judgement:
Appeal Nos.
555 & 556 of 1960.
Appeals by special.
leave from the judgment and order dated July 17, 1956, of the Bombay High Court in Special Civil Applications Nos.
580 and 581 of 1956.
A.V. Viswanatha Sastri, B. R. Nayak and Naunit Lal, for appellants.
Abdurrahman Adam Omer, section N. Andley, Rameshwar Nath and P. L. Vohra, for the respondents No. 1 and 3 to 6. 1962.
April 23.
The Judgment of the Court was delivered by DAS GUPTA, J.
Disputes having arisen between the appellant, a Co operative Bank and one Amin Saheb Patil, who had taken loans from the Bank and Kutubuddin Mohamad Ajim Kazi, who had stood surety in respect of the loans they were 350 referred to arbitration in two references under s.54 of the Bombay Co operative Societies Act, 1925.
The Board of Arbitrators originally consisted of Mr. L. V. Phadke, Mr. C. K. Phadke and Mr. Trilokekar.
After the Board had several meetings and recorded some evidence Mr. Trilokeker, who was the nominee of the borrower, Amin Saheb, retired.
Thereafter the Board was re constituted with Mr. Kotwal as the new nominee of the borrower.
This Board also recorded some evidence but after sometime Mr. Kotwal also retired.
There was a fresh constitution of the Board with the other two members as before and Mr. M. D. Thakur as the nominee of the, borrower.
Further evidence was recorded by the Board thus constituted and finally the Board gave its award in the matters on March 14, 1955.
Dissatisfied with these awards amin Saheb filed two revision applications before the Bombay Co operative Tribunal.
Apart from certain objections on the merits of the awards a preliminary objection was taken before the Tribunal as regards the legality of the awards on the ground that the Board as last constituted had acted on, evidence not recorded before it.
The Tribunal accepted this preliminary objection, set aside the awards and remanded the cases to the Assistant Registrar for a rehearing.
Shortly after this Amin Saheb died but his heirs and legal representatives made two applications to the Bombay High Court under article 227 of the Constitution against the, Tribunal 's decision.
The High Court held that the Tribunal had erred in thinking that the Board of Arbitrators had acted illegally in seting on the evidence recorded by the previous Boards when this was done with the full knowledge of the parties and without any objection on either side.
Accordingly, they set aside the orders passed by the Tribunal and 351 restored the awards made by the Board of Arbitrators.
The Bank has now appealed against the decision of the High Court after obtaining special leave from this Court.
Three points are raised before us in support of the appeal.
The first is that the Tribunal had not made any error in holding that the Board had acted illegally in acting upon the evidence recorded by the previous Boards. 'Secondly, it is urged that even if the Board had erred it was not such an error as would entitle the High Court to interfere under article 227 of the Constitution.
Lastly, it was contended that in any case, the High Court was not justified in setting aside the awards ' when the Tribunal had disposed of the application only on preliminary points and had not considered it on merits.
our opinion there is no substance in the first two contentions.
As the High Court has pointed out normally it would have been wrong and indeed illegal for the Tribunal to act on evidence not taken before it.
The position is however different when the parties expressly or impliedly agree that some evidence not taken before the Tribunal should be treated as evidence and taken into consideration.
It is settled law that question of mode of proof is a question of procedure and is capable of being waived and therefore evidence taken in a previous judicial proceeding can be made admissible in a subsequent proceeding by consent of parties.
This applies to proceedings of a civil nature.
While what is not relevant under the Evidence Act cannot in proceedings to which Evidence Act applies, made relevant by consent of parties, relevant evidence can be brought on the record for consideration of Court or the Tribunal without following the regular mode, if parties agree.
The reason behind this rule is 352 that it would be unfair to ask any party to prove a particular fact when the other party has already admitted that the way it has been brought before the Court has sufficiently proved it.
We are therefore of opinion that in the facts of these cases when the appellant Bank not only raised no objection to the Board as last constituted proceeding on the evidence already recorded before the previous Boards, but indeed appears to have invited the Board to act on such evidence previously recorded, the appellant cannot be allowed later on to object to the Board having considered the evidence merely because the decision has goes against it.
The Tribunal was clearly wrong in thinking otherwise and the error cannot but be considered to be an error apparent on the face of the record and as such the High Court had not only the power but duty to interfere with the Tribunal 's order.
It appears to us however that having come to the conclusion that the Tribunal was wrong in allowing the preliminary objection raised before it the High Court was not entitled to ignore the fact that before the Tribunal other questions had been raised which had not been considered by it.
The proper order to pass in such a case, in our opinion, would be to set aside the order of the Tribunal and direct it to decide the applications for revision on their merits.
We therefore allow the appeals in part, and order, in modification of the order made by the High Court, that the Tribunal 's order remanding the cases to the Assistant Registrar be set aside but the Tribunal should now proceed to hear the revision applications on their merits.
In the circumstances of the case, we order that the parties will bear their own costs.
Appeals allowed in part.

summary/full:
The dispute between the appellant a cooperative bank and A who had taken loan and his surety was referred to arbitration under section 54 of the Bombay Go operative Societies Act.
The Board of Arbitrators consisted of three members; after the Board has recorded some evidence, the nominee of the borrower retired.
Thereafter, the Board was reconstituted.
This Board also recorded some evidence ; but after some time, the newly appointed nominee of the borrower retired.
There was a fresh constitution of the Board with the other two members as before and a new member as the nominee of the borrower.
Further evidence was recorded by the Board thus constituted and finally the Board gave its award in the matter.
Dissatisfied with this award A filed revision applications before the Bombay Co operative Tribunal.
Apart from certain objections on merit a preliminary.
objection was taken as regards the legality of the award on the ground that the Board as last constituted had acted on evidence not recorded before it.
The Tribunal accepted this preliminary objection and set aside the award and remanded the cases to the Assistant Registrar.
Shortly after this A died but his heirs and legal representatives moved the Bombay High Court under article 227 of the Constitution against the Tribunal 's decision.
It set aside the orders passed by the Tribunal and restored the award made by the Board of Arbitrators.
The Bank came up in appeal by special leave to the Supreme.
Held, that when the parties expressly or impliedly agree that some evidence not taken before the Tribunal should be treated as evidence and taken into consideration, it will not be wrong or illegal for the Tribunal to act on such evidence not taken before it, the question of mode of proof is a question of procedure and is capable of being waived and therefore evidence taken in a previous judicial proceeding of a civil nature can heir made permissible in a subsequent proceeding by consent of parties, 349 While what is not relevant under the Evidence Act cannot in proceedings to which Evidence Act applies, be made relevant by consent of parties, relevant evidence can be brought on the record for consideration of the Court or the Tribunal without following the regular mode, if parties agree.
When a party does not only raise no objection before a Court or Tribunal to proceed on the evidence already recorded before the previous Court or Tribunal and impliedly invites the Court or Tribunal to act on such evidence previously recorded, he cannot be allowed later on to object to the Court or Tribunal having considered such evidence.
The High Court having come to the conclusion that the Tribunal was wrong in allowing the preliminary objection raised before it, the High Court was not entitled to ignore the fact that before the Tribunal other questions had been raised which had not been considered by it.
The proper order to pass in such a case ordinarily would be to set aside the order of the Tribunal and direct it to decide the applications for revision on their merits.


judgement:
Appeal No. 568 of 1960.
Appeal from the judgment, and order dated April 6, 1956, of the Madras High Court in 0.
S, A. No. 147 of 1953.
H. N. Sanyal, Additional Solicitor General of India, V. D. Mahajan and P. D. Menon, for the appellant.
R.Ganapathy Iyer, M. section K. Sastri and M. section Narasimhan, for the respondent.
April 19.
The Judgment of the Court was delivered by AYYANGAR, J.
The point involved in this appeal which comes before us on a certificate of fitness under article 133 (1)(e) granted by the High, Court of Madras is a very short one and relates to the nature and extent of the jurisdiction posses sed by the High Court in considering the validity 279 of an order of the Customs Authorities interpreting the provisions of the entries in the Tariff Schedule as regards the imposition of duties.
The respondent imported from Australia a quantity of oats which was described in the indent, contract and shipping documents as " 'standard feed oats".
The commodity imported consisted of oats in whole grain.
The question raised related to the proper classification of the goods imported under the Import Trade Control Schedules current during the period July to December 1952 when the consignment reached India.
The controversy centered round the point whether the "feed oats" fell within item 42 or within item 32 of the Circular.
Item 42 ran: " 'Fodder, bran and pollards O.G.L. Soft" i.e., this item was covered by an open general licence and so no special import licence was necessary for the import of these goods from a soft currency area, while as regards item 32 the entry ran: "Graio, not otherwise specified, including broken grain but excluding flour (a) oats (b) others Ports Nil A.V." which meant that a licence was necessary for the importation of the goods specified in it which would be granted by the Joint Chief Controller of Imports or Exports at Calcutta and Bombay, if they were the ports of entry, and by the Deputy Chief Controller of Imports & Exports Madras if they were to be imported through Madras; "nil" that no quotas were specified limiting the quantity to be imported, & that actual users (A.U.) could apply for the licence.
280 The respondent who carried on business in fodder under the name and style of Balakrishna Flour Mills placed an order with an Australian firm for the supply of whole grain "feed oats" without obtaining any licence for the import.
The goods arrived in Madras on August 1, 1952 and when the respondent attempted to clear the goods, the Customs Authorities insisted on the production of a licence before he would be permitted to do so.
The Assistant Collector hold that.
the goods imported fell within item 32 and as admittedly the respondent held no licence from the Deputy Chief Controller of Imports & Exports, Madras covering the import, there had been a contravention of a. 19 of the Sea Customs Act read with section 3(2) of the Import & Export Control Act, 1947 and so proceeded to deal with the violation under section 167 (8) of the Sea Customs Act.
He directed the confiscation of the good sand imposed a fine of Rs.5,000/ in lieu of confiscation, if the.
respondent desired to clear the goods.
An appeal filed to the Collector of Customs was rejected and thereafter the respondent moved the High Court for the issue of a writ of mandamus under section 45 of the Specific Relief Act.
In his affidavit in support of the application the respondent besides contending that oats in full grain fell within the head fodder ' under item 42, set out earlier, because (1) he had imported them for being made available solely for feeding race horses at Bangalore, (2) that in South India oats was not used as human foods but only as feed for horses, and (3) that in any event, he had been misled by an answer that he received from the Deputy Chief Controller of Imports, Madras of whom he had made an enquiry as to whether feed oats could be imported under an open general licence under serial No. 42 and had received an affirmative answer, The learned 281 Single Judge who heard the application dismissed it on the ground that the order of the Customs Authorities classifying uncrushed feeds oats as grain and not as fodder could not be said to be either perverse or malafide and that consequently the Court could not interfere with the decision of the authorities.
An appeal was perferred therefrom to a Division Bench and the learned Judged allowed the appeal and issued a direction prohibiting the Collector and his subordinates from collecting or taking steps to recover the fines and penalties imposed on the respondent.
It is the correctness of this order of the Division Bench that is challenged in this appeal.
Shortly stated, the ground on which the learned Judges allowed the respondent 's appeal were : (1) that the decision of the Customs authorities as regards the entry of the Tariff classification within which an imported commodity fell was not final but was open to judicial review and had ultimately to be decided by the Courts, (2) In the case before the Court, entry 32 reading "grain" had, in the absence of any specific entry regarding oats to be read as excluding all grains which would be "fodder" i.e., which were usually used as cattle or animal feed, and that as the respondent had imported the oats for use as horse feed the proper item within which the goods imported fell was item 42 Fodder etc.
In arriving at this conclusion the learned Judges referred to the answer of the Deputy Chief Controller to the query by the respondent to which we have adverted earlier, as a circumstance indicative of the doubts entertained by the departmental authorities themselves on this matter.
With very great respect to the learned Judges we are unable to agree with them both as regards the function and jurisdiction of the Court in matters 282 of this type, as well as in their actual construction of the relevant entries in the Import Trade Circular.
As regards the limits of the jurisdiction of the Court it is sufficient to refer to the decision in Venkatesvaram vs Wadhwani.
(1) That was a case where a party moved the High Court under Art.226 of the Constitution, and not as here under section 45 of the Specific Relief Act under which the power of the Court to interfere is certainly narrower and not wider.
This Court proceeded on the basis that it is primarily for the Import Control authorities to determine the head or entry under which any particular commodity fell; but that if in doing so, these authorities adopted a construction which no reasonable person could adopt i.e., if the construction was perverse then it was a case in which the Court was competent to interfere.
In other words, if there were two constructions which an entry could reasonably bear, and one of them which was in favour of Revenue was adopted , the Court has no jurisdiction to interfere merely because the other interpretation favourable to the subject appeals to the Court as the better one to adopt.
In the present case it could not be contended that uncrushed oats did not answer the description of "grain" and therefore the decision of the Customs authorities holding that the oats imported fell within item 32 could not be Raid to be a view which on no reasonable interpretation could be entertained.
In other words, the conclusion or decision of the Customs authorities wag rationally supportable.
We consider that even if there was no specific reference to "oats" in entry 32, any particular species of grain cannot be excluded merely because it is capable of being used as cattle or horse feed.
The word " 'fodder" is defined in the Oxford ' dictionary as 'dried food, hay, straw etc.
for stall feeding Cattle".
Without resorting to (1) ; , 283 Johnson 's famous definition of " 'oats" in his Dictionary, it is sufficient to point out that oats, though they may serve as food for horses, is also used as human food; in other words it is not by its nature or characteristic capable of serving solely as food for animal,% and incapable of use in the human dietary.
For instance, all coarse grains like Ragi and Khambu serve as food for man as well as for cattle.
The mere fact therefore that a grain is capable of being used as horse or other cattle feed does not make it "fodder" excluding it from the category of grain to which it admittedly belongs.
The decision of the Assistant Collector.
and of the Collector on appeal holding the oats imported by the respondent to be grain cannot therefore be characterised as perverse or malafide and in the circumstances we consider that the learned Judges of the High Court erred in interfering with the order of the appellant.
In this particular case however, the matter is placed beyond the pale of controversy by the specific reference to "oats" in entry 32 where "grain" is classified into two categories "oats" and "other.
grains".
It is apparent that unfortunately the attention of the learned Judges was 'not drawn to the entry in full, because, in the course of the judgment they point out that the construction of entry 42 would be different if there had been a specific reference to oats in entry 32.
Learned Counsel for the respondent laid some stress on the respondent having been misled by the answer of the Deputy Chief Controller of Exports to a query as regards the scope of entry 42.
The answer which was stated to have misled was in these terms : "Feed oats classifiable under serial 42 of Part IV can be imported under Open General License No. XXIII".
284 an answer by no means a model of clarity.
This letter is dated September 14, 1951, and it is the case of the respondent that he placed an order for the import of "feed oats" because he was led to believe that for its import no licence was necessary.
The contract for the purchase of the foods for import was entered into in the beginning of June, 1 952, but before that date the Deputy Chief Controller wrote a further letter to the respondent on January 1, 1952, clarifying the answer he gave in his earlier letter, and pointing out that whereas if the oats were in whole grain it would fall within item 32, but if the same was crushed, it would be "fodder" within item 42.
The respondent however, denied having received this letter and there is no specific finding on this point by the learned Judges of the High Court.
We do not propose to record any finding either.
We are drawing attention to this matter merely for pointing out that it is a matter which the authorities could properly take into account in modifying, if they consider that the respondent has really been misled, the quantum of penalty imposed on the respondent.
The appeal is accordingly allowed and the order of the Division Bench of the High Court set aside.
The application filed by the respondent under section 45 of the Specific Relief Act will stand dismissed.
In the circumstances of the case we direct that the parties bear their own costs in this Court.
Appeal allowed.

dataset_name: IN-Abs

summary/full:
Item 42 of Part IV of the Import Trade Control Schedule permitted "fodder. . " to be imported without a special import licence from a soft Currency area.
Item 32 of the same Schedule related to "grain. and included oats; and a licence was necessary for importing goods covered by this item.
The respondent imported from Australia, without a licence, goods described as "feed oats" for feeding race horses.
He claimed that the goods were covered by Item 42 and could be imported without a licence.
The customs authorities held that the goods were "grains" within the meaning of Item 32 which could not be imported without a licence, confiscated the goods and imposed a penalty in lieu of confiscation.
The respondent moved the High Court for the issue of a writ of mandamus under section 45 specific Relief Act.
The High Court held that the 278 goods were covered by item 42 and issued a writ prohibiting the authorities from recovering the penalty imposed.
Held, that the High Court had no, jurisdiction to interfere with the decision of the customs authorities that the goods fell within item 32.
It is primarily for the Import Control authorities to determine the head of entry under which any particular commodity falls, and only when the construction adopted is perverse are the courts entitled to interfere.
In the present case the decision of the customs authorities was not one which could not be supported on any,reasonable basis, and could be called perverse.
Venkatesvaran vs Wadhwani, A. I. R. , referred to.
Held, further that the goods imported fell within item 82 and not within item 42.
Oats are undoubtedly grain.
Any particular species of grain cannot be, excluded, from the item "grain" merely because it is capable of being used as cattle or horse feed.
The matter is made clear by the reference to "coats" in item 32 where grain is classified into two categories, oats and "other gains".


judgement:
l Appeal No. 9 of 1962.
Appeal by special leave from the judgment and order dated August 29, 1961, of the, Railway Rates Tribunal, Madras in Complaint No. 1 of 1960.
Veda Vyasa and 1.
N. Shroff, for the appellant.
Niren De., P. C. Chatterjee and section N. Mukherjee, for the respondents.
April 23.
The Judgment of the Court was delivered by DAs GUPTA, J.
This appeal by special leave arises out of a complaint made by the appellant, the Upper Doab Sugar Mills Ltd., Shamli, to the Railway Rates Tribunal.
The complaint as originally made was against the station to station rates on sugarcane on the Shahdara (Delhi) Saharanpur Light Railway imposed by the. respondent, the Railway Company.
by their rates Circular No. 8 of 1953 with effect from October 1, 1953.
The complaint was that these rates had been and were unreasonable.
The Railway Company in their answer to the complaint pointed out that the rates imposed by the rate Circular No. 8 of 1953 had long before the date of the complaint ceased to be in force and that subsequent to the decision of this Court in S.S. Light Railway Co. Ltd. vs Upper Doab Sugar Mills Ltd. (1) a new rate had come into operation from February 10, 1960, under Local Rate Advice No. 2A of 1960.
After this the complaint prayed for amendment of his complaint by adding a complaint against this new Advice rate.
The prayer was allowed.
The complaint as it stands after the amendment made on February 3, 1961, is both against the rates imposed under Local Rates Advice (1) 336 No. 8 of 1953 and also the rates under the now Advice No. 2A of 1960 and is that these rates and charges are all unreasonable.
The prayers are: (I ) for a declaration that the rates charged under the Local Rates Advice No. 8 of 1953 and the surcharges were unreasonable from 1 10 1953 to 10 2.1960; (2) a declaration that the rates charged from 10 2 1960 under rate Advice No. 2A of 1960 are also unreasonable; (3) a direction of refund of the excess collected or which may be collected after the date of the amendment of the complaint on the basis of rate Advice No. 2A of 1960 over the reasonable rates that may be fixed by the Tribunal and (4) the fixation of the rates as mentioned in the complaint as reasonable rates from various stations to Shamli.
The main contentions of the Railway Company with which we are concerned in the present appeal are: (1) that the Tribunal had no jurisdiction to entertain the complaint as regards the reasonableness of rates prior to the institution of the complaint (2) that the Tribunal had no jurisdiction to grant any refund.
These questions are raised in Issues Nos. 6 and 9A and are in these words "6.
Has the Tribunal jurisdiction to entertain or try the present complaint regarding reasonableness or otherwise of rates and/or charges prior to the institution of this complaint, or, at any rate, prior to 27 7 1958.
9A. Has this Tribunal jurisdiction to grant a refund.
" The Tribunal rightly took up the consideration of these issues first.
It held that it had no jurisdiction to entertain or try the complaint as regards the reasonableness or otherwise of rates and charges made prior to the institution of the complaint on 337 May 6, 1960.
It also held that it had no jurisdiction to grant any refund.
In coming to these conclusions, the Tribunal followed the decision of the Madras High Court in Southern Railways vs The Railway Rates Tribunal (1).
It is contended before us in appeal that the Tribunal 's decisions on these questions were wrong.
It will be helpful to consider briefly the background in which the Railway Rates Tribunal came into existence.
Till the establishment of these Tribunals the actions of the Government of India with regard to the regulations of rates and charges that may be charged by Railway Companies were largely influenced by the policy of laissez faire.
The only provision as regards such a regulation was to be found for many years only in the contracts between the Government of India and the Railway Companies.
One of the earliest contracts with the Madras Railway Company, dated December 22, 1852, had a provision that the Company could charge only such fares and tolls as might have been approved by the East India Company and that no increase in approved fares etc., could be brought into effect without the previous sanction of the East India Company.
In the contracts of most of the companies ' there used to be a provision in the following terms: "The Secretary of State shall from time to time authorise maximum and minimum rates within which the Company shall be entitled to charge the public for services rendered by way of, or in connection with, the conveyance of passengers and goods on the undertaking, and shall prescribe the several classes and descriptions of passengers and goods to which rates shall be respectively (1) A.I.R. 1955 (Madras) 476.
338 applicable." (Srinivasan 's Railway Freight Rates) The maxima were fixed by the Local Governments for the railways within their provinces in 1869 while the Government of India prescribed the maxima for good grains and coal, and fares for the lowest class of passengers only.
Statutory provisions for fixation of maxima and minima for rates and charges were first made the year 1939 by the Act 33 of 1939 which introduced section 42 (b) in these words: "The Federal Railway Authority may be general or special order fix maximum and minimum rates for the whole or any part of a railway, other than a minor railway, and prescribe the conditions in which such rates will apply.
(2)Any complaint that a railway administra tion is contravening any order issued by the Federal Railway Authority in accordance with the provisions of this section shall be deter mind by that Authority.
" Before this however, as a result of the inves tigations made by the Acworth Committee, a Railway Rates Advisory Committee had been established.
This Committee was empowered to investigate and make recommendations on: 1.
Complaints of "undue preference" section 42(2) of the Indian Railways Act.
Complaints that rates are unresonable in themselves.
Complaints or disputes in respect of terminals section 46 of the Indian Railways Act.
339 4.
The reasonableness or otherwise of any conditions as to packing of articles, specially liable to damage in transit or liable to cause damage to other merchandise; 5.
Complaints in respect of conditions as to packing attached to a rate; and 6.
Complaints that railways do not fulfll their obligations to provide reasonable facilities under section 42 (3) of the Indian Railways Act.
" It is to be noticed that this Committee could only make recommendations and could not make any effective order itself.
The Railway Rates Tribunal come into existence as a result of the amendment of the Railways Act of 1890 in 1948 (Act No. 65 of 1948).
Section 34 of the Act as amended, provides that there shall be a Tribunal called the Rates Tribunal for the purpose of discharging functions specified in the Chapter.
These functions were specified in sections 41 ' and 42, while section 39 empowered the Tribunal to pass interim and final orders.
including orders for payment of costs for the purpose of exercising the jurisdiction conferred.
The first sub section of section 41 set out a number of matters of which complaints might be made against a railway administration or jointly against two or more railway administrations.and states that such complaints "shall be heard and decided by the Tribunal".
The second sub section of section 41 provided that in the case of a complaint under cl.
(d) of sub s 1, that is, where the complaint is that a railway administration or rail.
way administrations is or are unreasonably refusing to quote a now station to station rate, the Tribunal may fix a now station to station rate.
The first sub section of section 42 gave the Tribunal the exclusive 340 power to reclassify any commodity in a higher class but added that such power shall not be exercised except on the application of the Central Government.
The third sub section of section 42 provided that the Tribunal as well as the Central Government would have power to re classify any commodity in lower class.
In December, 1949, the Indian Railways Act was further amended by the Act No. 56 of 1949.
Some changes were then made in section 41 which it is unnecessary to set out.
There was amendment again in December, 1957, by Act No. 53 of 1957 by which amongst other changes, a. 41 was changed.
As a result of these changes cl. 1 of a. 41 reads thus : "41(1) Any complaint that a railway administ ration (a) is contravening the provisions of section 28, or (b) it charging for the carriage of any com modity between two stations a rate which is unreasonable, or (c) is levying and other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter.
" The second sub section(which was not changed by the 1957 Act) deals with the question of burden of proof in connection with complaints.
under el.
(a) of the first sub section and also says that in deciding whether a lower charge to any trader or class of traders does amount to undue preference or not the Tribunal will take into consideration whether such lower charge is necessary in 'the interest of the public.
The third sub section ruins thus : "In the case of a complaint under el.
(b) or cl.
(c) of sub section 1 the Tribunal may fix such rate or charge as it considers reasonable: Provided that the rate 341 to be fixed under cl.
(b) of sub section I shall be within the limits of the maximum and minimum rates fixed by the Central Government under sub s.1 of section 29." Section 41A which was added by the amending Act of 1957 gives the Tribunal a power to vary or revoke an order made by it on being satisfied on an application made by the Railway Administration that since the order was made there has been a material change in the circumstances on which it was based, but such application cannot be made till the expiry of one year from the date of the order.
The old section 42 was substituted by a new section in these words : "The Central Government alone shall have the power to classify or reclassify any commodity, (b) to increase or reduce the level of class rates and other charges.
" It will be noticed that this amendment took away the power which the Tribunal formerly had in the matter of classification of commodities.
The amendment of section 41 however gave the Tribunal jurisdiction to entertain and consider complaints in respect of standard terminal charges which had been excluded in the old section 41.
At the same time it took away the Tribunal 's jurisdiction to entertain any complaint that a Railway Administration has unreasonably placed a commodity in a higher class or that it was unreasonably refusing to quote a new station to station rate which it had under the old cls.
(d) and (e).
Our first task is now to construe the words of cl.
(b) and (e) of the first sub section of section 42.
The question is what did the legislature mean by the words "is charging" in clause (b) and "is levying" in cl.
(c) ? The use of the present progressive tense is to denote something which is taking place at present.
What has already taken place cannot be described by saying that "it is taking place.
" Just as one cannot say of a man who has ceased to 342 exist, that he is existing; so also, one cannot say of a charge which has already been made that "it is being made.
" of the charge which has already been made a person aggrieved can complain that "the Railway Administration has charged me at this rate." ' It will not be correct to say that 'the Railway Administration is charging me at this rate.
" This, it is true, proceeds on the assumption that the words "charging a rate" was used by the legislature in its ordinary meaning of "demanding a price.
" This, it is contended on behalf of the appellant, is not however the only sense in which the words "charging a rate" of its senses, it is was demanded in the past".
in cl.
(c) the words used are can be used; and one "Collecting a price that It is pointed out that "levying a charge" and ",levying" can certainly mean "collecting.
" It will be legitimate, argues the learned Counsel, to think that the word #charging" in cl.
(b) and the word "levying" in el.
(c) were used by the legislature in the same sense.
According to him, both these words should be construed widely so as to include ,,collecting a price.
" The words "charging" in cl.
(b) and " 'levying" in cl.
(c) were used in the one and the same sense.
We find it impossible to agree however that they were used to include "collecting".
It appears to be clear that if the intention of the legislature was to give the Tribunal jurisdiction over complaints in connection with charges already made the legislature would have used the words "has charged and is charging" and would not merely say " 'is charging" Special jurisdiction of such a nature would be given clearly and the very fact that the words ,has charged" have not been used is sufficient ground for thinking that it was not the legislatures intention to give the Tribunal jurisdiction over complaints in 343 connection with charges made in the past.
In our opinion, the words ,,is charging" in cl.
(b) and ,,is levying" in cl.
(c) must be construed to mean ,is demanding a price at the present time for services to be rendered.
" The conclusion of the Railway Rates Tribunal that it had no jurisdiction to entertain or try the complaints as regards the reasonab leness or otherwise of rates and charges made prior to the institution of the complaint is therefore correct.
When the Tribunal had no jurisdiction to consider the reasonableness or otherwise of any charges made prior to the institution.
of the complaint, it follows necessarily that it could have no occasion to order any refund.
For, the question of refund could arise only after a decision that the charges made were more than what was reasonable.
It is clear however that even in respect of those charges and rates for which the Tribunal had jurisdiction to entertain a complaint the Tribunal had no power to order any refund.
It is necessary to consider this question as the prayer for refund as made in the complaint was not only for charges already made but for charges that might be made in future under the rate Advice No. 2A of 1960.
On behalf of the appellant it has been urged that it would be inequitable for the Tribunal not to make an order of refund in respect of charges made after the date of the complaint, if it comes to the conclusion that those charges were more than what was reasonable.
The question of equity does not however arise.
The Tribunal can have no more jurisdiction that what it is given by the Act whichbrings it into existences ; and if on a properconstruction of the words of the statute we findthat the Tribunal was not given any such jurisdiction we cannot clothe it with that jurisdiction on any consideration of convenience or equity or justice.
344 What the Tribunal has to do after a complaint is made is mentioned in section 41 (1) itself.
It is said there that the Tribunal shall hear and decide the complaint.
The complaint being that something is unreasonable all that the Tribunal has to decide is whether that thing is unreasonable or not.
A finding that it is unreasonable does not involve any consideration or decision of what would flow from the finding.
In other words, in making the complaint the complainant can ask only for a declaration that the rate or charge is unreasonable and it is only this declaratory relief which the Tribunal has been authorised to give.
There is no provision that the Tribunal can also give a consequential relief.
The only other thing which the Tribunal is authorised to do in connection with the complaint is to fix "such rate or charge as it consider reasonable".
In the absence of anything to indicate to the contrary it is reasonable to think that this fixation can only be prospective, that is, the Tribunal in making this order fixing the reasonable rate or charge will mention a future date for this to come .into operation.
Even if it was assumed for the sake of argument that the Tribunal can fix these rates from the date of the complaint that would not give the Tribunal any power to order refund.
Mr. Veda Vyasa has argued that the power to order refund flows from section 39 of the Act.
Section 39 is in these words : "For the purpose of exercising the jurisdiction conferred on it by this Chapter, the Tribunal may pass such interim and final orders as the circumstances may require, including orders for the payment, subject to the provisions of this Chapter, of costs; and it shall be the duty of the Central Government or the State Government, as the case may be, on whom any obligation is imposed by any such order to carry it out.
" Is it neceserly 345 for the Tribunal to make the order for refund at least in respect of the charges made after the date of the complaint in excess of what is held to be reasonlable "for the purpose of exercising the jurisdiction conferred on it?" The utmost that could be said is that the relief for making an order of refund has a connection with the order holding the rates already charged after the date of the institution of the complaint to be unreasonable.
It is impossible to say however that such )an order is necessary for the purpose of exercising the jurisdiction conferred that jurisdiction in connection with complaints, being under a. 41, only to arrive at a decision whether a certain rate was reasonable or not and if it was unreasonable to fix a reasonable rate.
An order for refund can by no stretch of imagination be considered to be " 'necessary for the purpose of exercising the jurisdiction".
Section 39 is therefore of no assistance to the appellant 's contention.
It was next urged that unless the Tribunal is held to have power to make an order of refund, s.46 (B) will be meaningless.
Section 46 (B) provides that the Tribunal may transmit any order made by a civil court having local jurisdiction and such civil court shall execute the order as if it were a decree.
It is obvious that an order for payment of coati; which may be made by the Tribunal could under a. 46 (B) be transmitted to a civil court and executed by a civil court as if it were a decree.
Even if the Tribunal can pass no other order, which may require execution, a. 46 (B ) will serve its purpose in connection with the orders for costs.
Nor is it necessary for us to speculate as to what other orders made by the Tribunal could require execution by the civil courts.
For., such considerations cannot in any way throw any light on the nature of the orders that can be made under a. 39.
It is hardly necessary to mention that a. 39 does not 346 confer any jurisdiction; but only provides for means for exercise by that Tribunal the jurisdiction which it has otherwise got under other sections.
It is interesting to remember in this connection the words used by the British Parliament in section 196 (3) of the Government of India Act, 1935.
The first sub section of section 196 provided for the constitution of the Railway Tribunal and then the third sub section proceeded to say : "It shall be the duty of the Railway Tribunal to exercise such jurisdiction as is conferred on it by this Act, and for that purpose the Tribunal may make such orders, including interim orders, orders varying or discharging a direction or order of the Authority,, orders for the payment of compensation or damages and of costs and orders for the production of docu ments and the attendance of witnesses, as the circumstances of the case may require, and it shall be the duty of the Authority and of every federated state and of every other person or Authority affect ed thereby to give effect to any such order".
These important words ,,orders for the payment of compensation or damages" have been omitted from the present section 39.
Mr. Veda Vyasa strenuously contended that unless the Tribunals be held to have jurisdiction to order refund, the 'appellant and others in his position would be deprived of their right to obtain relief against unreasonable charges already paid in view of the provisions of section 26 of the Act.
Section 26 (which is in the same words as the old 41) run thus : "Except as provided in this Act no suit shall be instituted or proceeding taken for anything done or any omission made by a Railway Administration in violation or contravention of any provisions of this Chapter" (Ch. V).
The argument in that section 26 stands in the way of bringing any suit of the civil courts on a claim for refund of charges 347 made in excess of reasonable charges.
This proceeds on the misconception that such a suit would be , 'for anything done or any omission made by a Railway Administration in violation or contravention of Ch.
V of the Act".
There is no provision in Ch.
V however saying that unreasonable charges shall not be made by a Railway Administration.
If therefore any Railway Administration has received payment of unreasonable charges or rates that is not "anything done in violation or contravention of any provisions of Chapter V".
If under the law, apart from the Railways Act, a consignor is entitled to obtain relief against unreasonable charges which he has paid, in the past, section 26 will not stand in his way.
What his rights in law are in respect of such past charges: and whether any claim for repayment of charges made in excess of reasonable charges can succeed in law in civil courts on the theory that as a common carrier the Railway is not entitled to charge anything more than reasonable rates and charges, need not be examined here.
As a suit on ,such a claim world not be on anything done or any omission made by the Railway Administration in violation or in contravention of any provisions of Ch.
V, the provisions of section 26 are quite irrelevant for the decision of the question whether the Tribunal has any jurisdiction to make an order for refund.
Our conclusion therefore is that neither expressly nor by necessary implication has the Railway Rates Tribunal been given any jurisdiction to make any order for refund.
The decisions of the Railway Rates Tribunal, in the present case, on both the issues are therefore correct.
The appeal is accordingly dismissed with costs.

summary/full:
A complaint was made by the appellant to the Railway Rates Tribunal against station, to station rates as being unreasonable on sugarcane imposed by the respondent Railway Co. by their rates circular No. 8 of 1953 with effect from October 1, 1953.
The Railway company in their answer pointed out that the rates imposed by the rates circular 8 of 1953 had long before the date of the complainant ceased to be in force and a new rate had come into operation from February 10, 1960.
Thereafter the complainant was allowed to amend the complaint.
The prayers were for a declaration that the rates charged were unreasonable, that a direction of refund of the excess collected or which may be collected after the date of the amendment of the complaint over the reasonable rates that may be fixed by the Tribunal and, lastly, for fixation of the rates.
The main contentions of the respondent were that the Tribunal had no jurisdiction to entertain the complaint as regards the reasonableness of rates prior to the institution of the complaint and that the Tribunal had no jurisdiction to grant refund.
The Indian Railways Act underwent several amendments and by the amendment in December 1957, section 41 was changed.
As a result of the change cl.
I of section 41 read thus: "Any com plaint that a railway administration (a) is contravening the provisions of section 28, or (b) is charging for the carriage of any commodity between two stations a rate which is unreasonable or is levying any other charge which is unreasonable shall hear and decide any such complaint in accordance with the provisions of this Chapter.
" 334 The Tribunal held that it had no jurisdiction to entertain or try the complaint as regards the rates and charges to prior to the institution of the complaint and it had no jurisdiction to grant any refund.
The appellants came up in appeal to the Supreme Court.
Held, that the words "is charging" in clause (b) and "is levying" in clause (c) of section 41 (1) of the Act must be construed to mean "is demanding a price at the present time for services to be rendered".
The Railway Rates Tribunal had no jurisdiction to entertain or try the complaint as regards the reasonableness or otherwise of rates and charges made prior to the institution of the complaint.
When the Tribunal had no jurisdiction to consider the reasonableness, or otherwise of any charges made prior to the institution of the complaint, it follows necessarily that it could have no occasion to order any refund.
For the question of refund could arise only after a decision that the charges made were more than what was reasonable.
Held, further, that neither expressly nor by necessary implication has the Railway Rates Tribunal been given any jurisdiction to make any order for refund.
, Southern Railway vs The Railway Rates Tribunal, A.I.R. 1955 (Madras) 676, referred to.
After a complaint is made the Tribunal shall hear and decide the complaint.
The complaint being that something is unreasonable all that the Tribunal has to decide is whether that thing is unreasonable or not.
A finding that it is unreasonable does not involve any consideration or decision of what would flow from the finding.
In otherwords, in making the complaint the complainant can ask only for a declaration that the rate or charge is unreasonable andit is only this declaratory relief which the Tribunal has been authorised to give.
There is no provision that the Tribunal can also give a consequential relief.
The only other thing which the Tribunal is authorised to do in connection with the complaint is to fix "such rate or charge as it considers reasonable.
" In the absence of any thing to indicate to the contrary it is reasonable to think that this fixation can only be prospective, that is, the Tribunal in making this order fixing the reasonable rate or, charge will mention a future date for this to come incoporation. 335


judgement:
nal Appeals Nos.
176 of 1959 and 40 of 1960.
Appeals by special leave from the judgment and order dated August 26, 1959, of the Bombay High Court, in Cr. A. No. 1638 of 1958.
A. section R. Chari, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellant (in Cr. A. No. 176 of 59).
Erenny Parekh and K. R. Choudhri, for the appellant (in Cr. A. No. 40 of 60).
Jai Gopal Sethi, R. L. Mehta and R. H. Dhebar, for the respondents.
April 24.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
A criminal conspirac.
to which, according to the prosecution, M.G. Agarwal 407 M. K. Kulkarni and N. Laxminarayan, hereafter called accused Nos. 1, 2 and 3 respectively, were parties between December, 1954, and June 1955, at Bombay, has given rise to the criminal proceedings from which the two present appeals arise.
At the relevant time, the three accused persons were attached to the office of the Income tax Officer, Ward No. A III in Greater Bombay.
Accused No.
I was designated as the First Income tax Officer, and accused Nos. 2 and 3 worked under him as second and third Assessment Clerks respectively.
The main charge against these persons was that during the relevant period, they had entered into a criminal conspiracy by agreeing to do or cause to be done illegal acts, by corrupt and illegal means and by abusing their position as public servants to obtain for themselves pecuniary advantage in the form of income tax refund orders and this criminal object was achieved by issuing the said refund orders in the names of persons who either did not exist or were not assessees entitled to such refunds.
The prosecution case was that after the said refund orders were thus fraudulently issued, they were fraudulently cashed and illegally misappropriates.
The ten persons in whose names these refund orders were fraudulently issued were G.M. Thomas, P.N. Swamy, K. section Patel, section R. Bhandarkar, section P. Jani, D. M. Joshi, C. B. Kharkar, Ramnath Gupta, V. M. Desai and K. V. Rao.
It appears that twenty five bogus vouchers were issued in respect of these ten fictitious cases ; eleven accounts were fraudulently opened in different Banks in Bombay and misappropriation to the extent of Es.
54,000/ has thereby been committed.
That, in.
substance, is the main charge which was levelled against the three accused persons.
Nine other subsidiary charges were also framed against them.
Charges 2, 3 and 4 wore in respect of the income tax refund order issued on 408 the 7th January, 1955, in favour of Mr. G. M. Thomas.
The prosecution alleged that by their several acts in respect of the issuance of this refund order, the three accused persons had committed offences under sections 467 and 471 read with, section 34 I.P.C., as well as section 5(2) of the Prevention of Corruption Act read with section 5(1)(d) of the said Act and a. 34 of 'the Indian Penal Code.
Similarly, charges 5, 6, and 7 were framed under the same sections respectively in regard to the income tax refund order issued in favour of Mr. G. M. Thomas on the 2nd April, 1955.
In regard to the income tax refund order issued in favour of Mr. section R. Bhandarkar on 2nd April, 1955, charges, 8, 9 and 10 were framed under the said respective, sections.
That is how the case against the three, accused persons under ten charges was tried by the Special Judge , Greater Bombay.
It would thus be seen that, in substance, the prosecution case if; that in order to carry out the criminal object of the conspiracy, the three accused, persons adopted a very clever and ingenious modus operandi in defrauding the public treasury.
They" decided to take adequate steps to issue income tax refund orders in the names of non existing persons and to misappropriate the amounts by encashing the said refund certificates issued in pursuance of the said refund orders.
In furtherance of the conspiracy and in furtherance of the common intention of all the conspirators, steps were taken to forge the signatures of the said fictitious persons as claimants wherever necessary, to prepare some of the supporting documents and to deal with the cases as though they were cases of genuine assessees submitting a return and making a claim for refund.
It is by adopting this clever device that all the accused persons have succeeded in misappropriating such a large amount as Re.
54,000/ .
409 It appears that when a return 'or refund application is received in the Income tax Office, first goes to the assessment refund clerk who, in ue course, puts it up for orders before the Incometax Officer.
In ordinary course, the Income tax Officer sends a notice to the assessee, examines him and the accounts produced by him to see if the return is correct.
That done, an assessment order is passed by the Income tax Officer.
Thereafter, a form known as I.T. 30 form is prepared.
This form contains several columns which, when filled in, give details about the income tax payable by the assessee the tax paid by him, the refund ordered by the income tax Officer or the collection demanded by aim.
After this form is duly filled, it is sent to another clerk for preparing the refund order.
At that stage, the refund order is prepared and the said order together with the demand and collection register and I.T. form 30 are sent back to the Income tax Officer who examines the record and signs the refund order and the I.T. form 30 and himself makes or causes to be made an entry in the demand and collection register.
At this time, he also cancels the refund certificates, such as dividend warrants.
The Income tax Officer also receives the advice memo prepared by the refund clerk and signs it.
The said memo is sent to the Reserve Bank and the refund order is sent to the assessee.
After the refund voucher is cashed by the Reserve Bank, the advice memo is received back in the Income tax Office.
It is thereafter that an entry is made in the Daily Refund Register.
The prosecution case is that the conspirators purported to adopt all steps which they deemed necessary to carry out their criminal object in order formally to comply with the procedure prescribed by the department in making refund orders.
At this stage, it is relevant to state briefly how, according to the prosecution, the fraud of the 410 conspirators was discovered.
In April ' 1955, Mr. Sundararajan who was then the Commissioner of Income tax, Bombay City received a report that many irregularities were being committed in respect of refund orders issued by A III Ward.
On receiving this report, he told Mr. Gharpure who was the Inspecting Assistant Commissioner of Income tax, A Range, to carry out an inspection of the work of accused No. 1.
He, however, cautioned Mr. Gharpure to carry out his assignment as if he was making an inspection in the normal course in order that no suspicion should arise in the mind of accused No. 1.
Mr. Gharpure accordingly made inspection and submitted his report on the 6th ,Tune, 1955.
It is common ground that Mr. Gharpure was not able to discover any fraud.
On the 10th June, 1955, Mr. Sundararajan asked Mr. Gharpure to produce before him all the refund books kept in A III Ward.
They were accordingly produced before him.
On examining these books, Mr. Sundararajan found certain sus picious features.
He came across one counter foil of the refund order in the Dame of G. M. Thomas and he noticed that the relevant postal acknowledgment did not bear any postal stamp and presented a clean and fresh appearance.
That appeared to Mr. Sundararajan to be suspicious.
He also found that a number of refunds were made in round figures which was very unusual.
The files showed that on the back of the counter foils the postal acknowledgments were not stuck up nor were advice notes stuck up.
His suspicions having been raised by these unusual features of the files, Mr. Sundararajan conducted a further scrutiny of the six counter foil books particularly to find out whether the refund orders were in respect of round figures and he found that such refund orders had been passed, in the names of Messrs G. M. Thomas, K. section Patel, P. N. Swamy, D. N. Joshi and S, R. Bhandarkar.
411 After the refund orders were encashed they we 're sent to the Accountant General 's Office by the Reserve Bank and so, Mr. Sundararajan thought that he could got them from the said office.
All this happened in the evening of the 10th June, 1955.
On the 11th June, 1955, which was a Saturday, Mr. Sundararajan called for the income tax files of some of the persons named above including G. M. Thomas and K. section Patel along with the files of twenty other regular assessees.
The files of the twenty regular assessees were submitted to him but not of the ten fictitious persons.
On enquiry he was told that those files were not available. ' The non production of the said files confirmed his suspicion that something irregular must have happened in respect of them.
That is why he sent for accused No. 1 at 2 p. m. but he was not in his office.
He came at 3 p. m.
Mr. Sundararajan showed him the relevant counter foils and examined him.
The statement made by accused No. I was duly recorded by Mr. Sundararajan.
As a result of the enquiry made by him, Mr. Sundararajan was satisfied that the three accused persons had fraudulently brought into existence several documents as a result of which a large amount had been misappropriated, and so, he requested the Central Board of Revenue to suspend accused No. 1.
At that stage, Mr. Sundararajan naturally wanted to search the office of A III Ward, but he could not carry out the search since he was told that the key of the A III Ward Office had been taken way by accused No. 3.
He then left instructions with the police guard of his office that nobody should be allowed to enter the room of A III Ward without his permission.
Next day, he attended his office but he found that no person in A III Ward had gone to work.
Before he left the office, he got the office of A III Ward sealed and 412 left word with the Inspector on duty that if any person came to work in that office thereafter, it should be reported to him.
After Mr. Sundararajan reached home, he received a telephone message that accused No. 3 had come to A III Ward Office with the keys.
Mr. Sundararajan directed the Inspector to take charge of the keys from accused No. 3 and ask him to attend office the next day.
Next day was a Monday (13 6 1955).
On that day, Mr. Sundararajan accompanied by certain other officers went to the office of A IlI Ward, opened the seal and the lock and after going inside, attached six registers.
He also made a search for the assessment records of the ten persons in question but he did not find them.
He then transferred accused No. 1 to an unimportant charge and instructed the Banks that no withdrawals should be allowed from any of the eleven accounts, since the said accounts appeared to him to be suspicious.
He then sent for accused No. 3 and examined him.
He also sent for accused No. 2 but he was not available since he had gone on leave.
He directed one of his inspectors to enquire whether the said ten persons were real persons or were merely fictitious Dames.
All this happened on the 13th June, 1955.
On the 14th June, 1955, Mr. Sundararajan went to A III Ward Office along with accused No. 3.
He wanted to search for the missing papers, viz., the assessment record of the ten persons in question.
Accused No. 3 waited for some time and then opened accused No. 2 's table and took out some papers.
A list of these papers was made and they were taken in charge.
This list has been signed by Mr. Sundararajan and the officers who accompanied him as well as by accused No. 3.
Thereafter, accused Nos.
2 & 3 were suspended and as a result 413 of the investigation which followed, all the three accused persons were put up for their trial before the learned Special Judge for Greater Bombay on the charges already indicated.
Before the learned trial Judge, accused No. 3 pleaded guilt to all the charges framed against him, whereas accused Nos. 1 and 2 denied that they had anything to do with the alleged commission of the offences charged.
The prosecution sought to prove its case against all the three persons by producing before the learned trial Judge the relevant documents including the files kept in A III Ward office, and it examined four witnesses from the department for the purpose of showing the procedure that is followed in passing assessment orders and granting refunds and with the object of showing that the conspiracy could not have succeeded without the active assistance and co operation of accused No. 1.
These witnesses are Sundararajan, P. W. 1, Nagwekar, P. W. 2, Subramanian, P.W. 5 and Downak, P. W. 21.
It also.
examined Das Gupta, P. W. 26, to prove the handwriting of the accused persons.
Eleven other witnesses were examined to prove the identity of accused Nos. 2 and 3 in respect of the steps taken by them to open accounts in different banks in order to encash the refund vouchers issued in pursuance of the refund orders passed by accused No. 1.
The learned trial Judge held that the evidence accused by the prosecution did not establish beyond a reasonable doubt 'the existence of the criminal conspiracy between the three accused.
He was not inclined to hold that the ten alleged persons were non existent.
Even so, he proceeded to deal with the case on the basis that the ten persons were non assesses and yet the refund orders had been passed in their favour.
According to the 414 learned trial Judge, accused No.
I may have innocently signed the, relevant documents without looking to them in a hurry to dispose of cases, placing confidence in his staff; and so, it would be difficult to hold that he was a member of the conspiracy.
The utmost, said the learned Judge, that can be argued against him is that he was negligent.
That is how he acquitted accused No. 1 of the principal charge of conspiracy under section 120 B &.ad as a result, the other charges as well.
In regard to accused No. 2, the learned Judge was likewise not satisfied that the evidence adduced by the prosecution to prove his signatures on the relevant documents established the fact that he had signed those documents and he was not impressed by the other evidence led before him to show that he assisted accused No. 3 in the matter of encashing the refund vouchers.
On these findings, accused No. 2 was acquitted of all the charges framed against him.
Since accused No. 3 had pleaded guilty to the charges, the learned Judge convicted him under sections 47 1, of the I. P.C. and section 5 (2) of the Prevention of Corruption Act and sentenced him to different terms of imprisonment which were ordered to run concurrently.
, He, however, acquitted accused No. 3 so far as the charge of conspiracy was concerned and he acquitted accused Nos. 1 and 2 of all the offences.
Against the order of acquittal passed by the learned Judge in favour of accused Nos. 1 and 2, the State of Maharashtra preferred an appeal in the Bombay High Co art and this appeal succeeded.
The High Court has found that the learned trial Judge a misdirected himself by assuming that accused No.
I had pleaded that he had negligently signed the relevant documents and passed the relevant orders in a hurry, placing confidence in his staff.
The High Court has pointed out that far from pleading negligence, accused No. 1 had definitely stated 415 in his written statement filed in the trial Court that before he directed the issue of refund in the ten cases, be had examined the files containing the supporting documents and had satisfied himself that it was proper to allow the refund in each one of those cases.
This position was conceded by the learned Advocate who appeared for accused No. 1 in the High Court.
The High Court then examined the question as to whether the ten assessees were existing persons or were fictitious names and it came to the. conclusion that the ten names given for the eleven accounts in which refund orders were passed were fictitious names.
The High Court then examined the circumstantial evidence on which the prosecution relied in support and proof of its main charge of conspiracy between the three accused persons and it came to the conclusion that the said charge had been proved against all the three accused persons beyond a reasonable doubt.
That is how the High Court partially allowed the appeal preferred by the State and convicted all the three accused persons under section 120 B of the Indian Penal Code.
It also convicted accused No. 2 of the offences under sections 467, 471, I. P. C., and section 5(2) of the Prevention of Corruption Act.
In regard to the other offences charged, the order of acquittal was confirmed.
Having convicted accused Nos. 1 & 2 under section 120 B, the High Court has sentenced each one of them to suffer rigorous imprisonment for 18 months for the said offence.
Accused No. 2 has also been directed to suffer R.I. for 18 months in respect of each of the offences under sections 467, 471, I. P. C. and section 5 (2) of the Prevention of Corruption Act.
These sentences are ordered to run concurrently with the sentence ordered under section 120 B.
It is against this order of conviction and sentence passed by the High Court in appeal that accused Nos. 1 , 2 have come to this Court by special leave by their appeals Nos. 176 of 1959 and 40 of 1960.
416 Since the impugned order of conviction and sentence was passed against the appellants by the High Court in exercise of its powers under section 423 of the Criminal Procedure Code while hearing 'an appeal against their acquittal, the first question which calls for our decision relates to the extent of the High Court 's powers in interfering with orders of acquittal in appeal.
This question has been discussed and considered in several judicial decisions both by the privy Council and this Court.
In dealing with the different aspects of the problem raised by the construction of section 423, emphasis has sometimes shifted from one aspect to the other and that is likely to create a doubt.
about the true scope and effect of the relevant provisions contained in section 423.
Therefore, we propose to deal with that point and state the position very briefly.
Section 423 (1) prescribes the powers of the appellate Court in disposing of appeals preferred before it and clauses (a) and (b) deal with appeals against acquittals and appeals against convictions respectively.
There is no doubt that the power conferred by clause (a) which deals with an appeal against an order of acquittal is as wide as the power conferred by clause (b) which deals with an appeal against an order of conviction, and so, it is obvious that the High Court 's powers in dealing with criminal appeals are equally wide whether the appeal in question is one against acquittal or against conviction.
That is one aspect of the question.
The other aspect of the question centres round the approach which the High Court adopts in dealing with appeals against orders of acquittal.
In dealing with such appeals, the High Court ;naturally bears in mind the presumption of innocence in favour of an accused person and cannot lose sight of the fact that the said presumption is strengthened by the order of acquittal passed in his favour by the trial Court and so, the fact that the accused person is 417 entitled to the benefit of a reasonable doubt will always be present in the mind of the High Court when it deals with the merits of the case.
As an appellate Court the High Court is generally slow in disturbing the finding of fact recorded by the trial Court, particularly when the said finding is based on an appreciation of oral evidence because the trial Court has the advantage of watching the demeanour of the witnesses who have given evidence.
Thus, though the powers of the High Court in dealing with an appeal against acquittal are as wide as those which it has in dealing with an appeal against conviction, in dealing with the former class of appeals, its approach is governed by the overriding consideration flowing from the presumption of innocence.
Sometimes, the width of the power is emphasized, while on other occasions, the necessity to adopt a cautious approach in dealing with appeals against acquittals is emphasised, and the emphasis is expressed in different words or phrases used from time to time.
But the true legal position is that however circumspect and cautious the approach of the High Court may be in dealing with appeals against acquittals, it is undoubtedly entitled to reach its own conclusions upon the evidence adduced by the prosecution in respect of the guilt or innocence of the accused.
this position has been clarified by the Privy Council in Sheo Swarup vs The, King Emperor (1) and Nur Mohammad vs Emperor In some of the earlier decisions of this Court, however, in emphasizing the importance of adopting a cautious approach in dealing with appeals against acquittals, it was observed that the presumption of innocence is reinforced by the order of acquittal and so, "the findings of the trial Court which had the advantage of seeing the witnesses and hearing their evidence can be reversed only for (1) (1934) L.R. 61 1.
A. 398.
(2) A.I.R. 1945 P.C. 151, 418 very substantial and compelling reasons": vide Surajpal Singh vs The State (1).
Similarly in Ajmer Singh vs State of Punjab (2), it was observed that the interference of the High Court in an appeal against the order of acquittal would be justified only if there are "very substantial and compelling reasons to do so. ') In some other decisions, it has been stated that an order of acquittal can be reversed only for "good and sufficiently cogent reasons" or for "strong reasons".
In appreciating the effect of these observations, it must be remembered that these observations were not intended to lay down a rigid or inflexible rule which should govern the decision of the High Court in appeals against acquittals.
They were not intended, and should not be read to have intended to introduce an additional condition in clause (a) of section 423 (1) of the Code.
All that the said observations are intended to em phasise is that the approach of the High Court in dealing with an appeal against acquittal ought to be cautious because as Lord Russell observed in the case of Shoo Swarup, the presumption of innocence in favour of the accused "is not certainly weakened by the fact that he has been acquitted at his trial." Therefore, the test suggested by the expression "substantial and compelling reasons" should not be construed as a formula which has to be rigidly applied in every case.
That is the effect of the recent decisions of this Court, for instance, in Sanwat Singh vs State of Rajasthan (2), and Harbans Singh vs The State of Punjab (4); and so, it is not necessary that before reversing a judgment of acquittal, the High Court must necessarily characterise the findings recorded therein as perverse.
Therefore, the question which we have to ask ourselves in the present appeals is whether on the material produced by the prosecution, the High Court was justified in reaching the conclusion that the (1) ; , 201.
(2) ; (3) ; (4) (1962) Supp.
I.S.C.R 104.
419 prosecution case against the appellants had been proved beyond a reason able doubt, and that the contrary view taken by the trial Court was, erroneous.
In answering this question, we would, no doubt, consider the salient and broad features of the evidence in order to appreciate the grievance made by the appellants against the conclusions of the High Court.
But under article 136 we would ordinarily be reluctant to interfere with the finding of fact recorded by the High Court particularly where the said findings are based on appreciation of oral evidence.
There is another point of law which must be considered before dealing with the evidence in this case.
The prosecution case against accused No. 1 rests on circumstantial evidence.
The main charge of conspiracy under section 120 B is sought to be established by the alleged conduct of the conspirators and so far as accused No. 1 is concerned, that rests on circumstantial evidence alone.
It is a well established rule in criminal jurisprudence that circumstantial evidence can be reasonably made the basis of an accused person 's conviction if it is of such a character that it is wholly inconsistent with the innocence of the accused and is consistent only with his guilt.
If the circumstances proved in the case are consistent either with the innocence of the accused or with his guilt, then the accused is entitled to the benefit of doubt.
There is no doubt or dispute about this position.
But in applying this principle, it is necessary to distinguish between facts which may be called primary or basic on the one hand and inference of facts to be drawn from them on the other.
In regard to the proof of basic or primary facts the Court has to judge the evidence in the ordinary way, and in the appreciation of evidence in respect of the proof of these basic or primary facts there is no scope for the application 420 of the doctrine of benefit of doubt.
The Court considers the evidence and decides whether that evidences proves a particular fact or not.
When it is held that a certain fact is proved, the question arises whether that fact leads to the inference of guilt of the accused person or not, and in dealing with this aspect of the problem, the doctrine of benefit of doubt would apply and an inference of guilt can be drawn only if the proved fact is wholly inconsistent with the innocence of the accused and is consistent only with his guilt.
It is in the light of this legal position that the evidence in the present case has to be appreciated.
The Court then considered the evidence and the findings of the High Court and dismissed the appeals.
Appeals dismissed.

summary/full:
Appellant Agarwal was an Income Tax Officer and appellant Kulkarni, a clerk under him.
They were put up for trial along with another clerk of the Department on several charge the principal charge being that they had entered into a criminal conspiracy to obtain for themselves pecuniary advantage in the form of income tax refund orders in the name of fictitious persons and had thereby fraudulently mis appropriated a large amount of Government money.
The trial judge held that the prosecution had failed to establish criminal conspiracy and acquitted the appellants of the charge under section 120B and the second appellant of all other charges under the Indian Penal ( ode but while acquitting the third person also under section 120B,, convicted him of other offends as he had pleaded guilty.
The State appealed against this order of acquittal.
The High Court allowed the appeal in part and convicted all the accused persons under section 120B of the Code and the second appellant also under the other charges.
Held, that there was no doubt that the powers of the High Court under section 423 (1) (a) of the Code of Criminal Procedure in dealing with an order of acquittal were as wide as those under section 423 (1) (b) in respect of orders of conviction; ' but in dealing with an appeal against acquittal that Court had to bear in mind the fact that the initial presumption of innocence in favour of the accused person is strengthened by the order of acquittal; But however cautious or circumspect the court might be, it was, nevertheless, free to arrive at its own conclusions as to the guilt or innocence of the accused on the evidence adduced before it by the prosecution; Sheo Swarup vs King Emperor , 934) L. R. 61 I. A. 398 and Nur Mohammad vs Emperor, A.I.R. 1945 P. C. 151., referred to.
406 Observations made on ' this point in certain decided cases of this Court were not intended to lay down a rigid or inflexible rule that should govern all such appeals and it is not necessary that the High Court must characterise the findings as perverse, before it can reverse a judgment of acquittal.
Surajpal Singh vs The State, ; and Ajmer Singh vs State, of Punjab, ; , considered.
Sanwat Singh v, State of Rajasthan; , and Harbans Singh vs State of Punjab, [1962]_"Supp. 1 section C. R. 104 referred to.
It was settled law that a conviction can be reasonably founded on circumstantial evidence if it is wholly inconsistent with the innocence of the accused and Consistent only with his guilt.
If the circumstances proved are consistent either with innocence or guilt, the accused person is entitled to the benefit of doubt.
But in applying this principle a distinction must be made between primary facts ' which have to be proved in the ordinary way and the inference of guilt to be drawn therefrom.
It is in connection with the latter aspect of the problem that the doctrine of benefit of doubt can apply ; and an inference of guilt can be drawn only if the proved facts are wholly inconsistent with innocence, and consistent only with guilt.