarantee were executed by the donor.
For creating a charge on immovable property no particular form of words is needed: by adequate words intention may be expressed to make property or a fund belonging to a person charged for payment of a debt mentioned in the deed.
But in order that a charge may be created, there must be evidence of intention disclosed by the .deed that a specified property or fund belonging to 662 a person was intended to be made liable to satisfy the debt due by him.
The recitals in cl. 17 of the deed do not evidence any intention of the donor to create a charge in favour of the Kottayam Bank: they merely set out an arrangement between the donor and the members of his family that the liability under the letter of guarantee, if and when it arises, will be satisfied by M.C. Chacko out of the property allotted to him under the deed.
The debt which M.C. Chacko was directed by the deed to satisfy was not in any sense a "family debt".
It was a debt of K.C. Chacko; and K.C. Chacko was personally liable to pay that debt.
After his death his sons, his daughter and his widow would be liable to satisfy the debt out of his estate in their hands.
From the recitals in the deed Ext.
D 1 an intention to convert a personal debt into a secured debt in favour of the Bank, a third person, cannot be inferred.
In Akalla Suryanarayana Rao & Others vs Dwarapudi Basivireddi & Others(1) the Madras High Court in construing a deed of partition of joint family property pursuant to a compromise decree, held that properties allotted to certain branches to which were also "allotted certain debts" with a stipulation that until the debts were fully discharged the properties allotted to the shares of the respective persons shall be liable in the first instance, were not subject to a charge in favour of the creditors.
The Court held that the covenant in the partition deed resulted in a contract of indemnity, and not a charge.
In the present case also the covenant that M.C. Chacko will either personally or out of the properties given to him satisfy the debt is intended to confer a right of indemnity upon other members of the family, if the Kottayam Bank enforced the liability against them.
and created no charge in favour of the Bank.
Clauses 12 'and 13 of the deed support that view.
By el.
12 the right to the coconut trees standing in the properties included in Schs.
A, B, C and F is reserved to K.C. Chacko.
Similarly Chinnamma, wife of K.C. Chacko, is permitted during her lifetime to occupy the houses in the properties described in the three schedules and to recover the income and to utilise the same for herself.
It is clear that K.C. Chacko had no intention to create a charge or to encumber any of the properties for the debt which may become due to the Bank.
The Kottayam Bank not being a party to the deal was not bound by the covenants in the deed, nor could it enforce the covenants.
It is settled law that a person not a party to a contract cannot subject to certain well recognised exceptions, enforce the terms of the contract: the recognised exceptions are that beneficiaries under the terms of the contract or where the contract is a part of the family arrangement may enforce the covenant.
In (1) I.L.R. 55 Med.
663 Krishna Lal Sadhu vs Primila Bala Dasi(1) Rankin, C.J observed: "Clause (d) of section 2 of the Contract Act widens the definition of 'consideration ' so as to enable a party to a contract to enforce the same in india in certain cases in which the English Law would regard the party as the recipient of a purely voluntary promise and would refuse to him a right of action on the ground of nudum pactum.
Not only, however, is there nothing in section 2 to encourage the idea that contracts can be enforced by a person who is not a party to the contract, but this notion is rightly excluded by the definition of 'promisor ' and 'promisee '.
" Under the English Common Law only a person who is a party to a contract can sue on it and that the law knows nothing of a right gained by a third party arising out of a contract: Dunlop Pneumatic Tyre Co. vs Selfridge & Co. (2).
It has however been recognised that where a trust is created by a contract, a beneficiary "may enforce the rights which the trust so created has given him The basis of that rule is that though he is not a party to the contract his rights are equitable and not contractual.
The Judicial Committee applied that rule to an Indian case Khwaja Muhammad Khan vs Husaini Begam(3).
In a later case Jaman Das vs Ram Autar(4) the Judicial Committee pointed out that the purchaser 's contract to pay off a mortgage debt could not be enforced by the mortgagee who was not a party to the contract.
It must therefore be taken as well settled that except in the case of a beneficiary under a trust created by a contract or in the case of a family arrangement, no right may be enforced by a person who is not a party to the contract.
Even if it be granted that there was an intention to create a charge, the Kottayam Bank not being a party to the deed could enforce the charge only if it was a beneficiary under the terms of the contract, and it is not claimed that the Bank was a beneficiary under the deed exhibit D 1.
The suit against M.C. Chacko must therefore be dismised.
The decree passed by the High Court is modified and it is declared that M.C. Chacko is not personally liable for the debt due under the letter of guarantee executed by K.C. Chacko, nor are the properties in schedule A allotted to M.C. Chacko under the deed dated June 21, 1951 liable to satisfy the debt due to the Kottayam Bank under the letter of guarantee.
(1) I.L.R. (2) ; (3) (1910) 37 I.A. 152.
(4) [1911] 39 I.A. 7.
14 Sup CI/69 13 664 Having regard to the circumstances of the case and specially that a concession that persons not parties to a contract may enforce the benefit reserved to them under the contract was made before the High Court, we direct that the parties to this appeal will bear their respective costs throughout.
Y.P ' Decree modified.

dataset_name: IN-Abs

summary/full:
A bank, of which the appellant was the Manager, had an overdraft account with another bank which later merged with the respondent.
The appellant 's father had executed from time to time letters of guarantee holding himself liable for the amount under the overdraft arrangements.
The appellant 's father executed a deed giving away his properties to the appellant, and other members of the family.
The deed recited that he had executed the letters of guarantee at the request of the appellant, and that the amount due to the Bank was to be paid by the appellant; but if any amount had to be, paid by him (father) as per the letter of guarantee, the appellant and the properties allotted to him were to be answerable for that amount.
The creditor bank filed a suit against the debtor bank and also against the appellant and his father 's other heirs and legal representatives for the amount due under the overdraft arrangement; and claimed that a charge was created on the properties to which the deed executed by the father of the appellant related.
The trial court decreed the suit against the debtor bank and also 'against the appellant limited to the property received by him fro.m his father under the deed but held that the claim to enforce the personal liability of the father against his legal representatives was barred by the law of limitation.
The High Court confirmed the decree.
On the questions (i) whether under the deed a charge was created in favour of the creditor bank to satisfy the debt arising under the letter of guarantee, and (ii) whether the charge, assuming that a charge arose, was enforceable by the creditor bank when, it was not a party to the deed, HELD: (i) In order that a charge may be created, there must be evidence of intention disclosed by the deed that a specified property or fund belonging to a person was intended to be made liable to satisfy the deed, In the present ease the recitals in the deed did not evidence any intention of the donor to create a charge in favour of the creditor bank; they merely set out an arrangement between the donor and the members of his family that the liability under the letter of guarantee if and when it arose, will be satisfied by the appellant out of the property allotted to him under the deed.
The letter of guarantee Created merely a personal obligation and an intention tO convert a personal debt into a secured debt in favour of the Bank, a third person, could not be inferred from the recitals in the deed.
Akalla Suryanarayana Rao & Ors.
vs Dwarapudi Basivireddi 659 (ii) Even if it be granted that there was an intention to create a charge the creditor bank, not being a party to the deed could not enforce its covenants.
It must be taken as well settled that except in the case of a beneficiary under a trust created by a contract or in the case of a family arrangement to right may be enforced by a person who is not a party to a contract.
[662 H] Krishna Lal Sadhu vs Pramila Bain Dasi, I.L.R. , referred to.


judgement:
ivil Appeal No. 1408 of 1966.
Appeal by special leave from the AWard dated May 19, 1965 February 23, 1966 of the Addl.
Industrial Tribunal, Delhi in Industrial Dispute No. 109 of 1965.
H.R. Gokhale, G.L. Sanghi and K.P. Gupta for the appellant.
Urmila Kapur and Bhajan Ramrakhiani, for the respondents.
The Judgment of the Court was delivered by Shah, J.
By order February 24, 1965 the Chief Commissioner of Delhi referred for adjudication, industrial disputes between the appellant company and its workmen relating to dearness allowance and introduction of a scheme of gratuity for the benefit of the workmen.
The Industrial Tribunal, Delhi framed the following "gratuity scheme": (1) On death or retirement on One months wages for each superannuation or on becoming Year of service of part mentally or physically unfit there of in excess of six for further service.
subject to a maximum of 15 months 's wages,In case of death of Employee the gratuity shall be payable to his nominee or if there is no nominee to his legal heirs (2)On termination after five 15 days for each year of se years 'service for any cause rvice or part there of in whatsoever except by way of exces of six months subject retrenchment or resignation to a maximum of 15 months resignation.
subject wages (3)On resignation after 10 years of service.
15 days wages for each year of service or part thereof in excess of six months to a maximum of 15 months wages Provided that if termination is for any misconduct causing financial loss to the company, the amount of loss shall be deducted from the gratuity payable.
The word 'wages ' in this Scheme shall mean the total pay packet of the workman including dearness which he was last drawing.
" The Tribunal also directed that "all workmen who were appointed in 1960 or earlier should get dearness allowance at Rs. 3 for every ten point rise in the cost of Consumer Price Index base 1960 over and above their existing wages with effect from 624 1st January, 1965.
In case of workmen appointed after 1960, the consumer price index base 1960 on the date of his appointment shall be found out and he shall be given Rs. 3 as dearness for every ten point rise in cost of Consumer Price index base 1960 above it with effect from 1st January, 1965 or such later date on which the limit of 10 point rise in cost of Consumer Price Index base is crossed.
" The Tribunal also directed that dearness allowance will not be enhanced till the limit of ten points be "crossed", and that dearness allowance once granted will not be reduced till the Consumer Price Index falls by more than 10 points.
The Company has appealed to this Court with special leave.
In the view of the Tribunal, the financial position of the company "is very sound" and that it has "financial capacity and, stability to bear the additional burden of dearness allowance and of the gratuity scheme." In reaching that conclusion the Tribunal relied upon a news item published in the newspapers that 2000 Russian Tractors were being immediately imported by the Company even though the agency of the Company was being terminated.
In relying upon newspaper reports the Tribunal may have erred.
But the conclusion of the Tribunal is rounded upon a review of several other circumstances.
It is true that one of the primary lines of business of the company was of selling tractors as agents of Russian manufacturers.
That agency was in danger of being terminated because the State Trading Corporation had arranged to take over the agency.
But the balance sheets of the company show that the agency was only one of the many lines of business and the closure of the agency of the tractor manufacturers was not likely to affect the financial structure of the Company seriously.
The Tribunal has on appreciation of evidence come to the conclusion that the financial position of the company was sound and assuming that the Tribunal is governed by the strict rules prescribed by the Evidence Act, sitting in appeal with special leave we will not be justified in interfering with the finding of the Tribunal even if it be open to the criticism that a part of the evidence relied upon is not in law relevant.
The company had on its roll 244 workmen out of whom 118 entered employment after 1960.
The company has been paying to its workmen wages consisting of two components basic wages and 50 per cent of the basic wages as dearness allowance.
Payment of wages is made in this form to all workmen whether their employment commenced before the year 1960 or thereafter.
It is true that before 1960 the company used to make a consolidated payment without specifying any amount of basic salary or dearness allowance.
Since 1960 in every appointment letter it was expressly recited that the employee v,iII get a consolidated salary consisting of 2/3rd of the consolidated salary as basic wages and 625 the balance as dearness allowance.
The company has produced before the Tribunal 118 such letters of appointment in respect of all employees employed after the year 1960.
In respect of the employees appointed prior to the year 1960 in the salary register basic salary and dearness allowance was separately entered though at the time of appointment of employees there was no allocation as basic wages and dearness allowance.
There is no dispute that since the year 1960 there has been a rise in the cost of living.
The Consumer Price Index for Industrial Workers which was 100 in 1960, had risen to more than 130 in 1965.
The management of the company granted dearness allowance to employees in other concerns under its management even though those other concerns were not financially very sound.
No serious argument has been advanced before us that the rise in dearness allowance is not Justified.
The only ground of complaint is that by relating the dearness allowance to the total wage packet the workmen are given a: rise both in the dearness allowance and in the basic wage The Tribunal has awarded dearness allowance at the flat rate of Rs. 3 for every 10 point rise in the cost of Consumer Price Index.
The rise is not related to the quantum of basic wage or consolidated wage.
It is a flat uniform rate applicable to every workman.
The Tribunal was of the view that the allocation between the basic wage and the dearness allowance was "not fair", but for the purpose of the present reference, the question is academic because dearness allowance is not related to the quantum of salary that the workmen receive.
The argument that the rise will operate to give to the workmen besides the additional dearness allowance, a percentage increase in dearness allowance already paid as part of the consolidated wage cannot be accepted.
We do not therefore see any reason to interfere with the order passed by "the Tribunal with regard to the dearness allowance at the rate of Rs. 3 for every 10 point rise in the Consumer Price Index.
" Gratuity payable to a workman on termination of employment is to be computed on the total wage packet of the workman including dearness allowance which he has last drawn.
This order makes a departure from the normal rule which is adopted in industrial awards.
In M/s. British Paints (India) Ltd. vs Its Workmen(1) this Court while introducing a gratuity scheme for the first time in the concern directed that the amount of gratuity shall be related to the basic wage or salary and not to the consolidated wage including dearness allowance.
A similar order was made in May and Baker (India) Ltd. vs Their Workmen(2).
It is true (1) ; (2) [1961] II L.L 626 that in British India Corporation vs The Workmen(1), an award made by the Tribunal fixing the quantum of gratuity on gross salary i.e., basic wage plus dearness allowance was upheld by this Court.
The Court affirmed that the usual pattern in fixing the gratuity is to relate it to the basic wage, but refused to interfere with the order because the. practice in that concern was to fix gratuity on the consolidated wage.
similarly in Hindustan Antibiotics Ltd vs their work men(2), the Tribunal directed the employer to pay gratuity at the rate of one half of wages for each month including dearness allowance but excluding house rent and all other allowances for each completed year of service subject to a maximum of wages for ten months.
In rejecting the claim of the employers for relating gratuity to the basic wage, this Court observed: "If the industry is a flourishing one, we do no see any reason why the labour shall not have the benefit of both the schemes i.e. the employees provident fund and the gratuity scheme.
Gratuity is an additional form of relief for the workmen to fall back upon.
If the industry can bear the burden, there is no reason why he shall not be entitled to both the retirement benefits.
The Tribunal considered all the relevant circumstances: the stability of the concern, the profits made by it in the past, its future prospects and its capacity and came to the conclusion that, in the concern in question, the labour should be provided with a gratuity scheme in addition to that of a provident fund scheme.
There was no justification to disturb this conclusion.
" In The Remington Rand of India Ltd. vs The Workmen(8) this Court declined to interfere with the order of the Tribunal awarding gratuity related to the consolidated wage including dearness allowance "in view of the flourishing nature of the concern, the enormous profits it was making, the reserves it had built up as also in view of the fact that it was paying gratuity to.
executives on the basis of consolidated wages.
" In The Delhi Cloth & General Mills Co., Ltd. vs The Workmen & Ors.
(4) this Court had to consider whether gratuity payable to workmen in the textile industry in the Delhi region should be related to.
the consolidated wage.
After referring to the decisions which were brought to the notice of the Court, it was observed that: "It is not easy to extract any principle from these cases:as precedents they are conflicting .
The (1) (1965) Vol.
10 Factory Law Report, 244.
(2) [1967] I L.L.J. 114.
(3) [1968] 1 S.C.R.164.
(4) ; 627 Tribunal has failed to take into account the prevailing pattern in the textile industry all over the country .
It is a countrywide industry: and in that industry, except in one case to be presently noticed, gratuity has never been granted on the basis of consolidated wages.
" The Court after referring to the schemes framed in respect of the industries in Bombay and Ahmedabad and other industries concluded that "determination of gratuity is not based on any definite rules.
In each case it must depend upon the prosperity of the concern, needs of the workmen and the prevailing economic conditions examined in the light of the auxiliary benefits which the workmen may get on determination of employment.
" There is no clear evidence on the record, and no precedents have been brought to our notice, to justify a departure from the normal rule that the quantum of gratuity is related not to the consolidated wage packet but to the basic wage.
A departure may be made from the normal rule, if there be some strong evidence or precedent in the industry, or conduct of the employer or other exceptional circumstances to justify that course.
In the absence of such evidence, we are of the view that gratuity should be related to the basic wage and not to the consolidated wage packet.
In the present case it is found that the financial position of the Company is sound but there is no evidence that the company is "making abnormally high profits" 'nor is there any evidence that in its sister concerns or in other engineering concerns in the region there is a practice of awarding gratuity related to consolidated wages.
It was urged on behalf of the company that even though the workmen had, in the claim made by them, demanded a scheme of .
gratuity benefit at the rate of 15 days wages for each year of service in case of death or retirement on attaining the age of superannuation or on becoming mentally or physically unfit for further service,.
the Tribunal had awarded gratuity at the rate of one month 's wages for each year of service subject to a maximum of 15 months ' wages.
But the claim was made on the footing that the wages were to include dearness allowance.
When the claim is not accepted, we cannot hold the workmen bound by the multiples.
We make no modification in clause (1 ) of the scheme.
We modify the scheme in so far as it relates to the dearness allowance and direct that for the last sentence of the gratuity scheme the following shall be substituted: "The word 'wages ' in the scheme shall mean basic salary or emoluments excluding dearness 'allowance and 628 other allowances and benefits payable to the workman which he had last drawn.
" Subject to the above modification, the appeal fails and is dismissed.
There will be no order as to costs in the appeal.
Y.P. Scheme modified and appeal dismissed.

summary/full:
The Industrial Tribunal on a reference of the disputes between the appellant company and its workmen framed a gratuity scheme.
The gratuity payable to a workman on termination of employment was to be computed on the total wage packet of the workman including dearness allowance which he had last drawn.
The tribunal also awarded dearness allowance at a flat uniform rate for every 10 point rise in the cost of Consumer Price Index.
The Tribunal found that the financial position of the company was sound and it had the capacity to bear the additional burden.
In appeal, this Court HELD: (i) The usual pattern in fixing gratuity is to relate it to the basic wage or salary and not to consolidated wage.
A departure may be made from the normal rule, if there by some strong evidence or precedent in the industry, or conduct of the employer or other exceptional circumstances to justify that course.
In .the absence of such evidence, gratuity should be related to the basic wage and not to the consolidated wage packet.
[627 D] In the present case it was found that the financial position of the company was sound but there was no evidence that the company was "making abnormally high profits", nor was there any evidence that in its sister concern or in other engineering concerns in the region there was a practice of awarding gratuity related to consolidated wages.
M/s. British Paints (India) Ltd. vs Its Workmen, ; , May & Baker (India.) Ltd. vs Their Workmen, [1961] II L.L.J. 94, British India Corporation vs The Workmen, (1965) Vol.
10 Factory Law Reports 244, Hindustan Antibiotics Ltd. vs Their Workmen, [1967] I. L.L.J 114, The Remington Rand of India Ltd. vs The Workmen, , and Delhi Cloth & General Mills Co. Ltd. vs The Workmen & Ors. ; , referred to.
(ii) The rise in dearness allowance was not related to the quantum of basic wage or consolidated wage; it was a flat uniform rate applicable to every workman.
Therefore, the.
rise would not operate to give the workman, besides the additional dearness allowance, a percentage increase in dearness allowance already paid as part of the consolidated wage.
[625 E F] (iii) The Tribunal, on appreciation of evidence found that the financial position of the company was sound.
Assuming that the Tribunal was governed by the strict rules prescribed by the Evidence Act, Sitting in appeal with Special Leave this Court would not be justified in interfering 623 with the finding of the Tribunal even if it be open to the criticism that a part of the evidence relied upon was not in law relevant.
[624 F]


judgement:
Appeal No. 31 of 1954.
Appeal by Special Leave from the Judgment and Decree dated the 9th September, 1952, of the High Court of Judicature at Bombay in Appeal No. 811 of 1951 from the Original Decree arising from the Judgment and Decree dated the 24th July, 1951, of the Bombay City Civil Court at Bombay in Suit No. 2310 of 1950.
C.K. Daphtary, Solicitor General for India (J. B. Dadachanji and Rajinder Narain, with him) for the appellant.
S.C. Isaacs (section section Shukla, with him) for the respondent.
May 28.
The Judgment of the Court was delivered by VENKATARAMA AYYAR J.
The suit out of which this appeal arises was instituted by the appellant on a hundi for Re. 10,000 dated 4th December, 1947, drawn 505 in his favour by Haji Jethabhai Gokuil and Co., Of Basra on the respondents, who are merchants and commission agents in Bombay.
The hundi was sent by registered post to the appellant in Bombay, and was actually received by one Parikh Vrajlal Narandas, who presented it to the respondents on 10th December, 1947, and received payment therefore It may be mentioned that the appellant had been doing business in forward contracts through Vrajlal as his commission agent, and was actually residing at his Pedhi.
On 12th January, 1948, the appellant sent a notice to the respondents repudiating the authority of Vrajlal to act for him and demanding the return of the hundi, to which they sent a reply on 10th February, 1948, denying their liability and stating that Vrajlal was the agent of the appellant, and that the amount was paid to him bonafide on his representation that he was authorised to receive the payment.
On 9th December, 1950, the appellant instituted the present suit in the Court of the City Civil Judge, Bombay.
In the plaint he merely alleged that the payment to Vrajlal was not binding on him, and that " the defendant drawee " remained liable on the hundi.
The defendants, apart from relying on the authority of Vrajlal to grant discharge, also pleaded that the plaint did not disclose a cause of action against them, as there was no averment therein that the hundi had been accepted by them.
At the trial, the appellant gave evidence that Vrajlal had received the registered cover containing the hundi in his absence, and collected the amount due thereunder without his knowledge or authority.
The learned City Civil Judge accepted this evidence, and held that Vrajlal had not been authorised to receive the amount of the hundi.
He also hold that the plea of discharge put forward by the respondents implied that the hundi had been accepted by them.
In the result, he decreed the suit.
The defendants took up the matter in appeal to the High Court of Bombay, and that was heard by Chagla C.J. and Shah J. who held that the appellant would 65 506 have a right of action on the hundi against the respondents only if it had been accepted by them, and that as the plaint did not allege that it had been.
accepted by them, there was no cause of action.
against them.
They accordingly allowed the appeal, and dismissed the suit.
The plaintiff prefers this appeal on special leave granted under article 136 of the Constitution.
There has been no serious attempt before us to challenge the correctness of the legal position on which the judgment of the High Court is based, that the drawee of a negotiable instrument is not liable on it to the payee, unless he has accepted it.
On the provisions of the , no other conclusion impossible.
Chapter III of that Act defines the obligations of parties to negotiable instruments.
Section 32 provides that, " In the absence of a contract to the contrary, the maker of a promissory note and the acceptor before maturity of a bill of exchange are bound to pay the amount thereof at maturity according to the apparent tenor of the note or acceptance respectively, and the acceptor of a bill of exchange at or after maturity is bound to pay the amount thereof to the holder on demand.
" Under this section, the liability of the drawee arises only when he accepts the bill.
There is no provision in the Act that the drawee is as such liable on the instrument, the only exception being under section 31 in the case of a drawee of a cheque having sufficient funds of the customer in his bands; and even then, the liability is only towards the drawer and not the payee.
This is elementary law, and was laid down by West J. in Seth Khandas Narandas vs Dahibai(1) in the following terms: " Where there is no acceptance, no cause of action can have arisen to the payee against the drawee.
" Nor is there any substance in the contention that section 61 of the Act provides for presentment for acceptance only when the bill is payable after sight, and not when it is payable on demand.
, as is the suit (1) I.L.R, 3 Bo. 182 at P. 183.
507 hundi.
In a bill payable after sight, there are 'two distinct stages, firstly when it is presented for accept ance, and later when it is presented for payment.
Section 61 deals with the former, and section 64 with the latter.
As observed in Ram Ravji Jambhekar vs Pralhaddas Subkarn(1), " presentment for acceptance must always and in every case precede presentment for payment.
" But when the bill is payable on demand, both the stages synchronise, and there is only one presentment, which is both for acceptance and for payment.
When the bill is paid, it involves an acceptance; but when it is not paid, it is really.
dishonoured for non acceptance.
But whether the bill is payable after sight or at sight or on demand, acceptance by the drawee is necessary before he can be fixed with liability on it.
It is acceptance that establishes privity on the instrument between the payee and the drawee, and we agree with the learned Judges of the High Court that unless there is such acceptance, no action on the bill is maintainable by the payee against the drawees.
The main contention on behalf of the appellant was that such acceptance must be implied when the respondents received the bill and made payment there for.
The argument was that the very act of the payment of the hundi to Vrajlal was an acknowledgment that the defendants were liable on the hundi to whosoever might be the lawful holder thereof.
The answer to this contention is, firstly, that there was no valid presentment of the hundi for acceptance; and secondly, that there was no acceptance of the same as required by law.
On the question of the presentment of the hundi for acceptance, the position stands thus: The person who presented it to the defendants was Vrajlal; and if he had no authority to act in the matter, it is difficult to see how he could be held to have acted on behalf of the plaintiff in presenting the hundi.
There was only one single act, and that was the presentment of the hundi by Vrajlal and the receipt of the amount due thereunder.
If he had no authority to receive the payment, he had no authority to present the bill for acceptance.
It was argued that there was no provision (1) I.L.R. at P 141.
508 in the Act requiring that bills payable at sight should be presented for acceptance by the holder or on his behalf, as there was, for bills payable after sight, in section 61.
But, as already pointed out, in the case of a bill payable at sight, both the stages for presentment for acceptance and for payment are rolled up into one, and, therefore, the person who is entitled to receive the payment under section 78 of the Act is the person, who is entitled to present it for acceptance.
Under section 78, the payment must be to the holder of the instrument; and if Vrajlal had no authority to receive the amount on behalf of the plaintiff, there was no valid presentment of the hundi by him for acceptance either.
It has next to be considered whether, assuming that there was a proper presentment of the hundi for acceptance, there was a valid acceptance, thereof The argument of the appellant was that as the hundi had got into the hands of the defendants and was produced by them, the very fact of its possession would be sufficient to constitute acceptance.
Under the common law of England, even a verbal acceptance was valid.
Vide the observations of Baron Parke in Bank of England vs Archer(1).
It was accordingly held that such acceptance could be implied when there was undue retention of the bill by the drawee.
(Vide Note to Harvey vs Martin(1)).
But the law was altered in England by section 17(2) of the Bills of Exchange Act, 1882 which enacted that an acceptance was invalid, unless it was written on the bill and signed by the drawee.
Section 7 of the , following the English law, provides that the drawee becomes an acceptor, when he has signed his assent upon the bill.
In view of these provisions, there cannot be, apart from any mercantile usage, an oral accept ance of the hundi, much less an acceptance by conduct, where at least no question of estoppel arises.
But then, it was argued that the possession of the hundi was not the only circumstance from which acceptance could be inferred; that there was the plea (1) (1843) I. M. & W. 383 at PP.
389, 390; I52 E.R. 852, 855.
(2) (1808) 1 CAMP 425; I , 509 of the defendants that they had discharged the hundi; and that that clearly imported an acknowledgment of liability on the bill, and was sufficient to clothe the plaintiff with a right of action thereon.
Assume that the plea of discharge of a hundi implies an acknowledgment of liability thereunder an assumption which we find it difficult to accept.
The question still remains whether that is sufficient in law to fasten a liability on the defendants on the hundi.
What is requisite for fixing the drawees with liability under section 32 is the acceptance by them of the instrument and not an acknowledgment of liability.
As the law prescribes no particular form for acceptance, there should be no difficulty in construing an acknowledgment as an acceptance; but then, it must satisfy the requirements of section 7, and must appear on the bill and be signed by the drawees.
In the present case, the acknowledgment is neither in writing; nor is it signed by the defendants.
It is a matter of implication arising from the discharge of the instrument.
That is not sufficient to fix a liability on the defendants under section 32.
In conclusion, we must hold that there was neither a valid presentment of the hundi for acceptance, nor a valid acceptance thereof.
In the result, the appeal fails, and is dismissed with costs.
Appeal dismissed.

summary/full:
Under section 32 of the , the liability of the drawee arises only when he accepts the bill.
There is no provision in the Act that the drawee is as such liable on the instrument, the only exception being under section 31 in the case of a, drawee of a cheque having sufficient funds of the customer in his hands; and even then, the liability is only towards the drawer and not the payee.
There is no substance in the contention that section 61 of the Act provides for presentment for acceptance only when the bill is payable after sight, and not when it is payable on demand.
In a bill payable after sight, there are two distinct stages, 504 firstly when it is presented for acceptance, and later when it is presented for payment.
Section 61 deals with the former, and section 64 with the latter.
Presentment for acceptance must always and in every case precede presentment for payment.
But when the bill is payable on demand both the stages synchronise and there is only one presentment, which is both for acceptance and for payment and therefore the person who is entitled to receive the payment under section 78 of the Act is the person who is entitled to present it for acceptance.
Section 7 of the , following the English Law, provides that the drawee becomes an acceptor when he has signed his assent on the bill.
Accordingly there cannot be, apart from any mercantile usage, an oral acceptance of the hundi, much lose an acceptance by conduct, where at least no question of estoppel arises.
What is requisite for fixing the drawees with liability under section 32 is the acceptance by them of the instrument and not an acknowledgment of liability.
As the law prescribes no particular form for acceptance, there should be no difficulty in construing an acknowledgment as an acceptance; but then, it must satisfy the requirements of section 7, and must appear on the bill and be signed by the drawee.
Seth Khandas Narandas vs Dahibai (I.L.R. , Ram Raviji Jambhekar vs Prahladdas Subhakaran (I.L.R. 20 Bom.1 33), Bank of England vs Archer ((1843) ; and Harvey vs Martin ( referred to.