judgement:
ivil Appeal Nos. 894 896 of 1971.
From the Judgment and order dated the 29th January 1965 of the Calcutta High Court in Wealth Tax Matter No. 21/52.
580 R.N. Sechthey and section P. Nayar, for the Appellant.
Leila Seth, Neelima Thakur, Praveen Kumar and B. P. Maheshwari for the Respondent.
The Judgment of the Court was delivered by GOSWAMI, J.
These appeals are by certificate of the Calcutta High Court under section 29(1) of the Wealth tax Act (briefly the Act).
The assessment years of the respondent company (hereinafter to be described as the assessee) involved in the composite reference to the High Court under section 27(1) of the Act are 1957 58, 1958 59 and 1959 60 for which the corresponding valuation dates are 31st March, 1957, 31st March, 1958 and 31st March, 1959.
The only common question of law which was referred to the High Court appertaining to all the three assessment years is in the following terms: "Whether on the facts and in the circumstances of the case and in view of the provisions of section 7(2) of the Wealth tax Act, an adjustment could be made in ascertaining the net value of the depreciable assets of the assessee company by substituting the written down value of the assets computed under the Indian Income tax Act for the value as shown in the balance sheet ' '.
The facts appearing from the statement of the case as well as the various orders annexed therewith are briefly as follows: The assessee claimed before the Wealth tax officer that in computing the wealth on the basis of balance sheet the Income tax officer should reduce the book value of the assets by the difference between the written down value that would be determined for the purpose of Income tax Act and the actual book figures disclosed by the balance sheet.
The difference between the book value and the written down value amounted to Rs. 95,69,070/ , Rs. 67,78,304/ and Rs. 36,15,678/ respectively for the three years under reference.
The only contention common to the three appeals related to the valuation of the fixed assets of the assessee.
The Wealth tax officer proceeded under section 7(2) (a) and computed the value of the assets at the figures shown in the balance sheets on the material valuation dates.
The assessee, however, contended that regard being had to the depreciable assets the written down value determined for the purpose of Income tax assessment should be taken to be the value of the assets for the purpose of inclusion in the net wealth and not the value shown in the respective balance sheets.
It was not disputed that adequate depreciation could not be provided for in the balance sheets in regard to the depreciable fixed assets on account of paucity of profits and hence the depreciation as provided for in the books was very much lower than the depreciation allowable under the provisions of the Indian Income tax Act.
The Wealth tax officer rejected the contention of the assessee and estimated the net value of the assets as shown in the balance sheets for the respective years.
The Appellate Assistant Commissioner confirmed the orders of the Wealth tax officer in the appeals filed by the assessee.
581 The Appellate Tribunal, however, took a contrary view and held that "in all such cases where proper depreciation has not been allowed for in the balance sheet for any reason whatsoever, it is proper to accept the written down value of the assets as worked out for the purpose of the Income tax assessments.
" The Tribunal, therefore, directed the Wealth tax officer to adopt the written down value of the assets as the value thereof for inclusion in the net wealth for all the years under reference.
At the instance of the Commissioner of Wealth tax the question set out earlier was referred to the High Court under section 27(1) of the Act.
The High Court by the impugned judgment of January 29, 1965, following another decision delivered on the same day in Commissioner of Wealth tax, Calcutta vs Tungabhadra Industries limited answered the question in the affirmative and in favour of the assessee.
Hence the present appeals by certificate.
The decision in the Tungabhadra Industries Limited (supra), which was followed by the High Court, was reversed by this Court in the Commissioner of Wealth tax, West Bengal II vs Tungabhadra Industries Ltd. on August 8, 1969.
This Court following an earlier decision of this Court in Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth tax (Central), Calcutta, accepted the contention of the Revenue.
Section 7 of the Act at the material time stood as follows: "(1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth tax officer it would fech if sold in the open market on the valuation date.
(2) Notwithstanding anything contained in sub section (1) (a) where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require. ." It is, therefore, clear that when the assessee is carrying on a business for which accounts are maintained by him regularly it is open to the Wealth tax officer to determine the net value of the assets of the business as a whole with reference to the balance sheet of such business as on valuation date and to make such adjustments therein as the circumstances 582 of the case may require.
The object of the Wealth tax officer in determining the value of the assets under section 7 is to arrive at the true value of the assets of the business.
If what has been shown in the balance sheet is not the true value of the assets disclosed, it is open to the assessee to satisfy the Wealth tax officer by producing relevant materials that the value given of the fixed assets in the balance sheet is not the true value and, therefore, a reduced value of the assets should be taken into account.
The onus in that case would be entirely upon the assessee to satisfy the Wealth tax officer that what is shown in the balance sheet is not the actual and true value of the assets on the valuation date.
The decision will depend upon the facts and circumstances disclosed in each case.
This Court in the Tungabhadra Industries case (supra) dealing with the same question observed as follows: "It is also open to the assessee to establish by acceptable reasons that the written down value of any particular asset represents the proper value of the asset on the relevant valuation date.
In the absence of any material produced by the assessee to demonstrate that the written down value is the real value, the Wealth tax officer would be justified in a normal case in taking the value given by the assessee itself to its fixed assets in its balance sheet for the relevant year as the real value of the assets for the purposes of the Wealth tax.
It is a question of fact in each case as to whether the depreciation has to be taken into account in ascertaining the true value of the assets.
The onus of proof is on the assessee who must produce reliable material to show that the written down value of the assets and not the balance sheet value is the true value.
If, therefore, the assessee merely claims that the written down value of the assets should be adopted but fails to produce any materials to show that the written down value is the true value, the Wealth tax officer is justified in rejecting the claim and adopting the values shown by the assessee himself in his balance sheet as the true value of his assets".
We should have thought that the question raised in these appeals is squarely covered by the above decision.
Even so, Mrs. Leila Seth submits that in the instant case it is admitted that adequate depreciation could not be provided for in the balance sheet in regard to the depreciable fixed assets on account of paucity of profits and hence the depreciation as provided in the balance sheet was much lower than the depreciation allowable.
According to the learned counsel this fact is sufficient to displace the balance sheet as a prima facie evidence and substitute in its place the written down value and onus shifts on the Revenue to establish that paucity of profits is wrong.
It is true, as described in the Statement of the case, that it was not disputed that adequate depreciation could not be provided for in the balance sheet on account of paucity of profits.
But we are unable to hold that merely a statement to that effect is sufficient to discharge the onus which rests upon the assessee to establish that the value of the 583 assets shown in the balance sheet is not the real value of the assets as on the valuation date.
If the contention of the learned counsel is accepted, it will be tantamount to laying down a rule that in determination of the value of assets the written down value allowable under the Income tax Act shall always be the value of the assets.
In that event, there would be no necessity for any exercise by the Wealth tax officer.
That is, however, not the intention of section 7 which clearly shows that the Wealth tax officer may make such adjustments in the value of the assets shown in the balance sheet in accordance with the requirements of the circumstances disclosed by the assessee.
Those circumstances which will be disclosed by the assessee must relate to the determination of the real value of the assets irrespective of what is shown in the balance sheet if the assessee seeks a lower figure than appearing in the same.
Thus onus is not discharged by merely stating that since profits in a given year are less or nil little or no provision was made for depreciation of the assets in the balance sheet.
The assessee must also show further to what extent the depreciation has resulted in lowering the value of the assets compared to that mentioned in the balance sheet and whether the written down value computed under the Indian Income tax Act in fact represents the lower value.
It is open, as observed by this Court in the case of Tungabhadra Industries (supra), to establish after producing relevant material that the value of the fixed assets in the balance sheet is artificially inflated.
Further in case the assessee wants the written down value to be accepted, it is open to him to establish, as mentioned in that case, by acceptable reason, that the written down value represents the proper value of the assets at the relevant date.
The learned counsel also drew our attention to a decision of this Court in the Commissioner of Wealth tax, West Bengal vs Aluminium Corporation of India Ltd., (1) where at page 172 there is an observation that the value of the assets shown in the balance sheet is not conclusive.
The value of the assets shown in the balance sheet is not conclusive in the sense that it can be demonstrated to be more or less than what is shown therein.
That is the core of determination under section 7(2) (a) of the Act.
The observation of this Court in the above case has to be understood only in that context.
We may in this connection refer to clause (b) of the proviso to clause (vi) of sub section (2) of section 10 of the Income tax Act, 1922 where a provision is made for carrying forward of depreciation allowance for the following year or years where full effect cannot be given to the allowance in a particular year owing to there being no profits or gains chargeable for that year or owing to the profits and gains chargeable being less than the allowance.
If an assessee chooses to carry forward the depreciation allowance, and shows the value of the assets at a particular figure in the balance sheet, he cannot by merely asserting that there was no profit or very little profit compel the tax authorities to discard the value mentioned in the balance sheet and to accept the written down value.
The depreciation must have nexus with real value of the assets itself and the burden is upon the assessee to satisfy the Wealth tax officer by producing relevant reliable materials 584 for determination of the actual and true value of the assets.
It may be that in a given year the written down value may be the real value of the assets but that cannot be the inexorable rule in determining the value of the assets under section 7 of the Act.
Mrs. Seth drew our attention to a decision of the Calcutta High Court in the Commissioner of Wealth tax (Central) Calcutta vs Mohan Lal Nopany.
This was a case of break up value of certain shares of a company.
There was material in that case to indicate that the balance sheet did not represent the correct value of the shares.
The observation in that case must be taken to be confined to its own facts.
To the extent observations are made in that contrary to the view we have taken in the matter, we cannot agree with them.
In the result the judgment of the High Court is set aside and the question is answered in the negative against the assessee and in favour of the Revenue.
The appeals are allowed with one set of costs.
P.H.P. Appeals allowed.

summary/full:
The respondent assessee maintains accounts regularly.
In the accounts maintained by him adequate depreciation could not be provided in the balance sheet in regard to the depreciable fixed assets on account of paucity of profits and hence the depreciation as provided in the balance sheet was very much lower than the depreciation allowable under the Income Tax Act.
The assessee claimed before the Wealth Tax officer that in computing the wealth on the basis of the balance sheet he should reduce the book value of the assets by the difference between the written down value that would be determined for the purpose of Income Tax Act and the actual book figures disclosed by the balance sheet.
The Wealth Tax officer rejected the contention of the assessee and estimated the net value of the assets as shown in the balance sheets for the respective.
years.
The appellate Assistant Commissioner confirmed the orders of the Wealth Tax officer.
The Appellate Tribunal, however, took a contrary view and held that where proper depreciation has not been allowed in the balance sheet it is proper to accept the written down value of the assets as worked out for the purpose of income tax assessments.
On a reference made to the High Court, the High Court answered the question in favour of the assessee.
Allowing an appeal by certificate under section 29 (1) of the Wealth Tax Act.
^ HELD: Under Section 7(1) of the Wealth Tax Act the value of any asset is the market value.
Section 7(2) provides that notwithstanding anything in section 7(1) where the assessee carries on business for which accounts are maintained by him regularly the Wealth Tax officer may instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case might require.
The object of the Wealth Tax officer under section 7 is to arrive at the true value of the assets of the business.
If what is shown in the balance sheet is not the true value of the assets disclosed it is open to the assessee to satisfy the Wealth Tax Officer.
by producing relevant materials that the value given of the fixed assets in the balance sheets is not the true value, and, therefore a reduced value of the assets should be taken into account.
In case the assessee wants the written down value to be accepted it is open to him to establish, by acceptable reason that the written down value represent the proper value of the assets at the relevant date.
The onus in that case would be entirely on the assessee.
Merely a statement that on account of paucity of profits adequate depreciation would not be provided for in the balance sheet is not sufficient to discharge the onus which rests upon the assessee.
The judgment of the High Court is set aside and the question answered against the assessee.
[581E H, 582A B, H, 583A. 584C]


judgement:
Civil Appeal No. 858 of 1968.
From the Judgment and Decree dated 7 7 67 of the Assam and Nagaland High Court at Gauhati in Misc.
Appeal Nos. 36 and 37 of 1966.
Sarjoo Prasad and A. K. Nag for the appellant.
B. P. Maheshwari for the respondent.
The Judgment of the Court was delivered by RAY, C.J.
This appeal by certificate is from the order dated 26 July, 1967 of the High Court of Assam.
The only question in this appeal is whether the respondent 's application filed on 27 July, 1965 for execution of the decree obtained by him is barred by limitation.
626 The respondent on 7 January, 1952 obtained a decree against the appellant for the sum of Rs. 71,980 in a money suit filed in the Court of Subordinate Judge, Gauhati.
On 8 December, 1956 the respondent decree holder filed an application No. 89/56 for executing the said decree.
On 15 July, 1957 the appellant, the judgment debtor, filed an application pleading adjustment of the decree.
On 15 April, 1958 the judgment debtor withdrew the said application.
On 18 December, 1957 the Subordinate Judge Gauhati dismissed the decree holder 's application No. 89/56.
The decree holder preferred an appeal.
The High Court at Gauhati on 1 July, 1959 set aside the order of the Subordinate Judge and allowed the appeal for execution of the decree.
Meanwhile on 18 January, 1958 the appellant judgment debtor in the Gauhati suit obtained a decree against the respondent for the sum of Rs. 1,22,000 in the Court of the Subordinate Judge at Nowgong.
In execution of the decree in the Nowgong suit the appellant on or about 29 January, 1958 obtained an attachment of the respondent 's decree passed in the Gauhati suit.
On 13 August, 1959 the Subordinate Judge, Gauhati struck off the execution application No. 89/56 from the file.
The respondent filed an appeal against the decree obtained by the appellant in the Nowgong suit.
The High Court on 28 April 1964 accepted the appeal filed by the respondent and dismissed the Nowgong suit filed by the appellant.
On 27 July, 1965 the respondent filed an application for execution in the Court of the Subordinate Judge, Gauhati.
The appellant preferred an objection contending that the application is barred by limitation.
On 4 March, 1966 the Subordinate Judge dismissed the execution application as barred by time.
On 26 July, 1967 the High Court accepted the appeal filed by the respondent and directed the execution to proceed.
The contention of the appellant is that the order obtained by the appellant attaching the respondent 's decree did not amount to a stay within the meaning of section 15 of the Indian Limitation Act, 1908, and therefore, the respondent 's application for execution which was filed on 27 July, 1965 was barred by limitation.
The appellant contended that when the Subordinate Judge, Gauhati on 13 August, 1959 struck off the execution application of the respondent the respondent should have filed an application for execution within three years from that date.
The High Court referred to the order dated 29 January, 1958 passed by the Nowgong Court attaching the decree obtained by the respondent.
The High Court relied on the provisions contained in Order 21 Rule 53 (1) (b) of the Code of Civil Procedure and held that the attachment continued restraining the respondent from executing the decree until the notice issued by the Court attaching the decree was recalled.
The Nowgong court did not pass any order recalling the 627 order.
On 1 March, 1958 the Nowgong court passed an order which was as follows: "Notice served.
No objection filed by J. D. (meaning thereby judgment debtor).
Heard both parties.
Execution case is struck off for the present.
Attachment to continue until further orders.
" In the context of this order of attachment passed by the Nowgong court the attachment continued until the Nowgong suit was dismissed by the High Court on 28 April, 1964.
The High Court rightly held that there was no question of limitation because the application was filed within three years from 28 April, 1964 when the bar against execution was raised and the order restraining the respondent decree holder from executing the decree in the Gauhati suit ceased to be operative.
Another contention which had been raised by the appellant and repeated here is that when the Gauhati court on 13 August, 1959 struck off the execution case No. 89/56 the execution application filed on 27 July, 1965 was barred by time.
The High Court held that the Gauhati Court on 13 August, 1959 merely struck off the execution application, and, therefore, the subsequent application which was made was a continuation of the execution proceedings.
The High Court held that striking off the application did not amount to any order deciding the merits of the application.
The order obtained by the appellant attaching the decree of the respondent in the Gauhati suit has been rightly held by the High Court to have precluded the respondent from executing the decree during the time the attachment was in force.
The other conclusion of the High Court that the execution application dated 27 July, 1965 was a continuation of the earlier application is also correct.
The order striking off the execution application has been rightly construed by the High Court as merely consigning the application to the Record Room for statistical purposes.
The application dated 27 July, 1965 indicates in column 2 as the respondent rightly stated that the previous application for execution was struck off on 13 August, 1959 because of the order of attachment passed by the Nowgong court.
The attachment order was nullified only when the appellant 's suit was dismissed by the High Court on 28 April, 1964.
The respondent 's decree became executable at that time.
The inescapable conclusion is that the application for execution on 27 July, 1965 is a continuation of the old application.
For these reasons, the judgment of the High Court is affirmed.
The appeal is dismissed with costs.
M.R. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The respondent obtained a money decree against the appellant, from the Subordinate judge, Gauhati, and applied for its execution.
The appellant applied for an adjustment of the decree, and the respondent 's application for execution was dismissed.
The appellant then obtained a decree from the Subordinate Judge, Nowgong, against the respondent, and in its execution, got his Gauhati decree attached.
The appellant then withdrew his adjustment application.
The High Court allowed the respondent 's appeal for execution of the Gauhati decree.
The Subordinate Judge, Gauhati, struck off his original execution application from the file.
Thereafter, the attachment order ceased to be operative on account of the High Court 's allowance of the respondent 's appeal in the Nowgong matter, and the respondent again applied for execution of the Gauhati decree, but the Subordinate Judge, Gauhati, dismissed the application as time barred.
The High Court allowed his appeal and directed the execution to proceed.
The appellant contended before this Court that attachment of the respondent 's decree did not amount to a 'stay ' within the meaning of section 15 of the Indian Limitation Act, and therefore, his second application for execution was barred by limitation, not having been filed within three years of the first one being struck off by the Subordinate Judge, Gauhati.
Dismissing the appeal, the Court ^ HELD: (1) The order obtained by the appellant attaching the decree of the respondent precluded the respondent from executing the decree during the time the attachment was in force.
There was no question of limitation because the application was filed within three years from 28 April, 1964, when the bar against execution was raised and the attachment order ceased to be operative.
[627B C] (2) The order striking off the execution application was mere consigning it to the record room for statistical purposes.
The application for execution on 27th July, 1965, is a continuation of the old application.
[627D E]


judgement:
Civil Appeal No. 1436 of 1968.
From the Judgment and order dated 28 9 67 of the Patna High Court in Appeal from original Decree No. 129/62 V.S. Desai and B.P. Singh for the Appellant.
R.C. Prasad for the Respondent.
The Judgment of the Court was delivered by KHANNA, J.
This is an appeal on certificate under article 133(1) (a) of the Constitution against the judgment of the Patna High Court whereby the appeal of the respondent State against the award of the 586 learned Additional District Judge Arrah was allowed in part and the amount of compensation payable to the respondent in a land acquisition case was reduced.
The respondent State acquired 23.70 acres of the appellant 's land out of plots Nos. 529 and 1262 appertaining to Khata No. 1 in village Tenduni in Shahbad district for the purpose of constructing an Irrigation Research Station.
Notification under section 4 of the Land Acquisition Act (hereinafter referred to as the Act) was first published on March 8, 1957, but this notification was cancelled on December 2, 1957.
Another notification for the acquisition of the said land was issued under section 4 of the Act on January 1, 1959.
The Land Acquisition officer awarded compensation to the appellant at the rate of Rs. 3,000 per acre, besides certain other amounts with which we are not concerned.
The total compensation awarded by the Land Acquisition officer came to Rs. 86,070.92.
The appellant got a reference made under section 18 of the Act.
Learned Additional District Judge Arrah who disposed of the reference held the market value of the land to be Rs. 800 per katha.
It is stated that there are 32 kathas in an acre.
On appeal by the State the High Court assessed the market value of the land at Rs. 475 per katha.
In appeal before us, learned counsel for the appellant has assailed the judgment of the High Court and has contended that the High Court was in error in reducing the rate at which compensation had been awarded.
As against that, learned counsel for the respondent State has canvassed for the correctness of the view taken by the High Court.
We have given the matter our consideration, and are of the view that there is no merit in this appeal.
A number of documents were filed on behalf of the State to show the market value of the land in question.
Those documents showed that a plot measuring 66 acres in the same village, in which the land in dispute is situated, was sold for Rs. 2,000 on March 13, 1958 at the rate of Rs. 94 per katha.
Another sale transaction related to the sale of 22.5 decimals of land on November 22, 1958 at the rate of Rs. 58 per katha.
A third transaction related to the sale of .06 acre of land for Rs. 100 on August 12, 1957 at the rate of Rs. 52 per katha.
The Additional District Judge excluded these sale transactions out of consideration on the ground that the plots which were the subject matter of those sales were at some distance from the acquired land.
The High Court took the view, in our opinion rightly, that these sale transactions could not be excluded altogether from consideration.
The High Court also took into account three other sale transactions which had been relied upon by the appellant.
Those sale transactions related to sale of five dhurs of land for Rs. 275 on October 19, 1957 at the rate of Rs. 1,100 per katha, 15 dhurs of land for Rs. 750 on November 5, 1956 at the rate of Rs. 1,000 per katha and 15 dhurs of land for Rs. 750/ on September 28, 1956 at the rate of Rs. 1,000 per katha.
One katha is said to consist of 20 dhurs.
The land which was the subject of these sale transactions abutted the road and, from the small size of the plots, it appears that they were purchased for the purpose of constructing 587 shops or similar buildings thereon.
The land now sought to be acquired does not abut the road.
It is in evidence that in making acquisition the strip of the land of the appellant up to a depth of 100 ft. from the road was not acquired.
The High Court on taking into consideration the above three sale transactions relied upon by the appellant and three sale transactions relied upon by the respondent found the mean price of the land covered by the six sale deeds to be a little more than Rs. 460 per katha.
The High Court in the circumstances came to the conclusion that the just and fair market value of the land should be assessed at Rs. 475 per katha.
The above rate included, according to the High Court, the potential value of the land.
In addition to that, the appellant was held entitled to 15 per cent solatium for compulsory acquisition.
We find no infirmity in the above approach of the High Court.
The finding of the High Court is based upon consideration of the evidence adduced in the case, and no cogent ground has been shown to us as to why we should interfere with that finding.
We may observe that the High Court excluded from consideration certain sale deeds executed by the appellant.
These transactions related to small plots of land situated on the roadside and were entered in to after the land in dispute had been notified for acquisition.
In the opinion of the High Court, the said sale deeds could not form a safe criterion for assessing the market value of the acquired land because they had been executed by the claimant himself after the notification.
It was also observed that the plots sold were quite suitable for shop or residential purposes.
We find no sufficient reason to take a contrary view.
Section 23 of the Act provides that in determining the amount of compensation to be awarded for land acquisition under the Act the Court shall inter alia take into consideration the market value of the land at the date of the publication of the notification under section 4 of the Act.
Market value means the price that a willing purchaser would pay to a willing seller for the property having due regard to its existing condition with all its existing advantages and its potential possibilities when laid out in the most advantageous manner excluding any advantages due to the carrying out of the scheme for which the property is compulsorily acquired.
In considering market value the disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded.
There is an element of guess work inherent in most cases involving determination of the market value of the acquired land, but this in the very nature of things cannot be helped.
The essential thing is to keep in view the relevant factors prescribed by the Act.
If the judgment of the High Court reveals that it has taken into consideration the relevant factors, its assessment of the fair market value of the acquired land should not be disturbed.
No such infirmity has been brought to our notice as might induce us to disturb the finding of the High Court.
The appeal consequently fails and is dismissed but in the circumstances without costs.
P.H.P. Appeal dismissed.

summary/full:
The respondents acquired appellant 's land under the Land Acquisition Act.
The Land Acquisition officer awarded compensation at the rate of Rs. 3000/ per acre.
In a reference under section 18, the Additional District Judge enhanced the compensation to Rs. 800/ per katha (1/32 of an acre).
On appeal by the State, the High Court reduced the compensation to Rs. 475/ per katha.
In an appeal by certificate the appellant contended that the High Court was in error in reducing the rate of compensation.
Dismissing the appeal, ^ HELD: (1) The Additional District Judge wrongly excluded certain sale transactions on the ground that the plots in those transactions were at some distance from the acquired land.
The High Court rightly held that the said transactions could not be excluded altogether from consideration.
The High Court also took into account 3 other sale transactions which were relied upon by the appellant.
The High Court rightly excluded from consideration certain sale deeds executed by the appellant.
These transactions related to small plots of land situated on road site and were entered into after the land in dispute had been notified for acquisition.
[586E H, 587C D] (2) Market value under section 23 means the price that a willing purchaser would pay to a willing seller for property having due regard to its existing condition with all its existing advantages and its potential possibilities when laid out in the most advantageous manner excluding any advantages due to the carrying out of the scheme for which the property is compulsorily acquired.
In considering market value the disinclination of the vendor to part with his land and the urgent necessity of the purchaser to buy should be disregarded.
[587E F] (3) There is an element of guess work inherent in most cases involving determination of the market value of the acquired land.
But, this in the very nature of things cannot be helped.
The essential thing is to keep in view the relevant factors prescribed by the Act.
The finding of the High Court is based upon consideration of the evidence adduced in the case and there are no grounds to interfere with that finding.[587F G]


judgement:
Civil Appeal No. 1308 of 1968.
From the order dated 1st May, 1967 of the Punjab and Haryana High Court at Chandigarh in Civil Writ No. 707 of 1967.
621 Hardyal Hardy, Naunit Lal and Miss Lalita Kohli, for the appellants.
O. P. Sharma and P. N. Puri, for the respondents.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This appeal by certificate under Article 133 (1) (a) of the Constitution of India granted by the High Court of Punjab and Haryana at Chandigarh is directed against its order dated May 1, 1967, dismissing in limine the writ petition filed by the appellants herein.
The facts giving rise to this appeal are: Natha Singh, appellant No. 1 herein, was recorded in revenue records as land owner in respect of 39 standard acres and 9 3/4 units of land in village Malout, 53 standard acres and 5 1/2 units in village Kanamgarh and 4 standard acres and 2 units in village Bhagwanpur.
By his order dated July 5, 1959, the then Collector, Ferozepore, acting under the provisions of the Punjab Security of Land Tenures Act, 1953, hereinafter referred to as 'the Act ' declared an area of 63 standard acres and 1 1/4 units out of the aforesaid land aggregating 93 standard acres and 1 1/4 units as surplus in the hands of Natha Singh.
Rajinder Singh and Jarnail Singh, appellants Nos. 2 and 3 herein, who are the sons of appellant No. 1, went up in appeal against the said order of the Collector to the Commissioner, Jullundur Division, who vide his order dated July 20, 1965 allowed the appeal, set aside the aforesaid order of the Collector and remanded the case for fresh determination of the "Surplus Area." After re examination of the case on remand, the Collector, Ferozepore, vide his order dated December 20, 1965, overruled the plea raised by appellants Nos. 2 and 3 that the area comprised in khasra Nos. 296, 297, 517, 519, 285, 293 and 206 which was in their cultivating possession as tenants under appellant No. 1 before the commencement of the Act should be treated 'Tenants Permissible Area ' and excluded from the surplus pool and held that the entries in khasra girdawaries on which the claim of the said appellants was grounded could not be relied upon as they had been tampered with.
The Collector further held that even taking the entries at their face value, appellants Nos. 2 and 3 could not be treated tenants as contemplated by the Punjab Tenancy Act, 1887 (Act XVI of 1887) as they were not paying any rent to appellant No. 1.
The Collector also overruled the plea raised by appellant No. 1 that there was some 'banjar ' land which had to be excluded while reckoning the permissible area.
Dissatisfied with this order, the appellants preferred an appeal to the Commissioner, Jullundur Division, who by his order dated November 7, 1966 dismissed the same and upheld the aforesaid order of the Collector, Ferozepore.
Aggrieved by these orders, the appellants took the matter in revision to the Financial Commissioner, Taxation, Punjab, who also by his order dated March 3, 1967, affirmed the aforesaid orders of the Collector, Ferozepore, and Commissioner, Jullundur Division.
All these orders were challenged by the appellants before the High Court of Punjab and Haryana by means of a petition under Article 226 of the Constitution but the same, as already stated, was dismissed in limine.
The High Court, however, granted a certificate to the appellants under Article 133(1) (a) of the Constitution.
622 Appearing in support of the appeal, Mr. Hardayal Hardy has contended that the writ petition filed by the appellants could not, in the facts and circumstances of the case, be dismissed in limine by the High Court.
Elaborating by his submission, the learned counsel has urged that the orders passed by the revenue authorities could not be sustained as they did not, while computing the 'Surplus Area ', leave out the permissible area which even according to the khasra girdawaries and Roznamcha Waqaiti which is maintained for the purpose of recording changes in cultivation was being cultivated by appellants Nos. 2 and 3, as tenants of appellant No. 1 since 1951 52; that 30 bighas of land which was recorded as 'banjar ' at the time of the commencement of the Act and did not fall within the definition of land as contained in section 2(8) of the Act had not been taken into account while evaluating and assessing the "Surplus Area", and that appellants Nos. 2 and 3 were not afforded proper and adequate opportunity by the Collector to prove the claim put forth by them.
Mr. Hardayal Hardy has, in conclusion, drawn our attention to the application made by the appellants for permission to adduce additional documentary evidence in the form of khasra girdawaries for the years 1952 to 1960, the grounds of appeal preferred by the appellants before the Commissioner, the grounds of revision filed by them before the Financial Commissioner, the depositions of appellant No. 1 and Gurcharan Singh, Patwari, and forms A.D.E. and F. and its inclusion in the record and has emphasized that the aforesaid documents which are relevant and necessary for disposal of the appeal should be allowed to be produced.
With regard to the first contention advanced on behalf of the appellants, it is sufficient to observe that it has been time and again observed by this Court that in dealing with a petition under Article 226 of the Constitution, the High Court cannot exercise the jurisdiction of an appellate court and cannot re examine or disturb the findings of fact arrived at by an inferior court or a tribunal in the absence of any error of law.
So far as the contention of the learned counsel for the appellants based on the revenue record is concerned, it may be remarked that it has been concurrently found by the Collector and the Commissioner who examined the original khasra girdawaries that they had been tampered with by the revenue staff in collusion with the appellants.
In the circumstances, it would not be safe to place any reliance on them.
The reliance sought to be placed on 'Roznamcha Waqaiti ' is also an after thought.
No authenticated copy of the 'Roznamcha Waqaiti ' with reference to which we are invited to verify the entries in the khasra girdawaries has been included in the record.
It is also significant that no reliance either before the Collector or before the Commissioner or even before the Financial Commissioner seems to have been placed upon the 'Roznamcha Waqaiti '.
It is also to be noted that even in the application for leave to adduce additional evidence, no mention has been made of any entry in 'Roznamcha Waqaiti '.
Even if the entries in khasra girdawaries are treated as genuine, they can be of little 623 assistance to the appellants as they do not at all, as observed by the Collector, appear to show that any rent was being paid by the appellants Nos. 2 and 3 to appellant No. 1.
In the absence of payment of rent or in the absence of material to show that there was a contract between appellant No. 1 and appellants Nos. 2 and 3 absolving the latter of the liability to pay rent, it is difficult to uphold the claim of appellants Nos. 2 and 3 that they were tenants of appellant No. 1.
So far as the claim regarding 'banjar ' land is concerned, it would suffice to say that the Collector who examined the revenue record found that there was no land which fell within that category.
It cannot be disputed that a land owner who wishes to claim the benefit of the exclusion of 'banjar qadim ' or 'banjar jadid ' land from the purview of land has to prove that it was not at the relevant date being put to any agricultural purpose or a purpose subservient to agriculture or used for pasture.
No such proof seems to have been adduced in the instant case.
It is also important to note that even before the Commissioner, the appellant did not plead that any 'banjar ' land was not left out of consideration while assessing the 'Surplus Area '.
All that was urged before the Commissioner was that the land comprised in khasra No. 864 of village Malout had not been left out of account although it was banjar.
The Commissioner repelled this plea as he found from the examination of the record that the area comprised in the said khasra number was 'Chair Pumkin Sarak ' which had not been taken into account while assessing the 'Surplus Area of appellant No. 1.
The contention raised on behalf of the appellants that they were not allowed an opportunity of establishing their claim cannot also be countenanced.
There is nothing on the record to indicate that the appellants were denied opportunity to prove their case.
The Financial Commissioner has categorically found that appellants Nos. 1 and 2 had full opportunity to place on record their evidence to establish that they were cultivating the land of their father as his tenants and that they did not avail of that opportunity by placing any material on the record to show that, or that there was a private partition as sought to be urged by them before him.
In view of the foregoing reasons we are satisfied that the orders passed by the revenue authorities did not suffer from any error of law so as to warrant interference in writ proceedings and the High Court was justified in dismissing in limine that writ petition preferred by the appellants.
So far as the application of the appellants for additional evidence is concerned, it cannot be allowed in view of the well settled principles of law that the discretion given to the appellate court to receive and admit additional evidence is not an arbitrary one but is a judicial one circumscribed by the limitations specified in Order 41, Rule 27 of the Code of Civil Procedure.
If the additional evidence is allowed to be adduced contrary to the principles governing the reception of such evidence, it will be a case of improper exercise of discretion and the additional evidence so brought on the record will have to be ignored.
The true test to be applied in dealing with applications for additional 624 evidence is whether the appellate court is able to pronounce judgment on the materials before it, without taking into consideration the additional evidence sought to be adduced.
(See Arjun Singh Alias Puran vs Kartar Singh and Ors.(1).
In the instant case, we have not been able to experience any difficulty in rendering the judgment on the material already before us.
Instead we feel that the prayer for adducing additional evidence has been made merely to fill up gaps on the basis of some revenue record which has been found by the Collector and the Commissioner to the spurious.
We also do not find any other substantial reason to accede to the request of the appellants to allow them to adduce additional evidence.
There is no inherent lacuna or obscurity which we require to be filled up or removed to be able to pronounce judgment.
The application of the appellants is accordingly rejected.
In the result we do not find any merit in this appeal which is also hereby dismissed but in the circumstances of the case without any order as to costs.
M.R. Appeal dismissed.

summary/full:
Appellant Natha Singh was recorded as a land owner in revenue records.
Under the Punjab Security of Land Tenures Act, 1953, the Collector, Ferozepore, declared an area of 63 standard acres and 4 units, as surplus land in his hands.
The sons of Natha Singh appealed to the Commissioner, Jullundur division, who remanded the case for fresh determination of "surplus area".
On a re examination of facts, the Collector, Ferozepure, overruled the pleas of the appellants.
Their appeal to the Commissioner, Jullundur division, and a further revision petition to the Financial Commissioner, Taxation, Punjab, were also dismissed.
All these orders were challenged before the High Court under article 226.
The High Court dismissed the matter in limine, but granted a certificate under article 133(1)(a).
The appellants contended before this Court that in the facts and circumstances of the case, the High Court could not dismiss the writ petition in limine, as the revenue authorities had wrongly computed the 'surplus area '.
They further contended that appellants No. 2 and 3 were not afforded proper and adequate opportunity by the Collector to prove their claims.
The appellants also applied for permission to adduce additional documentary evidence.
Dismissing the appeal, the Court, ^ HELD: (1) In dealing with a petition under article 226 of the Constitution, the High Court cannot exercise the jurisdiction of an appellate court, and cannot re examine or disturb the findings of fact arrived at by an inferior Court or a tribunal in the absence of an error of law.
[622E F] (2) In the instant case, the orders passed by the revenue authorities did not suffer from any error of law so as to warrant interference in writ proceedings and the High Court was justified in dismissing in limine the writ petition preferred by the appellants.
[623F] (3) The application of the appellants for additional evidence cannot be allowed in view of the well established principles of law that the discretion given to the appellate court to receive and admit additional evidence is not an arbitrary one but is a judicial one circumscribed by the limitations specified in order 41 rule 27 of the Code of Civil Procedure.
The true test to be applied in dealing with applications for additional evidence is whether the appellate court is able to pronounce judgment on the materials before it, without taking into consideration the additional evidence sought to be adduced.
[623G H, 624A] Arjun Singh alias Puran vs Kartar Singh & Ors. ; referred to.


judgement:
ivil Appeal Nos. 1562 to 1573 of 1971.
From the Judgment and Decree dated the 13 4 1966 and 3 9 1968 of the Patna High Court in Appeals from Original Decree Nos.
127 130, 246 and 247 of 1958.
section P. Nayar for the Appellants.
P. K. Chatterjee and Rathin Dass for Respondents in C. As.
1567, 1572 and 1573 of 1971.
A. N. Sinha and P. K. Mukherjee for Respondents in C.As.
1562 65 and 1568 71 of 1971.
The Judgment of the Court was delivered by RAY, C.J.
These appeals are by certificate from the judgment and decree of the High Court at Patna dated 13 April, 1966 and 3 September, 1968.
Four suits were filed by Sugauli Sugar Works Limited for recovery of money on account of non delivery of consignments.
Two suits were filed by Majhaulia Sugar Works for recovery of money on account of non delivery of two consignments.
The suits were filed in the Court of the Subordinate Judge, Motihari in Bihar.
The plaintiffs are respondent.
The case of the respondents was that goods were booked on 5 September, 1955 to several destinations under railway risk.
The goods did not reach the destinations.
The respondents alleged that non delivery was on account of gross negligence and misconduct on the part of the Railways.
The defence was that the wagons containing the goods in suit along with other wagons were taken on Barge No. 6 from Samaria Ghat to Mokamah Ghat on 7 September, 1955.
There was an accident.
The Barge with all the wagons sank in the river Ganges.
The Railways contended that the employees were not guilty of any negligence or misconduct.
The Subordinate Judge dismissed all the suits and held that the accident was not because of the negligence of the railway employees.
The High Court accepted the appeals filed by the respondent.
The High Court held that the consignments were booked at railway risk and there was no explanation given for the sinking of the Barge.
616 The High Court held that the Barge sank because of serious negligence of the railway employees and it was not a case of inevitable accident.
The High Court also held that the railway did not take the care which it was required to take as a bailee.
The High Court delivered the judgment on 13 April, 1966 and sent to the trial court for determination of the issue: "What is the amount for which the plaintiffs are entitled to a decree in this case?" One group of appeals is against the judgment of the High Court dated 13 April, 1966 which determined the liability.
The Additional Subordinate Judge, Motihari, who tried the issue on remand by an order dated 10 September, 1966 gave decrees in favour of the respondent.
The High Court by judgment dated 3 September, 1968 set aside the judgment and decree of the trial court on remand.
The High Court awarded decrees in favour of the respondents.
The second group of appeals is by certificate against the judgment of the High Court dated 3 September, 1968.
One of the contentions raised before the High Court and repeated here is that the High Court should not have relied on an enquiry report into the accident.
The High Court held that there was an enquiry under Rule 18 of the Rules made by the Railway Board.
The High Court referred to sections 83 and 84 of the Railways Act.
Section 83 provides that if there is any accident attended with loss of human life or grievous hurt or with serious injury to property, notice shall be given to various persons.
Section 84 confers power on the Central Government to make Rules for several purposes including the purpose of prescribing the duties of railway servants, police officers, inspectors and Magistrates on the occurrence of an accident.
Section 2 of the Indian Railway Board Act authorises the Central Government to invest the Railway Board with all or any of the powers or functions of the Central Government under the Railways Act.
The Central Government authorised the Railway Board to make rules in pursuance of section 84 of the Railways Act.
Rule 18 of the Railway Board Rules provides that whenever an accident has occurred in the course of working a Railway, the Agent or Manager shall cause an enquiry to be promptly made by a committee of railway officers (to be called a joint enquiry) for the thorough investigation of the cases which led to the accident.
It is also provided in the rule that an enquiry may be dispensed with in certain cases.
In the present case the enquiry was held by three officers.
The enquiry report which is marked as Exhibit 9 was contended by the respondent to be admissible under sections 5, 7, 9 and 35 of the Evidence Act.
The Railway contended that the report was a privileged document and further claimed that the enquiry was a private enquiry.
The High Court rightly rejected both the contentions.
First, the High Court held that no privilege had been claimed and there was no affidavit of the Minister in charge or the Secretary of the department to support a claim for privilege.
The High Court 617 also referred to the fact that the report was called for by the Court of the Subordinate Judge at Gaya and the Railways did not claim any privilege there.
Second, the High Court also rightly held that the enquiry report was admissible under sections 5, 7 and 9 of the Evidence Act.
The High Court did not go into the question whether it was admissible under section 35 of the Evidence Act.
The High Court further held that the Railways did not examine important witness, viz., the Commander of the ferry who was on the spot when the Barge was in trouble.
The High Court held that the Railways suppressed important documents like the marine certificate and the stock register which would have given the life history and the capacity of the Barge.
The High Court correctly drew adverse inference against the appellants for non production of important witness and important documents.
The liability of the railway was that of a bailee.
The consignments were booked at railway risk.
The onus of proving that the railway employees took the necessary amount of care and that they were not guilty of negligence rested on the Railway Authorities.
The High Court held that it was not a case of unavoidable accident and that the Barge sank because of gross negligence of railway employees and the railways did not take the amount of care which it was required to take as a bailee.
The question of onus is not important when the entire evidence is before the Court.
The High Court found that Rasul the Sarang of 'Chapra ' was responsible for the accident because he had failed to exercise proper judgment while manoeuvring his own vessel for the purpose of heaving up the anchor of Barge No. 6 and he failed to exercise initiative to save the barge by breaching it on the nearest char, instead of taking it to the Simariaghat goods jetty.
The High Court also held that the Commander of the ferry found that he visited the steamer 'Samastipur ' and Barge No. 6 when there was difficulty in heaving the anchor of the barge and thereafter went away, leaving the matter entirely in the hands of the sarang.
The High Court held that these officers were responsible for not staying on board until the barge was out of trouble.
The High Court found that Barge No. 6 was very old.
It was built in 1897.
It underwent heavy repairs in 1953.
The time of the accident was at about 2 20 p.m. on 7 September, 1955.
"Samastipur" started towing the barge, went about a mile when the radius rod of Samastipur broke down.
Radius rod is a part of the paddle by which a steamer is driven.
The radius rod of Samastipur was repaired in due course.
It then heaved up its anchor.
The anchor of the barge could not be lifted.
There was a danger whistle.
Rasul, the Sarang of "Chapra" came with his steamer to the aid of Samastipur.
Two officers Lall and Devia herein before mentioned left the matter in the hands of the three sarangs.
Lall, the Commander of the Ferry was not examined.
The Assistant Mechanical Engineer was examined.
The High Court found that Rasul did not take the steamer and the barge to the Diara but took them to Simarighat.
The steamer and the 618 barge reached jetty at Simariaghat.
When the barge was about to be attached to the jetty, it sank.
The High Court found that the strength of the current in the month of September was a known factor.
The railway employees were used to ply the steamer and the barge between the two ghats during the month of September.
The railway employees were found to equip themselves with appropriate appliances and necessary skill for the job of taking the barge across.
The High Court found that there was no satisfactory explanation for the sinking of the barge.
The High Court also found that there was no explanation why the anchor of the barge could not be lifted.
According to the High Court, this might have been due to defective or insufficient appliance for haulage of the anchor.
The High Court also found that there was no evidence to show that there was any unforeseen difficulty, by reason of which the anchor could not be heaved up.
The fact that the anchor could not be lifted was held by the High Court to be on account of the negligence of the railway employees.
The High Court also referred to the fact that the barge developed a big hole and there was no explanation how this happened.
The High Court felt that this could be explained by assuming that Chapra pulled the barge in such a way as to make the anchor chain rub against the bottom plates of the barge so as to create the hole.
The High Court found no other reasons because there is no suggestion that there was any submerged tree or stone, and the hole was caused because the barge accidentally struck against any such substance.
Since the creation of the hole could not be attributed, according to the High Court to anything unforeseen, it was due to the negligence of the railway employees.
The High Court further found that if the barge had been towed to the Diara, it could not sink.
The water near the Diara must have been shallow so that the wagons upon the barge could not be submerged in the water near it.
On the other hand, Rasul took the steamer and the barge to a much longer distance and the passage must have taken a considerable time.
Besides, the water near the jetty was undoubtedly deep and the wagons were also submerged.
The High Court on these findings correctly came to the conclusion that the barge sank because of the serious negligence of the railway employees and the railways did not take the care which it was required to take as a bailee.
The High Court passed decrees awarding the respondents price of sugar and costs of damages and interest pendente lite and future interest.
The appellant contended that the contract price should not have been awarded.
The High Court said that the evidence of plaintiff 's witness Gaya Prasad showed the selling rate of sugar and there was no challenge to that evidence.
The High Court found that the goods were despatched on 4 September, 1955.
The barge sank on 7th September, 1955, and, therefore, the contract price would be the correct 619 measure of damages.
The High Court on the facts and circumstances of the case found that the contract price would also be the same as the market price at that time.
The market rate is a presumptive test because it is the general intention of the law that, in giving damage for breach of contract, the party complaining should, so far as it can be done by money, be placed in the same position as he would have been in if the contract had been performed.
The rule as to market price is intended to secure only an indemnity to the purchaser.
The market value is taken because it is presumed to be the true value of the goods to the purchaser.
One of the principles for award of damages is that as far as possible he who has proved a breach of a bargain to supply what he has contracted to get is to be placed as far as money can do it, in as good a situation as if the contract had been performed.
The fundamental basis thus is compensation for the pecuniary loss which naturally flows from the breach.
Therefore, the principle is that as far as possible the injured party should be placed in as good a situation as if the contract had been performed.
In other words, it is to provide Compensation for pecuniary loss which naturally flows from the breach.
The High Court correctly applied these principles and adopted the contract price in the facts and circumstances of the case as the correct basis for compensation.
For these reasons, the judgment of the High Court is affirmed.
The appeals are dismissed with one set of costs.
S.R. Appeals dismissed.

summary/full:
The non delivery of the goods booked by the respondent on September 5, 1955 to several destinations under "Railway Risk" due to the sinking of "Barge No. 6, carrying the wagons containing the goods" led to the filing of four suits which were dismissed by the Trial Court holding that the accident was not due to the negligence of the Railway employees.
The High Court, accepting the appeal of the respondent by its judgment dated April 13, 1966 held that the sinking of Barge was not due to "inevitable accident" but due to the serious negligence of the Railway employees and their failure of duty to take due care which it was required to take as a bailee as revealed by their own Enquiry Committee held with reference to Ss. 83 and 84 of the Railways Act read with section 2 of the Indian Railways Board Act (4 of 1905) and rule 18 of the Railway Board Rules.
The High Court remanded the suits for determination of the quantum of the decretal amount due to the respondent.
The trial court after remand gave decrees in favour of the respondent on 10th September, 1966 without interest claimed up to the date of filing of the suit and interest "pendent lite".
The High Court, on appeal by the respondent by its judgment dated 3 9 1968 allowed interest "pendent lite" and future interest at the rate of 4 1/2% per annum.
Dismissing the two sets of appeal by the Union, one by Special Leave against the order dated 13 4 1966 determining the liability and another by certificate against the judgment dated 3 9 1968 awarding interest the High Court.
^ HELD: (1) The liability of the Railway was that of a bailee.
The consignments were booked at Railway risk.
The onus of proving that the Railway employees took the necessary amount of care and they were not guilty of negligence rested on the Railway Authorities.
The question of onus is not important when the entire evidence is before the court.
In the instant case there was no legal evidence to prove "inevitable accident" but suppression of important documents and non production of important witnesses in charge of the Barge.
The Barge sank because of the serious and gross negligence of the railway employees and the railways did not take due care which it was required to take as a bailee.
[617B D; 618F G] (II) The Enquiry Committee, in the instant case, is a Joint Enquiry, under the rules and the report is admissible under Ss. 5, 7 and 9 of the Evidence Act.
The claim for privilege is not admissible because no such claim was made before the Courts below and there was no affidavit of the Minister incharge or the Secretary of the Department to support a claim for privilege.
[616G H] (III) One of the principles for award of damages is that so far as possible he who has proved a breach of a bargain to supply what he has contracted to get is to be placed as far as money can do it, in as good a situation as if the contract had been performed.
The fundamental basis thus is compensation for the pecuniary loss which naturally flows from the breach.
Therefore, 615 the principle is that as far as possible the injured party should be placed in as good a situation if the contract has been performed.
In other words, it is to provide compensation for the loss which naturally flows from the breach.
The market rate is a presumptive test because it is the general intention of law that in giving damages for breach of contract, the party complaining should, so far as it can be by money, be placed in the same position as he would have been in if the contract had been performed.
The rule as to market price is intended to secure only an indemnity to the purchaser.
The market value is taken because it is presumed to be the true value of the goods to the purchaser.
In the instant case, the High Court correctly applied these principles and adopted the contract price in the facts and circumstances of the case as the correct basis of compensation.
[619 D]


judgement:
Civil Appeal No. 1365 of 1968 From the Judgment and Decree dated the 8 12 66 of the Madras High Court in Appeal No. 609 of 1961.
K. N. Balasubrahmaniam and Miss Lily Thomas for the Appellant.
K. Jayaram for the Respondent.
The Judgment of the Court was delivered by JASWANT SINGH, J.
This is an appeal by certificate granted by the High Court of Judicature at Madras under Article 133(1) (a) and (b) of the Constitution of India against its judgment and decree dated December 8, 1966 in A. section No. 609 of 1961.
The facts culminating in this appeal lie in a short compass and may be briefly stated thus: Kota Venkatachala Pathy whose legal representatives are the respondents herein and Kota Narayanan, the appellant herein, were real brothers being the sons of one Kota Rangaswami Chettiar.
Together with their cousin Subramanyam Chettiar, the son of Kota Kuppuswami Chettiar, the brother of Kota Rangaswami Chettiar, they formed a joint family which was a trading one.
Prior to 1927, Subramanyam Chettiar was the manager and karta of the family.
After 1927 Kota Venkatachala Pathy took over the management of the family and its properties.
By registered deed dated May 29, 1929 (Exh.
A 1) a partition of joint family properties was effected between Subramanyam Chettiar on the one hand and Kota Venkatachala Pathy and his brother, Kota Narayanan, who was then a minor, on the other, each branch taking a half share.
As karta of the joint family.
Subramanyam Chettiar had, before November 20, 1927 incurred debts to the tune of Rs. 9,506/ from several creditors.
Five items of joint family properties detailed in Schedule D 1 to the deed of partition were earmarked for the discharge of the aforesaid debts and were given over to Kota Venkatachala Pathy who was made responsible for the discharge of the debts.
These debts were discharged by Kota Venkatachala Pathy before March 26, 1934.
On September 7, 1956, Kota Venkatachala Pathy brought a suit, being No. O. section 87 of 1956, in the Court of the Subordinate Judge of Vellore, North Arcot, for partition and separate possession of 3/4th of the properties set out in Schedule 'A ' to the plaint, 1/2 of the properties set out in Schedule A 1 to the plaint and whole of the properties set out in Schedule 'B ' to the plaint.
One of the items namely, item No. 1 of Schedule 639 'B ' to the plaint which consists of four shops is what remains undisposed out of the properties mentioned in Schedule 'D 1 ' to the deed of partition which were set apart for the purpose of discharging the aforesaid debts incurred by Subramanyam Chettiar before 1927.
The case as set out by Kota Venkatachala Pathy in his plaint was that the properties set out in Schedule 'B 1 ' to the deed of partition were given over to him absolutely for the discharge of the aforesaid debts set out in Schedule 'D ' to the deed of partition and it was provided in the said deed that either he would discharge the debts mentioned in the deed or undertake to pay the same himself within a month from the registration of the document and obtain and hand over to Subramanyam Chettiar receipts from the creditors specifically mentioned there that Subramanyam Chettiar was not liable for payment of the aforesaid debts and that if the aforesaid conditions were not satisfied by him i.e. by Kota Venkatachala Pathy and any loss was occasioned to the former, the latter would be liable for those losses.
The case of Kota Venkatachala Pathy further was that since he had discharged the debts detailed in Schedule 'D ' to the deed of partition, he was entitled to the exclusive possession of item No. 1 of Schedule 'B ' to the plaint as his self acquired property by virtue of the terms of deed of partition and also to the rest of the properties detailed in the said Schedule 'B ' as he had purchased the same with his own funds.
Kota Venkatachala Pathy based his claim of 3/4th share in properties detailed in Schedule 'A ' to the plaint on the ground that he was entitled to 1/4th by birth as a coparcener and the rest of the half share allotted to Subramanyam Chettiar as he had purchased the same from auction purchasers.
The relief for accounts was based by Kota Venkatachala Pathy on the ground that there was an oral division in status in 1938 and it was the appellant who was managing the properties either as a co owner or as an agent since then.
The appellant resisted the claim of extra share made by Kota Venkatachala Pathy and contended that the latter was entitled only to half share in all the suit properties.
According to the appellant, the family debts set out in Schedule 'D ' to the aforesaid deed of partition was discharged by Kota Venkatachala Pathy not only by the sale of the properties set out in Schedule 'D 1 ' to the deed of partition but also by substantially utilising other joint family properties available for division.
It was also contended by the appellant that since Kota Venkatachala Pathy acted as Karta of his branch, the aforesaid deed of partition should be construed as meaning that any item salvaged or saved after the discharge of the aforesaid family debts would be ancestral property and not exclusive property of the plaintiff.
As regards the properties other than item No. 1 of Exhibit 'B ' of the plaint, it was contended by the appellant that they were also to be shared half and half between him and Kota Venkatachala Pathy as they were purchased from the joint family funds.
With regard to the relief for rendition of accounts, the appellant contended that he became the Karta of the joint family in 1947 and Kota Venkatachala Pathy was not entitled to the relief of rendition of account till the date of the suit when alone there was a division of status and not in 1938 as claimed by Kota Venkatachala Pathy.
640 On a consideration of the evidence adduced in the case, the Trial Court by its judgment and decree dated September 12, 1960, held that there was no division in status till the date of the suit.
With regard to item No. 1 of Schedule 'B ' to the plaint, the Trial Court held that the total amount of debts paid was Rs. 15,669 6 2 and out of D 1 Schedule properties of the estimated value of Rs. 9,506/ only Rs. 2,575/ were realized from the sale of four items thereof and the balance of the debts were discharged from out of the joint family assets like jewels, outstandings realized and other immovable properties allotted to Rangaswamy Chettiar 's branch in 1929 partition and that the conversion of such joint family assets was made by Kota Venkatachala Pathy who was managing the family till 1957.
The Trial Court accordingly held that the properties namely item No. 1 of Schedule 'B ' to the plaint should be deemed to have been salvaged by detriment to the paternal estate.
The Trial Court also found that as the defendant appellant herein was a minor at the time of 1929 partition and Kota Venkatachala Pathy, the original plaintiff had acted as his guardian, the latter must be deemed to have acted for the former also when he undertook to discharge the debts and that as between the original plaintiff and defendant to whom the properties were jointly allotted under Exhibit A 1, there was a position of implied trust in respect of properties set out in Schedule 'A ' and 'B ' to the plaint.
The Trial Court also upheld the appellant 's plea of blending of all the properties by Kota Venkatachala Pathy.
The Trial Court also found that properties covered by sale deeds Exhibit B 1 and Exhibit B 4 which originally formed part of the half share allotted to Subramanyam Chettiar though purchased by the original plaintiff in his own name were joint family properties and as such were liable to partition in equal shares.
The Trial Court negatived the claim of Kota Venkatachala Pathy for a share in excess of one half in the aforesaid properties and held that he was entitled to only one half of all the suit properties.
The Trial Court also decreed that the appellant shall render true and proper accounts in respect of the income and expenses regarding half share of the respondents in the properties mentioned in Schedule A, A 1 and to the plaint from 1947 onwards but did not give directions as to the assets and funds of capital nature withdrawn by Kota Venkatachala Pathy from out of the joint family utilised for his own separate and independent business.
Aggrieved by this judgment, Kota Venkatachala Pathy, the original plaintiff, whose legal representatives are the respondents herein, preferred an appeal to the High Court of Judicature of Madras.
By its judgment dated December 8, 1966, the High Court allowed the appeal in part, set aside the judgment and decree of the Trial Court and decreed the suit brought by the original plaintiff with regard to item No. 1 of Schedule to the plaint holding that the properties mentioned in Schedule D 1 to the partition deed were conveyed absolutely to the original plaintiff in lieu of his undertaking to be liable to discharge the entire debts mentioned in Schedule 'D ' to the partition deed whether the properties were sufficient or insufficient to discharge the same and if there was any surplus out of the properties he was to have the same absolutely, but if the properties were not sufficient, he was to dis 641 charge the debts on his own responsibility without making Subramanyam Chettiar liable for the same; that though a portion of the debts were discharged out of the joint family funds that only cast on the legal representatives of the original plaintiff a liability to account to the appellant for such drawings as the original plaintiff might have made and whatever amount was found to be so drawn would have to be debited against his i.e. the original plaintiff, after giving him credit for whatever amount he might have put into the common fund.
The High Court further held that in determining the net drawals by the original plaintiff from the joint family funds, credit would be given to him for drawings made by the appellant by way of receipts of rents from item No. 1 of Schedule 'B ' to the plaint; that the original plaintiff was not liable to account for the joint family properties as there was no proof of mismanagement, mishandling or improper application of joint family properties or funds and that the defendant was also not liable to account to the original plaintiff for the management of the properties of which he was in charge.
The High Court affirmed the judgment of the Trial Court in regard to the properties covered by Exhibits B 1 and B 4 holding that these were acquired with the common funds of the original plaintiff and the appellant which he was managing.
Dissatisfied with this judgment and decree, the defendant has come up in appeal to this Court.
The learned counsel for the appellant has, while supporting the appeal, strenuously urged that the properties mentioned in Schedule D 1 to the deed of partition (Exh.
A 1) were not intended by the parties thereto to be given to Kota Venkatachala Pathy as his separate properties but were given to him only for a specific purpose viz. for discharging the family debts; that the ancestral properties could not be converted into separate properties by means of an arrangement arrived at between Subramanyam Chettiar and Kota Venkatachala Pathy; that the character of a property has to be decided after considering whether it is saved as a result of detriment to the paternal estate and as in the instant case, property mentioned at item No. 1 of Schedule D 1 to the deed of partition was saved by using the joint family assets, the said property could not but be regarded as the ancestral property of the parties which was subject to partition.
He has further urged that in any event D 1 Schedule properties lost the character of separate properties as they were blended by Kota Venkatachala Pathy with the joint family properties.
He has lastly urged that the directions given by the High Court with regard to accounting cannot be sustained as they are neither clear nor justified.
The principal question for determination in this case is whether the properties mentioned in D 1 Schedule to the deed of partition were separate properties of Kota Venkatachala Pathy or retained the character of ancestral properties.
The answer to this question depends largely on the construction of the deed of partition (Exh.
A 1), material portion whereof is reproduced below for facility of reference: "Venkatachala Pathy the individual No. 2 shall discharge the debts described in 'D ' Schedule, the debts payable to outsiders by Subramanyam Chetti amongst us for the 642 amount borrowed for conducting the family business prior to 20 11 27 and individual No. 2 for discharging the loans, shall enjoy absolutely the properties mentioned in Schedule D 1.
Venkatachalapathi Chetti, the individual No. 2 shall either discharge the debts within a month from the date of registration of this document and obtain receipt for the creditors stating that Subramanyam Chetti is not liable to the aforesaid loans and shall give those receipts to Subramanyam Chetti.
If it is not done so and thereby any loss is caused to Subramanyam Chetti by creditors, Venkatachalapathi Chetti shall be liable for those losses.
The aforesaid Venkatachalapathi Chetti himself shall get possession of D 1 Schedule properties given to him in lieu of discharging the aforesaid debts whether those properties are adjusted to the aforesaid debts, or whether there remain any balance or any deficit".
The salient features of the deed as extracted above are: (1) sole responsibility for discharge of the debts detailed in Schedule D 1 to the deed of partition which were payable to the outsiders was placed on Kota Venkatachala Pathy.
(2) The liability cast on Kota Venkatachala Pathy for the discharge of the debts was not to the extent of the properties detailed in Schedule D 1 to the deed of partition but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively.
(3) The debts were to be discharged by Kota Venkatachala Pathy within a month of the registration of the deed and he was required to have it in writing from the creditors that Subramanyam Chettiar was no longer liable for the debts.
(4) In case, there was a default on the part of Kota Venkatachala Pathy to discharge the debts as undertaken by him and any loss was caused to Subramanyam Chettiar, to the former was to indemnify the latter.
(5) Exclusive dominion, control and enjoyment of the properties mentioned in Schedule D 1 was vested in Kota Venkatachala Pathy in consideration of the obligation undertaken by him to discharge the debts.
The aforesaid salient features leave no manner for doubt that the properties mentioned in D 1 Schedule to the deed of partition were given to Kota Venkatachala Pathy in lieu of the personal undertaking given by him to discharge the aforesaid debts.
In other words, the conveyance of the properties to Kota Venkatachala Pathy was in the nature of remuneration for the services to be rendered by him.
It will be useful in this connection to refer to the decision of this Court in Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax, Madhya Pradesh where on the question whether the managing director 's remuneration received by the assessee was assessable in his individual hands or in the hands of the assessee 's Hindu undivided family, this Court expressed the view that the remuneration was assessable as the assessee 's individual income and not as the income of his Hindu undivided family.
We are, therefore, of the 643 view that Schedule D 1 properties were given absolutely to Kota Venkatachala Pathy as his separate properties.
Let us now see as to whether the aforesaid arrangement entered between the members of the Hindu undivided family whereby properties mentioned in Schedule D 1 to the deed of partition were made over to Kota Venkatachala Pathy was valid according to Hindu Law.
A reference to page 426 of Mayne 's Treatise on Hindu Law and Usage (11th Edition) makes it clear that while dividing the family estate, it is necessary for the joint family to take account of both the assets and the debts for which the undivided estate is liable and to make provision for discharge of the debts.
It is also well settled by the decisions of this Court in Sahu Madho Das vs Pandit, Mukand Ram Maturi Pullaian vs Maturi Narasimham and section Shanmugam Pillai & Ors.
vs K. Shanmugam Pillai Ors.
that if family arrangements which are governed by a special equity peculiar to themselves or entered into bonafide to maintain peace or bring about harmony in the family and the terms thereof are fair taking into consideration the circumstances of the case, every effort must be made by the Court to recognise and sustain it.
Examining the matter in the light of these principles, we find that by the aforesaid arrangement both Subramanyam Chettiar and the defendant appellant were absolved of the responsibility to discharge the family debts and liability was cast on Kota Venkatachala Pathy alone to discharge the same irrespective of the fact whether the properties mentioned in Schedule D 1 to Exhibit A 1 ultimately turned out to be sufficient or insufficient to meet the burden.
Thus the arrangement being bonafide and its terms being fair, we cannot but hold that it was valid and the properties detailed in Schedule D 1 to the deed of partition became separate properties of Kota Venkatachala Pathy from the date of the execution of the deed of partition and are not liable to partition.
This takes us to the question as to whether there was, as contended by the appellant, any blending of the properties mentioned in Schedule D 1 to the deed of partition with the rest of the properties of the joint family consisting of Kota Venkatachala Pathy and the appellant.
It is true that property separate or self acquired of a member of a joint Hindu family may be impressed with the character of joint family property if it is voluntarily thrown by the owner into the common stock with intention of abandoning his separate claim therein but the question whether a coparcener has done so or not is entirely a question of fact to be decided in the light of all the circumstances of the case.
It must be established that there was a clear intention on the part of the coparcener to waive his separate rights such an intention cannot be inferred merely from the physical mixing of the property with his joint family or from the fact that other members of the family are allowed to use the property jointly with himself or that the income of the separate property is utilised out of generosity or kindness to support persons whom the holder is not bound to support or from the failure to maintain separate accounts for an 644 act of generosity or kindness cannot ordinarily be regarded as an admission of a legal obligation.
(See Lakkireddi Chinna Venkata Reddi & Ors.
vs Lakkireddi Lakshmama and G. Narayana Ram vs G. Chamaraju & Ors.
In the instant case we are unable to find that there was any intention on the part of Kota Venkatachala Pathy of abandoning his separate rights over the properties set out in Schedule D 1 to the deed of partition.
The mere fact that these properties were not separately entered by Kota Venkatachala Pathy in the account books or that no separate account of the earning from these properties was maintained by him cannot rob the properties of their character of self acquired properties.
We are accordingly of the view that there was no blending of the properties by Kota Venkatachala Pathy as contended by the appellant.
The mere fact that some amount out of the joint family funds was used for discharge of the debts mentioned in Schedule to the deed of partition is also of no consequence.
If any amount out of the joint family funds was used for the discharge of the outstandings payable to the outside debtors, the legal representatives of Kota Venkatachala Pathy would, as pointed out by the High Court be liable for them.
There is also no substance in the last contention advanced on behalf of the appellant.
The legal position is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager of a joint family a coparcener seeking partition is not entitled to call upon the manager to account for his past dealing with the family property.
The coparcener is entitled only to an account of the joint family property as it exists on the date he demands partition.
In the instant case there being no evidence to establish any misappropriation or fraudulent conversion of the joint family property by Kota Venkatachala Pathy during the period he acted as karta of the family, we are unable to interfere with the direction issued by the High Court which is just and proper.
For the foregoing reasons, the appeal fails and is hereby dismissed but in the circumstances of the case without any order as to costs.
V.P.S. Appeal dismissed.

summary/full:
The appellant and V, father of respondents, were brothers.
They, together with their cousin, formed a joint Hindu family.
In a partition in 1929 between the two branches, certain properties were given to V for discharging some family debts.
V took over the management of his branch of the family and after discharging the debts, filed in 1956 a suit for partition against the appellant claiming, inter alia, that one of the items earmarked for the discharge of the debts which remained undisposed of, was his exclusive property as it was given to him absolutely; and also for accounts on the ground that the appellant took over the management from 1938.
The trial court negatived the claim in respect of the property, but directed the appellant to give accounts from 1947 when admittedly he took over management.
On appeal, the High Court upheld V 's claim with respect to the property and gave modified directions for accounts by the parties.
Dismissing the appeal to this Court, ^ HELD: (1) The properties given to V became his separate properties from the date of the partition deed of 1929 and were not liable to partition.
[643A] (a) The salient features of the deed are, (i) the sole responsibility for discharge of the debts was placed on V; (ii) V 's liability was not to the extent of the properties but was irrespective of the sufficiency or otherwise of the properties and any deficit or surplus was to be met or enjoyed by him exclusively; (iii) the cousin was no longer liable for the debts; (iv) in case there was a default on V 's part, and if, any loss was caused to the cousin he was to be indemnified by V; and (v) exclusive dominion and control over, and enjoyment of, the properties was vested in V in consideration of the obligation undertaken by him to discharge the debts.
The properties were thus given to V in view of his personal undertaking to discharge the debts, and, the conveyance was in the nature of remuneration for services to be rendered by him.
[642 C G] Raj Kumar Singh Kukam Chandji vs Commissioner of Income tax Madhya Pradesh referred to.
(b) The arrangement was valid because it was bona fide and its terms were fair.
[643E] Sahu Madho Das vs Pandit Mukand Ram ; , Maturi Pullaiah vs Maturi Narasimham AIR 1966 SC 1836 and section Shanmugam Pillai & Ors.
vs K. Shanmugam Pillai & Ors. ; referred to.
(c) There was no blending of the properties by V with other joint family properties.
There was no evidence of any intention on V 's part to abandon his separate rights over the properties.
The mere fact that they were not separately entered by him in the account books or that no separate account of the earnings from them was maintained by him cannot rob them of their separate character.
[644B C] Lakkireddi Chinna Venkata Reddi & Ors.
vs Lakkireddi Lakshmama ; and G. Narayana Ram vs C. Chamaraju & Ors. ; referred to.
638 (d) If any amount of the joint family funds was used by V for the discharge of the debts, the respondents (legal representatives of V) would be liable for them, but that would not affect the character of the properties.
[644 C D] (2) It is well settled that in the absence of proof of misappropriation or fraudulent or improper conversion by the manager, a coparcener, seeking partition, cannot call upon the manager to account for his past dealings with the family property.
Since there was no evidence of any misappropriation by V, he was not liable for accounts during his period of management.
[644E F]