judgement:
minal Appeal No. 260 of 1968.
Appeal by special leave from the judgment and order dated October 18, 1968 of the Bombay High Court in Criminal Appeal No. 1161 of 1966.
A. section R. Chari, section section Khanduja and Maya Rao, for the appellant.
M. C. Bhandare and section P. Nayar, for respondent No. 1.
V. M. Tarkunde, Janendra Lal and B. R. Agarwala, for respondent No. 2.
The Judgment of the Court was delivered by P. Jaganmohan Reddy, J.
This appeal is by special leave against the order of the High Court of Bombay dated the 18th October 1968 allowing the oral application of the learned advocate for the respondent for the amendment of the charge of terms of the draft submitted by him and directing the Chief Presidency Magistrate to assign the case to some court for holding a new trial in respect of the amended charge.
This order was made in the following circumstances The appellant was one of the partners of a firm Chandulal Kanji & Co. along with his brother Chandulal K. Mehta.
By and under an agreement called the Packing Credit Agreement entered into between the firm and the second respondent, the Union Bank of India, the appellant obtained 75 per cent of the value of groundnut extraction to be purchased by the firm and exported to the United kingdom and other European countries from the Bank on the condition that immediately after the purchase of the goods and its export the shipping documents would be sent to it.
This arrangement required the firm while sending a letter requesting the credit to be given to it, to enclose the contract of sale of groundnut extraction entered into between it and the foreign firm.
On receipt of this letter and the agreement.
the bank would advance 75 per cent of the money required to purchase the groundnut extraction.
After the amount was received, goods had to be purchased from the mills and shipped for export and the shipping documents sent to the Bank within a month from the date of such advance.
It appears that under this arrangement the second respondent Bank had advanced under the Cash Credit Agreement and the Packing Credit Agreement nearly rupees 4 lacs on several dates the first of which was 744 March 27, 1965 which was for the purchase of 200 tons of groundnut extraction and with which we are now concerned.
The Cash Credit Agreement, the Packing Credit Agreement and the letter requesting the advance of Rs. 60,000/ were all signed on the same date.
The advance, as requested, was also made on the 27th March 1965.
Goods were purchased but could not be shipped within a month from the date of the advance because, as stated in the letter of the appellant dated the 27th April, due to change in the schedule of departure of the ships it was not possible to export the goods on the 24th or 25th March as originally planned as such he undertook to ship the goods a week thereafter.
On the same day, the appellant further sent a declaration that the firm had purchased 300 tons from the advance made to it and is holding the stock.
On the 6th May the Bank requested the firm to forward the shipping documents in respect of the seven agreements of which one related to the agreement of 27th March.
When the shipping documents were not sent to it in conformity with the several documents the bank made certain enquiries from its branch in Veraval, a port in Kathiawar and received certain information as to the dates on which the various quantities were exported and the ships in which they were sent.
As the shipping documents were not sent to the second respondent as required under the agreements entered into with it, it again called on the firm on the 24th May to hand over the documents to it in respect of the groundnut exported.
When this request was not complied with, it filed a complaint against the appellant who alone was the active partner of the firm, in the court of the Presidency Magistrate on the 26th May alleging against him misappropriation of moneys and goods contrary to the agreement.
In support of this complaint the manager of the Bank gave evidence and at the stage of framing the charge the Magistrate heard the lawyers for both sides.
He framed only one charge against the accused for misappropriation of the moneys under section 406 I.P.C. advanced by the Bank in respect of which the Magistrate ultimately convicted him on 31st August 1966 and sentenced him to 18 months ' R.I.
Against this conviction the appellant appealed to the High Court and when the case came up for hearing and had been argued for a considerable length, the advocate for the complainant, the second respondent, appears to have made an oral application for amending the charge framed by the Magistrate as per the draft handed over to the learned Judge which was to be added as an alternative charge to the charge already framed.
It was contended that the Magistrate had framed a charge merely in respect of the entrustment of the moneys that were advanced by the Bank to the appellant but even so the evidence had been led on behalf of the complainant at the trial to show that apart from the money with which the appellant was said to have been 745 entrusted with, even the goods that were purchased by the appellant with the moneys so advanced had also been entrusted to him and which he had agreed to hold on account of the Bank.
This prayer was opposed by the learned advocate for the appellant who contended that it was open to the complainant to have urged the Magistrate at the time when the charge was being framed to have an alternate charge similar to the one now required to be added.
In fact it was stated by the learned advocate that the charge was actually framed by the Magistrate after substantial evidence of the complainant had been recorded by him and after the complainant 's advocate in the lower court had discussions on the question of the framing of charge, but in spite of it only one charge was framed against the appellant for breach of trust in respect of moneys said to have been entrusted to the appellant by the Bank.
The charge relating to goods was omitted and not framed.
It was also pointed out that the altering or amending of charge at this stage would really amount to the framing of a totally new charge in regard to altogether a new subject matter, namely, alleged entrustment of goods, which if permitted would prejudice the accused in his defence.
The learned Judge, however, after hearing these arguments thought that a charge which would include entrustment of moneys as well as entrustment of goods ought to have been framed by the Magistrate but having regard to the materials which have already been brought on record by the complainant at the trial he thought that it was desirable in the interest of justice to allow the amendment.
The following directions given by the learned Judge are relevant for the determination of the contention urged before us : "I direct that the charge as framed by the learned Magistrate be altered and amended in terms of the draft amendment submitted and send the case back for a new trial on this amended charge so as to enable the appellant to have full opportunity to meet this case, till which time this appeal is kept pending.
I direct that the papers be sent to the learned Chief Presidency Magistrate forthwith and the learned Chief Presidency Magistrate is further directed to assign the case to some Court for holding the new trial.
I further direct that the new trial should be expeditiously completed and preferably within two months from the receipt of the papers by the Court to which the case would be assigned by the learned Chief Presidency Magistrate.
The other two appeals being Criminal Appeals Nos. 1162 and 1163 of 1966 should also be adjourned as part heard matters and to be put up along with Cri 746 minal Appeal No. 1161 of 1966 after the record and the proceedings of the new trial is received by this Court." Mr. Chari on behalf of the appellant construing the above order as a direction for a new trial without disposing of the appeal contends that it is unwarranted, unfair, inequitable and unsupported 'by any of the provisions of the Code of Criminal Procedure.
The learned advocate further submits that it is grossly prejudicial to the accused, for the prosecution to wait till the end of the trial and then say that the charge should be amended.
It could have easily insisted at the stage of framing the charge itself that an additional charge should be framed and if the prayer was not accepted it could have come in revision.
The, prosecution having let the trial proceed to the end without insisting on any additional charge cannot now before an appellate court ask for its amendment nor should the said amendment be permitted.
Secondly, he submits that the learned Judge did not consider the question whether there was or was not a prima facie case of entrustment of goods.
In fact it is the contention that the cumulative effect of the agreement and the transaction between the appellant and the second respon dent Bank does not disclose entrustment of moneys to sustain the charge for which the appellant was convicted and if there can be no question of any entrustment of moneys there can be no entrustment of goods.
The learned Judge, it is stated, should have adverted his mind to this aspect of the case before he permitted the framing of additional charge and directed the Magistrate to hold a new trial.
In fact the learned advocate urged that before the Magistrate the second respondent 's advocate had specifically stated that the trial should proceed only on one charge relating to entrustment of moneys as a test case and having taken up this position no prayer for the addition of another charge can be made or ought to have been granted.
But Shri Tarkunde appearing on behalf of the second respondent denies that there was any such submission and contends that in fact Tulzapurkar J. did not direct a new trial as suggested by the advocate on behalf of the appellant though the use of the words "new trial" has unhappily given rise to such a contention.
What in fact the learned Judge did was to send the case back to the Magistrate to enable the appellant to have full opportunity to meet the case and return the record to the court to enable it to dispose of the appeal on both the charges.
The learned advocate submits that there is no illegality in the order of the learned Judge because what the appellate court could have done itself it is directing the Magistrate to do, namely, to give an opportunity to the accused to call the prosecution witnesses if he so desires, obtain his statement under section 342 in respect of the additional charge and to allow him to record any evidence on 747 his behalf if he is so desirous.
It appears to us that the contention of Shri Tarkunde is amply justified by the following observations of the learned Judge allowing the application for amendment made by Mr. Patel on behalf of the second respondent: "I have therefore asked Mr. Khambata as to whether the appellant would like to have an opportunity of a new trial where he could meet this case and Mr. Khambata has stated that the proper course for the court, after allowing amendment of the charge in the manner sought by the complainant, would be to order a new trial.
Mr. Patel for the complainant, however, has stated before me that even during such new trial that would be ordered by the court, no fresh evidence would be led on behalf of the complainant and the complainant would be relying upon the self same material that has already been brought on record by the complainant at the trial, which is already concluded.
Mr. Khambata also urged before me that if I were inclined to allow the application of Mr. Patel, I should dispose of the appeal which deals with the alleged entrustment of the monies and either accept the findings or set aside the findings and thereafter order a new trial in regard to the alleged entrustment of the goods.
I feel that it would be desirable and proper to keep this pending till the opportunity that is being given to the appellant accused No. 2 to meet this new case is fully availed of by him and the record of such new trial is received by this court.
I accordingly allow the application of Mr. Patel for amendment of the charge in terms of the draft submitted by him." From the above observations it would be clear that the learned Judge did not intend that the trial should be a new trial in the sense that the Magistrate would record the evidence afresh, see whether there, was a prima facie case for framing a charge and if there was, to frame a charge then permit the complainant to lead evidence, record the statement of the accused under section 342 and adduce evidence on his behalf after which he would pronounce judgment of conviction or acquittal.
If he had so intended and had directed a totally new trial as is alleged, he could not have rejected the contention of Shri Khambata for the appellant that he should dispose of the appeal and order a new trial on the additional charge nor would he have directed that the appeal should be kept pending till the record of the new trial is received back in his court which could only be after giving 748 the accused appellant an opportunity to meet the case on the additional charge.
On this interpretation of the order the question is whether what has been directed by the learned Judge is in conformity with the provisions of the Code of Criminal Procedure.
In our view the Criminal Procedure Code gives ample power to the courts to alter or amend a charge whether by the trial court or by the appellate court provided that the accused has not to face a charge for a new offence or is not prejudiced either by keeping him in the dark about that charge or in not giving a full opportunity of meeting it and putting forward any defence open to him, on the charge finally preferred against him.
The power of the appellate court is set out in section 423 Cr. P. C. and invests, it with very wide powers.
A particular reference may be made to clause (d) of sub section (1) as empowering it even to make any amendment or any consequential or incidental order that may be just or proper.
Apart from this power of the appellate Court to alter or amend a charge, section 535 Cr. P. C. further provides that no finding or sentence pronounced or passed shall be deemed to be invalid merely on the ground that no charge has been framed unless the Court of appeal or revision thinks that the omission to do so has occasioned failure of justice and if in the opinion of any of these courts a failure of justice has been occasioned by an omission to frame a charge, it shall order a charge to be framed and direct that the trial be recommenced from the point immediately after the framing of the charge.
The wide and extensive power which an appellate or revisional court can exercise in this regard has also the support of the Privy Council.
Lord Porter who delivered the opinion of the Judicial Committee in Thakar Sahab vs Emperor(1) had occasion to point out that while the history of the growth of Criminal Law in England its line of development and the technicalities consequent thereon would have made it more difficult and may be impossible to justify a variation of the charge, Indian Law was subject to no such limitation but is governed solely by the Penal Code and Criminal Procedure Code.
In that case the Privy Council was called on to decide whether the alteration of the charge and the conviction from one of abetment of forgery by known person or persons to abetment of forgery by an unknown person or persons vitiated the conviction.
It was held that it did not, because an Appellate Court had wide powers conferred upon it by section 423 and in particular by sub section (1)(a) of that section, which is "always of course subject to the limitation that no course should be taken by reason of which the accused may be prejudiced either because he (1) [1943] P.C.192.
749 is not fully aware of the charge made or is not given full opportunity of meeting it and putting forward any defence open to him on the charge finally preferred.
" In this case Shri Chari contends that : (1 ) what the High Court should have done if it found that interest of justice required it either to have recorded the evidence itself or to have asked the trial court to record it and send it back, but it cannot refuse to give a finding on the charge for which he was convicted and (2) that the prosecution having proceeded with the trial on the charge framed and not having asked for an amendment at that stage cannot ask the appellate court to amend or add to the charge.
It appears to us that both these contentions are based on a misreading of the order of the High Court.
As already pointed out the learned Judge of the High Court did not intend nor did he direct a new trial in the sense that it is contended he had done.
There was in fact no retrial directed, but only an opportunity was given to the accused to safeguard himself against any prejudice by giving him an opportunity to recall any witnesses and adduce any evidence on his behalf.
The appellant has also understood the order not as a retrial is clear from ground (f) of the Special Leave Petition filed before us.
It is therefore not necessary for us to examine the scope and extent of the power or circumstances in which a retrial should be ordered.
The complainant 's Advocate Shri Tarkunde in fact said and even now submits before is that he does not want to lead any evidence and would be satisfied on the same evidence to sustain a conviction on the amended charge, nor does the alternative charge now framed requires him to answer a charge against him of a new offence which would cause prejudice.
The offence 'With which he is now charged alternatively is the same namely under Section 406 but as the entire transaction was one and indivisible he is not only required to answer the charge of misappropriation of money but in the alternative misappropriation of goods which the complainant Bank contends became their 's as soon as the accused purchased them with the moneys it advanced.
In our view no prejudice is caused or is likely to be caused to the accused by the amendment of the charge as directed by the High Court.
It was again contended that the High Court ought to have considered whether there was a prima facie case against the accused to justify the framing of the amended charge particularly when it took the view that the first charge could not be sustained.
We do not think the learned Judge expressed any view as to the maintainability or otherwise of the conviction, but thought there should have also been framed an alternate charge in respect of the goods.
It is true that the court did not give any reasons as 750 to why it thinks there was a prima facie case, but being an appellate court perhaps it was anxious to avoid giving an impression that it has taken any particular view on the evi dence.
The accused raised no ground on this account in the Special Leave Petition, nor do we think on this account we should interfere with the judicial exercise of discretion of the learned Judge in framing the charge and in giving the accused an opportunity to recall any witnesses or adduce fresh evidence on his behalf.
If no objection could be taken to the trial Court in framing the original charge it is difficult to see how an objection can be taken at this stage to the framing of an alternate charge on the same allegation in the complaint.
The appeal is accordingly dismissed.
Y.P. Appeal dismissed.

summary/full:
The second respondent Bank filed a complaint against the appellant alleging against him misappropriation of moneys and goods contrary to the Packing Credit Agreement entered into between the appellant 's firm and the Bank.
The Magistrate framed only one charge against the appellant, viz., 'for misappropriation of moneys, under section 406, Penal Code.
Against his conviction the appellant appealed to the High Court and when the case had been argued for a considerable length the learned Judge allowed an oral application for amendment of the charge to include one of misappropriation of goods.
Allowing the application the learned Judge directed that the case be sent back "for a new trial on the amended charge so as to enable the appellant to have full opportunity to meet the case till which time the appeal is kept pending." In appeal to this Court against this order.
HELD : Dismissing the appeal, The Code of Criminal Procedure gives ample power to the courts to alter or amend a charge whether by the trial court or by the appellate Court provided that the accused has not to face a charge for a new offence or is not prejudiced either by keeping him in the dark about that charge or in not giving a full opportunity of meeting it and putting forward any defence open to him, on the charge finally preferred against him.
Especially, cl.
(d) of sub section
(1) of section 423 empowers the appellate court even to make any amendment or any consequential or incidental order that may be just or proper.
Further, section 535 provides that no finding or sentence pronounced or passed shall be deemed to be invalid merely on the ground that no charge has been framed unless the court of appeal or revision thinks that the omission to do so has occasioned failure of justice and if in the opinion of any of these courts a failure of justice has been occasioned by an omission to frame a charge, it shall order a charge to be 'framed and direct that the 'trial be recommended from the point immediately after the 'framing of the charge.
[748 A E] Thakar Sahab vs Emperor, , referred to.
In the present case the learned Judge of the High Court did not intend nor did he direct a new trial; only an opportunity was given to the accused to safeguard himself against any prejudice by giving him a opportunity to recall any witness and adduce any evidence on this behalf.
[749 C] The offence with which the appellant was charged alternatively was the same, namely, under section 406; but as the entire transaction was one and indivisible he was not only required to answer the charge of misappropriation of money but in the alternative misappropriation of goods which the complainant Bank contended became their 's as soon as the accused purchased them with the moneys it advanced.
Therefore no prejudice was 743 caused, nor was likely to be caused to the accused by the amendment of the charge as directed by the High Court.
[749 E F]


judgement:
al from the order dated October 20, 1965 of the Punjab, High Court in Letters Patent Appeal No. 262 of 1965.
V. C. Mahajan and R. N. Sachthey, for the appellant.
Sobhag Mal Jain and B. P. Maheshwari, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Sant Singh Kanwarjit Singh hereinafter called the assessee is registered as a dealer under the Punjab General Salestax Act, 1948.
The assessee filed returns of the turnover of its business for the quarters ending 30th June, 1962 and 30th September, 1962, but without appending thereto the list of sales to registered dealers as required by rule 30 framed under the Act.
The Sales tax Officer proceeded to make "exparte assessments" for the two quarters.
The assessee then moved a petition in the High Court of Punjab for a writ quashing the orders of assessment.
A single 312 Judge following the Judgment of the Punjab High Court in Mansa Ram Sushil Kumar V. The Assessing Authority, Ludhiana,( ') quashed the orders of assessment.
An appeal by the State of Punjab was summarily dismissed by a Division Bench of the High Court.
The scheme of levy and assessment of tax under the Act may be briefly noticed.
Every dealer whose gross turnover during the year proceeding commencement to the Act exceeded the taxable turnover is liable to pay tax on all sales effected after the quarter after the commencement of the Act.
Tax is to be levied on the taxable turnover at such rates as the State Government may direct.
Tax is payable under the Act in the manner provided and at such intervals as may be prescribed.
section [10(l)].
A registered dealer furnishing a return has to pay the amount of tax due according to the return into the Government Treasury.
The assessing authority may without requiring the presence of the registered dealer or production by him of any evidence hold that the returns furnished are correct and complete, and proceed to assess the amount of tax due from the dealer on the basis of these returns; if the assessing authority is not satisfied with the return he may require the registered dealer to remain present in person or by pleader and to produce evidence on which he may rely upon in support of the return.
The Assessing authority may after hearing the evidence as the dealer may produce and such other evidence as the Assessing authority may require, assess the amount of tax due from the dealer.
The scheme is plain.
A registered dealer must file return of the turnover in the manner prescribed and at such intervals as may be prescribed.
The dealer while submitting the return has also to pay tax according to the return.
The Assessing Officer may accept the return or he may call upon the tax payer to explain the.turnover, and support it by evidence.
Under the Act sales tax is a yearly tax, but the provisions relating to assessment contemplate assessments for periods shorter than a complete year, and for that purpose the tax payers are required by the Act to submit periodical returns of their turnover and to pay tax due thereon.
In Mansa Ram Sushil Kumar vs
The Assessing Authority Ludhiana (1), a Division Bench of the Punjab High Court held that the tax imposed under the Punjab General Sales Tax Act may be assessed only at the end of the year and not during the pendency of the year as and when, the return is filed, and in the absence of machinery in the Act for making Assessment for (1) (1964) 16 S.T.C. 857. 313 period shorter than the year of assessment, the order of assesment of tax for a quarter before the expiry of the assessment year is illegal.
In reaching that conclusion the High Court relied upon the judgment of this Court in M/s. Mathura Prasad & Sons vs State of Punjab (1).
But in Mathura Prashad 's case( ') this Court considered whether an exemption granted by the State, Government during the course of the year was applicable to the whole or only a part of the year of assessment.
This Court held(Mr.
Justice Kapur dissenting) that the exemption operated for the entire financial year.
The Court observed that the tax was a yearly tax levied on the taxable turnover of a dealer for the year; it was collected in some cases quarterly, some, cases yearly; and proceeded to hold that whenever the exemption came in, in the year for which the tax was payable, it exempted sales throughout the year unless notification fixed the date of commencement of the tax.
In our judgment the principle, of that case has no, bearing on the question arising in this case.
:The Court in Mathura Prasad 's case( ') merely emphasised that the tax was an annual tax but that did not imply that assessment of tax quarterly was illegal.
Adjustment may possibly have to be made when the .assessment of the final quarter is made, but the taxing authorities are not debarred from determining and assessing the quarterly turnover of tax.
Mansa Ram 's case (2) has since been over ruled by a full Bench of the Punjab High Court in M/s. Om Parkash Rajinder Kumar vs K. K. Opal (3).
The Court in that case held that Sales tax may be assessed under section 1 1 of the Act on the basis of quarterly returns submitted by the dealer pursuant to the notice served on him under sec.
10(3) before the close of the relevant financial year.
In our judgment the High Court was right in holding in Mis.
Om Parkash Rajinder Kumar 's case (3) that the, assessment proceeding under the Punjab General Sale tax may be started even before the expiry of the year where provision is made for submission of periodical returns, and that such assessments are not provisional.
The appeal is allowed and the order passed by the High Court set aside and the petition is dismissed.
There will be no order to cost throughout.
V.P.S. Petition dismissed.
(1) [1962] Supp. 1 S.C.R. 913.
(2) {1964] 15 S.T.C. 857.
(3) I.L.R. (1967) Vol.
& Har, 155.

dataset_name: IN-Abs

summary/full:
The assessee, a dealer registered under the Punjab General Sales Tax Act, 1948, filed returns of the turnover of its business for the quarters ending 30th June, 1962 and 30th September, 1962 and the Sales Tax Officer assessed the tax for the two quarters.
On the question whether the tax could be assessed only at the end of the year and not during the year, HELD : Under the Act, sales tax is a yearly tax, but that does not imply that assessment of tax quarterly is illegal if provision is made in the Act for quarterly returns and assessment.
Since the provisions relating to returns and assessment, namely, sections 10 and I 1, and rule 20, contemplate submission of quarterly returns, assessment of tax due thereon and payment of the tax by the taxpayers, the tax was validly assessed.
[313 D, F G] Mathura Prashad & Sons vs State of Punjab, [1962] Supp. 1 S.C.R. 913, explained.
Om Prakash Rajinder Kumar vs K. K. Opal, I.L.R. [1967] Vol.
1 Punjab & Haryana 155, approved.


judgement:
n No. 378 of 1969.
Petition under article 32 of the Constitution for a writ in the nature of habeas corpus.
D. P. Singh, for the petitioner.
G. section Chatterjee for Sukumar Basu, for the respondents.
The Judgment of the Court was delivered by Hegde, J.
In this petition under article 32 of the Constitution submitted from jail, the petitioner seeks a writ of habeas .corpus directing his release from detention.
We have already directed the release of the petitioner on 15 12 1969.
Now we proceed to give our reasons in support of that order.
The petitioner was ordered to be detained by the Commis sioner of Police, Calcutta under section 3(2) of the (Act IV of 1950) by his order dated July 15, 361 1969.
It is stated in that order that the petitioner was ordered to be detained with a view to preventing him from acting in any manner prejudicial to the maintenance of "public order".
That order was confirmed by the State Government after the same was approved by the Advisory Board.
From the grounds served on the petitioner, it appears that his detention was ordered because of the three instances mentioned therein.
It is said therein that on 28 2 1968 between 9 50 p.m. and 10 30 p.m. the, petitioner armed with a knife along with some others, also armed, created disturbance on the Northern Avenue in the course of which he attacked the local people with knife as a result of which one Ajit Kumar Biswas sustained stab injuries.
It is further alleged that during that incident, the petitioner and his associates hurled sodawater bottles and brickbats towards the local people endangering their lives and safety and thereby they created.
fear and frightfulness amongst the people of the locality and thus affected public peace ,and tranquillity of the locality.
The second incident mentioned therein is that on 29 10 1968 at about 9 10 p.m. the petitioner being armed with bombs and accompanied by, some other created disturbance on Raja Manindra Road, in the course of which he and his associates hurled bombs, used swords, iron rods ' and lathis against the local people endangering their lives and safety and thereby they created fear and frightfulness in the locality resulting in the disturbance of public peace and tranquillity of that locality.
The last incident mentioned is that on 28 6 1969 at about 11 15 p.m., the petitioner and his associates armed with bombs created disturbance on Raja Manindra Road in the course of which they indiscriminately hurled bombs towards the local ;people endangering their lives and safety and thereby they affected _public peace and tranquillity of that locality.
From the record it does not appear that the petitioner was prosecuted for any of the offences mentioned earlier.
It is not known why he was not prosecuted.
In the ordinary course, if there is truth in the allegations made, he should have been prosecuted and given an opportunity to defend himself.
The allegations made against the petitioner do not amount to anything more, than that he committed certain breaches of law.
The freedom of the individual is of utmost importance in any civilized society.
It is a human right.
Under our Consti tution it is a guaranteed right.
It can be deprived of only by due process of law.
The power to detain is an exceptional power to be used under exceptional circumstances.
It is wrong to 362 consider the same, as the executive appears to have done in the present case, that it is a convenient substitute for the ordinary process of law.
The detention of the petitioner under the circumstances of this case appears to be a gross misuse of the power conferred under the .
The three incidents mentioned in the grounds are stray incidents spread over a period of one year and four months.
These incidents cannot be said to be inter linked.
They could not, have prejudiced the maintenance of 'public order ' nor can they be held to be subversive of 'public order '.
They were at best prejudicial to " 'law and order".
The distinction between the maintenance of 'public order ' and maintenance of "law and order ' was brought out by this Court in Dr. Ram Manohar Lohia v State of Bihar( ').
Therein this Court pointed out that main tenance of "law and order" is a conception much wider than the conception of maintenance 'public order '.
The latter is the prevention of a disorder of grave nature.
, Every act that affects "law and order" need not affect 'public order '.
If it is otherwise every one who disturbs "law and order", however petty the offence committed by him may be, can be detained under the Prevention Detention Act.
This would be a total repudiation of of the rule of law and an affront to our Constitution.
The lega position relating to the point in issue was again recently considered by this Court in Arun Ghosh vs State of West Bengal( '), Therein it was observed that 'public order ' is the even tempo of the life of the community taking the country as a whole or ever a specified locality.
Disturbance of "public order" is to be distinguished from acts directed against individuals which do no disturb the society to the extent of causing a general disturbance of public tranquillity.
It is the degree of disturbance and it, effect upon the life of the community in a locality which determines whether the disturbance amounts only to a breach of "law and order".
We are of the opinion that the grounds stated in support of the detention cannot amount to a disturbance of the, maintenance of 'public order '.
V.P.S. (1) ; (2) [19701 3 S.C.R. 288.

summary/full:
The petitioner along with others, committed various offences on three occasions.
On the first occasion he attacked the people of a locality with a knife and by hurling bottles at them.
On the other two occasions he attacked the people of another locality, by hurling bombs at them.
He was detained under section 3(2) of the , with a view to preventing him from acting in any manner prejudicial to the maintenance of public order.
In a petition under article 32 for the issue of a writ of habeas corpus, HELD : The incidents were not interlinked and could not have prejudiced the maintenance of public order.
They were stray incidents spread over a period of one year and four months, directed against individuals, and did not disturb society to the extent of causing a general disturbance of public tranquillity; and hence,.
the petitioner was entitled to be released.
The power to detain is an exceptional power to be used in exceptional circumstances and cannot be used as a convenient substitute for the ordinary process of law.
The acts complained of against the petitioner can at best be considered as prejudicial to "law and order" and not "public order" as required by the law relating to preventive detention.
[361 H; 362 A C, E F] Ram Manohar Lohia vs State of Bihar, ; and Arun Ghosh vs State of West Bengal,.[1970] 3 S.C.R. 288, followed.


judgement:
Appeal No. 524 of 1967.
Appeal from the judgment and order dated July 19, 1966 of the Madhya Pradesh High Court in Misc.
Petition No. 33 of 1965.
P. Ram Reddy and section section Khanduja, for the appellant.
I. N. Shroff, for the respondents.
Shyamala Pappu, C. L. Somesekhar and Vineet Kumar, for the intervener.
The Judgment of the Court was delivered by Hidayatullah C.J.
The appellant, who appeals :by certificate granted by the High Court of Madhya Pradesh, was appointed as Assistant Surgeon on probation, for one year by the Board of Directors, Hindustan Steel Ltd.
,Ranchi with effect from October 22, 1959.
After completing his period of probation he was employed on a contract for 5 years.
exhibit P 3 is the Contract of Service which he entered into with the Company.
Under the terms of the contract there.
was a further period of probation.
During the period of probation the Company could terminate his service without notice and without assigning any reason.
On the completion of the period of probation, either side could terminate the contract by 3 months ' notice without assigning any reason.
The Company could also terminate the employment by 'giving in lieu of notice, three months ' salary.
This term was .applicable till three months immediately before the end of the period of 5 years.
If a notice terminating the service was not ven three months before the close of the end of 5 years the contract was automatically extended till the incumbent became superannuated on reaching the age of 55 years.
The appellant passed the probation period and he was en titled to three months ' notice if his services were to be terminated.
The Company maintains certain set, of Rules governing the employment of its workmen, in addition to the Standing.
Orders of.
Company.
exhibit P 4 represents the procedure for imp sing major penalties and for punishment and appeal.
These are .extracts from the Disciplinary and Appeal Rules.
On September 17, 1964 the appellant.
was on duty in the Medical Out Patients Department.
He examined one Mrs. 365 Holey I who complained of cold, headache and weakness.
It appears that Mrs. Holey complained of some misbehaviour on the part of the appellant and her husband reported the matter to the Chief Medical Officer of the Bhilai Steel Plant where the appellant was then posted.
The Chief Medical Officer asked for the explanation of the appellant on September 21, 1964, but the appellant denied the allegation.
Some enquiry was then held.
The appellant in his appeal submits that he was not given a copy of the written complaint received from Mr. and Mrs. Holey.
On October 5, 1964 some witnesses were examined in the presence of the appellant.
Two days previously the statements of Mr. and Mrs. Holey were also recorded.
The enquiry was being held by the Commercial Manager.
The appellant then sent a notice to Mr. and Mrs. Holey charging them with defamation and actually filed a suit on November 17, 1964 demanding damages.
On December 15, 1964 the General Manager ter minated his services with effect from March 15, 1965, that is to say, after the expiry of three months ' notice under the contract.
It was stated in the order that the services were being terminated in terms of his employment.
The appellant thereupon filed a petition under article 226 of the Constitution in the High Court of Madhya Pradesh claiming inter alia that his services were wrongly terminated without giving him the protection granted by article 311 of the Constitution.
He also complained of breach of the principles of natural justice inasmuch as the enquiry was not proper.
His contention was that although the action was ostensibly taken according to the terms of the contract of employment, he was really punished and he was entitled, therefore, to the protection of article 3 1 1 of the Constitution.
The Company resisted the ground by saying that article 311 was not applicable to the appellant inasmuch as he was employed by a Corporation and neither belonged to the civil service of the Union nor held a civil post under the Union.
The High Court in its judgment ruled that the protection of article 311 of the Constitution was not available in the case because the appellant was not entitled to it.
It appears that this was the only point urged in the High Court.
In the appeal before us attempt was made to enlarge the case by arguing other points, namely, that the enquiry was not properly conducted, that the principles of natural justice were violated and that the appellant had no opportunity of defending himself.
None of these points is touched upon in the High: Court 's judgment and it appears that in the High Court only the constitutional question was raised.
Otherwise, one would expect the High.
Court to have said something about it, or the appellant to have said so in the application for certificate or in 366 the proposed grounds filed with that, application.
We decline to allow these fresh grounds to be urged.
The question that arises in this case is : whether the em ployeesof a Corporation such as the Hindustan Steel Ltd., are entitledto the protection of article 31 1 ? This question can only be answered in favour of the appellant if we hold that the appellant held a civil post under the Union.
It was conceded before us that the appellant could not be said to belong to the civil service of the Union or the State.
article 31 1, on which this contention is based, reads as follows : "31 1.
Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State.
(1) No person who is a member of a civil service of the Union or an all India service or a civil service or a State or holds a civil post under the Union or a State shall be dismissed or removed by an authority subordinate to that by which he was appointed.
(2)No such person as aforesaid shall be dismissed or removed or reduced in rank until he has been given a reasonable opportunity of showing cause against the action proposed to be taken in regard to him; Provided that this clause shall not apply (a)where a person is dismissed or removed or reduced in rank on the ground of conduct which has led to his conviction on a criminal charge; (b)where an authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that some reasons, to be recorded by that authority in writing, it is not reasonably practicable to give to that person an opportunity of showing cause; or (c) where the President or Governor, as the case may be, is satisfied that in the interest of the security of the State it is not expedient to give to that person such an opportunity.
(3)If any question arises whether it is reasonably practicable to give to any person an opportunity of showing cause under clause (2), the decision thereon of the Authority empowered to dismiss or remove such person or to reduce him in rank, as the case may be, shall be final." 367 Clause (2) of the article, which gives the protection opens with the words "no such person as aforesaid" and these words take one back to clause (1) which describes the person or persons to whom the protection is intended to go.
Clause (1) speaks of (i) persons who are members of (a) a Civil Service of the Union, or (b) an All India Service or (c) a Civil Service of a State, or (ii) hold a civil post under the Union or a State.
(a), (b) and (c) refer to the standing services which have been created in the Union and the States and which are permanently maintained in strength.
In addition to the standing services there are certain posts which are outside the permanent services.
The last category in article 311(l) therefore speaks of such posts on the civil side as opposed to the military side.
Incumbents of such posts also receive protection.
In the present case the appellant did not belong to any of the permanent services.
He held a post which was not borne on any of the standing services.
It was, however,, a civil post as opposed to a military post.
So far the appellant 's case is clear but the clause speaks further that such posts must be under the Union or a State.
The question thus is whether the servant employed here can be said to have held the post under the Union or a State ? The appellant contends that since Hindustan Steel Limited is entirely financed by the Government and its management is directly the responsibility of the President, the post is.
virtually under the Government of India.
This argument ignores some fundamental concepts in relation to incorporated companies.
In support of the contention that the post must be regarded as one under the Union the appeliant relies on some obiter observations of a single Judge in M. Verghese vs Union of India and others( 1).
In that case the petitioners were drivers working for the Durgapur Project under Hindustan Steel Limited.
The learned Judge considered the question by analysing the set up of Hindustan Steel Limited.
He found that it was a Government company and a private limited company, although it did not include in its name any notice Jr that it was a private company.
He referred in detail to the various provisions in the Articles of Association as also in the Indian Companies Act which rendered the ordinary company law in applicable in certain respects and conferred unlimited powers.
of management on the President of India and his nominees.
He also found that Hindustan Steel Limited was entirely owned by the Union of India.
From this the learned Judge wished to infer that Hindustan Steel Limited was really a department of" the Government but he did not express this opinion and decided 368 the case on another point.
The appellant contends that the conclusion which the learned single Judge did not draw in the Calcutta case is the conclusion to draw in this appeal.
We must, according to him, hold that there is no difference between Hindustan Steel Limited and a Department of the Government and that the service under Hindustan Steel Limited is a service under the Union.
On the other hand, in State of Bihar vs Union of India and Anr.(1) Hindustan Steel Limited was not held to be a "State" for purposes of article 131.
The question whether Hindustan Steel Limited was subject to the jurisdiction of the High Court under articles 226 and 227 was left open.
In dealing with the above conclusion, reference was made to the incorporation of Hindus tan Steel Limited as an independent company and thus a distinct entity.
In Praga Tools Corporation vs C. V. Imanual and Ors.(2) it was pointed out that a company in which 88 % of ,the capital was subscribed by the Union and the State Governments could not be regarded as equivalent to Government because being registered under the Companies Act it had a separate legal existence and could not be said to be either a Government Corporation or an industry run by or under the authority of the Union Government.
Similar views were also expressed in the High Courts.
In Lachmi and Others vs Military Secretary to the Government of Bihar( '), the expression "civil post under the Union or the State" was held to mean that the civil post must be in the control of the State and that it must be open to the State to 'abolish the post or regulate the conditions of .service.
Although the case concerned a Mali employed in Rai Bhavan, it was held that it was not a post under the State even though the funds of the State were made available for paying, his salary.
In a later case Subodh Ranjan Ghosh vs Sindhri Fertilizers and Chemicals Ltd.( ') the employees of the Sindhri Fertilizers were held not entitled to the protection of article 31 1.
Our brother Ramaswami (then Chief Justice) noticed that the corporation was completely owned by the Union Government; that the Directors were to be appointed by the President of India who could also issue directions.
He nevertheless held that in the eye of law the company was a separate entity and had a separate legal existence.
In our judgment the decision in the Patna case is correct.
It has also the support of a decision re ported in Ram Babu Rathaur vs Divisional Manager, Life Insurance Corporation of India(5) and another in Damodar Valley , 'Corporation vs Provat ROY( ').
Our brother Ramaswami relied (1)Civil Appeals Nos.
512 513 etc.
of 1969 decide on 19.9.1969.
(2) Civil Appeal No. 612 of 1966 decided on February 19, 1969.
(3) (4) A.I.R. 1957 Pat.
(5) (6) LX C.W.N. 1023.
369 in particular upon an English case Tamlin vs Hannaford(1).
In that case it was held in relation to a business that although the minister was really incharge, the corporation was different from.
the Crown and the services of the corporation were not civil services.
Justice P. B. Mukherjee of the Calcutta High Court, to.
whose judgment we referred earlier distinguished the English, case by pointing out certain differences between the Corporation in that case and Hindustan Steel Limited.
He pointed out that (a) in the English Corporation no shareholders were required to, subscribe the capital or to have a. voice in the affair, (b) the capital was raised by borrowing and not by issuance of shares, (c) the loss fell upon the consolidated fund and (d) the corpo ration was non profit making.
In our judgment these differences rather accentuate than diminish the applicability of the principle laid down in the English case to our case.
The existence of shareholders, of capital raised by the issuance of shares, the lack of connection between the finances of the corporation and the consolidated fund of the Union rather make out a greater independent existence than that of the corporation in the English case.
We must, therefore, hold that the corporation which is Hindustan Steel Limited in this case is not a department of the Government nor are the servants of it holding posts under the State.
It has its independent existence and by law relating to Corporations it is distinct even from its members.
In these circumstances, the appellant, who was an employee of Hindustan Steel Limited, does not answer the description of a holder of " a civil post under the Union ' as stated in the article.
The appellant was not entitled to the protection of article 311.
The High,, Court was therefore right in not affording him the protection.
The appeal fails and is dismissed but in the circumstances of the,case we make no order about costs.
G.C. Appeal dismissed. , (1) [1950] 1 K.B.D. 18.

summary/full:
The services of the appellant as Assistant Surgeon in the Hindustan Steel Ltd., Ranchi were terminated purportedly in terms of his contract of employment.
In a petition under article 226 he claimed that the termination was wrongful inasmuch as it was really by way of punishment and article 311 of the Constitution had not been complied with.
The company resisted the ground by saying that article 311 was not applicable to the appellant since he was employed by a corporation and neither belonged to the civil service of the Union nor held a civil post under the union.
The High Court dismissed the ' appellant 's petition.
In appeal before this Court by certificate, the appellant contended that since Hindustan Steel was entirely financed by the Government and its management was directly the responsibility of the President, the post was virtually under the Government of India.
HELD : (i) The protection of article 311(2) is available to the categories of persons mentioned in cls. (a)(b) and (c) of article 311(l).
The appellant did not fall in the categories mentioned in cls, (a) and (b).
He did hold a civil post as opposed to a military post but cl.
(c) further required that it must be under the Union or a State.
In view of the existence of shareholders, of capital raised by the issuance of shares, and the lack of connection between the finances of the corporation and the Consolidated Fund of the Union, it must be held that Hindustan Steel Ltd. was not a department of the Government nor were the servants of it holding posts under the State.
It had its independent existence and by the law relating to corporations it was distinct even from its members.
In these circumstances the appellant, as an employee of Hindustan Steel Ltd., did not answer the description of a holder of 'a civil post under the Union ' as stated in article 31 1.
The High Court was therefore right in not affording him the protection of that Article.
[367 D; 369 C E] State of Bihar vs Union of India, C.A. Nos.
512 513/69 dt.
19 9 1969 and Praga Tools 'Corporation vs C. V. Imanual & Ors.
C.A. No. 612 1966 dt.
19 2 1969, applied.
Subodh Raman Ghosh vs Sindhri Fertilizers and Chemicals Ltd. A.I.R. 1957 Pat. 10, approved.
M. Verghese vs Union of India & Ors.
A.I.R. 1963 Cal.
421, Lachmi and Ors.
vs Military Secretar to the Government of Bihar, Ram Babu Rathaur vs Divisional Manager, Life Insurance Corporation of India, , Damodar Valley Corporation V. Provat Roy, ILX C.W.N. 1023 and Tamlin vs Hannaford, [1950] 1 K.B.D. 18, referred to.
364 (ii)The contentions sought to be raised by the appellant regarding the validity of the departmental enquiry against him were not touched upon in the High Court 's judgment nor mentioned in the proposed grounds filed with the application for certificate.
The appellant could not be allowed to urge them for the first time in this Court.


judgement:
l Appeals Nos.
2143 to 2145 of 1968.
315 Appeals from the judgments and orders dated March 18, 1965 of the Calcutta High Court in Income tax References Nos. 154, 155.
and 156 of 1961.
M.C. Chagla, P. C. Bhartari, and 0.
C. Mathur, for the appellant (in C.As.
2143 and 2144 of 1968).
S.Mitra, P. C. Bhartari and 0.
C. Mathur, for the appellant (in C.A. No. 2145 of 1968).
S.T. Desai, section K. Aiyar and B. D. Sharma, for the respondent (in all the appeals).
The Judgment of the Court delivered by Shah, Actng C.J.
These appeals relate to the assessment to tax of M/s. Bengal Enamel Works Ltd. a public limited com pany for the assessment years 1951 52, 1952 53 and 1953 54.
The Company is doing business of manufacturing "enamelled ware.
It had originally employed a "technician ' at a monthly salary of Rs. 5001 .
In June 1941 the technician was relieved, and one Col. Bhattacharya who was a director of the Company was appointed its "Technical Adviser.
" He was to receive as remuneration 15% of the gross annual profits of the Company.
Col. Bhattacharya resigned his office and Dr. Ganguly (son inlaw of Col. Bhattacharya) was appointed to that office.
The Board of Directors resolved on May 18, 1950 to pay to Dr. Ganguly 15% of the gross annual profits (without deducting depreciation) as his remuneration.
In the assessment years 1951 52, 1952 53 and 1953 54 the Company claimed under section 10(2) (xv) of the Income tax Act, 1922, as admissible allowance, in computing its taxable income, Rs. 52,947/ , Rs. 64,356/ and Rs. 79,227/ respectively, paid as remuneration to Dr. Ganguly under the terms of the resolution dated May 48, 1950.
The Income tax Officer, Companies District III, Calcutta, allowed for each of the years remuneration at the rate of Rs. 42,000/ only as a permissible deduction.
The order was confirmed in appeal to the Appellate Assistant Commissioner and by the Tribunal.
The Tribunal referred in respect of each of the three years the following question: "Whether on the facts and in the circumstances of the case, the disallowance of a part of the expenses incurred by the assessee 'for payment of remuneration to its Technical Adviser is permissible under the Provisions of section 10(2) (xv) of the Indian Income tax Act)" 216 The High Court answered the question in the affirmative, and disallowed the claim of the Company.
With certificate of fitness, these appeals are preferred against the order of the High Court.
In computing the taxable income of an assessee, whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of the, business, profession or vocation of the assessee must be decided on the facts and in the light, of the circumstances of each case : Swadeshi Cotton Mills Co. Ltd. vs Commissioner of Income tax, U.P.(1).
Resolution of the assessee fixing the remuneration to be paid to an employee and production of vouchers for payment together with proof of rendering service do not exclude an enquiry whether the expenditure was laid out wholly and exclusively for the purpose of the assessee 's business.
It is open to the Tax Officers to hold agreement to pay and payment notwithstanding that the expenditure was not laid out wholly and exclusively for the purpose of the business: Swadeshi Cotton Mills Co.Ltd. 's case( ').
But an inference from the facts found that the expenditure was, wholly and exclusively laid out for the purpose of the business is one of law and not of fact, and the High Court in a reference under section 66 of the Income tax Act is competent to decide that the inference raised by the Tribunal is erroneous in law.
In the present case, the facts found are these : Col. Bhattacharya and his son in law Dr. Ganguly were two of the directors of the Company who between them held on January 1, 1950 49% of the total number of shares of the Company and the other directors of the Company held only I % of the shares.
Dr. Ganguly had received no training in the technique of enamelling : he was a medical practitioner earning Rs. 20,000/ per annum by the exercise of his profession.
Apparently no applications were invited for the appointment of a Technical Adviser when Col. Bhattacharya resigned his office.
In the resolution passed by the Directors it was recorded that many "personal enquiries" regarding the post were made, but no candidate was found suitable The Board, it was recorded, considered the applications of section Urbeneck and J. Schulser but the qualifications of these two candidates did not impress the directors: moreover the terms of service offered by J. Schulser were not acceptable to the Board and therefore the only applicant Dr. Ganguly who was working on Probation in the post for some time past and had worked without remuneration up to December 31, 1949 was considered the applications of section urbeneck and J. Schulser though called for by the Incometax Officer were not produced by the Com pany.
At the relevant time "a good technical expert in enamelling" (1) 63 I.T .
R. 57.
317 could be secured for a monthly remuneration of Rs. 1,000/ or Rs. 1,200/ provided that appointment was not for a short period.
In the view of the Income tax Officer, Dr. Ganguly came to be appointed to the post of Technical Adviser of the Company as soon as, his father in law vacated the post and "the generous remuneration offered to him was influenced by factors other than commercial considerations, and considering that Dr. Ganguly was giving up his professional practice in allopathic medicine which yielded him an annual income of Rs. 20,000/ to engage himself as a whole time Adviser attending to the development of the industry a gross remuneration of Rs. 3,500/ per month, beside the .remuneration of Rs. 1,000/ per month that he obtained as Secretary of the Managing Agents of the Company, would be adequate.
" With that view the Applicate Assistant Commissioner and the Income tax Appellate Tribunal have substantially agreed.
The Tribunal observed that they were inclined to conclude that "extra commercial considerations" had influenced the fixation of remuneration of Dr. Ganguly and that partial disallowance of the remuneration "so influenced seems quite fair".
Counsel for the Company urged, relying upon the judgments of this Court in J. K. Woollen Manufacturers vs Commissioner of Income tax, U.P.(1) and Commissioner of Income tax, Bombay vs Walchand & Co. Private Ltd.( ') that in determining the admissibility of an allowance as expenditure laid out and expended wholly and exclusively for thee purpose of the business has to be adjudged from the point of view of the employer and not of the revenue, the Taxing authorities had no power to disallow the remuneration paid to its Technical Adviser, merely because they think that the Company may probably have secured the services of another Adviser for a smaller remuneration.
But these cases, in our judgment, have no bearing here.
The departmental authorities have not attempted to reduce the allowance on the ground that the remuneration paid to Dr. Ganguli was in their view excessive.
Indisputably an employer in fixing the remu neration of his employee is entitled to take into consideration the extent of his business, the nature of duties to be performed, the special aptitude of the employee, the future prospects of the business and other related circumstances and the taxing authorities cannot substitute their own view as to the reasonable remuneration which should have been agreed to be paid to the employee.
But the taxing authority may disallow an expenditure claimed on the ground that the payment is not real or is not incurred by the assessee in the course of his business, or that it is not laid out wholly and exclusively for the purpose of the business (1) ; (2) ; 318 of the assessee.
Thereby the authority does not substitute its own view of how, the assessee 's business affairs should be managed, but proceeds to disallow the expenditure because the condition of its admissibility is absent.
It, has been uniformly found by all the authorities that the remuneration agreed to be paid to Dr. Ganguly was influenced by "extra commercial considerations".
Ganguly and Col. Bhattacharya were able to control the voting before the Board of Directors.
Dr. Ganguly was not trained in the technique of .
enamelled ware," and had no special qualifications for the post.
The remuneration agreed to be paid was much in excess of what was normally payable, and also of what Dr. Ganguly was earning by practising his profession as a doctor of medicine.
The criticism that the Tribunal 's finding was based on no evidence or was based on irrelevant considerations cannot therefore be accepted.
Where an amount paid to an employee pursuant to an agreement is excessive because of "extra commercial considerations," the taxing authority has jurisdiction to disallow a part of the amount as expenditure not incurred wholly and "elusively for the purpose of the business : Swadeshi Cotton Mills Co. Ltd. The appeals fail and are dismissed with costs.
One hearing fee.
V.P.S. Appeals dismissed.

summary/full:
The appellant, which was doing the business of manufacturing enamelled ware, appointed a technical adviser and the Board of Directors resolved to pay him 15% of the gross annual profits as his remuneration.
.For the assessment years, 1951 52, 1952 53 and 1953 54, the appellant claimed the amounts paid to the technical adviser as admissible allowances under section 10(2)(xv) of the Income tax Act, 1922.
The Income tax Officer found, that the technical adviser was a doctor of medicine without any special qualification for the post, that he was not trained in the technique of enamelled ware, that he and his father in law, by the number of shares they held, were able to control the voting before the Board of Directors, that good technical experts in enamelling could have been secured for a smaller remuneration, that the remuneration agreed to be paid to the technical adviser was influenced by extra commercial considerations and therefore, disallowed a part of the amount, holding that it was expenditure not incurred wholly and exclusively for the purpose of the business.
The order was confirmed by the Appellant Assistant Commissioner, the Tribunal and the High Court.
In appeal to this Court.
HELD : The question whether an amount claimed as expenditure was laid out or expended wholly and exclusively for the purpose of the business must be decided on the facts and circumstances of each case, and the inference drawn from the facts found is one of law.
Ordinarily, an employer, in fixing the remuneration of his employee, is entitled to take into consideration the extent of his business, the nature of duties to be performed, the special aptitude of the employee, the future prospects of the business and other related circumstances, and the taxing authorities cannot substitute their own view as to the reasonable remuneration which should have, been agreed to be paid to the employee.
But, the taxing authority may disallow an expenditure claimed, on the ground that the payment is not real or is not incured by the assessee in the course of his business or that it is not laid out wholly and exclusively for the pur pose of the business.
In doing so, the authority does not substitute its own view of how the assessee 's business affairs should be managed, but proceeds to disallow the expenditure, because, the condition of its admissibility is absent.
[316 B, D; 317 F H ', 318 A, D] Swadeshi Cotton Mills Co. Ltd. vs C.I.T., U.P. , followed.


judgement:
Appeal No. 1453 of 1966.
Appeal from the judgment and decree dated September.
14, 1965 of the Madras High Court in Second Appeal No. 1394 of 1963.
A. K. Sen, R.M. Mehta and J.B. Dadachanji, for.
the appellant.
R. Gopalakrishnan, for the respondent.
The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted by the High Court of Madras is directed against its judgment and decree modifying the decree passed by the District Judge.
The relevant facts for the determination of the points raised before us are as follows: The plaintiff, K '.
M. Viswanatha pillai, appellant before us and hereinafter referred to as the plaintiff, and K.M. Shanmugham Pillai, respondent before us and hereinafter referred to as the defendant, were originally members of a Joint Hindu Family.
On June 29, 1953, the six brothers who constituted the Joint Hindu Family entered into a partition of the properties belonging to the Joint Family, evidenced by a registered document exhibit A 35.
A motor bus MDH 662 fell to the share of the plaintiff.
At the time of partition the permit was not in the name of the defendant and some proceedings for the transfer of the permit to his name were pending.
Accordingly it was provided in the partition deed as follows: "As soon as its route permit and registration etc. are transferred in the name of Shanmugam Pillai, he shall have the same transferred in the name of the 4th individual of us, Viswanatha Pillai." In September 1953, the permit was transferred in the name of the defendant.
In April 1954, the plaintiff purchased two more vehicles, namely, MDO 1106 and MDH 730, but the permits were obtained in the name of the defendant in whose name the vehicles were also actually acquired.
As the defendant was going to Kuala Lumpur on business he executed a general power of attorney, exhibit A 55, in favour of the plaintiff.
In this power of attorney the defendant admitted that the three buses above mentioned belonged to the plaintiff and were plying in his name as requested by the plaintiff.
Two more buses seem to have been acquired since then.
The plaintiff 's case in brief was that the defendant was carrying on business on his behalf as a benamidar.
He accordingly prayed for a declaration that the five buses alongwith the stage 898 carriage permits belonged to him and that he was entitled to run the same in terms of the power of attorney which was irrevocable.
The defendant had joined with the plaintiff earlier in filing a joint application for transfer of permits before the Regional Transport Authority.
The defendant, however, withdrew his consent and the application was rejected.
The plaintiff, accordingly, seeks a mandatory injunction directing the defendant to execute necessary documents required to effectuate the transfer of the permits.
The suit was decreed entirely by the Trial Court, but the District Judge confirmed the decree only with reference to four of the buses.
With reference to Bus No. MDU 4069 the decree was set aside.
The High Court held that "the plaintiff and the defendant practiced a fraud upon the authorities, conjointly, in contravention of the express provision of the .
The benamidar of the vehicles, representing himself to be the owner, falsely obtained the permits in his name, and allowed the true owner, who had no permit, to conduct the actual business; there cannot be a more flagrant violation of the basic requirements of the Act, or of its scheme.
" The High Court, accordingly, felt that they could not possibly grant mandatory injunction compelling 'the defendant to co operate in any further application for transfer, since that would, in effect, give recognition to the fraudulent contrivance and effectuate rights on the very basis of that contrivance.
The High Court also agreed with the District Judge that the plaintiff could not get a declaration as far as bus No. MDU 4069 was concerned.
The learned counsel for the appellant, Mr. A.K. Sen urges 'before us that no provision of the (IV of 1939) hereinafter referred to as the Act has been contravened and that it is not necessary under the Act that a permit should be obtained only by the real owner of the bus.
The relevant statutory provisions may now be noticed, and they 'are as follows: "The Section 2.
(3) "contract carriage" means a motor vehicle which carries a passenger or passengers for hire or reward under a contract expressed or implied for the use of the vehicle as a whole at or for a fixed or agreed rate or sum and from one point to another without stopping to pick up or set down along the line of route passengers not included in the contract; and includes a motor cab 899 notwithstanding that the passengers may pay Separate fares." (19) "owner" means, where the person in possession of a motor vehicle is a minor, the guardian of such minor, and in relation to a motor vehicle which.
is the subject of a hire purchase agreement, the person in possession of the vehicle under that agreement.
" (20) "permit" means the document issued by the commission or a State.
or Regional Transport Authority authorising the use of a transport vehicle as a contract carriage, or stage carriage, or authorising the owner as a private carrier or public carrier to use such vehicle." (22) "private carrier" means an owner of a transport vehicle other than a public carrier who uses that vehicle solely for the carriage of goods which are his property or the carriage of which is necessary for the purposes of his business not being a business of providing transport, or who uses the vehicle for any of the purposes specified in sub section (2) of section 42.
(23) "public carrier" means an owner of a transport vehicle who transports or undertakes to transport goods, or any class of goods, for another person at any time and in any public place for hire or reward, whether in pursuance of the terms of a contract or agreement or otherwise, and includes any person, body, association or company engaged in the business of carrying the goods of persons associated with that person, body, association or company for the purpose of having their goods transported." Section 42(1) on which the High Court has relied reads thus: "42(1) No owner of a transport vehicle shall use or permit the use of the vehicle in any public place, save in accordance with the.
conditions of a permit granted or countersigned by a Regional or State Transport Authority or the Commission authorising the use of the vehicle in that place in the manner in which the vehicle is being used; . " This section does not, in our view, on the language require that the owner himself should obtain the permit; it only requires the owner that the transport vehicle shall not be used except in accordance with the conditions of the permit.
The High Court would add the words "to him" after the words "permit granted", 900 but, in our view, there is no justification for inserting those words.
The definition of the "permit" itself shows that all permits need not be in the name of the ,owner because the latter part of the definition shows that it is only in the case of a private carrier or a public carrier that a permit has to be in the owner 's name.
The same inference follows from the definitions of "private carrier" and "public carrier".
This Court came to the same conclusion in Veerappa Pillai vs Raman & Raman(1).
Some reliance was placed on the amendments made in section 60( 1 ) (c).
The, section as ' amended reads :, "60 (1) The transport authority which granted a permit may cancel the permit or may suspend it for such period as it thinks fit (c) if the holder of the permit ceases to (own)(2) the vehicle or vehicles covered by the permit," .
There has been a conflict of opinion between the different High Courts as to the inference following that amendment.
It seems to us that the High Court of Allahabad in Khalil ul Rahman Khan vs State Transport Appellate Tribunal(3) rightly gives the effect of the amendment.
Srivastava, J., observed: "A reference was, however, made to cl.
(c) of sub section (1) of Section 60 of the Act and on the basis of that clause it was urged that it assumed that the permit holder should be the owner of the vehicle.
That clause provides for one of the contingencies in which a permit can be cancelled.
According to it, it is permissible for the Transport Authority to cancel a permit if the holder of it ceases to own the vehicle covered by the permit.
It is only a permissive clause and the Transport Authority has only been given a discretion to cancel the permit in that contingency.
It may or may not cancel it, even if the holder of the permit ceases to own the vehicle covered by it.
But it is by no means necessary that el.
(c) should be applicable to the case of every permit holder.
There may be permit holders who own the vehicle covered by the permit and there may be permit holders who do not own the vehicle.
This clause appears to apply only to t he former case and not to the latter.
On its basis, therefore, it cannot be held to be a requirement of the (1) ; (2) Substituted by section 54 of the Motor Vehicles (Amendment) Act, 1956 (100 of 1956) for "possess" (w.e.f. 16 2 1957).
A.I.R. 1963 All. 383, 388.
901 Act that in each case the person in whose favour a permit has been issued should necessarily be the owner of the vehicle covered by it.
" We agree with these observations.
The contrary view held in Varadarajulu Naidu vs Thavasi Nadar(x) that section 42(1 ) contemplates that only an owner will have a permit is erroneous.
The decision of the Andhra High Court in Chavali Venkataswami vs Chavali Kotayya(2) that section 60(1)(c) of the Act envisages the grant of a permit to the owner alone must also.
be dissented from.
The learned counsel for the respondent says that at any rate the Act does not contemplate persons applying for permits benami.
In India benami transactions are recognised and not frowned upon.
(see Gut Narayan vs Sheolal Singh)(a).
In C.I.T. Gujarat vs Abdul Rahim & Co. (4) it was held by this Court that the registration of the partnership deed under section 26A of the Indian Income Tax Act, 1922, could not be refused on the ground that K was the benamidar of V. We see nothing in the Act which expressly or by implication bars benami transactions or persons owning buses benami and applying for permits on that basis.
In the result the appeal is allowed, the decree of the High Court set aside and the decree passed by the District Judge restored.
We may mention that Mr. Sen did not press the claim regarding the fifth bus, MDU 4069.
The appellant will have half costs in this Court.
The parties.
will bear their own costs in the High Court.
Appeal allowed.

summary/full:
The appellant was the owner of 5 buses.
The Vehicles stood in the name of the respondent, appellant 's benamidar, and the stage carriage permits were also obtained in the respondent 's name.
The appellant, who was running the buses, flied a suit claiming the buses along with their permits.
It was decreed by the trial court, and the lower appellate court confirmed the decree in respect of 4 buses.
The High Court, in further appeal, held that the appellant and the respondent together practised fraud in contravention of as.
41(1) and 60(1)(c) of the in as much as the respondent representing himself to be the owner falsely obtained the permits in his own name, and allowed the true owner, who had no permit to conduct the actual business and dismissed the suit in toto.
In appeal this Court, HELD: There is nothing in the , which expressly or by implication bars benami transactions or persons owning buses benami and applying for permits on that basis.
Section 42(1) does not require that the owner himself should obtain the permit; it only requires the owner to see that the transport vehicles shall not be used except in accordance with the conditions of the permit.
The definition of 'permit ' itself shows that all permits need not be in the name of the owner because the latter part of the definition shows that it is only in the case of a private earner or a public carrier that a permit has to be in the owner 's name.
The same inference follows from the definitions of 'private carrier ' and 'public carrier '.
[899 H] The amended section 60(1)(c) provides for one of the contingencies in which permit can be cancelled.
According to it, it is permissible for the Transport Authority to cancel a permit if the holder of it ceases to own the vehicle covered by the permit.
It is only a permissive clause and the Transport Authority has only been g/yen a discretion to cancel the permit in that contingency.
It may or may not cancel it, even if the holder of the permit ceased to own the vehicles covered by it.
But it is by no means necessary that cl.
(c) should be applicable to the case of every permit holder.
There may be permit holders who own the vehicle covered by the permit and there may be permit holders who do not own the vehicle.
This clause appears to apply only to the former case and not to the latter.
[900] Veerappa Pillai vs Raman & Raman, ; , followed.
Khallil ul Rahman Khan vs State Transport Appellate Tribunal, A.I.R. 1963 All. 383, Gut Narayan vs Sheolaf Singh, and C.I.T. Gujarat vs Abdul Rahim & Co., , approved.
Varadarajulu Naidu vs Thavasi Nadar, (1963) 2 M.LJ. 20 and Chavali Venkataswami vs Chavali Kotayya, (1959) 2 and W.R. 407, disapproved.


judgement:
Appeal No. 1953 of 1969.
320 Appeal by special leave from the, judgment and decree dated ,October 18, 1968 of the Mysore High Court in Regular First Appeal No. 56 of 1963.
M. C. Chagla and R. Gopalakrishnan, for the appellant.
section V. Gupte, R. V. Pillai Sadasiv Rao and P. Keshava Pillai, for respondent No. 1.
The Judgment of the Court was delivered by Hegde, J.
This is a plaintiff 's appeal by special leave.
The plaintiff sued for possession of the suit properties on the basis of his title.
The suit properties originally belonged to the family .of one Veerbaswantji Rao Deshmukh.
He died in 1892 without male issues, leaving behind him his widow Ratnabai and a daughter by name Lakshmibai.
Ratnabai succeeded to the estate, of her husband.
She died in 1924.
On her death Lakshmibai became entitled to the suit properties.
But one Parwatibai,alias Prayag Bai took unlawful possession of the 'suit properties.
Hence Lakshmibai instituted a suit for their possession in the court of Sadar Adalath, Gulbarga, against the said Parwatibai and obtained a decree.
In execution of the said decree Lakshmibai obtained delivery of the lands described in Schedule 11 to the plaint.
Lakshmibai died in 1948.
Sometime thereafter Parwatibai also died.
The defendant claiming to be the sister 's son of Veerbaswanth Rao Deshmukh got himself impleaded as the legal representative of Lakshmibai in the execution proceedings and sought delivery of the lands mentioned in Schedule I of the plaint.
Meanwhile one Vishwanath alleging to be the legal representative of Parwatibai got himself impleaded in the execution proceedings.
Thereafter the defendant and Vishwanath entered into a compromise in pursuance of which Vishwanath delivered possession of the lands included in Schedule I to the defendant.
Sometime thereafter the plaintiff applied to the court to reopen the execution proceedings and implead him as the legal representative of Lakshmibai claiming that he is the adopted son of Lakshmibai.
The executing court dismissed his application holding that his remedy was by way of a sevarate suit.
A revision taken against that order to the High Court was rejected.
Thereafter the plaintiff filed a suit in the court of Subordinate District Judge, Bidar, for a declaration that lie is entitled to be impleaded 'in the execution proceedings mentioned earlier as the revresenta tive of Lakshmibai and to proceed with the execution after setting aside the order made by the executing court.
on the, basis of the compromise entered into between the defendant and Vishwanath.
It may be noted that that was the only relief asked for in the plaint.
The purported cause of action for the suit was the dismissal of the plaintiff 's application for impleading him in 321 the execution proceedings.
That suit should have been dismissed on the ground that it was not maintainable in law.
But strangely enough it was dismissed on the ground that it was hit by section 42 of the Specific Relief Act inasmuch as the plaintiff did not sue for possession of the concerned property.
Thereafter the suit from which this appeal arises was instituted by the plaintiff on the basis of his title.
The trial court dismissed his suit in respect of the lands mentioned in Schedule I of the; plaint on the ground that the relief in question is barred by Order 2, rule 2, Code of Civil Procedure.
It decreed the suit for the possession of the: lands mentioned in Schedule II except items 3 and 9.
It also,, decreed the plaintiff 's claim in respect of the cash amount mentioned in the plaint.
Both the plaintiff and the defendant went up in appeal to the High Court of Mysore as against the decision of the trial court to the extent that decision was against them.
The High Court, affirmed the decision of the trial court.
Before the trial court and the High Court, there was contro versy as regards the truth of adoption pleaded by the plaintiff.
, Both the courts have upheld the plaintiff 's claim that he was adopted by the husband of Lakshniibai.
That question was not reopened before us.
Before the High Court, the learned Counsel for the plaintiff conceded that the plaintiff 's suit in respect of items 3 and 9 of ' Schedule II of the plaint is barred by limitation.
Hence that question stands concluded.
The only question that remains for consideration is whether the High Court and the trial court were right in their conclusions that the plaintiff 's claim in respect of the lands mentioned in Schedule I of the plaint is barred by Order 2, rule 2, Code of ' Civil Procedure.
We are of the opinion that the trial court and the High Court erred in holding that the plaintiff 's suit in respect of the lands, mentioned in plaint Schedule I is barred by Order 2, rule 2, Code of Civil Procedure.
The suit instituted by the plaintiff.
in the court of Subordinate District Judge, Bidar for a declaration that he is ' entitled to be impleaded in the execution proceedings as legal representative of Lakshmibai and to proceed with the execu tion proceedings, was as mentioned earlier, a misconceived one.
It was exercise in futility.
His remedy was to file a suit for the possession of the concerned properties on the basis of his title.
The High Court and the trial court proceeded on the erro neous basis that the former suit was a suit for a declaration of 322 the plaintiff 's title to the lands mentioned in Schedule I of the plaint.
The requirement of Order 2, rule 2, Code of Civil Procedure is that every suit should include the whole of the claim which the plaintiff is entitled to make in in respect of a cause of ,action. 'Cause of action ' means the 'cause of action for which the suit was brought '.
It cannot be Said that the cause of action on which the present suit was brought is the same as that in the previous suit.
Cause of action is a cause of action which gives occasion for and forms the foundation of the suit.
If that cause, ,of action enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings see Mohd. Hafiz vs Mohd. Zakaria(1).
As seen earlier the cause of action on the basis of which the, previous suit was brought does not form the foundation of the present suit.
The cause of action mentioned in the earlier suit, assuming the same afforded a basis for a valid claim, did not enable the plaintiff to ask for any relief other than those he prayed for in that suit.
In that suit he could not have claimed the relief which he seeks in this suit.
Hence the trial court and the High Court were not right in holding that the plaintiff 's suit is barred by Order 2, rule 2, Code of Civil Procedure.
In view of our above.conclusion, we have not thought it ,necessary to go into the controversy whether Order 2, rule 2, Code of Civil Procedure is applicable to a suit under section 42 of the Specific Relief Act.
We are unable to accept the contention of the learned Counsel 'for the appellant that we should allow to the appellant mesne profits at least from the date of the suit.
No claim for mesne profits was made in the plaint.
Therefore we cannot go into that ,question in this appeal.
For the mesne profits, if any, due to the plaintiff, he must take separate steps according to law.
In the result this appeal is allowed and the trial court 's decree is modified by including therein the lands mentioned in Schedule I of the plaint.
In other respects the decree of the trial court is sustained.
The appellant will be entitled to his costs both in this 'Court as well as in the High Court.
Y.P. Appeal allowed.
(1) [1922] L.R. 49 I.A. 9.

summary/full:
The appellant applied to the executing court to reopen the execution proceedings in respect of certain properties and to implead him as the legal representative of the owner of the properties, claiming that as the adopted son he was entitled to delivery of possession.
The Court dismissed the application holding that his remedy was by way of a separate suit.
Thereupon he filed a suit for a declaration that he was entitled to be impleaded in the execution proceedings as the legal representative and proceed with the execution.
The purported cause of action for suit was the dismissal of the earlier application for impleading in the execution proceedings.
The suit was dismissed on the ground that it was hit by section 42 of the Specific Relief Act inasmuch as it was not one for possession of the concerned property.
Thereafter the appellant filed another suit on the basis of his title.
The trial court dismissed the suit on the ground that the relief in question was barred by Order 2 rule 2 of the Code of Civil Procedure.
The High Court affirmed.
On the question whether the plaintiff 's claim in respect of the properties was barred by Order 2 rule2 Code of Civil Procedure, HELD : The High Court and the trial court proceeded on the erroneous basis that the former suit was a suit for a declaration of the appellant 's title to the properties in question.
The requirements of Order 2 rule 2, Code of Civil Procedure is that every suit should include the whole of the claim which the plaintiff is entitled to make in respect of a "cause of action.
" 'Cause of action ' means the, 'cause of action for which the suit was brought '.
It cannot be said that the cause of action on which the present suit was brought is the same as that in the previous.
Cause of action is a cause of action which gives occasion for and forms the foundation of the suit.
If that cause of action enables a person to ask for a larger and wider relief than that to which he limits his claim, he cannot afterwards seek to recover the balance by independent proceedings.
[321 G, 322 A C] In the instant case the cause of action on the basis of which the previous Suit was brought does not form the foundation of the present suit.
The cause of action mentioned in the earlier suit, assuming the same afforded a basis for a valid claim, did not enable the plaintiff to ask for any relief other than those he prayed for in that suit.
In that suit he could not have claimed the relief which he seeks in this suit.
Hence the trial court and the High Court were not right in holding that the plaintiff 's suit was barred by Order 2, rule 2, Code of Civil Procedure.
[322 C D]