judgement:
Appeal No. 494 of 1970.
From the judgment and order dated the 24th January, 1969 of the Delhi High Court in Income Tax Ref.
No. 51 of 1966.
V. C. Desai, J. Ramamurthy and R. N. Sachthey, for the appellant.
K. Sen and H. K. Puri, for the respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal is directed against the Judgment, dated 24 1 1969, of the High Court of Delhi answering in the affirmative the following question referred to it under section 66(1) of the Indian Income tax Act, 1922 (for short, the Act) by the Commissioner of Income tax .
"Whether on the facts and in the circumstances of the case the capital loss of Rs. 28,662/ could be determined and carried forward in accordance with the provisions of Section 24 of the Indian Income tax Act, 1922, when the provisions of section 12B of the Income tax Act, 1922 itself were not applicable in the assessment year 1955 56.
" The assessee (respondent) is a Private Limited Company.
The assessment year under reference is 1955 56 and the relevant previous year is from 1 5 1953 to 30 4 1954.
On 10 1 1952 the assessee pur 698 chased 1124 shares of M/s. Intercontinent Travancore Pvt. Ltd. at a cost of Rs. 1,12,400/ from M/s. Escorts (A&M) Ltd. In the relevant accounting year ending on 30 4 195 3 the assessee received 562 bonus shares from the same company.
It thus acquired a total number of 1686 shares.
On 3 9 53, i.e. during the relevant previous year the assessee sold all these 1686 shares to M/s. Escorts (Agents) Ltd. for Rs. 84,300 and claimed a loss of Rs. 84,862/ in the income tax return filed by it.
The Income tax Officer disallowed the entire loss of Rs. 84,862 on the ground that it was a loss of a capital nature.
The assessee carried an appeal to the Appellate Assistant Commissioner and contended that this loss of Rs. 84,862/ was a revenue loss arising out of dealing in shares.
The Appellate Assistant Commissioner found that the assessee 's claim was exaggerated and that the actual lose was to the tune of Rs. 28,662/ only.
He further held that this loss of Rs. 28,662/ was not a 'revenue loss, but a 'capital loss ' arising out of change of investments.
Against the decision of the Appellate Assistant Commissioner the assessee preferred an appeal before the Tribunal, challenging the findings of the Commissioner both in regard to the amount of loss and its nature.
At the stage of arguments before the Tribunal, the assessee 's Counsel did not press these grounds of appeal but took up the plea that the amount of Rs. 28,662/ which had been held to be a "capital loss" by the authorities below, should be allowed to be carried forward and set off against profits and gains, if any, under the head "capital gains" earned in future, as laid down in sub sections (2A) & (2B) of section 24 of the Act.
Despite objection from the Departmental Representative, the Tribunal allowed this new ground to be raised with the observation that It was "a pure question of law and did not require investigation of any fresh fact '.
It further accepted the contention of the assessee and directed that the "capital loss" of Rs. 28,662/ should be carried forward and set off against "capital gains" if any, in future.
At the instance of the Commissioner of Income tax, the Tribunal referred the above question (set out at the commencement of this judgment) to the High Court under section 66(1) of the 1922 Act.
It was contended before the High Court on behalf of the Revenue that the expression "capital gains" in sub section (2A) of section 24 has reference only to section 12B so that the loss suffered in the year in which the profits under the head "capital gains" were not taxable, could not fall within sub section (2A) of section 24, section K. Kapoor J., speaking for the Division Bench, rejected this contention in these terms : "This argument overlooks the fact that the head of income chargeable to income tax are set out in section 6. "Section 12 B deals only with the computation of capital gains and with their taxability if they arise during a particular period.
As a matter of fact, section 12B itself refers to section 6 inasmuch as it says that "the tax shall be payable by an assessee under the bead "capital gains".
This obviously has reference to the VIth head in section 6.
The effect of 699 sub section (2A) and (2B) of section 24 read with section 6 and 12B, therefore, is that if a capital loss is incurred in a year in which a capital gain did not attract tax under section 12B such loss would still be loss under the head "capital gains" and if in subsequent year the assessee has any profit under that head it can still be carried forward and set off against the taxable capital gain.
The Tribunal was in my opinion, right in coming to the conclusion that it did.
" Hence this appeal by the Commissioner of Income tax (Central) Delhi.
Capital Gains Tax for the first time was introduced by the Income tax and Excess Profit Tax (Amendment) Act, 1947 (No. 22 of 1947) which inserted section 12B in the Act.
This section made taxable "capital gains" which arose after March 31, 1946 The same Act of 1947 added as the VIth head "capital gains" in section 6 of the Act.
It also inserted sub sections (2A) and (2B) in section 24 of the Act.
The Indian Finance Act, 1949 virtually abolished the levy and restricted the operation of section 12B to "capital gains" arising before the ' 1st April, 1948.
But section 12B in its restricted form, and the VIth head, capital gains ' in section 6, and sub sections (2A) and (2B) of section 24 were not deleted and continued to form part of the Act.
The Finance (No. reintroduced the "capital gains ', tax with effect from the 31st March, 1956.
It substantially altered the old section 12B and brought it into its present form.
As a result of Finance Act (3) of 1956 "capital gains" again became taxable in the assessment year 1957 58.
The position that emerges is that "capital gains" arising, between 1 4 1948 and 31 3 1956, were not taxable.
The capital loss in question relates to this period.
Mr. V. section Desai, learned Counsel for the appellant contends that according to the scheme of the Act, a "capital loss" occurring in a previous year, could be allowed to be carried forward and set off against the capital gains of a subsequent year, only if the income under that head was taxable in the relevant previous and subsequent years.
Since during the period from 1 4 1948 to 31 3 1956, capital gains (plus) or capital gains (minus) did not enter into computation of the, total income of the assessee chargeable to tax under section 3 read with section 12B of the Act, the question of carrying forward inch loss did not arise, much less could such a loss be set off against the profits of any subsequent year.
As against this, Shri Ashok Sen, learned Counsel for the assessee maintains that a, right to carry forward a loss under any of the heads enumerated in section 6, is not dependent upon the taxability of income under that head it is sufficient if at the relevant time "capital gains" is one of the heads of income recognized by the charging section 6 and the loss is adjustable against "capital gains", if any, in future under section 24.
The argument proceeds, that section 6(vi) was not lying inert on the, statute book but was operative, throughout, for the purpose of calculating the losses under that head.
Shri Sen compared the non taxability of 700 capital gains during the period from 1 4 1948 to 31 3 1956, to a tax holiday for those years.
Another illustration given by the learned Counsel is of a person whose total income falls entirely on the negative side on account of losses suffered by him under any of the heads of income given in section 6.
Such a person notwithstanding the fact that he had no assessable income has a right to file a return and get his losses computed by the Income tax Officer merely for the purpose of carrying forward the loss.
The Income tax Officer, it is added, cannot ignore the return filed by the assessee, voluntarily, showing losses even though such a return is filed beyond time.
In this connection, Shri Sen has referred to Commissioner of Income tax, Punjab vs Kulu Valley Transport Co. Ltd. (1), Jaikishan Gopikishan and Sons vs Commissioner of Income tax, M.P. (2) and Commissioner of Income tax, Madhya Pradesh vs Khushat Chand Daga(3).
Before dealing with the contentions canvassed, it will be appropriate to have a clear idea of the terms 'income ', 'total income ', 'computation of total income ', 'carrying forward ' of a loss and its purpose, in the context of the scheme of the Act.
Section 2 Cl.
(15) defines "total income" to mean total amount of income, profits and gains referred to in sub section (1) of section 4 computed in the manner laid down in this Act.
Section 3, captioned as "Charge of Income tax", emphasises that the income tax shall be charged in respect of the total income of the previous year of every assessee.
Section 4 defines the ambit of that total income.
Section 6 enumerates six heads of income, profits and gains chargeable to income ax.
They are : " (i) Salaries.
(ii) Interest on securities.
(iii) Income from property.
(iv)Profits and gains of business, profession or vocation.
(v) Income from other sources.
(vi) Capital gains.
" Sections7, 8, 9, 10, 12 and 12B relate to payability and computation of taxunder the various heads of income.
The material part of section 12B at the relevant time was as follows: "12B (1) The tax shall be, payable by an assessee under the head "Capital gains" in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946 and before the, 1st day of April, 1948 and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place.
" (1) 7 (3) (2) 701 Section 22(1) requires a general notice to be published requiring every person whose total income during the previous year exceeds the maximum non taxable limit to Me a return.
Sub section (2) of this section enables the Income tax Officer to issue notice to any such person requiring him to furnish a return.
Sub section (2A) which was inserted by the Income tax Amendment Act 25 of 1953 with effect from 1 4 1952 provides "If any person who has not been served with a notice under sub section (2) has sustained a loss of profits or gains in any year under the head Profits and gains of business, profession or vocation, and such loss or any part thereof would ordinarily have been carried forward under sub section
(2) of section 24, he shall, if he is to be entitled to the benefit of the carry forward of loss in any subsequent assssment, furnish within the time specified in the general notice given under sub section
(1) all the particulars required under the prescribed form of return.
" The material part of section 24 runs thus : "24.(1) Where any assessee sustains a loss of profits or gains in any year under any of the heads mentioned in section 6, he shall be entitled to have the amount of the loss set off against his income, profits or gains under any other head in that year * * * * * Provided that in computing the profits and gains chargeable under the head "Profits and Gains of business, profession or vocation", any loss sustained in speculative transaction which are in the nature of a business shall not be taken into account except to the extent of the amount of profits and gains, if any, in any other business consisting of speculative transactions * * * * * (2) Where any assessee sustains a loss of profits or gains in any year, being a previous year not earlier than the previous year for the assessment for the year ending on the 31st day of March 1940, in any business, profession or vocation, and the loss cannot be wholly set off under sub section (1), so much of the loss as is not so set off or the whole loss where the assessee bad no other head of income shall be carried forward to the following year, and (i) where the loss was sustained by him in a business consisting of speculative transactions, it shall be set off only against the profits and gains, if any, of any business in speculative transaction carried on by him in that year; (ii) where the loss was sustained by him in any other business, profession or vocation, it shall be set off against the profits and gains, if any, of any business, profession or vocation carried on by him in that year pro 702 vided that the business, profession or vocation in which the loss was originally sustained continued to be carried on by him in that year; and (iii) if the loss in either case cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following year and so on. * * * * * * 2A.
Notwithstanding anything contained in sub section (1), where the loss sustained is a loss falling under the head "Capital gains".
such loss shall not be set off except against any profits and gains failing under that head.
Where an assessee sustains a loss such as is referred to in sub section (2A) and the loss cannot be wholly set off in accordance with the provisions of that sub section, the portion not so set off shall be carried forward to the following year and set off against capital gains for that year, and if it cannot be so set off, the amount thereof not so set off shall be carried forward to the following year and so on, so however, that no such loss shall be so carried forward for more than six years : Provided that where the loss sustained in any previous year does not exceed fifteen thousand rupees, it shall not be carried forward.
(3) When, in the course of the assessment of the total income of any assessee, it is established that a loss of profits or gains has taken place which he is entitled to have set off under the provisions of this section, the Income tax, Officer shall notify to the assessee by order in writing the amount of the loss as computed by him for the purposes of this section,.
" Section 2(6C) provides that 'income ' includes (among other things) "(vi) any capital gain chargeable under Section 128.
" From the charging provisions of the Act, it is discernible that the words 'income ' or 'Profits and gains ' should be understood as including losses also, so that, in one, sense 'profits and gains ' represent 'plus income ' whereas losses represent 'minus income '(1).
In other words, loss is negative profit.
Both positive and negative profits are of a revenue character.
Both must enter into computation, wherever it becomes material, in the game mode of the taxable income of the assessee.
Although section 6 classifies income under six heads, the main charging provision is section 3 which levies income tax, as only one tax, on the 'total income ' of the assessee as defined in section 2(15).
An income in order to come within the purview of that definition must satisfy two conditions.
Firstly, it must comprise the "total amount of income, (1) CIT vs Karamchand Prem Chand ; CIT V. Elphinston Spinning & Weaving Mills; 703 profits and gains referred to in s: 4(1).
" Secondly, it must be "computed in the manner laid down in die Act".
If either of these conditions fails, the income will not be a part of the "total income" that can be brought to charge.
Now, capital gains would be covered by the definition of 'income ' in sub section (6C) of section 2, only if they were chargeable under section 12B.
As noticed already, s.12B as modified by the Finance Act, 1949, did not charge any 'capital gains ' arising between 1 4 1948 to 14 1957.
Indeed, section 12B was not operative in these years (1948 57).
During this period, "capital gains", whether on the positive or the negative side, could not be computed and charged under section 12B or any other provisions of the Act.
In the instant case, the second condition, namely, "the manner of computation laid down in the Act" which to use the words of Stone C.J.(1) "f an integral part of the definition of 'total income" ' was not satisfied.
Thus in the relevant previous year and the assessment year, or even in the subsequent year, capital gains or "capital losses" did not form part of the "total income" of the assessee which could be brought to charge, and were, therefore, not required to be computed under the Act.
Before the insertion of sub section (2A) in section 22 by the amendment of 1 4 1952, an assessee was entitled to carry forward a loss even if he had submitted no return for the year in which the loss was sustained.
After the enactment of sub section (2A), it is a condition precent to the carry forward and set off of, the loss, that the assessee must file a return either in response to a general notice under sub section (1) of section 22 or voluntarily, without any individual notice under sub section (2) of that section.
If he does not Me the return for the year in which the loss was incurred and get the loss computed by the Income tax Officer, the right to carry forward the loss will also be lost.
But if the loss is from a source or head of income not liable to tax or congenitally exempt from income tax, neither the assessee is required to show the same in the return, nor is the Income tax Officer under any obligation to compute or assess it, much less for the purpose of "carry forward".
It is noteworthy that in the instant ease, the assessee in his return had not shown any "capital losses".
He had claimed this loss as a revenue loss.
The Income tax Officer could, therefore, reject the assessee 's claim to carry forward the loss, merely on the ground that it was not a "revenue loss".
His further finding that it wag a "capital loss" was only incidental and, in fact, was not necessary.
From what has been said above, it follows as a necessary corollary, that during the period section 12B did not make income under the he ad, ,capital gains ' chargeable, an assessee was neither required to show income under that head in his return, nor entitled to file a return showing "capital losses" merely for the purpose of getting the same computed and carried forward.
Sub section (2A) of section 22 would not give him such a right because the operation of that sub section is, in terms, confined to (i) a loss which is sustained "under the head 'profits and gains, of business, profession or vocation" and would ordinarily (1) In re Kamdar , 21.
704 have been carried forward under sub section (2) of section 24, and (ii) to "income" which falls within the definition of 'total income '.
Both these conditions necessary for the application of the sub section are lacking in the present case.
Nor do we find any substance in the contention that under sub section (2) read with subsection (1) of section 24, the assessee had an independent right to carry forward his capital loss, even if it could not be set off, owing to the non taxibility of capital gains, against future profits, it any, in the immediate subsequent years.
Sub section (2) of section 24 expressly refers to loss 'in any business, profession or vocation '.
It does not cover a "Capital loss", or the minus income under the head 'capital gains ' which at the relevant time, were not chargeable and did not enter into computation of the 'total income ' of the assessee under the Act.
It may be remembered that the concept of carry forward of loss does not stand in vacuo.
It involves the notion of set off.
Its sole purpose is to set off the loss against the profits of a subsequent year.
It presupposes the permissibility and possibility of the carried forward loss being absorbed or set off against the profits and gains, if any, of the subsequent year.
Set off implies that the tax is exigible and the assessee wants to adjust the loss against profit to reduce the tax demand.
It follows that if such set off is not permissible or possible owing to the income or profits of the subsequent year being from a nontaxable source, there would be no point in allowing the loss to be "carried forward".
Conversely, if the loss arising in the previous year was under a head not chargeable to tax, it could not be allowed to be carried forward and absorbed against income in a subsequent year, from a taxable source.
Now let us test the claim of the assessee in the light of the above principles.
The "capital loss" of Rs. 28,662/ in the present case, was, sustained in September 1953, that is, in the previous year 1953 54.
Let us assume that in the subsequent years 1955 56 and 1956 57 when the capital gains were not taxable, he made huge capital gains far exceeding this loss, could he be obliged to show those capital gains ill his return? Could the loss of the year 1953 54 be absorbed or set off against such capital gains of the subsequent years? The answer is emphatically in the negative.
The cases cited by Shri Sen are not relevant.
In all those cases, the heads of income under which the, losses were sustained, were chargeable to tax.
None of them was a case of 'capital loss ' pertaining to the period, 1948 to 1957.
For the foregoing reasons, we are of the opinion that the High Court was in error in answering the question referred to it, in favour of the assessee.
We would reverse that answer in favour of the Revenue.
In the result, the appeal is accepted with costs.
Appeal allowed.

summary/full:
By the Income tax and Excess Profit Tax (Amendment) Act, 1947 section 12B was inserted in the Indian Income tax Act, 1922, making capital gains which arise after March 31, 1946, taxable.
The same Act inserted sub sections (2A) and (2B) in section 24 of the Income tax Act.
As a result of the Indian Finance Act, 1949 which restricted the operation of section 12B to capital gains arising before April 1, 1948, and the Finance (No. 3) Act, of 1956 which restored tax on capital gains with effect from April 1, 1948 capital gains arising from 1 4 1949 to 31 3 1956 were not taxable.
For the assessment year 1955 56 which relates to the period when capital gains were not taxable the assessee claimed a loss of Rs. 84,862/ arising from the sale of certain shares.
The Income tax Officer disallowed the loss on the ground that it was a loss of capital nature.
The Appellate Assistant Commissioner, in appeal, held that the assessee 's claim was exaggerated, that the actual loss was only Rs. 28,662/ and agreed with the Income tax Officer that the loss was not a revenue loss but a capital loss.
Before the Tribunal the assessee contended that the amount of Rs. 28,662,/ which had been held to be a capital less by the authorities should be allowed to be carried forward and set off against profits and gains under the head "Capital gains" earned in future as laid down in section 24(2A) and (2B).
The Tribunal held in favour of the assessee.
The High Court.
in reference, confirmed the order of the Tribunal holding that the effect of sub sections (2A) and (2B) of section 24 read with sections 6 and 12B was that if a capital loss was incurred in a year in which a capital gain did not attract tax under section 12B even then such loss would still be loss under the head 'capital gains ' and if in a subsequent year the assessee had any profit under that head it would still be carried forward and set off against the taxable capital gain.
Allowing the appeal to this Court, HELD : (1) From the charging provision of the Indian Income tax Act it is discernible that the words 'income ' or 'profits and gains, should be understood as including losses, so that both must enter into computation, wherever it becomes material, of the taxable income of the assessee.
Although section 6 classifies income under six heads the main charging provision is section 3 which levies income tax as only one tax on the 'total income ' of the assessee as defined in section 2(15).
An income in order to come within the purview of that definition must satisfy two conditions.
(a) it must comprise the 'total amount of income, profits and gains referred to in section 4(1), and (b) it must be computed in the manner laid down in the Act.
If either of these conditions fails the income will not be a part of the total income that can be brought to charge.
[702F 703B] (2)The concept of carry forward of loss does not stand in vacuo.
Its sole purposeis to set off the loss against the profits of a subsequent year.
Set off impliesthat the tax is exigible and the assessee wants to adjust the loss against profit to reduce the tax demand.
It follows that if such set off is not Permissible or possible owing to the income or profits of the subsequent year being from a non taxable source, there would be no point in allowing the loss to be carried forward.
Also, if the loss arising in the previous year was under a head not chargeable to tax it could not be allowed to be carried forward and absorbed against income in a subsequent year from a taxable source.
[704C E] (3) Capital gains would be covered by the definition of income in section 2(6C) only if they were chargeable under s ' 12B.
But section 12B was not operative in the years 1948 to 1956.
Thus in the relevant previous year and the assessment year or even in he subsequent year capital gains ' or 'capital losses ' did not 697 form part of the total income of the assessee which could be brought to charge and were, therefore, not required to be computed under the Act.
That is condition (b) which 'total income ' must satisfy is not satisfied in the present case.
[703B D] (4) Under section 22(2A) it is a condition precedent to the carry forward and set off of the loss that the assessee must file a return either in response to a general notice, under section 22(1) or voluntarily, without any individual notice under subsection (2).
If he does not file the return for the year in which the loss was incurred and get the loss computed by the Income tax Officer, the right to carry forward the loss will also be lost.
But if the loss is from a source or head of income not liable to tax or exempt from tax neither the assessee is required to show the same in the. return nor is the Income tax Officer under any obligation to compute or assess it, much less for the purpose of carry farward.
[703D F] (5) In the instant case.
the, assessee in his return had not shown any ,capital loss ' but claimed the loss as a revenue loss.
The Income tax Officer should have rejected the assessee 's claim to carry forward the loss merely on the ground that it was not a revenue loss and he need not have given a finding that it was a capital loss, because 'capital gains were not taxable during the year.
[703F G] (6) Section 24(2) expressly refers to loss, 'in any business, profession or vocation '.
It does not cover a capital loss under the head 'capital gains ' which at the relevant time were not chargeable and did not enter into computation of the total income of the assessee.
Therefore, under a. 24(1) and (2) the assessee had no independent right to carry forward his capital loss even if it could not be set off owing to the non taxability of capital gains against future profits in the immediate subsequent years.
[704B C] (7) Assuming, therefore, that the assessee in the subsequent years 1955 56 and 1956 57 when the capital gains were not taxable made huge capital gains he would not be obliged to show those capital gains in his return.
Therefore, the loss suffered by him in the relevant assessment year in the instant case could not be absorbed or set off against such capital gains.
[704F]


judgement:
minal Appeal No. 203 of 1973.
Appeal by special leave from the Judgment and Order dated the 14th March, 1973 of the Calcutta High Court in Criminal Revision No. 613 of 1972.
L. N. Sinha, Solicitor General.
G. L. Sanghi and Girish Chandra for the Appellant.
A. K. Sen Mrs. Liela Seth and U. K. Khaitan for the Respondents.
The Judgment of the Court was delivered by MATHEW, J.
The respondents were tried before the Presidency Magistrate, 11th Court for having committed offences under sections 4(3), 20(3) and 22 of the Foreign Exchange Regulation Act, 1947 (hereinafter called 'the Act ') read with section 120 B of the Indian Penal Code and section 23 of the Act.
The Court discharged the respondents in view of the decision of the High Court of Calcutta in M/s. Serajuddin & Co and Others vs Union of India and Others(1) holding that section (1) Civil Rules Nos.
2183 (W), 2184 (W) of 1966 and cases Nos.
1998 and 1999 of 1963 decided on 16 9 1971.
804 23(IA) was violative of Article, 14 of the Constitution.
The appellant filed a revision petition against the order, before the High Court.
The Court concurred with the decision of the trial Court and dismissed the revision.
This appeal, by special leave, is against that order.
The question for consideration is whether section 23(1A) of the Act violates Article 14 of the Constitution.
Section 23 (1) as it originally stood in the Act provided that whoever contravenes any of the provisions of the Act or of any rule, direction or order made thereunder shall be punishable with imprisonment for a term which may extend to two years or with fine, or with both, and any Court trying any such contravention may, if it thinks fit and in addition to any sentence which it may impose for such contravention, direct that any currency, security, gold or silver or goods or other property in respect of which the contravention has taken place shall be confiscated.
Section 23 was amended in 1950 and 1952.
We are not concerned with those amendments.
In 1957, the section was further amended by the Foreign Exchange Regulation (Amendment) Act, 1957 (Act No. 39 of 1957).
This amendment provided for departmental adjudication in respect of contravention of certain provisions of the Act.
The section as amended read as under: "23(1) If any person contravenes the provisions of section 4, section 5, section 9 or sub section (2) of section 12 or of any rule, direction or order made thereunder, he shall (a) be liable to such penalty not exceeding three times the value of the foreign exchange in respect of which the contravention has taken place, or five thousand rupees, whichever is more, as may be adjudged by the Director of Enforcement in the manner hereinafter provided or, (b) up on conviction by a Court, be punishable with imprisonment for a term which may extend to two years, or with fine or with both, (IA) Whoever contravenes (a) any of the provisions of this Act or of any rule, direction or order made thereunder, other than those referred to in sub section (1) of this section and section 19 shall, upon conviction by a court, be punishable with imprisonment for a term which may extend to two years, or with fine or with both.
(b) any direction or order made under section 19 shall, upon conviction by a Court, be punishable with fine which may extend to two thousand rupees.
" By section 23D it was provided that the Director of Enforcement shall for the purpose of adjudicating under clause (a) of sub section (1) of section 23 805 hold an inquiry after notice to the person proceeded against and impose a penalty, but if at any stage of the inquiry he is of opinion that having regard to the circumstances of the case, the penalty he is empowered to impose would not be adequate, he shall, instead of imposing a penalty, file a complaint in writing to the Court.
The argument of the respondents was that section 23 provides for two different procedures for dealing with contravention of the provisions of the Act; that while persons contravening the provisions of the Act specified in section 23(1) (a) have to be dealt with by the Director of Enforcement in the first instance and need face trial in criminal court only if he is of opinion that having regard to circumstances of the case the penalty he is empowered to impose would not be adequate, the persons contravening the other provisions of the Act are liable to be prosecuted in the first instance in criminal court without an injury by the Director of Enforcement which would give them the possibility to escape prosecution in a criminal court.
In other words the argument was that persons who have contravened the provisions specified in section 23 (I) (a) anti are found guilty by the Director of Enforcement need not face prosecution in a criminal court if the Director is of opinion, that the penalty he is empowered to impose would be adequate punishment, whereas, the persons alleged to contravene the other provisions of the Act have necessarily to face prosecution in criminal court without being given the benefit of an inquiry by the Director of Enforcement and the opportunity to the delinquents to convince him that imposition of penalty by him would be adequate punishment even if they are found guilty.
The question, therefore, is whether persons contravening the provisions specified in section 23 (I) (a) are similarly situated with persons contravening the other provisions of the Act with respect to the purpose or object of the Act or whether by reason of the nature of the offences resulting from the contravention of the provisions specified in section 2 3 (I) (a) the persons contravening them form a class by themselves distinct from the persons contravening the other provisions of the Act and therefore the legislative judgment to deal with them under a different procedure was justified with reference to the ultimate purpose of the Act.
The preamble provides the key to the general purpose of the Act.
that purpose is the regulation of certain payments, dealings in foreign exchange and securities and the import and export of currency and bullion in the economic and financial interest of India.
The general purpose or object of the Act given in the preamble may not show the specific purpose of the classification made in section 23(1) (a) and section 23(1A).
Supreme Court has therefore to ascribe a purpose to the statutory classification and coordinate the purpose with the more general purpose of the Act and with other relevant Acts and public policies.
For achieving this the Court may not only consider the language of section 23 but also other public knowledge about the evil sought to be remedied, the prior law, the statement of the purpose of the change in the prior law and the internal legislative history.
When the purpose of a challenged classification is in doubt, the courts attribute to the classification the purpose 806 thought to be Most probable.
Instead of asking what purpose or purposes the statute and other materials reflect, the court may ask what constitutionally permissible objective this statute and other relevant materials could plausibly be construed to reflect.
The latter approach, is the proper one in economic regulation cases.
The decisions dealing with economic regulation indicate that courts have used the concept of 'purpose ' and 'similar situations ' in a manner which give considerable leeway to the legislature.
This approach of judicial restraint and presumption of constitutionality requires that the legislature is given the benefit of doubt about its purpose.
How far a court will go in attributing a purpose which though perhaps not the most probable is at least conceivable and which would allow the classification to stand depends to a certain extent upon its imaginative power and its devotion to the theory of judicial restraint.
At this stage, it is necessary to sharpen the focus to understand the real grievance of the respondents.
As already indicated, their submission is that since they are similarly situated with persons contravening the provisions of the Act specified in section 23 (1) (a), they should have been included in that class and dealt with by the Director Enforcement in the first instance so that they might also have the benefit of inquiry by him with the possible advantage of escaping with penalty even if they are found guilty of the offences.
Their grievance therefore is that the classification made in section 23 (1) is under inclusive and is, therefore, unreasonable.
Often times the courts hold that under inclusion does not deny the equal protection of laws under Article 14.
In strict theory, this involves an abandonment of the principle that classification must include all who are similarly situated with respect to the purpose.
This under inclusion is often explained by saying that the legislature is free to remedy parts of a mischief or to recognize degrees of evil and strike at the harm where it thinks it most acute.
The Courts have recognised the very real difficulties under which legislatures operate difficulties arising out of both the nature of the legislative process and of the society which legislation attempts perennially to reshape and they have refused to strike down indiscriminately all legislation embodying classificatory inequality here under consideration.
Mr. Justice Holmes, in urging tolerance of under inclusive classifications, stated that such legislation should not be disturbed by the Court unless it can clearly see that there is no fair reason for the law which would not require with equal force its extension to those whom it leaves untouched.
See Missouri K. and T. Rly.
vs May(I).
What, then, are the fair reasons for non exten sion ? What should a court do when it is faced with a law making an under inclusive classification in areas relating to economic and tax matters '? There are two main considerations to justify an Linder inclusive classification.
First, administrative necessity.
Second, the legislature might not be fully convinced that the particular policy which it adopts (1) at p. 269.
807 will be fully successful or wise.
Thus to demand application of the policy to, all whom it might logically encompass would restrict the opportunity of a state to make experiment.
These techniques would show that some sacrifice of absolute equality may be required in order that the legal system may preserve the flexibility to evolve new solutions to social and economic problems.
The gradual and piece meal change is often regarded as desirable and legitimate though in principle it is achieved at the cost of some equality.
It would seem that in fiscal and regulatory matters the court not only entertains a greater presumption of constitutionality but also, places the burden on the party challenging its validity to show that it has no reasonable basis for making the classification.
This was the approach of this Court in State of Gujarat vs Ambica Mills(1).
The Court said : "The piecemeal approach to a general problem permitted by under inclusive classifications, appears justified when it is considered that legislative dealing with such problems is usually an experimental matter.
It is impossible to tell how successful a particular approach may be, what dislocations might occur, what evasions might develop, what new evils might be generated in the attempt.
Administrative expedients must be forged and tested.
Legislators, recognizing these factors, may wish to proceed cautiously, and courts.
must allow them to do so (37 California Rev. 341).
" The background of the amendment of section 23 of the Act will be relevant for appreciating the reason for making the distinction between the two classes of contraventions.
From April, 1949 to December, 1952, the Reserve Bank was handling all cases including those relating to unauthorized import, export of gold and silver.
The Bank had an enforcement section.
In 1952, the Central Government authorised the Customs and Central Excise officers to investigate and prosecute cases if import or export of gold and silver in contravention of the provisions relating to them.
In May, 1956, the Central Government took over the work relating to enforcement, i.e., the residuary work done by the Reserve Bank other than those entrusted to Custom.% Department.
A Directorate of Enforcement was set up in May, 1956 with the idea that there should be a specialized agency to deal with specified categories of offences.
Between April, 1949 and April 1956, when the duty of enforcement was with the Reserve Bank, the Bank had completed investigation in about 200 cases but prosecutions could be launched in respect of 66 cases only and out of these 60 cases ended in convictions.
No prosecution could be launched in respect of other cases in view of the fact that evidence legally neces sary to secure conviction in a court was not forthcoming.
When the work was transferred to the Enforcement Directorate of the Ministry of Finance, its experience was also similar.
From May, 1956 till about 1957, the Directorate had handled 832 cases.
But prosecutions could be launched only in respect of 32 cases.
This Was due to the fact that legal evidence necessary for establishing the cases beyond (1) ; 808 doubt in a court of law was not forthcoming partly because it was difficult to secure cooperation of the foreign collaborators in getting the incriminating documents against the suspects and partly because the banks in foreign countries were under no obligation to furnish statements of accounts maintained by the suspects in them.
Faced with this difficulty, the Government had to consider other ways of enforcing the provisions of the Act more effectively.
The Government, after considering the pros and cons decided to provide for departmental enquiry and adjudication of contravention of certain provisions of the Act by an authority specially constituted for that purpose.
In the statement of Objects and Reasons to the Foreign Exchange Regulation Bill, 1957, it was stated ; ".
The most important of these amendments is the one providing for departmental inquiry an adjudication of foreign exchange offences by an authority constituted by Government on the Sea Customs Act.
" In short, the reason for the amendments made in 1957 was the experience gained in the working of the Act till then.
That experience was that persons contravening the provision of the Act specified in section 23 (1) (a) invariably escaped without punishment : firstly because, successful prosecution of these offences in many cases was not possible for want of legal, evidence; secondly because, the criminal courts were not equipped with the training, expertize and experience necessary to deal with the intricate and ingenious methods adopted by the persons contravening them.
The Government therefore thought that imposition of penalty by departmental adjudication would prove a more effective means if checking these types of foreign exchange offences as against the previous system of prosecution of all offences on the basis of the strict standard of proof required for criminal prosecution which proof was by and large, so much within the special knowledge of the offender and so much out of the reach of the department.
It may be noted that after the amendment in 1957, further amendments of section 23 were made in 1964 whereby sections 10, 17, 18(A) and 18(B) were also brought within the purview of section 23(1)(a).
The introduction of these sections within section 23(1)(a) was the result of further experience gained during the succeeding years.
It was only on the basis of the experience gained by the working of the Act that a decision could be taken about the classification of offences in respect of which a trial by a court would be expedient and those in respect of which summary procedure visualized by section 23(1) (a) might be necessary.
Generally speaking, therefore, the basis of the classification was that in cases where there was likelihood of getting sufficiently unimpeachable evidence as, for instance, in cases involving contravention ,of sections 14, 13(2), 15, 18, etc., where the Reserve Bank of India as a specialized agency comes into the picture and be in possession ,of relevant materials, those cases were left to be dealt with under s.23(1A) by criminal courts.
809 In paragraph 17 of the affidavit of Shri M. L. Sharma, Under Secretary, Ministry of Finance, Department of Economic Affairs, filed with the permission of this Court, the reasons why the legislature selected the contravention of certain provisions of the Act for being dealt with by the criminal courts in the first instance have been fully stated.
According to that affidavit, broadly speaking, the classes of offenceswhich have been brought under sections 23(1) and 23A are what maybe termed as 'primary ' offences and those brought under s.23(1A)may be termed as 'secondary ' offences.
Primary offences are those which need detection and action at executive or field level by the concerned specialized agency.
There is greater need fur taking deterrent measures in respect of these offences.
It is not a question of the seriousness or gravity of the offences.
Both primary and secondary offences may be grave or serious and involve large amounts.
But the difference is that primary offences are distinguished by the volume and areas of incidence and may need greater deterrence which sometimes may lie in large pecuniary penalty and sometimes in criminal punishment by way of imprisonment.
A delinquent who has become an insolvent may not feet any deterrent effect however large the pecuniary penalty may be and such a case may call for a sentence of imprisonment.
In respect of secondary offences there are heady built in institutional checks laid down by the Reserve Bank or other Government agencies.
As indicated above, where contraventions do take place in regard to, other sections, there would normally be adequate or reasonable documentary evidence, etc., and these will facilitate prosecution in courts of law.
We do.
not think that there is any merit in the contention that the classification made in s.23(lA) is discriminatory.
Even according to the respondents, it is the classification made in s.23(1)(a) which is under inclusive and is, therefore, unreasonable.
If this Court were_ to declare that the classification made in section 23 (1) (a) is under inclusive and therefore unreasonable, the result would be that contraventions of the provisions specified in section 23(1)(a) would also fall within section 23(1 A) and would have to be dealt with by the Criminal Court a consummation which the respondents devotedly want to avoid.
We do not think that the High Court was right in holding that section 23(1A) was bad.
We set aside the order of the High Court and allow the appeal.
V.M.K. Appeal allowed.

dataset_name: IN-Abs

summary/full:
The respondents were tried for having committed offences under section 4(3), 20(3) and 22 of the Foreign Exchange Regulation Act, 1947 read with section 120 B of the Indian Penal Code and section 23 of ' the Act.
The Court discharged the respondents in view of the decision of the High Court of Calcutta in M/s Serajuiddin & Co. and Ors.
vs Union of India and Ors.
Civil Rules Nos.
2183 (W) of 1966 and cases Nos.
1998 and 1999 of 1963 decided on 16 9 1971, holding that section 23(AI) was violative of article 14 of the Constitution.
The appellant filed a revision petition against the order, before the High Court.
The High Court concurred with the decision of the trial Court and dismissed the revision.
This appeal, by special leave, is against that order dismissing the revision, It was contended for the respondents that section 23 provides for two different procedures for dealing with contravention of the provisions of the Act.
That is to say, persons who have contravened the provisions specified in section 23(1)(a) and are found guilty by the Director of Enforcement need not face prosecution in a criminal court if the Director is of opinion that the penalty he is empowered to impose would be adequate punishment, whereas, the persons alleged to contravene the other provisions of the Act have necessarily to face prosecution in criminal court without being given the benefit of an inquiry by the Director of Enforcement and the opportunity to the delinquents to convince him that imposition of penalty by him would be adequate punishment even if they are found guilty.
The classification made in section 23(1) is under inclusive and is, therefore, unreasonable.
Allowing the appeal, HELD : (i) When the purpose of a challenged classification is in doubt, the courts attribute to the classification the purpose thought to be most probable.
Instead of asking what purpose or purposes the statute and other materials reflect, the court may ask what constitutionally permissible objective this statute and other relevant materials could plausibly be construed to reflect.
The latter approach is the proper one in economic regulation cases.
The decisions dealing with economic regulation indicate that courts have used the concept of 'purpose ' and 'similar situations ' in a manner which give considerable leeway to the legislature.
This approach of judicial restraint and presumption of constitutionality requires that the legislature is given the benefit of doubt about its purpose.
[805H 806C] (ii) Often times the courts hold that tinder inclusion does not deny the equal protection of laws under Article 14.
In strict theory, this involves an 803 abandonment of the principle that classification must include all who are similarly situated with respect to the purpose.
This under inclusion is often explained by saying that the legislature, is free to remedy parts of a mischief or to recognize degrees of evil and strike at the harm where it thinks it most :acute.
There are two main considerations to justify an under inclusive classification.
First, administrative necessity.
Second, the legislature might not be fully convinced that the particular policy which it adopts will be fully successful or wise.
Thus to demand application of the policy to all whom it might logically encompass would restrict the opportunity of a state to make experiment.
These techniques would show that some sacrifice of absolute equality may be required in order that the legal system may preserve the flexibility to evolve new solutions to social and economic problems.
[806E; H.807B] Missouri &. and T. Rly.
vs May, ; at p. 269 and Gujarat vs Ambica, Mills ; referred to.
(iii) The experience of the Government was that persons contravening the provisions of the Act specified in section 23(1)(a) invariably escaped without punishment.
: firstly because, successful prosecution of these offences in many cases was not possible for want of legal evidence; secondly because, the criminal courts were not equipped with the training, expertize and experience necessary to deal with the intricate and ingenious methods adopted by the persons contravening them.
The Government, therefore, thought that imposition of penalty by departmental adjudication would prove a more effective means of ,checking these types of foreign exchange offences as against the previous system of ' prosecution of all offences on the basis of the strict standard of proof required for criminal prosecution which proof was, by and large, so much within the special knowledge of the offender and so much out of the reach .of the department.
[808D F] The basis of classification was that in cases where there was likelihood of getting sufficiently unimpeachable evidence as, for instance.
in cases involving contravention of sections 14, 13(2), 15, 18 etc., where the Reserve Bank of India as a specialized agency comes into the picture and be in possession of relevant materials, those cases were left to be dealt with under section 23(IA) by criminal courts.
The classification made in section 23(IA) is, therefore, not dis criminatory.
[808H; 809E]


judgement:
No. 118 of 1974.
Petition under article 32 of the Constitution.
R. L. Kohli, for the petitioner.
Dilip Sinha and G. section Chatterjee, for the respondent.
The Judgment of the Court was delivered by CHANDRACHUD, J.
The petitioner was detained by an order dated August 23, 1973 passed by the District Magistrate, Howrah, under the .
The order recites that the petitioner was detained with a view to preventing him from acting in any manner prejudicial to the maintenance of public order.
The particulars of the ground of detention refer to a solitary incident dated March 18, 1973.
It is alleged that at about 2 p.m. on that date, the petitioner and his associates being armed with swords, Ballams and Lathis attacked a group of Bengalees at Rajnarayan Roy Choudhury Ghat Road, Shibpur, Howrah causing severe injuries to them.
It is further stated that this conduct led to a reign of terror 426 in the locality as a result of which the shops and the doors of the read side houses were closed, people of the locality fled away inpanic and the people were generally afraid of coming out of their houses for fear of being assaulted.
Learned counsel appearing on behalf of the petitioner has raised two points for our consideration in this petition fOr the writ of habeas corpus.
The particulars furnished to the petitioner say that the petitioner was detained on the ground: "you have been acting" in a manner prejudicial to the maintenance of public order.
The argument is that the order is founded on a single incident and therefore, the use of language showing that the culpable conduct on the part of the petitioner extended over an appreciably long period of time was wholly inappropriate.
Inferentially; it is urged, the detaining authority had material before it showing that the petitioner was indulging in a criminal course of conduct for a long periOd of time and as such material was not disclosed to the petitioner, he bad no opportunity to meet it, leading thereby to the contravention of Article 22(5) of the Constitution.
We are not impressed by this submission.
It is true that in matters involving the liberty of the subject, the detaining authorities ought to exercise the greatest care in the discharge of their functions.
But that dOes not justify an unrealistic dissection of detention orders.
The counter affidavit filed on behalf of the State Govt.
shows that no other material was taken into account by the detaining authority while passing the order of detention.
Therefore, the use of the expression, "you have been acting" though unfortunate does not support the submission that the order of detention is founded on undisclosed material.
The petitioner was expressly apprised that he had been acting in a manner prejudical to the maintenance of public order "as evidenced by the particulars" furnished to him.
The particulars refer only to a single incident.
The second ground of attack on the detention order is that when the State Government approved the detention on August 30, 1973 it passed an order approving a detention order dated "25 8 73".
As the impugned order of detention is dated August 23, 1973 it is urged that while approving the detention of the petitioner, the State Government had before it some other order of detention.
There is no substance in this contention.
The order of approval contains but a typographical error.
This is clear from the order passed by the State Govt.
on November 8, 1973 confirming the order of detention after obtaining the opinion of the Advisory Board.
The order of confirmation refers to the order of detention dated August 23, 1973.
It must also be stated that as in the order of confirmation so in the order of approval, an express reference is made to the detention order bearing No. 1818 C.
The order of detention passed against the petitioner on August 23, 1973 bears that very number which shows hat the reference to an order dated "25 8 73" in the order of approval is a topographical mistake.
In the result, we confirm the order of detention and discharge the rule in this petition.
P.H.P. Petition dismissed.

summary/full:
The petitioner wag detained under the .
The ground of detention referred to a solitary incident.
The particulars furnished to the petitioner however stated that he was detained on the ground: "You have been acting", in a manner prejudicial to the maintenance of public order.
in a petition for habeas corpus it was contended that since the language used showed a culpable conduct over a long period of time, the detaining authority had before it material showing that the petitioner wag indulging in a criminal course of conduct for a long period and as such material was not disclosed to the petitioner, he had no opportunity to meet it resulting thereby in the contravention of article 22(5) of the Constitution It was also contended that since State Government approved a detention order hearing a date different from the one shown in the order served on the petitioner, State Government had before it some other order of detention while approving the petitioner 's detention.
Confirming the order of detention, HELD : In matters involving the liberty of the subject the detaining authorities ought to exercise the greatest care in the discharge of their functions.
But that does not justify an unrealistic dissection of detention orders.
The counter affidavit filed by the State shows that no other material was taken into account.
The use of expression "you have been acting", though unfortunate does not support the submission that the detention order was founded on undisclosed material, [426C E] (2)The order of approval contains a typographical error which is clear from the fact that the number of detention order is correctly given and in the order confirming the detention order, after consultation with the Advisory Board the correct date of the detention order is mentioned.
[426F H]


judgement:
iminal Appeal No. 67 of 1971.
Appeal by special leave from the judgment & Order dated the 17th July, 1970 of the Gujarat High Court in Crl.
A. Nos. 287 and 128 of 1969.
R. H. Dhebar and R. N. Sachthey, for the appellant.
A. section Qureshi, Vinal Deve and Kailash Mehta, for the respondents.
The Judgment of the Court was delivered by UNTWALIA, J.
There is a locality known as Nani Malokoad in the town of Kaloy, District Mehsena, Gujarat.
In this locality is a road (lane) running north to south.
Bai Fatima, respondent No. 1 in this appeal filed on grant of special leave by the State of Gujarat, is the wife of Allarakha Hussemkhan.
He had a younger brother named Gulabkhan Husseinkhan.
The victim of the occurrence is the said Gulabkhan.
Both the brothers had their houses adjacent to each other in this lane facing east.
The northern one was in occupation of and belonged to the deceased and the southern one was of Allarakha.
There are a number of other houses situated around the houses of the two brothers.
One such house is of Sardarkhan Muradkhan facing west abutting the road, two houses north of the house of the deceased.
Jamiyatkhan is the son of Sardarkhan, father in law of the deceased Gulabkhan.
In the month of June, 1968 a complaint. was made to the Kalol Municipality by persons of the locality including the deceased and some of the prosecution witnesses that Allarakha, husband of respondent no.1 was discharging dirty water of his house towards East which collects on the road and causes nuisance to the residents of the locality.
That had caused friction between the families of the two brothers.
On 27.6.1968 according to the prosecution story there were two incidents in the Angana i.e. space on the road in front of the houses of the parties .one was at 5.30 p.m. and the other at 6.30 p.m.
The, prosecution case is that a she goat of Gulabkhan strayed in the house of Fatima. 'She began giving blows to the goat.
There, were altercations between the members of the families of the, two brothers.
Res pondent no.2.
who is a married daughter of respondent no.1 and her son Liyakat who was 15 years old on the date of occurrence were also present at the time of this quarrel.
They threw stones which hit P.W.3 Nannubibi, wife of deceased Gulabkhan, one Rahematbibi and P.W. 4 Noorbibi a neighbourer and a close relation of Nannubibi Respondent no.1 is said to have come out with a stick from her house, and went to Gulabkhan to strike him.
One Allarakha Rehman a close neighbour came there, caught hold of the stick, quietened respondent No. 1 and sent her back to her house The second part of the story is that Gulabkhan and Nannubibi went and sat in the Angana of 995 Jamiyatkhan son of Sardarkhan, father in law of Gulabkhan.
Respondent No. 1 about an hour later went with a stick in her hand and hurled a blow on Gulabkhan.
Nannubibi intervened and got the blow on her right hand finger.
Gulabkhan directed respondent no.1 to go back to her house by gestures of his hand and he also proceeded and pushed her towards her house.
When Gulabkhan reached the Angana of his house, respondent no.1 is said to have put her leg across his legs with the result that he fell down on his back.
Respondent no.2 caught hold of the hands of Gulabkhan.
Respondent no.1 sat on his legs and squeezed his testicles and pulled them.
The boy Liyakat is said to have bitten the deceased on the left shoulder.
Gulabkhan thereafter was made to recline on a cot.
Eventually he.
died of the shock due to the pressing of his private parts by respondent No. 1.
Information was sent to the Police Station.
A complaint of Nannubibi was recorded at about 10.30 p.m.
Liyakat was sent for trial before the Juvenile Court.
Respondent nos.
1 and 2 were tried by the Sessions Judge, Mehsana.
The learned Sessions Judge held the prosecution story to be proved beyond reasonable doubt in all material particulars.
Finding that the injury caused to Gulabkhan in ordinary course of nature may not be sufficient to cause his death but was likely to cause his death, he convicted respondent no.1 under section 304 Part I of the Indian Penal Code and sentenced her to undergo rigorous imprisonment for 7 years.
She was further convicted under section 323 and was given a concurrent sentence for 3 months under this count.
Respondent no.2 was convicted of an offence under section 323 read with section 114 of the Penal Code and was sentenced to undergo rigorous imprisonment for 3 months.
The respondents filed an appeal in the Gujarat High Court from the order of conviction recorded against them and the State went up in appeal for their conviction under section 302 of the Penal Code read with section 114 in the case of respondent no.2 The State appeal was dismissed by the High Court and that of the respondents allowed.
The State came to this Court and obtained special leave from the judgment of acquittal recorded by the High Court in the respondents appeal.
The dismissal of the State appeal by the High Court is final.
The three eye witnesses to the occurrence are P.W.3 Nannubibi, P.W.4 Noorbibi and P.W.6 Jenatbibi.
The latter two are neighbourers and related to Nannubibi.
The Trial Judge believed their evidence.
He also believed the evidence of P.W.7 Gulamanabi Shermohmad a close neighbour of the parties to whom an oral dying declaration is said to have been made by Gulabkhan before his death.
It may be stated here that P.W.8 Rasulbhai was sitting in the Bazar at some distance from the place of occurrence in the evening of the 27th June, 1968.
He got the information at about 9.45 p.m. about the death of Gulabkhan.
He rushed to the Police Station and merely informed about his death.
It is also necessary to note here that respondent no.1 had received some injuries on her person in either of the incidents which took place 996 on the evening of 27th June, 1968.
Prosecution did not explain the injuries on her person but the Trial Judge inferred that they must have been caused in the first incident which took place at 5.30 p.m. and not in the second which was the subject matter of the charge against the respondents.
The High Court has held in favour of the prosecution on the main part of the occurrence, namely, squeezing of the testicles of the deceased by respondent no.1 as a result of which he died.
Yet it has disbelieved the prosecution case in regard to some other aspects.
It has not accepted the prosecution story that there were two incidents in the evening.
Nor has it accepted the version that shortly after the first incident Gulabkhan and Nannubibi had gone to the Angana of Jamiyatkhan.
The, story of falling down of the deceased by the tripping of his legs by respondent no.1 has been discarded by the High Court.
So also the evidence of P.W.7 Gulamnabi.
Even after believing the main part of the occurrence the High Court has exonerated respondent No. 1 of the charges levelled against her and consequently respondent no.2 also on the ground that she must have done so in exercise of her right of private defence in as much as she must have squeezed testicles of the deceased when he was showering blows with a stick on respondent No. 1 in order to protect herself.
In our opinion there are two many conjectures, surmises and contradictions in the judgment of the High Court.
The respondents bad not examined any witness to give any counter version of the occurrence or to justify the assault on testicles of the deceased which resulted in ' his death.
The High Court has said in its judgment : (1) "There is also no doubt that since some days prior to the date of the incident the relations between the deceased and the family of accused no.1 were not cordial." (2) "There is no doubt that a quarrel did arise on that day" (meaning thereby the date of occurrence "between the deceased and accused No. 1 in respect of a goat." (3) "It is very reasonably clear that the squeezing of the testicles of the deceased was in all probability the act of accused no.1" (4) "There is further no doubt that the deceased did die on account of squeezing of his testicles in the evening that day at round about 8.30 p.m." On the findings aforesaid if the claim of right or private defence put forward on behalf of respondent no.1 was untenable as we shall show hereinafter it was wholly so, then it is plain that the High Court ought not to have interferred with the order of conviction recorded by the Trial Court.
Even in face of the said findings the High Court criticized the prosecution case as regards some details of the occurrence or the ,incidents and rejected a good portion of it.
We shall briefly show that the said rejection by the High Court was wholly unjustified.
997 There were two incidents according to the prosecution case which happened in the evening at an interval of about an hour.
High Court says it was not so and says so without any basis.
The prosecution did not stand to gain anything by splitting up the evening incident in two parts.
Even in the First Information Report, Ext.32 recorded at 10.30 p.m. in the night the two incidents were separately narrated.
There was absolutely no reason for the High Court to interfere with the findings of the Trial Court in that regard.
The High Court does not accept the prosecution story that deceased Gulabkhan had gone to the `Angana of Jamiyatkhan and respondent No. 1 went there as an aggressor with a stick in her hand.
This story has been discarded on the ground that it is not mentioned in the First Information Report nor in the statements of the other two witnesses before the police.
We may observe again that the prosecution did not stand to gain anything by unnecessarily or falsely introducing the story of Gulabkhan 's going to the Angana of his father in law.
The main occurrence happened in the Angana of Gulabkhan.
The places are so very near that the story of Gulabkhan going to the Angana of his father in law was not an important one to be remembered by the witnesses to be recited before the police.
It mattered little whether respondent no.1 went as an aggressor to the Angana of the deceased or a bit further North to the Angana of Jamiyatkhan.
High Court also discarded the story of the tripping of the legs of Gulabkhan because it is not mentioned in the First Information Report.
But then it ought to hive been noticed that no such contradiction was to be found in the evidence of P.Ws 4 and 6 in Court and their statements before the police.
It must, therefore.
be presumed that they had given out the tripping story before the police.
The High Court has not thought it safe to rely upon the evidence of the three eye witnesses none of whom was found to be disinterested in the prosecution.
The comment is that Allarakba Rehman and Mansabu who lived in the house opposite to the deceased have not been examined by the prosecution.
According to the prosecution, case the said Allarakha had merely quietened respondent No. 1 in the first incident and Mansabu came after the second incident was over.
In material particulars we find the evidence of the eye witnesses very convincing and natural.
In our opinion the High Court was not justified in thinking that it was not safe to rely on their evidence wholly and specially when the main part of the occurrence which fastened the guilt on respondent no.1 was not disbelieved.
Absence of any details in the statement recorded at the police station on the basis of the information given by P.W. 8 Rasulbhai unnecessarilly led the High Court to remark that no one knew upto 10.00 on as to how Gulabkhan died.
This contradicts the earlier findings of the High Court that he died as a result of the squeezing of his testicles by respondent no.1 Rasulbhai, according to his evidence did not get the details of the occurrence and so did not give any to the police.
998 The High Court has given 3 or 4 reasons for discarding the evidence of P.W.7 Gulamnabi to whom the oral dying declaration is said to have been made by the deceased.
The first reason given by the High Court is that when this witness went near Gulabkhan the three women who claimed to have witnessed the occurrence were sitting near him; none of them related the story to Gulamnabi.
he put a question to Gulabkhan who being in a position to give the answer gave it, it was not necessary for him to talk to the women thereafter.
Gulamnabi was the person who had gone to call Dr. Rao to examine Gulabkhan.
Dr. Rao came at 8.30 p.m. and declared him to be dead.
It was not necessary for Gulamnubi to relate the details of the occurrence to Dr. Rao as he himself had not witnessed it Another reason given for discarding the evidence of Gulamnabi is with reference to the evidence of Rasulbhai that upto 10.00 p.m. no one knew the exact reason for the death of Gulabkhan.
Having accepted the prosecution story about the cause of his death it was unnecessary to dilate upon the matter any further.
The High Court has not disbelieved the lodging of the complaint before the police on the statement of Nannubibi at 10.00 p.m.
The last reason given is the non examination of Dr. Rao by the prosecution.
His evidence was of no use to it and the comment of the High Court is not, therefore, justified.
We have unhesitatingly come to the conclusion that the Trial Court was right in believing the evidence of the prosecution witnesses in regard to both the incidents and the occurrence in question forming part of the second incident.
The High Court differed from the view of the Trial Judge on flimsy and unsustainable grounds.
Now we come to deal with the question of right of private defence.
It is no doubt true that the prosecution did not explain the injuries on the person of respondent no.1.
P.W.5 Dr. section C. Masalia who had examined the injuries on the side of the prosecution also examined ' Fatima, respondent no.1 when she was sent to him by the police.
Fatima Bibi had lodged a complaint before, the police which was; found to be a non cognizable offence at about 8.00 p.m. on 27 6 1968.
That is Ext 44.
In this complaint she stated that her young one of the goat had gone in the Angana of Gulabkhan.
Three persons named ' in the complaint were Gulabkhan, Bai bibi, mother in law of Gulabkhan and Nannubibi, his wife.
The two ladies caught hold of her Odhana and began to give her blows.
of kicks and fists Gulabkhan gave stick blows on the right hand and so she fell down on the ground and began to shout.
The injuries found on the person of Fatima Bibi were 5 in number.
Three contusions on the right forearm, one contusion on posteric parietal part of right side of scalp and one contusion on scapular part of right side of back.
The injuries were all of minor character.
In her statement under section 342 of the Code of Criminal Procedure, 1898 respondent No. 1 stated almost the same story and added that Gulabkhan was drunk while he was abusing her.
Neither in Ext.44 nor in the statement under section 342 there was a whisper by by respondent no.1 of her having squeezed the testicles and the private part of Gulabkhan.
Nothing was stated to give any inkling of her having squeezed the testicles of Gulabkhan 999 in exercise of her right of private defence to protect her from further assault.
Nor was any evidence adduced in Court to give any counter version of the occurrence.
No foundation was laid to enable the court to acquit the respondents granting them a right of private defence.
It did require a pure conjecture and imagination to hold the respondents not guilty by extending to them the right of private defence.
In a situation like this when the prosecution fails to explain the injuries on the person of an accused, depending on the facts of each case, any of the three results may follow : (1) That the accused had inflicted the injuries on the members of the prosecution party in exercise of the right of self defence.
(2) It makes the prosecution version of the occurrence doubtful and the charge against the accused cannot be held to have been proved beyond reasonable doubt.
(3) It does not affect the prosecution case at all.
Question is in which category the present case falls ? In Munhi Ram and others vs Delhi Administration(1) Hegde, J delivering the judgment of this Court has said at page 458 "It is true that appellants in their statement under section 342 Cr.
P.C. had not taken the plea of private defence, but necessary basis for that plea had been laid in the cross examination of the prosecution witnesses as well as by adducing defence evidence.
It is well settled that even if an accused does not plead self defence, it is open to the Court to consider such a plea if the same arises from the material on record see In Re jogali Bhaige Naiks and another A.I,R.
The burden of establishing that plea is on the accused and that burden can be discharged by showing preponderance of probabilities in favour of that plea on the basis of the material on record.
" In the instant case not only the plea of private defence was not taken by the respondents in their statement under section 342 but no basis for that plea was laid in the cross examination of the prosecution witneses or by adducing any defence evidence.
In our opinion the burden of establishing that plea was not discharged in any manner by the respondents even applying the test of preponderance of probabilities in favour of that plea.
There is absolutely no material in the records of this case to lead to any such conclusion.
We do not think that the Trial Judge was right in assuming that respondent No. 1 must have received the injuries in the first incident.
It may well be that she received the injuries in the second incident.
Since prosecution did not come forward to show in what manner she received these (1) 1000 injuries, assumption can be made to the farthest extent in favour of the respondents that respondent no.1 received the injuries with a stick, may be at the hands of Gulabkhan or any other person on his side.
But surely the assumption could not be stretched to the extent it has been done by the High Court.
The High Court is not right in saying that by the tripping of the legs Gulabkhan would have fallen on his face and not on his back.
A man may fall on back or on face depending upon the side and the angle of the tripping.
The other error committed by the High Court is when it says :, "It appears to us to be more probable that while the quarrel was going on in the Angana of the deceased and the deceased was delivering blows of stick on the accused No. 1, she squeezedhis testicles in order to liberate herself from his attack.
It appears that she did so while the deceased was standing and giving blows on her." The deceased was wearing a pant and it is impossible to imagine that the, squeezing of the testicles could be done by respondent No. 1 to the extent of causing his death soon after the squeezing when Gulabkhan was in a standing position.
In that position he could have at once.
moved back and liberated himself.
The extent of squeezing done in this case was possible only if respondent No. 1 could sit on his legs after he bad fallen down at his back.
This lends further support to the prosecution story that respondent No. 2 caught his hands from behind meaning thereby from towards the side of his head, in the front being respondent No. 1 on his legs.
In our opinion, therefore, there was absolutely no basis or material in the records of this case to enable the High Court to record an order of acquittal in favour of the respondents by extending them a right of private defence.
Even going to the maximum in favour of the respondents that respondent no.1 got the blows with a stick at the hands of Gulabkhan and in the second incident it is manifest that her action of assault on him was a deliberate counterattack to cause him such injury which at least was likely to cause his death.
The counter ,attack could in no sense be an attack in exercise of the right of private defence.
In material particulars the evidence of the three eye witnesses as also the evidence of dying declaration of the deceased before P.W. Gulamnabi is so convincing and natural that no doubt creeps into it for the failure of the prosecution to explain the injuries on the person of respondent No. 1.
The prosecution case is not shaken at all on that account.
1n our judgment this is a case which falls in the third category 1001 as enumerated above.
In agreement with the Trial Court, we hold that the guilt of both the respondents have been proved beyond any reasonable doubt.
For the reasons stated above, we allow this appeal, set aside the order of the High Court and restore that of the Trial Court as against respondent No. 1 as respects her convictions and sentences and as against respondent No. 2 only in regard to her conviction.
It is no use sending the young girl back to jail for a few months.
While maintaining her conviction under section 323/114 of the Penal Code, we reduce her sentence to the period already undergone.
P. B. R. Appeal allowed.

summary/full:
Respondents Nos. 1 and 2 were mother and daughter.
The deceased was the brother in law of respondent No. 1.
For some days before the date of the Occurrence, the relations between the two families were none too cordial.
On the clay of the occurrence there was a scuffle between the respondents and the deceased.
A little later, when the deceased was sitting in the house of his father in law in the opposite row of houses, respondent No. 1 was alleged to have gone to the deceased with a stick to beat him.
Some neighbours intervened and tried to pacify both the parties.
When the deceased was going out, respondent No. 1 put her leg across the legs of the deceased, as a result of which he fell down on his back.
Respondent No. 2 immediately caught hold of both the hands of the deceased and respondent No. 1 is stated to have squeezed his testicles and pulled them.
Eventually the deceased succumbed to the injury.
After the incident respondent No. 1 lodged a complaint before the police stating that the deceased, his wife and his mother in law caught hold of her and gave her blows and kicks with a stick as a result of Which she fell down.
Holding that the prosecution case was proved beyond reasonable doubt, the Sessions Judge convicted respondent No. 1 under section 304, Part I I.P.C. Respondent No. 2 was convicted under section 323 read with section 144, I.P.C. On appeal, the High Court, even after believing the main part of the occurrence, acquitted respondent No. 1 of the charges levelled against her and consequently respondent No. 2 also on the ground that she must have done so in exercise of her right of private defence inasmuch as she must have squeezed the testicles of the deceased when be was showering blows with a stick on her in order to protect herself.
Allowing the appeal of the State.
HELD : (1) The trial Court was right in believing the evidence of the proSecution witnesses in regard to both the incidents and the occurrence in question forming part of the second incident.
The High Court differed from the view of the trial judge on flimsy and unsustainable grounds.
[998 D E] (2) There was absolutely no basis or material on the record to enable the High Court to record an order of acquittal in favour of the respondents by extending them a right of private defence.
Even going to the maximum extent in favour of the respondents that respondent No. 1 got the blows with a stick at the hands of the deceased and in the second incident it is manifest that her action of assault on him was a deliberate counterattack to cause him such injury which at least was likely to cause his death.
The counterattack could in no sense be an attack in exercise of the right of private defence.
[100 F G] (3) Neither in her complaint before the police nor in the statement under s.342 Cr.
P.C. Was there a whisper by respondent No. 1 of her having squeezed the testicles and private parts of the deceased in exercise of her right of private defence.
Not only was the plea of private defence not taken by the respondents in their statements under section 342, Cr.
P.C. but no basis for the plea was laid in the cross examination of the prosecution witnesses or by adducing any defence evidence.
The burden of establishing that plea was not discharged in any way by the respondents even applying the test of preponderance of probabilities in favour of that plea.
There is absolutely no material on the record to lead to any such conclusion.
[999 G H] Munhi Ram and Others vs Delhi Adtministration [19681 2 S.C.R. 455, followed.