judgement:
ion No. 467 of 1988.
(Under Article 32 of the Constitution of India.) D.N. Dwivedi, B.D. Aggarwala, O.P. Khadaria, Sarva Mitter, Bagga, Mrs. S.K. Bagga, R.P. Srivastava, Ms. A. Subhashini, R.K. Mehta, Ms. Sushma Manchanda and Ms. Suman Rastogi for the appearing parties.
The following Order of the Court was delivered: ORDER This petition under Article 32 of the Constitution arises out of implementation of the decision rendered by this Court in Dr. Pradeep Jain 's case ; The petitioner is an unsuccessful candidate for admission to the Post Graduate Medical Course in the All lndia Entrance Examination held by the All India institute of Medical Sciences, respondent No. 2.
In this application he has asked for a declaration that clauses 11 and 15(g) of the Bulletin of Information published by respondent No. 2 in regard to th Post Graduate Medical courses are illegal, unconstitutional and incompetent.
He has also asked for a writ of certiorari to quash the list of successful candidates for admission in the Post Graduate Medical colleges within the 25 per cent reserved quota and for a writ of mandamus to the respondents to admit the petitioner and similarly placed other candidates against the 1500 and odd seats left out due to the arbitrary decision/action of the respondents.
In Dr. Pradeep Jain 's case (supra) this Court decided that admission to 25 per cent of the seats in the different Post Graduate courses in he medical colleges located in the States and Union Territories as also those run by public authorities should be filled up by an All India Entrance examination.
Under the Court 's directions made from time to time, a scheme was evolved by the Union of India in coordination with the Indian Medical Council and the State Governments, universities and medical institutions.
This Court approved the scheme and directed that the same should be implemented from the Academic year 1988 89 by holding an All India Entrance Examination by the respondent No. 2.
The scheme contained the provision that cut off base for selection for admission shall be 50 per cent marks.
The bulletin prepared by the respondent No. 2 is on the basis of the scheme.
Since the bulletin is in accordance with the scheme approved by this Court, and the PG NO 388 examination has been held following the terms thereof the petitioner is not entitled to the first two reliefs claimed by him, namely, quashing of a part of the bulletin and quashing of the list of selected candidates.
We would like to make it clear that there is no tenable challenge against the examination.
It is well settled that judicial determination is not to be tested by the touch stone of Article 14 of the Constitution.
Since the matter has come before this Court and from the facts disclosed in the petition we find that in the very first year of implementing the scheme, a stalemate has arisen, we think it appropriate to give certain directions which may, in the facts and circumstances, be appropriate and adequate to meet the situation to the extent possible.
We gather that 25 per cent reservation as envisaged by the scheme would mean about 2050 to 2100 seats and these were intended to be filled up by the selection tests to be conducted by the respondent No. 2.
It is said that about 30,000 candidates appeared at the selection test but the respondent No. 2 found only 500 students fit, strictly in terms of the scheme, for being admitted as against the 25 per cent reservation.
As a result of this about 1600 seats could not be filled up in terms of the scheme.
The question for consideration is as to whether these unfilled seats should revert back to the respective States and/or institutions or what other method should be adopted to fill up the vacancies.
It has been contended on behalf of the petitioner, and there is total unanimity amongst all the parties that no seat should go unfilled.
It is well known that our country does not have sufficient number of qualified doctors and every step should, therefore, be taken to turn out as many doctors with Post Graduate qualification as possible.
The problem to be resolved, therefore, is as to what method should be adopted to fill up these unfilled reserved seats.
We had given a direction to the Union of India to find out the exact position in regard to the reserved seats.
Mr. Dwivedi for the respondent No. 1 has not been able to give us complete details and has placed a statement in regard to the few States and institutions.
At the Bar it has been stated that the total number of seats in regard to this disclosure may not exceed 300.
We do not think any useful purpose would be served by further adjourning the matter particularly when respondent No. 1 wants a few more weeks to collect the same.
We cannot lose sight of the fact that a tight frame of time has been fixed by the previous order of PG NO 389 this Court in regard to admission as also commencement of studies.
We have not the least intention to disturb that schedule.
It is appropriate at this stage to take note of the fact that one of the medical colleges of Uttar Pradesh moved this Court in the month of May, 1988, for a direction that the remainder of the seats from out of the 25 per cent reserved quota should revert back to the college to be filled up by candidates who had applied for the remaining 75 per cent of the seats and had not got admission.
Mr. Dwivedi for the Union of India has informed us that there has been some confusion as that direction has been construed to be of general application by some and in the case of others instructions have been issued to move this Court to obtain similar orders.
Now that about 1600 seats have reverted to the States and the medical colleges located within them, these seats have got to be filled up.
It is in the interest of the parties that the same should be done as quickly as possible so that the academic time schedule may be stuck to.
We are of the view that it would be in the interest of everyone if the respondent No. 2 is directed to supply to each State and/or Union Territory from where candidates had appeared at the entrance test, candidate wise particulars confined to such State within 10 days from now.
Once these particulars are available the Selection Committee operating in the State and/or Union Territory or in the respective medical colleges covered by the scheme, as the case may be, shall draw up a list of the remaining candidates seeking admission as against the 75 per cent of the seats and the candidates who had taken the All lndia Entrance examination but have not been found fit on the basis of the marks secured in their respective selection tests and in the event of there being no selection test in the States relating to the 75 per cent quota then at the MBBS examination.
This shall be on the footing that the marks in the respective tests or the test and the examination are at par and admission would be on the basis of merit.
There is no doubt that the All India Selection test had been a stricter one.
Now it would not be possible for us to direct what weightage is to be added on that score.
Once the common list is drawn up on the basis of performance, admission to the remaining seats in the Post Graduate courses can be taken up.
We make it clear that by our Order we do not propose to vacate the admissions already effected up to today, that is, 12th August, 1988 inclusive in respect of the seats in the reserved quota.
The colleges will be closed for the next PG NO 390 three days being Second Saturday, Sunday and the Independence Day and the possibility of further admission can only be on the 16th of August, 1988.
Further admission in respect of unfilled seats as against the 25 per cent quota shall be deferred till the list of eligible candidates on the basis of what has been stated above is drawn up.
Since we have allowed ten days ' time to the respondent No. 2 to supply the particulars, seven more days shall be allowed thereafter to the institutions including the State Government to finalise the lists and send out intimations to candidates quickly.
In these circumstances admissions may again be taken up three weeks after for the remaining seats and may be kept open for ten days.
The Director General of Health Services will communicate this part of the order to every medical college subject to the scheme as also the Governments telegraphically today.
A copy of this order shall be made available to Mr. Dwivedi forthwith.
We reiterate that we have no intention to interfere with the scheme which has been approved except to the extent that the dates of admission and commencement of classes may have to be varied to give effect to the present order.
We must take note of the situation that the concern which was shown by this Court while reserving 25 per cent of the total number of seats to be filled up on the basis of the All India Entrance examination has not been effectuated on account of only 500 students having been selected.
We hope and trust that such a situation would not recur and a more practical view shall be taken by those who are incharge of the matter.
We are cognizant of the position that our direction might give dis satisfaction to some candidates, but in the back drop and the present situation perhaps no other arrangement more equitable than what we have indicated could be done.
At any rate we declare that this is a final order and no application for varying or modifying the same would be entertained by the Registry.
The writ petition is disposed of with these directions but without costs.
C.M.P. No. 19754 of 1988 is a miscellaneous application in Writ Petition Nos.
348 to 352 of 1985 which have long been disposed of.
The directions which we have given in the writ petition shall operate to the extent applicable to the facts of the case.
N.P.V. Petitions disposed of.

summary/full:
In compliance with the decision of the Supreme Court in Dr. Pradeep Jain etc.
vs Union of India B Ors.
; , and on the basis of the scheme approved by the Court, respondent No. 2 held an All India Entrance Examination for filling up 25 per cent seats in different Post Graduate Medical Colleges in the States and Union Territories and those run by public authorities.
The scheme provided that cut off base should be 50 per cent marks.
Out of about 2100 seats, only 500 could be filled.
In the Writ Petition filed before this Court, the petitioner, an unsuccessful candidate at the aforesaid examination sought (1) a direction that clauses 11 and 15(g) of the Bulletin of Information, published by respondent No. 2 in this regard were illegal, unconstitutional and incompetent, (2) a writ of certiorari to quash the list of successful candidates for admission within 25% reserved quota, and (3) a writ of mandamus to the respondents to admit the petitioner and similarly placed other candidates against the 1500 odd seats left out due to the arbitrary decision/action of the respondents, contending that no seat should go unfilled.
Disposing of the Writ Petition and a pending CMP in other disposed of Writ Petitions, HELD: 1.1 It is well settled that judicial determination is not to be tested by the touchstone of Article 14 of the Constitution.
[388B] In the instant case since the bulletin is in accordance with the scheme approved by this Court, and the examination PG NO 385 PG NO 386 has been held following the terms thereof, the petitioner is not entitled to ask for quashing a part of the bulletin and the list of selected candidates.
There is no tenable challenge against the examination.
[387H, 388A] 1.2 Since in the very first year of implementing the scheme, a stalemate has arisen, it is appropriate to give certain directions, which may in the facts and circumstances, be appropriate and adequate to meet the situation to the extent possible.
Sufficient number of qualified doctors are not available.
Every step should, therefore, be taken to turn out as many doctors with Post Graduate qualification as possible.
Since about 1600 seats have reverted to the States and medical colleges located within them, and have to be filled up, it is in the interest of the parties that this should be done as quickly as possible so that the academic time schedule may be stuck to.
[388B C, F, 389D] 1.3 Respondent No. 2 is directed to supply to each State and/or Union Territory from where candidates had appeared at the entrance test, candidate wise particulars confined to such State.
Once these particulars are available, the Selection Committee operating in the State and/or Union Territory or in the respective medical colleges covered by the scheme, as the case may be, shall draw up a list of the remaining candidates seeking admission as against the 75 per cent of the seats and the candidates who had taken the All India Entrance examination, but have not been found fit on the basis of the marks secured in their respective selection tests or at the MBBS examination, in States where there is no such selection test relating 75 per cent seats.
This shall be on the footing that marks in the respective selection tests or the test and the examination are at par and admission would be on the basis of merit.
No doubt, the All India Selection test had been a stricter one, but it would not be possible for this Court now to direct what weightage is to be added on that score.
Once the common list is drawn up on the basis of performance, admission to remaining seats can be taken up.
[389F G] [The admissions already effected inclusive of seats in the reserved quota shall continue.
But further admissions in respect of unfilled seats as against the 25 per cent quota shall be deferred now and again taken up after the list of eligible candidates is drawn up as per the time schedule now indicated.] [389H, 390B] Dr. Pradeep Jain etc.
vs Union of India & Ors. etc.
; , , referred to.
PG NO 387


judgement:
ivil Appeal No. 3054 of 1988.
From the Judgment and Order dated 16.3.1988 of the Rajasthan High Court in S.B. Civil Miscellaneous Appeal No. 240/1987.
K. Parasaran, Attorney General, B.L. Saruparia and Badridas Sharma for the Appellant.
Soli J. Sorabjee, Paras Kulad, Rohinton F. Nariman and Rathin Das for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Leave granted.
Appeal is disposed of by the judgment herein.
This appeal challenges the order of the High Court of Rajasthan, dated 16th March, 1988.
The respondent 's tender for construction of complete masonry dam (Civil Engineering Works) Mahi Bajaj Sagar Project, Banswara, was accepted by the appellant for a sum of Rs.5,90,30,791 vide letter dated 29.4.1974 and a provisional agreement was entered into between the parties on 23.5.1975.
The construction was commenced by the respondent company but it did not complete the same and, it is alleged, left the work unfinished in the year 1979, which was of the value of Rs. 1,79,80,054.
The letter of acceptance was dated 23.5.1975.
It is stated that the respondent did not start the work in spite of written notices and, ultimately, by a letter dated 24th December, l979 of the Executive Engineer (Dam Division), Banswara, the respondent was informed that as it had committed breach of the conditions of the contract, the same had been terminated and that the State Govt.
would complete the work under the clauses and conditions of the contract.
The work had to be completed departmentally at the cost and risk of the respondent company.
After some litigation between the parties when the Civil Revision was pending in the High Court of Rajasthan at Jodhpur, a compromise between PG NO 444 the parties was arrived at on the 13th April, 1982.
It was agreed that the dispute would be settled through arbitration.
By an agreement dated 13th June, 1982 the parties named their arbitrators.
The arbitrators entered upon the reference on 19th June, 1982.
On 5th May, 1982, the respondent company presented its claims under 40 heads claiming a total sum of Rs. 1,90,53,059.28.
This amount was later on revised to Rs. 1,82,20,261.02.
The State filed a counter claim for a sum of Rs. 1,70,63,026.37 which was revised to Rs. 1,25,706,17.
It is stated that the arbitration proceedings were conducted for 52 days during which the number of sittings was 25.
Various issues were framed.
Minutes of the proceedings were recorded.
The arbitrators gave the award on 8.12.1982.
It is stated that the award did not contain any reason as to why and how they had arrived at the figure of Rs. 75,41,755 in favour of the respondent company.
The award, however, mentioned that the State of Rajasthan committed breach of contract and was also guilty of wrongful revocation of the agreement and the actions taken under Clauses 2 and 3 of the conditions of the Contract, were wrongful and unjustified.
However.
no reasons were indicated as to how the arbitrators arrived at those findings.
The respondent filed an application in the Court of the learned District Judge for making the award Rule of the Court.
The appellant, however, filed an objection on the grounds inter alia that no reasons had been given by the arbitrators for the award and the amount of interest awarded was unjustified.
It was further averred that the award being ambiguous, showed non application of mind and the question as regards the plant machinery of the respondent company lying at the dam site, were beyond the scope of the arbitrator.
The learned District Judge by his judgment and order dated 11th August, 1987 allowed the objection and set aside the award on the ground of ambiguity and non application of mind.
The award also suffered from the vice of non statement of reasons, according to the learned District Judge.
According to him, the award was not in accordance with law.
He further held that the plant & machinery lying at the dam site was beyond the reference made to the arbitrators.
He was of the opinion that the interest amount was ambiguous and thus liable to be set aside.
THere was an appeal to the High Court.
The High Court allowed the appeal and passed a decree for Rs. 75,41,755 being the amount of all claims and directed that the State should pay interest @ 5% p.a.
on the said amount for the period from 1.8.1983 to 8.12.1985, being the period during which the arbitration proceedings were PG NO 445 pending.
This decision of the High Court is under challenge in this appeal.
It was contended before us that the question whether on the ground of absence of reasons, the award is bad per se, is pending consideration by a Constitution Bench of this Court in C.A. No. 3137 39/85, 3145/85 Jaipur Development Authority vs Firm Chhokhamal Contractor etc.
It was, hence, urged that this should await adjudication on this point by the Constitution Bench.
We are unable to accept this contention.
In our opinion pendency of this question should not postpone all decisions by this Court.
One of the cardinal principles of the administration of justice is to ensure quick disposal of disputes in accordance with law, justice and equity.
In the instant case the proceedings have long procrasticated.
Indeed, the learned Judge of the High Court, after narrating the incidents from 1975 to 1985, concluded his judgment in March 1988 by observing that that was the end of the journey.
He was wrong.
That was only the end of a chapter in the journey and the appellant wants to begin another chapter in the journey on the plea that the award is not a reasoned one.
The bargaining between the parties was entered into in 1974 75 and the award was made on 8th December, 1985 i.e. a decade after the beginning of the transaction.
The law as it stands today is clear that unless there is an error of law apparent on the face of the award, the award cannot be challenged merely on the ground of absence of reasons.
This is settled law by a long series of decisions.
Interests of justice and administration of justice would not be served by keeping at bay final adjudication of the controversy in this case on the plea that the question whether an unreasoned award is bad or not, is pending adjudication by a larger Bench.
There have been a large number of sittings before the arbitrators.
Parties have been heard.
There was no misconduct in the proceedings.
There has been no violation of the principles of natural justice.
In such a situation it would be inappropriate to postpone the decision pending adjudication of this question by a larger Bench of this Court.
We do not know how long it would take to decide that question, and whether ultimately this court would decide that unreasoned awards per se are bad or whether the decision would have prospective application only in view of the long settled position of law on this aspect in this country or not.
Justice, between the parties in a particular case, should not be in suspended animation.
Law as it stands today, as observed in Jivarajbhai Ujamshi Sheth & Ors.
vs Chintamanrao Balaji & Ors., ; is that award made by an arbitrator is conclusive as a judgment between the parties and the Court is entitled to set aside an award only if the arbitrator has misconducted himself in PG NO 446 the proceedings or when the award has been made after the issue of an order by the Court superseding the arbitration or if the arbitration proceedings have become invalid under Sec.
35 of the or where an award has been improperly procured or is otherwise invalid under Sec.
30 of the Act.
An award may be set aside by the Court on the ground of error on the face of the award, but an award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator had committed some mistake in arriving at some conclusion.
In that decision Shah, J. and Sarkar, J. as the learned Chief Justices then were, were of the view that it was not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusions.
They held the award not severable.
Hidayatullah, J. as the learned Chief Justice then was, observed that if the parties set limits to action by the arbitrator, then the arbitrator had to follow the limits set for him and the Court can find his auxiliary jurisdiction.
Instant case before us is also not a severable award.
In Firm Madanlal Roshanlal Mahajan vs Hukumchand Mills Ltd., Indore ; Bachawat, J. speaking for the Court observed that an arbitrator could give a lump sum award.
He was not bound to give a separate award for each claim.
His award on both fact and law is final.
There is no appeal from his verdict.
The Court cannot review his award and correct any mistake in his adjudication, unless an objection to the legality of the award is apparent on the face of it.
In the present case the arbitrator gave no reasons for the award.
There is no legal proposition which is the basis of the award, far less any legal proposition which is erroneous.
Also there is no allegation of any misconduct in the proceedings.
It is an error of law apparent on the face of it and not mistake of fact which could be the ground for challenging the award.
See in this connection the observations in Union of India vs Bungo Steel Furniture P. Ltd.; , Also see the observations of this Court in Allen Berry & Co. (P) Ltd. vs Union of India, New Delhi, [l971] 3 SCR 282.
Hence, the High Court was right in the instant case.
There is, however, one infirmity in the award as sanctioned by the High Court, that is to say, the grant of interest pendente lite.
The arbitrators have observed as follows : "By adjustment of interest held to be due to the Respondents with that held to be due to the Claimants on their items of claims which were not in the nature of claim PG NO 447 for damages for breach, we hold that the Respondents do pay Rs. 17,92,957 (Rupees seventeen lacs ninetytwo thousand nine hundred fiftyseven only) as interest, to the Claimants upto the date of the AWARD.
Claimants further do pay to the Respondents Rs. Nill.
" This was awarding interest pendente lite.
This is in violation of the principles enunciated by this Court in Executive Engineer (Irrigation), Balimela & Ors.
vs Abhaduta Jena & Ors., [1988] 1 SCC 418.
Our attention was drawn by Shri Soli J. Sorabjee, counsel for the respondent, to the decision of this Court in Food Corpn.
of India vs M/s. Surendra, Devendra & Mohendra Transport Co., where at pages 555 556 of the report, the Court referred to certain decisions cited by Chinnappa Reddy, J. in Executive Engineer (Irrigation), (supra) in which he had expressed the view that those were cases in which the references to arbitration were made by the Court or in Court proceedings of the disputes in the suit.
In that context it was held in those cases that the arbitrator had power to grant interest.
It was contended before us that this was a similar case.
There was a Court proceeding in this case regarding the appointment of the arbitrator and, as such, on the same analogy it should be treated that the arbitrator had power to grant interest.
We are unable to accept this.
What Mr justice O. Chinnappa Reddy meant to say by the latter judgment in Executive Engineer (Irrigation), case referred to in Food Corporation of India, (supra) was where the disputes regarding the merit of the case were pending in the Court and such disputes instead of being decided by the Court adjudication had been referred to an arbitrator by the Court, in such cases the arbitrators deciding in the place of the Court, would have the same powers to grant interest pendente lite as the Courts have under Section 34 of the Civil Procedure Code.
Instant case is not such a proceeding.
In that view of the matter this part of the award, which was affirmed by the High Court of granting of interest, must be deleted.
We do so accordingly.
Shri K. Parasaran, learned Attorney General, assures us that the amount awarded as modified, would be paid within 8 weeks from today.
The appeal is thus disposed of without any order as to costs.
R.S.S. Appeal disposed of.

dataset_name: IN-Abs

summary/full:
A dispute over the completion of construction work under a contract led to the litigation between the appellant and the respondent company.
However, during the pendency of the proceedings in the High Court, the parties agreed to settle the dispute through arbitration.
The Arbitrators gave their award in favour of the respondent company on the ground that the appellant had committed breach of contract and was also guilty of wrongful revocation of the agreement.
The award did not contain any reason as to why and how the Arbitrators had arrived at the sum awarded.
The appellant filed objection to the respondent 's application for making the award Rule of the Court on the ground inter alia that (i) no reasons had been given for the award, (ii) the award being ambiguous showed non application of mind, and (iii) the amount of interest awarded was unjustified.
The learned District Judge allowed the objection and set aside the award on the ground of ambiguity and non statement of reasons.
The High Court, however, allowed the respondent 's appeal and also directed payment of interest for the period during which the arbitration proceedings were pending.
Before this Court it was urged that, because the question whether on the ground of absence of reasons the award is bad per se is pending consideration by a Constitution Bench of this Court, the present case should await adjudication on this point by the Constitution Bench.
Disposing of the appeal, it was, HELD: (1) One of the cardinal principles of the administration of justice is to ensure quick disposal of PG NO 441 PG NO 442 disputes in accordance with law, justice and equity.
Justice between the parties in a particular case should not be in suspended animation.
[445B C, G] (2) Interests of justice and administration of justice would not be served by keeping at bay final adjudication of the controversy in this case on the plea that the question whether an unreasoned award is bad or not, is pending adjudication by a larger Bench.
[445E F] (3) It is not known whether the decision of this Court would have prospective application only in view of the long settled position of law on this aspect in this country or not.
[445G] (4) The law as it stands today is clear that unless there is an error of law apparent on the face of the award, the award cannot be challenged merely on the ground of absence of reasons.
This is settled law by a long series of decisions.
[445E] (5) An award is not invalid merely because by a process of inference and argument it may be demonstrated that the arbitrator had committed some mistake in arriving at some conclusion.
[446B] (6) It is not open to the Court to speculate, where no reasons are given by the arbitrator, as to what impelled the arbitrator to arrive at his conclusions.
[446C] Jivarajbhai Ujamshi Sheth vs Chintamanrao Balaji & Ors., ; , referred to.
(7) It is an error of law apparent on the face of it and not a mistake of fact which could be the ground for challenging the award.
[446F] Union of India vs Bungo Steel Furniture P. Ltd., ; and Allen Berry & Co. P. Ltd. vs Union of India, ; , referred to.
In the present case the arbitrator gave no reasons for the award.
There is no legal proposition which is the basis of the award, far less any legal proposition which is erroneous.
And there is no allegation of any misconduct in the proceedings.
[446E F] (9) The award of interest pendente lite in this case was in violation of the principles enunciated by this Court.
[447B] PG NO 443 Executive Engineer (Irrigation) Balimela vs Abhaduta Jena, [1988] 1 SCC 418, followed.
Food Corporation of India vs M/s. Surendra Devendra & Mohendra Transport Co., [1988] 1 SCC 57, explained.


judgement:
DICTION: Writ Petition No. 626 of 1988 etc.
(Under Article 32 of the Constitution of India) G.Ramaswamy, Additional Solicitor General, section Murlidharan, A.D.N. A. Subba Rao and and Krishan Kumar for the Petitioners.
PG NO 520 Kuldip Singh, Additional Solicitor General, K.K. Venugopal, Kapil Sibbal, Lal Chand, C.S. Vaidyanathan, H,S. Phoolka, N.S. Das, Rajiv Khosla, P. Tripathi, Kailash Vasdev, Miss A. Subhashini, Harish Salve and Ravinder Sethi for the Respondents.
The following Order of the Court was delivered: ORDER VENKATARAMIAH, J.
It is unfortunate that this case has arisen between lawyers and police who are both guardians of law and who constitute two important segments of society on whom the stability of the country depends.
It is hoped that cordiality between the two sections will be restored soon.
In order to avoid any further delay in the proceedings before the Committee consisting of Goswamy and Wadhwa, JJ., constituted by Order dated 23rd February, 1988 to enquire into certain incidents which took place on the 15th January, 1988, 2lst January, 1988 and 17th February, 1988, we pass the following order now but we shall give detailed reasons in support of this order in due course.
The order is as under: 1.
This order is passed on the basis of the material available on record, the various steps already taken before the Committee and other peculiar features of the case.
The Delhi Administration has to examine first all its witnesses as required by Rule 5(5)(a) of the Commissions of Inquiry (Central) Rules, 1972 (hereinafter referred to as 'the Rules ') framed under the (hereinafter referred to as "the Act ').
Even those witnesses who may have filed affidavits already may first be examined in chief before they are cross examined, since it is stated that when the affidavits were filed the deponents did not know what the other parties who have also filed affidavits had stated in their affidavits.
The question whether a party has the right of cross examination or not shall be decided by the Committee in accordance with section 8 C of the Act.
In the facts and circumstances of the case to which reference will be made hereafter this direction issued to the Delhi Administration to examine its witnesses first as provided by rule 5(5)(a) of the Rules referred to above does not apply to those witnesses falling under section 8 B of the Act, who have to be examined at the end of the inquiry as opined by the Committee itself.
PG NO 521 3.
We have gone through the several,affidavits and other material placed before the Committee and also the Interim Report dated 9.4.88 passed by the Committee.
In para 13 of the Interim Report the Committee has observed thus: "During the course of the inquiry, we have to examine the conduct of various police officers and others and particularly, as the record .shows, of the D.C.P. (North), Addl.
D.C.P. (North), S.H.O., P.S. Samepur (Badli) and S.I. Incharge Police Post, Tis Hazari and S.I.,Samepur (Badli).
" In para 14 of the Interim report it is observed: "Lawyers have seriously urged that this Committee should send a report recommending suspension of the D.C.P. (North) Ms. Kiran Bedi" Ultimately the Committee recommended the transfer of the petitioners in these cases, namely, Ms. Kiran Bedi, D.C.P. (North) and Jinder Singh S.I. Incharge, 'Police Post, Tis Hazari.
Section 8 B of the Act reads : "8 B. If, at any stage of the inquiry, the Commission (a) considers it necessary to inquire into the conduct of any person ; or (b) is of opinion that the reputation of any person is likely to be prejudicial affected by the inquiry, the Commission shall give to that person a reasonable opportunity of being heard in the inquiry and to produce evidence in his defence : Provided that nothing in this section shall apply where the credit of a witness is being impeached." In its Interim Report the Committee has unequivocally observed that it had to examine the conduct of various police officers, and in particular among others Ms. Kiran Bedi, D.C.P. (North) and Jinder Singh , section I., Incharge Police Post, Tis Hazari.
PG NO 522 Having given our anxious consideration to all the aspects of the case we hold that the petitioners Ms. Kiran Bedi and Jinder Singh are persons who fall under section 8 B of the Act and have to be dealt with accordingly.
According to the Committee 's own opinion formed in the light of the facts and circumstances of the case, all those persons to whom notices under section 8 B of the Act are issued have to be examined at the end of the inquiry.
This is obvious from the order of the Committee passed on 29.6.88 after it was asked by this Court by its order dated June 2, 1988 to reconsider the whole question relating to the order in which the witnesses had to be examined in the case.
In its order dated 29.6.88 the Committee has observed thus: "Without going into the controversy if Rule 5(5) is an independent Rule or is governed by section 8 B and 8 C of the Act, we would direct that in the circumstances of the case three persons namely, the Additional Commissioner of Police (Special Branch), D.C.P. (Traffic) and Mr. Gopal Das Kalra, SI to whom notices under section 13 B of the Act have been issued be examined at the end of the inquiry.
" If three persons referred to above to whom notices under section 8 B have been issued are to be examined even according to the Committee at the end of the inquiry there is no justifiable reason to deny the same treatment to the petitioners Ms. Kiran Bedi and Jinder Singh who are in the same position as those three persons.
The action of the Committee in asking them to be cross examined at the beginning of the inquiry appears to us to be discriminatory.
Mere non issue of notices to them under section 8 B ought not to make any difference if they otherwise satisfy the conditions mentioned in section 8 B.
The issue of such a notice is not contemplated under section 8 B of the Act.
It is enough if at any stage the Commission considers it necessary to inquire into the conduct of any person.
Such person would thereafter be governed by section 8 B of the Act.
The Committee should have considered whether the petitioners were entitled to be treated as persons governed by section 8 B of the Act before asking them to get into the witness box for being cross examined.
If the Committee had found that the petitioners were covered under section 8 B then perhaps they would not have been asked to get into the witness box for being cross examined till the end of the inquiry.
The Committee would have then asked them to give PG NO 523 evidence along with others who were similarly placed at the end of the inquiry.
On behalf of both the petitioners it is submitted that they did not either wish to delay the proceedings or to show disrespect to the Committee but only wanted to protect their own interest by making the submission which they made before the Committee as per legal advice given to them.
This is not a case where the circumstances in which the several incidents that had taken place were not known to anybody else.
The affidavits and other material before the Committee show that there were a large number of persons who were eye witnesses to the incidents and why could give evidence before the Committee.
Taking into consideration all the aspects of the case we feel that the Committee should not have in the circumstances of the case directed the filing of a complaint against either of the petitioners for an offence punishable under section 178 I.P.C.
In view of the foregoing we feel that the orders of the Committee directing the filing of the complaints and the criminal proceedings initiated against the petitioners before the Metropolitan Magistrate pursuant to the complaints filed on behalf of the Committee should be quashed and we accordingly quash the said orders of the Committee and also the criminal proceedings.
A judgment containing the reasons for this order will follow.
Before concluding this order we record the statement made by Shri Kuldip Singh, learned Additional Solicitor General appearing for the Delhi Administration that the Delhi Administration and its police officers will fully cooperate with the Committee so that the Committee may complete its work as early as possible.
We also record the statement made by Shri G. Ramaswamy, learned Additional Solicitor General that he and his clients, the petitioners in this case hold the Committee in great respect and that they never intended to show any kind of discourtsey to the Committee.
He also expresses apology for using one or two strong words against the Committee in the course of the arguments in this Court.

summary/full:
A Committee consisting of Goswamy and Wadhwa, JJ.
was constituted on 23rd February, 1988 to inquire into certain incidents involving lawyers and police officers, which took place in January, 1988.
Pursuant to this Court 's order dated 2.6.88 to reconsider the whole question relating to the order in which the witnesses had to be examined, the Committee issued an order on 29.6.88 on the basis of which notices under Sec.
8B were issued to three other officers, but not to the petitioners.
It was directed by the Committee that the petitioners be cross examined at the beginning of the inquiry.
On their refusal, the Committee directed the filing of a complaint against them for an offence punishable under Section 178 IPC.
Pursuant to the complaints filed on behalf of the Committee, criminal proceedings were initiated against the petitioners before the Metropolitan Magistrate.
Against the above directions and complaints by the Committee, the petitioners have approached this Court by way of the present Writ Petitions/Special Leave Petitions.
The petitioners submitted that they did not either wish to delay the proceedings or to show disrespect to the Committee, but only wanted to protect their own interest in making the submission before the Committee as per the legal advice given to them.
Quashing the orders of the Committee directing the filing of the PG NO 518 PG NO 519 complaints and the criminal proceedings initiated against the petitioners before the Metropolitan Magistrate pursuant to the complaints, this Court, HELD: 1.
The Delhi Administration has to examine first all its witnesses as_required by Rule 5(5)(a) of the Commissions of Inquiry (Central) Rules, 1972 framed under the .
Even those witnesses who may have filed affidavits already may first be examined in chief before they are cross examined.
The question whether a party hair the right of cross examination or not shall be decided by the Committee in accordance with Sec.
8C of the Act.
This direction does not apply to those witnesses falling under Sec.
8B of the Act, who have to be examined at the end of the inquiry as opined by the Committee itself.
[520F H] 2.1.
The petitioners are persons who fall under Sec.
8B of the Act and have to be dealt with accordingly.
[522A B] 2.2 If the three persons to whom notices under Sec.
8B have been issued are to be examined even according to the Committee at the end or the inquiry there is no justifiable reason to deny the same treatment to the petitioners who are in the same posit~on as those three persons.
The action of the Committee in asking them to be cross examined at the beginning of the inquiry appears to be discriminatory.
Mere non issue of notices to them under Sec.8B ought not to make any difference if they otherwise satisfy the conditions mentioned in Sec.
The issue of such a notice is not contemplated under Sec.
8B of the Act.
It is enough if at any stage the Commission considers it necessary to inquire into the conduct of any person.
Such person would thereafter he governed by Sec.
8B of the Act.
[522E G] 3.
The Committee should not have, in the circumstances of the case, directed the filing of a complaint against either of the petitioners for an offense punishable under Sec.
178 IPC.
[523C, D] [For Judgment containing the reasons for this order, please Sec (1989) 1 SCR p. 20.]


judgement:
vil Appeal Nos.
1631 33 of 1987 etc.
From the judgment and order dated 10.7.1987 of the Bombay High Court in W.P. Nos. 941, 986 and 1012 of 1987.
A.S. Bobde.
General.
section K. Dholakia and A.S, Bhasme for he Appellants.
Soli J. Sorabjee, R.N. Sachhar, Mrs. Aruna Mathur, J. Wad, K.J. John and A.K. Sanghi for the Respondents.
The judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
These civil appeals and special leave petitions centre around one point, namely, the validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of the Maharashtra Act, XIV of 1987 as well as Section 6 of the said Act as amended by Maharashtra Act XXXlll of 1987 as well as the Maharashtra Act IX of 1988.
PG NO 486 The Bombay Motor Vehicles Tax Act, 1958 prior to its amendment in 1987 provided for levy of tax on vehicles annually or quarterly.
In 1987, by Section 3 of the Maharashtra Act No. XIV of 1987, sub section (IC) was added to provide for levy of one time tax at 15 times the annual rate on all motor cycles used or kept for use in the State.
The said provisions further provided that in case of motor cycles used or kept for use by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
Section 6 of the Maharashtra Act 14 of 1987, added sub section (6) to Section 9 of the principal Act.
The new sub section (6) enabled a registered owner of motor cycle or tricycle to obtain refund of "one time tax" in cases where (a) the vehicle is removed outside the State; and (b) the registration of vehicle is cancelled due to scrapping of the vehicle, or for a similar reason.
The refund was to be paid in accordance with the Fourth Schedule.
The Third and Fourth Schedules were introduced by the Maharashtra Act 14 of 1987.
In the case of Luna Mopeds, the one time tax comes to Rs.2925 which according to the petitioners in the S.t.P. Nos.
1 1673 75/87, is 86% of the ex factory price of the Moped.
In that view the petitions were filed by the respondents in the first batch of appeals and the petitioners in the second batch challenging the amended provisions of the Bombay Motor Vehicles Tax Act, 1958.
On or about 9/10th July. 1987, a Division Bench of the Bombay High Court, Nagpur Bench held that the levy of one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule.
It further held that the provisions for imposition of levy at thrice the rates so far as the vehicles owned by the firm or the company, were neither discriminatory nor arbitrary.
The High Court, however, in view of the fact that the refund was restricted to the circumstances mentioned above.
struck down Act 14 of 1987.
According to the High Court, the absence of provisions for refund in cases of temporary non user made the Maharashtra Act XlV of 1987, confiscatory in character and not regulatory or compensatory which alone was in the competence of the State Legislature.
The State preferred applications for leave to appeal against the impugned judgment and the special leave having been granted, are the subject matter of Civil Appeals Nos.
1631 33/877.
The petitioners also, filed special leave applications which are the subject matter of Special Leave Petitions Nos. 11673 75/87 which have been heard along with these appeals.
While the State 's appeal against the High Court 's judgment was pending before this Court, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987.
It deleted Section 3(4) of the principal Act, as PG NO 487 amended by Maharashtra Act XIV of 1987.
That provision made the existing provisions of refund for temporary non user inapplicable in cases of motor cycles and tricycles, restricting the right of refund to Section 9(6) in contingencies mentioned above.
It also introduced sub section (7) to Section 9 conferring right of refund in respect of motor cycles and tricycles in accordance with the rates specified in the Fifth Schedule and prescribed the rates of refund in the Fifth Schedule.
But the said Schedule did not prescribe a separate rate of refund for company owned vehicles.
Therefore, the refund in respect of company owned vehicles would be same as that payable to individual owned vehicles, even though the tax paid on former class of vehicles was three times.
Soon thereafter the Maharashtra Legislature enacted Act 9 of 1988 The only relevant change for the present purpose was that the rate of refund was enhanced to three times in respect of company owned vehicles.
Before the contentions are judged, it is imperative to reiterate that the tax imposed on motor vehicles or a class of motor cycles would not be valid unless it is compensatory or regulatory or does not have any nexus with the vehicles using the public roads.
In such a case the levy would be violative of Act.
301 of the Constitution and would not be protected by Act.
304 of the Constitution.
In this connection reference may first be made to the observations of this Court in Bolani Ores Ltd. vs State of Orissa, ; where at page 155 this Court observed that Entry 57 of List II of the Seventh Schedule was subject to the limitations, namely, the power of taxation cannot exceed the compensatory nature which must have some nexus with the vehicles using the roads.
If the vehicles do not use the roads, notwith standing that these are registered under the Act, these cannot be taxed.
More or less the same view was echoed in G. K. Krishnan vs The State of Tamil Nadu & Anr., [1975 ] 2 SCR 715.
See also Malwa Bus Service (P) Ltd. vs State of Punjab & Ors.
,[1983] 2 SCR 1009.
On behalf of the appellant State, the learned Advocate General submitted that the amendments enacted by the Maharashtra Act No. 33 of 1987 and No. 9 of 1988, have brought the principal Act as amended by the Maharashtra Act No. XIV of 1987 within the constitutional requirements of making `one time tax ' a regulatory and compensatory tax.
It was submitted by him that this development had made it unnecessary for this Court to decide if the Act, as it stood when it was challenged before the High Court, was beyond the legislative competence of the State Legislature.
It was PG NO 488 further emphasised that the fact that the Act at present, does not provide for refund in the 14th & v 15th years, does not make the law outside the competence of the State Legislature.
It was urged that the concept of "regulatory and compensatory tax" does not imply mathematical precision.
In this context one may refer to the observations of this Court in International Tourist Corpn.
vs State of Haryana & Ors.
, ; , where at page 374 Justice Chinnappa Reddy speaking for this Court observed as follows : "But to say that the nature of a tax is of a compensatory and regulatory nature is not to say that the measure of the tax should be 'proportionate to the expenditure incurred on the regulation provided and the services rendered.
If the tax were to be proportionate to the expenditure on regulation and service it would not be a tax but a fee.
While in the case of a fee it may be possible to precisely identify and measure the benefits received from the Government and levy the fee according to the benefits received and the expenditure incurred, in the case of a regulatory and compensatory tax it would ordinarily be well high impossible to identify and measure, with any exactitude, the benefits received and the expenditure incurred and levy the tax according: to the benefits received and the expenditure incurred.
What is necessary to uphold a regulatory and compensatory tax is the existence of a specific.
identifiable object behind the levy and a nexus between he subject and he object of he levy.
" Earlier this principal had been sated in Income tax officer Shillong & Anr.v.
N. Takim Roy Rymbai etc.
,[1976] 3 SAC 413, where this Court observed though taxation law could not claim immunity from the equality clause i n Article 14 of the Constitution, it must be remembered that in view of the intrinsic complexity of fiscal adjustments of diverse element, he State has a considerably wide discretion in the matter of classification of taxation purposes.
the fact that the tax falls more heavily on some in the same category, is by itself no ground to render the law invalid.
Similar are he observations of this Court in Mrs. Meenakshi & Ors.
vs State of Karnataka & Ors., AIR 1983 Sc 1283; Anant Mills Co Ltd. vs State of Gujarat & Ors.,[1975] 3 SC 220 and Khhandige Sham Bhat & Ors.
V. The Agricultural Income ax Office; , PG NO 489 In the instant case, the impugned legislation had been subsequently amended to provide for the refund of a proportionate part of the one time tax in the event of the vehicle not being used for a period of quarter or more than a quarter of a year as mentioned before.
This was provided by substituting a new sub section (7) to section 9 of the Act and also substituting new Fifth Schedule.
Even after the amendment, however, no refund is available in respect of a vehicle which has been registered for more than 13 years.
The effect of the same is that no refund at all is available in respect of the tax paid for a vehicle for the 14th and 15th years, it was urged on behalf of the respondents in the appeals and the petitioners in the S.L.Ps.
It was submitted on their behalf that so far as four wheelers are concerned, Section 9(1) of the act provided for refund of the proportionate amount of tax for every completed calendar month for which the vehicle has not been used.
It was urged on behalf of the respondents in the appeals and the petitioners in the S.L.Ps.
that there is no justification what so ever for the non grant of the refund of the proportionate amount of tax paid in respect of a two wheeler or three wheeler, which is not used in its 14th and/or 15th year.
On this score, it was urged on their behalf that the impugned levy of tax ceases to be compensatory or regulatory and as such is void under Entry 57 of List II and thus violative of Article 301 of the Constitution.
In our opinion the fact that the Act, as at present, does not provide for refund in the 14th and 15th years, does not make the law outside the competence of the State Legislature.
The concept of "regulatory and compensatory" tax does not imply mathematical precision of quid pro quo.
This aspect was emphasised in International Tourist Corporation etc.
vs State of Haryana & Ors.
, (supra) as noted before.
It was further submitted on behalf of the owners of two wheelers that the impugned one time levy of Rs.975 has been worked out at Rs.65 per two wheeler per annum for 15 years and is sought to be recovered from the two wheeler owner as a one time down payment at the time the two wheeler is purchased by him.
On behalf of the respondents/petitioners it was contended that having regard to the extent of road user by a two wheeler, in comparison with the road user by a four wheeler, the Legislature considered that.
a tax of Rs.65 per two wheeler per annum would be a reasonable and adequate compensatory levy.
While the maximum annual rate of tax was fixed at Rs. 200 per annum for motor cars weighing not more than 750 kg and Rs.36O per annum for motor cars PG NO 490 weighing between 750 kg to 1500 kg it may be noted that the tax on four wheelers has not been increased.
But as far as two wheelers are concerned the one time tax for the period of 15 years is exactly 15 times the amount of tax of Rs.65 per year.
It is clear from these factors, it was submitted by the owners of the two wheelers, that the Legislature continues to consider the tax of Rs.65 per two wheeler per year to be an adequate compensatory tax.
However, by recovering the tax for the future period of 15 years in advance as a one time levy, the taxing authorities are in fact recovering not Rs.65 per two wheeler per year but in reality about Rs.356.79 per two wheeler per year.
The respondents/petitioners sought to explain the position by submitting that if the two wheeler owner has an amount of Rs.975 with him at the time of purchase of the vehicle, and is not compelled to make one time payment, then he would initially pay only Rs.65 as the tax for the first year.
That would leave a balance amount of Rs.9.10 which could be invested by him at an interest yield of 15% per annum.
It was urged that the rate of interest that is recoverable as well as paid under the Income Tax Act is 15% per annum.
The said amount of Rs.910 would yield an interest of Rs. 136.50 in the first year.
Out of that amount of Rs. 136.50 an amount of Rs.65 would be paid by the two wheeler owner as tax at the beginning of the second year.
Consequently, an amount of Rs.71.50 would be available from out of the said interest earning of Rs. 136.50, which also could be invested at a yield of 15% per annum.
Consequently, the amount of interest that would be earned by the vehicle owner in the second year would come to Rs. 147.
23, out of which only Rs.65 would have to be paid as tax in the beginning of the third year, leaving a balance of Rs.82.23 available for further investment.
It was submitted that by compelling the vehicle owner to make the one time down payment of Rs.975 at the time of the purchase of the vehicle, the owner is in reality being deprived of a total amount of Rs.4376.
19 over the said period of 15 years.
If this amount is divided by 15, the resultant figure will be Rs.291.79.
The effective tax burden has thus in fact been multiplied by about 5 times only as a result of the one time levy, it was urged.
It was submitted that the said one time levy was unreasonable, discriminatory and not regulatory or compensatory.
The fact that a tax on motor vehicles must be compensatory and regulatory in order to be valid, was emphasised in the decision of this Court in Stare of Karnataka vs K. Gopalakrishna Shenoy and another, A.I.R. 1487 S.C. 1911 where at page 1915 of the report, it was observed that tax on motor vehicles is a compensatory tax levied for the use of the roads and it is not a tax on ownership or possession of motor vehicles.
It was emphasised on behalf of the owners of the vehicles that the impugned legislation is based on PG NO 491 the assumption that two wheelers and three wheelers have an approximate life of 15 years.
It is on that basis and footing that the rates of tax have been fixed.
It was contended that the life of two wheelers and three wheelers is as much as 25 to 30 years and therefore, the recovery of the one time tax for the period of 15 years actually constitutes the conferment of a benefit on the owners of two wheelers and three wheelers.
In this connection, on the other hand it is of importance to note that the Department of Heavy Industry, Ministry of Industry, Government of India, had commissioned a report from an eminent firm of Chartered Accountants on Long Term Demand Projections for Automotive Vehicles (including two wheelers and three wheelers).
The said report concludes, after an exhaustive analysis of statistical data including the data provided by vehicle manufacturers and also studies made in the past, that the average life of scooters is 10 years, that of motor cycles c) years and that of mopeds 5 years.
But what was emphasised was that one time levy of tax compelled owners of two wheelers to incur a further expenditure of about 70% of the cost of the vehicles purchased by them at the time they acquire the vehicle and that imposes heavy additional liabilities.
It was, therefore, submitted that it was neither compensatory nor regulatory and further more, it was discriminatory.
It was further submitted that section 3(IC)(c) exempts public trusts and recognised institutions.
That was bad.
In our opinion, after the amendment the mischief mentioned in the judgment and order of the High Court of Bombay has been remedied.
On an examination of the various provisions of the Act as amended, we have come to the conclusion that after the amendment the Act comes within the constitutional requirement of making the one time tax a regulatory and compensatory tax.
It is true as was emphasised that the Act has not provided for refund in the 14the and 15th years but does not make the law outside the competence of the State Legislature.
It is not mathematical precision that is necessary nor can it be.
There is in the provisions as amended, a discernible and an identifiable object behind the levy and a nexus between the subject and the object of the levy.
In this matter two principles have to be emphasised, firstly.
that the tax must be regulatory and compensatory and secondly, there must be no discrimination.
About discrimination it is well to remember that a taxation law cannot claim immunity from the equality clause in Article 14 of the Constitution.
But in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerably wide discretion and latitude in the matter of classification PG NO 492 for taxation purpose is permissible.
See the observations of this Court in Income Tax Officer, Shillong and Anr.
vs N. Takim Roy Rymbai etc.
, (supra).
Also see the observation in Mrs. Meenakshi and others vs State of Karnataka, (supra); Anant Mills Co. Ltd. vs State of Gujarat & Ors., (supra) and Khandige Sham Bhat and Ors.
vs The Agricultural Income tax Officer, (supra).
The evidence on record shows that the life of motor cycles and tricycles normally exceeds 25 years.
The so called non refund for certain period is not conclusive of the matter.
Even if mathematical precision is not possible, we cannot say that it is wholly unmathematical.
The collection of tax for a period of 15 years at one point of time is a convenient method enabling the owner to use the vehicle for more than 25 years, without having to visit the office to pay the tax periodically, and pay enhanced tax that may be levied during the 25 years of life of the vehicle.
Regulatory and compensatory tax can be levied to the extent the State is required to pay for rendering the services.
According to the State, the evidence on record shows that the cost of services is twice the total amount recovered from all types of vehicles.
The balance of expenditure is met by the State from the general revenues.
Even from this half collection, the motor cycles and tricycles contribute only 6.4 per cent.
The percentage of motor cycles and tricycles is 56 to 58 percent of all vehicles.
Thus, even insubstantial increase in their rates cannot be said to be not a "regulatory or compensatory" tax measure.
The Act, as at present, is not violative of Article 14 of the Constitution.
The fact that company owned vehicles are taxed at three times the rate payable by individuals, does not make the legislation violative of Article 14.
Historically, the company owned vehicles have always been taxed at a rate higher than the individually owned vehicles.
As appears from the records produced.
the motor cycles and tricycles constituting 56 to 58 per cent of all types of vehicles contribute only 6.4 per cent of the total revenue earned through the tax imposed by the Act.
It is well settled that the Legislature has the power to distribute tax burden in a flexible manner and the Court would not interfere with the same.
This principle has been reiterated in G.K. Krishnan etc.
vs The State of Tamil Nadu & Anr.
, (supra) where this Court observed that in the context of commercial regulation, Article 14 is offended only if the classification rests on grounds wholly irrelevant to the achievement of the objective and this lenient standard is further weighted in the State 's favour by the fact that a statutory discrimination will not be set aside if a state of facts may reasonably be conceived by the PG NO 493 Court to justify it.
Tax laws have to respond closely to local needs and Court 's familiarity with these needs is likely to be limited.
Therefore, the Court must be aware of its own remoteness and lack of familiarity with the local problems.
Classification is dependent upon peculiar needs and specific difficulties of the community.
The needs and the difficulties of a community are constituted out of facts and information beyond the easy ken of the Court.
It appears that in the instant case, the State Government has specifically averred that the company owned vehicles travel more and use roads more often.
No evidence have been produced to the contrary.
In view of the well settled principles, we cannot say that there was without any basis and as such there was discrimination.
It further appears that the Government of lndia has liberalised the licensing policy and granted large number of industrial licences for the manufacture of two wheelers.
In Maharashtra itself following is the new registration of two wheelers during the last four and five year: " 1983 84 1,13,949 1984 85 1,24,877 1985 86 1,66,124 1986 87 2,01,904" In 1986 87 per working day on an average 929 new two wheeler have been registered.
There was tremendous strain on Motor Vehicles Department due to increase in the number of two wheeler.
The following statistics and figures indicate the position that one time tax on two wheelers have beneficient effect: "As on 1.4.1987 there were 10,93,170 two wheelers in Maharashtra and total number of vehicles was 1841 lakhs.
In 1985 86 the total revenue by way of Motor Vehicles Tax was Rs.98 crores out of which only Rs. 6 to 7 crores was from two wheelers.
That means 58% vehicles (3 wheelers) used to give only 6.4% Motor Tax for which 22,000 man days were required to be spent.
All the two wheeler owners were required to come to R.T.O. for payment of tax every year.
PG NO 494 Almost 70 to 75% Motor Vehicle Tax arrear cases were of 2 wheelers.
Because of new system of one time tax if the owner pays it, he is not required to pay the tax again during the life time of the 2 wheeler.
Any further increase in one time tax rate will not be applicable to the 2 wheelers which have already paid the one time tax.
Statistics show that the 2 wheelers are being used for more than 25 years.
The rate of increase of 2 wheelers because of easy availability and affordability is almost 25%.
The total number of two wheelers projections in the State will be as follows: By the end of 1986 87 10.94 lakh 1987 88 13.33 lakh 1988 89 16.20 lakh 1989 90 19.69 lakh 1990 91 23.77 lakh 1991 92 28.73 lakh Existing vehicles will have to pay one time tax in sliding scale rate.
Older the vehicles, less will be the tax.
This tax system is already in existence in Karnataka since 1.4.1986 and also in Gujarat, Rajasthan.
This new system will definitely give relief to the two wheeler owners as they will not be required to come to R.T. Office for annual payment." Having regard to these factors and having regard to the principles applicable to taxation laws, we are of the opinion that the Maharashtra Act as amended from time to time and mentioned hereinbefore, does not suffer from any vice of being not regulatory or compensatory taxation nor from the vice of being violative of Article 14 of the Constitution.
In that view of the matter, the challenge to the provisions of the Act as amended after the judgment of the PG NO 495 Bombay High Court cannot be maintained.
In that view of the matter, Civil Appeals Nos.
1631 1633 of 1987 are disposed of by saying that after the amendments noted here in before the Act does not suffer from the vice mentioned in the judgment of the High Court of Bombay.
The appeals are, therefore, allowed and disposed of accordingly.
In that view of the matter the challenge made in the special leave petitions Nos. 11673 75 of t987 is dismissed.
In the facts and circumstances of the case, there will be no orders as to costs.
Interim orders, if any, are vacated.
The taxes will be realised in accordance with the Act and necessary adjustments will be made accordingly.

summary/full:
These Civil appeals and special leave petitions centred round one point, namely, the validity of the Bombay Motor Vehicles Tax Act, 1958 as amended by Section 3 of the Maharashtra Act XIV of 1987 and Section 6 of the said Act as amended by Maharashtra Act XXXIII of 1987 and the Maharashtra Act IX of 1988.
Section 3 of the said Act XIV of 1987 added sub section (IC) to provide for the levy of one time tax at 15 times the annual rate on all motor cycles in the State.
The said provisions further provided that in the case of motor cycles owned by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
Section 6 of the said Act XIV of 1987 added sub section (6) to section 9, enabling a registered owner of a motor cycle or tricycle to obtain refund of `Lone_time tax" under certain conditions.
Petitions were filed in the High Court by the respondents in the appeals and petitioners in the special leave petitions, challenging the amended provisions of the principal Act.
The High Court held that (i) the levy of the one time tax was beyond the legislative competence of the State Legislature and also beyond Entry 57 of List II of the Seventh Schedule, and (ii) the provision for imposition of levy at thrice the rates on the vehicles owned by a firm or company, were neither discriminatory nor arbitrary.
The High Court struck down Act XIV of 1987.
The appeals by leave were filed by the State and the special leave petitions were fixed by the petitioners in this Court against the decision of the High Court.
In the meanwhile, the Maharashtra Legislature enacted Maharashtra Act XXXIII of 1987, which deleted Section 3(4) of the principal Act as amended by the PG NO 482 PG NO 483 Maharashtra Act XIV of 1987, whereby the existing provisions of refund for temporary non user were made inapplicable in cases of motor cycles and tricycles, restricting the right of refund to Section 9(6) in the contingencies mentioned therein.
It also introduced sub section (7) to section 9 conferring the right of refund in respect of motor cycles and tricycles in accordance with the rates specified in the Fifth Schedule.
But the said schedule did not prescribe a separate rate of refund for the company owned vehicles.
Therefore, the refund in respect of the company owned vehicles was the same as that payable to individual owned vehicles even though the tax paid on former class of vehicles was three times.
Soon thereafter, the Maharashtra Legislature enacted Act IX of 1988, whereby the only relevant change for the present purpose was that the rate of refund was enhanced to three times in respect of the company owned vehicles.
Before this Court, the appellant State submitted that the amendments enacted by the Maharashtra Acts XXXllI of 1987 and IX of 1988 had brought the principal Act as amended by the Maharashtra Act XIV of 1987 within the constitutional requirements of making one time tax 's regulatory and compensatory tax and that it was not necessary to decide if the Act as it stood when it was challenged before the High Court? was beyond the legislative competence of the State Legislature.
The respondents in the appeals and the petitioners in the special leave petitions urged that as even after the amendment no refund was available in respect of a vehicle which had been registered for more than 13 years? the effect of that was that no refund al all was available in respect.
of the tax paid for a vehicle for the 14th and 15th years.
The impugned levy of tax ceased to be compensatory or regulatory and was void under Entry 57 of List II and was violative of Article 301 of the Constitution.
Disposing of the appeals and dismissing the special leave petitions the Court.
HELD: The tax imposed on the motor vehicles or a class of motor cycles would not be valid unless it is compensatory or regulatory or does not have any nexus with the vehicles using the roads.
In such a case.
the levy would be Section of the said Act XIV of 1987 added sub section (IC) to provide for the levy of one time tax at 15 times the annual rate on all motor cycles in the State.
The said provisions further provided that in the case of motor cycles owned by a company or other commercial organisation, the one time tax was to be levied at thrice the rate.
The fact that the act, as at present, did not provide for refund in the 14th and 15th years, did no make the law outside the competence of the State Legislature.
he concept PG NO 484 of "regulatory and compensatory" tax does no imply mathematical precision of quid pro quo.
[489E] After the amendment, the Act came with in the constitutional requirements of making he one time tax a regulatory and compensatory tax.
It was true that the Act has no provided for refund in the 14h and 15h years but that does no make he law out sides the competence of the State Legislature.
It is no mathematical precision that is necessary nor can it be.
there is in the provisions as amended, as amended, a discernible and an identifiable object behind the levy and a nexus between the subject and the object of the levy, [491E F] Two principles have to be emphasised, firstly, that the tax must be regulatory and compenstaory and secondly, there must be no discrimination.
A taxation law cannot claim immunity from the equality clause in Article 14 of the Constitution, but in view of the intrinsic complexity of fiscal adjustments of diverse elements, a considerable wide discretion and latitude in the matter of classification for taxation purpose is permissible.
The life of Motor cycles and tricycles normally exceeds 25 years.
Non refund for certain period is no conclusive of the matter.
Even if mathematical provision is no possible, it cannot be said that it is wholly unmathematical.
The collection of ax for a period of 15 ears at one point of time is a convenient method enabling the owner o use he vehicle for more than 25 years without having to pay the tax periodically and pay the enhanced tax at may be levied during the 25 years of life of the vehicle.
Regulatory and compensatory tax can be levied to the extent e State is required to pay for rendering the services.
[491G;492A C] The Act, as at present, is not violative of Article 145 of the Constitution.
The fact that the company owned vehicles are taxed that three times the rate payable by individuals, does not make the legislation violatvie of Article 14.
Histrocially, the company owned vehicles are always been taxed at a rate higher that the individually owned vehicles.
he legislature has he power to distribute tax burden in a flexible manner and the Court would no interfere with the same.
It could not be said that there was differentiation without any basis and as such there was discrimination.
[492E H] In view of the principles applicable to the taxation laws and various other factors, the Maharashtra Act as amended from time to time does not suffer from any vice of being not regulatory or compensatory taxation nor from the vice of being violative of Article 14 of the Constitution, and the challenge to the provisions of the Act as amended PG NO 485 after the judgment of the High Court could not be maintained.
[494G ;495A] After the amendments afore mentioned the Act does no suffer from the vice mentioned in the judgment of the High Court .
The appeals were allowed thus, and the challenge made in the special leave petitions was dismissed.
[495] The taxes would be realised in accordance with the Act and the necessary adjustments would be made accordingly.
[495C] Bolani Ors.
Ltd. vs State of Orissa.
; ; G.K. Krishnan vs The State of Tamil Nadu & Anr., [1975] 2 S.C.R. 715; Malwa Bus Service (P) Ld.
vs State of Punjab and Ors.
, ; ' International ouris Corporation vs State of Haryana & Ors., ; ; Income tax Officer, shillong & Anr.
vs N. Takim Roy Rymbai, etc., ; Mrs. Meenakshi & Ors.
vs, State of Karnataka & Ors., AIR 1983 SC 1283; Anant Mills Co. Ltd. vs State of Gujarat and Ors., [1975] 3 S>.C.R. 220; Khandige Sham Bhat & Ors.
vs The Agricultural Income tax Officer; , and State of Karnataka vs K. Gopalakrishna Shenoy and Another, ; , refered to.