judgement:
Appeal No. 143 of 1952.
Appeal under article 132(1) of the Constitution of India from the Judgment and Order, dated the 997 11th December, 195 1, of the High Court of Judicature, Rajasthan at Jodhpur in D. B. Civil Miscellaneous Case No. 1 of 1951.
M. C. Setalvad, Attorney Genaral for India and K. section Hajela, Advocate General of Rajasthan, (Porus A. Mehta, with them) for the appellant, N. C. Chatterjee.
and U. M. Trivedi (Jiwan Sinha Chandra and Ganpat Rai, with them) for the respondent.
March 15.
The Judgment of the Court was delivered by GHULAM HASAN J.
This appeal filed on a certificate granted by the High Court of Rajasthan under article 132(1) of the Constitution arises from the judgment and order of the said High Court (Wanchoo C.J. and Bapna J.) in a petition under article 226 of the Constitution, whereby the High Court held that section 8 A inserted in Rajasthan Ordinance No. XXVII of 1948 by section 4 of Rajasthan Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance XV of 1949 are void under article 14 of the Constitution and issued a writ restraining the State of Rajasthan from collecting rents from the tenants of lands comprising the Jagir of Bedla held by the respondent.
The respondent Rao Manohar Singhji is the owner of the Jagir of Bedla situate in the former State of Mewar, now included in the State of Rajasthan.
The former State of Mewar was integrated in April, 1948, to form what was known as the former United State of Rajasthan.
In April and May, 1949, the latter State was amalgamated with the former States of Bikaner, Jaipur, Jaisalmer and Jodhpur and the former Union of Matsya to form the present United State of Rajasthan.
Three Ordinances, No. XXVII of 1948 and Nos.
X and XV of 1949, were issued by the former State of Rajasthan in connection with State Jagirs.
The management of the Jagirs including the Jagir of Bedla was assumed by the former State of Rajasthan in virtue of the powers under these Ordinances.
After the final formation of the State of Rajasthan in May, 129 998 1949, the Ordinances remained in force in a part of the present area of Rajasthan with the result that while jagirs in a part of the area were managed by the State in that area, the Jagirs in the rest of the State were left untouched and remained with the Jagirdars.
On 4th January, 1951, the respondent filed a petition under article 226 of the Constitution contending that the said Ordinances were ultra vires the Constitution and that they became void under article 13 (1) of the Constitution of India, read with articles 14 and 31.
The respondent challenged the Ordinances firstly because they constitute an infringement of articles 14, 19 and 31 of the Constitution and secondly because the Jagirdars only of the former State of Rajasthan which was formed in 1948 are prejudicially affected, while Jagirdars of the States which integrated later on are not at all affected (Para 9, K and L).
It was alleged that there was a denial of equality before the law and the equal protection of the laws by reason of these Ordinances and further that the State had taken possession of the property of the respondent without providing for compensation.
The reply of the State was that the Jagir was a State grant held at the pleasure of the Ruler and that it reverted to the Ruler on the death of the holder of the Jagir and was regranted to his successor after the Ruler had recognized the succession.
The rights of the Jagirdars were non heritable and nontransferable and the Jagirs could not be partitioned amongst the heirs of the Jagirdar.
It was pleaded therefore that even if the State took possession of the Jagir, the Jagirdar was not entitled to compensation under article 31 (2).
It was also alleged that the impugned Ordinances had merely the effect of transferring the management of the Jagirs to the Government and did not deprive the Jagirdars of their property and they were consequently not hit by article 31 (2).
It was denied that there was any discrimination under article 14 of the Constitution.
The High Court held on the first question that the pro I visions of Ordinances Nos.
X and XV of 1949 are not void under article 31 (2) or 19 (1) (f ).
On the second point they recorded the conclusion that section 8 A which was introduced in Ordinance No. XXVII of 1948, by section 999 4 of Ordinance No. X of 1949, and the amendment to section 8 A by section 3 of Rajasthan Ordinance No. XV of 1949, are void under article 13 (1) of the Constitution, read with article 14.
The High Court accordingly, allowed the petition and prohibited the State from collecting rents from the tenants of the land comprising the Jagir of Bedla held by the respondent.
This judgment was given on 11th December, 1951, but we understand that since then the State has passed Acts abolishing Jagirs throughout the State.
The question however is of some importance to the respondent inasmuch as it affects his right of collecting the rents even though for a short period.
In appeal it is contended by the learned AttorneyGeneral on behalf of the State of Rajasthan that the decision of the High Court that the impugned section 8 A as amended was hit by article 14 of the Constitution is erroneous.
Before deciding the validity of this contention it will be necessary to refer briefly to the relative provisions of the Ordinances.
Ordinance No. I of 1948 (the United State of Rajasthan Administration Ordinance, 1948) was made and promulgated on April 28, 1948, by the Rajpramukh of Rajasthan to provide for the administration of the United State ,of Rajasthan after the latter came into existence.
On July 26, 1948, Ordinance No. XXVII of 1948, [the United State of Rajasthan Jagirdars (Abolition of Powers) Ordinance, 1948] was made and promulgated by the Rajpramukh providing for the abolition of judicial powers of Jagirdars and executive powers in connection with the judiciary and vesting them in the Government.
Section 8 of this Ordinance authorised the Government to make orders with a view to carrying out and giving effect to the provisions and pur poses of the Ordinance and the various powers enumerated in that section.
Then came section 8 A which was introduced by Ordinance X of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (Amendment) Ordinance, 1949].
It reads thus: "Without prejudice to the generality of the foregoing provisions, it is hereby enacted that the revenue which was heretofore collected by Jagirdars shall 1000 henceforward be collected by and paid to the Government; the Government will after deducting the collection and other expenses pay.
it to the Jagirdar concerned.
" It was amended by section 3 of Ordinance No. XV of 1949 [the United State of Rajasthan Jagirdars (Abolition of Powers) (2nd Amendment) Ordinance, 1949] by adding to section 8 A after the word 'Revenue ' the following: " Including taxes, cesses and other revenue from forests.
" It is not denied that when the State of Rajasthan was formed in April and May, 1949, the Jagirdars of only a part of the present State of Rajasthan could not collect their rents while Jagirdars in other areas which were covered by Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union were under no such disability.
It appears that in the former State of Rajasthan provisions regarding the management by Government of Jagirs and the right to collect rents already existed, whereas there was no such provision in the former States of Jaipur, Bikaner, Jaisalmer and Jodhpur and Matsya Union, but when the integration took place in April and May, 1949, the discrimination exhibited itself not by virtue of anything inherent in the impugned Ordinances but by reason of the fact that Jagirdars of one part of the present State of Rajasthan were already subjected to a disability in the matter of management of their Jagirs while the other parts were wholly unaffected.
This discrimination, however undesirable, was not open to any exception until the Constitution came into force on January 26, 1950, when article 13 of the Constitution declared that "all laws in force in the territory of India immediately before the commencement of this Constitution, in so far as they are inconsistent with the provisions of this Part, shall, to the extent of such inconsistency, be void.
" It becomes therefore necessary to see whether the impugned provision which is discriminatory on the face of it is hit by article 14 which declares that "the State shall not deny to any person equality before the law or the equal protection of the laws within the territory of India.," Such an obvious discrimination 1001 can be supported only on the ground that it was based upon,,,& reasonable classification.
It is now well settled by the decision of this court that a proper classification must always bear a reasonable and just relation to the things in respect of which it is proposed.
Judged by this criterion it seems to us that the discrimination is based on no classification at all and is manifestly unreasonable and arbitrary.
The classification might have been justified if the State had shown that it was based upon a substantial distinction, namely that the Jagirdars of the area subjected to the disability were in some way different to those of the other area of Rajasthan who were not similarly situated.
It was perfectly possible for the State to have raised a specific ground in order to get out of the mischief of article 14, that the discrimination was based upon what the learned Attorney General called geographical consideration, that the Jagirs of the particular area were governed by different laws of tenure and thus constituted a class by itself and that that was a good ground for differentiation.
No such ground was ever put forward before the High Court, much less was any attempt made to substantiate such a ground.
In the absence of any allegation supported by evidence we are unabe to find in favour of the State that the Jagirdars of the particular area to which category the respondent belongs were differently situated to other Jagirdars.
The preambles of the Ordinances do not purport to show that the conditions in the former State of Rajasthan were such as to justify the imposition of the disability on the Jagirdars of that State while the conditions prevailing in the other States forbade such a course.
The High Court held that the Ordinance abolishing the Police and the Judicial powers and the administrative powers of the Jagirdars in respect to revenue in forests was open to no objection but there was no reason for taking away from the Jagirdars by section 8 A the power to collect rents to which they were entitled.
We agree with the High Court in holding that there was no real and substantial distinction why the Jagirdars of a particular area should continue to be 1002 treated with inequality as compared with the Jagirdars in another area of Rajasthan.
We hold therefore that no rational basis for any classification or differentiation has been made out.
Section 8 A of the impugned Ordinance as amended is a clear contravention of the respondent 's right under article 14 of the Constitution and must be declared void.
The case of Frank J. Bowman vs Edward A. Lewis(1) relied upon by the learned Attorney General on behalf of the State is inapplicable to the facts and circumstances of the present case.
By the Constitution and laws of Missouri the citizens residing in one hundred and nine counties of the State of Missouri had the right and privilege of an unrestricted appeal to the supreme Court of the State, while, at the same time the right of appeal was denied to the citizens of the State residing in four of the counties in the easterly portion of the State, as also to those residing in the City of St. Louis.
It was contended that this feature of the judicial system of Missouri was in conflict with the 14th Amendment of the Constitution of the United States.
Bradley J. held that the equality clause in the 14th Amendment contemplates the protection of persons against unjust discriminations by a State; it has no reference to territorial or municipal arrangements made for different portions of a State.
He went on to say: " If a Mexican State should be acquired by treaty and added to an adjoining State or part of a State, in the United States, and the two should be erected into.a new State, it cannot be doubted that such new State might allow the Mexican 1aws and judicature to continue unchanged in the one portion, and the common law and its corresponding judicature in the other portion.
Such an arrangement would not be prohibited by any fair construction of the 14th Amendment.
It would not be based on any respect of persons or classes, but on municipal considerations alone, and a regard to the welfare of all classes within the particular territory or jurisdiction.
" This passage which was strongly relied upon by the learned Attorney General does not advance his case (1) 1O1 U.S 22; ; 1003 for in the present cage there is no question of continuing unchanged @the old laws and judicature in one portion and a different law in the other.
As we have already said there is nothing to show that there as any peculiarity or any special feature in the Jagirs of the former State of Rajasthan to justify differentiation from the Jagirs comprised in the States which subsequently integrated into the present United State of Rajasthan.
After the new State was formed, there was no occasion to take away the powers of Jagirdars of a disfavoured area and to leave them intact in the rest of the area.
The case in Ramjilal vs Income tax Officer, Mohindargarh (1) is distinguishable on the ground that that case proceeded upon the principle that "pending proceedings should be concluded according to the law applicable at the time when the rights or liabilities accrued and the proceeding commenced was a reasonable law founded upon a reasonable classification of the assessees which is permissible under the equal protection clause.
" Such is however not the case here.
Reliance was also placed on the case of The State of Punjab vs Ajaib Singh and Another(1).
In that case the Abducted Persons (Recovery and Restoration) Act of 1949 was not held to be unconstitutional under article 14 upon the ground that it extended only to the several States mentioned in section 1(2), for in the opinion of the court classification could well be made on a geographical basis.
There the Muslim abducted persons found in those States were held to form one class having similar interests to protect and their inclusion in the definition of abducted persons could not be called discriminatory.
; The learned Attorney General referred to two cases decided by the same.
Bench of the Rajasthan High Court, Thakur Madan Singh vs Collector of Sikar(3), and an unreported judgment delivered on November 10, 1953, In re, Raja Hari Singh vs Rajasthan and argued (1) (1951] S.C.R. 127.
(2) ; (3) Rajasthan Law Weekly, 1954, P.1.
1004 that the Bench had not stuck to its view expressed in the judgment under appeal.
A careful, perusal of the judgments in these cases will show that this is far from being the case.
The former case was distinguished from the case under appeal on the ground that there was a reasonable basis for classification in that case, while no such basis existed in the case before us.
It appears that before Jaipur State merged into the present United State of Rajasthan there were District Boards existing in that State.
They were continued on the formation of the new State but there were no District Boards in the other States.
The argument that the Jaipur District Boards Act was invalid under article 14 of the Constitution was repelled it being held that the existence of District Boards in Jaipur was for the welfare of all classes within Jaipur that Jaipur had reached a higher stage of development than many of the other States and it would have been a retrograde step to deprive the People living in the former Jaipur State of the benefits of Local Self Government conferred by the District Boards Act.
Reliance was placed on the observations of Bradley J. in Frank J. Bowman vs Edward A. Lewis(1) in connection with the illustration of the Mexican State and* the learned Chief Justice referred with approval to the decision under appeal before us.
In the second case the attack was on the alleged discriminatory provision contained in the Mewar Tenancy Act and the Land Revenue Act.
Under these Acts the rent rates had been approved by the Board of Revenue and the Government and they were alleged to be detrimental to the interests of the Jagirdars.
The Jagirdars had challenged those Acts by a petition under article 226.
It appears that no such laws existed in the other parts of Rajasthan.
The decision of the High Court proceeded on the ground that it was not shown that there were no similar tenancy and Land Revenue laws in other parts of Rajasthan and the impugned Acts being ameliorative legislation designed to raise the economic status of the agriculturists in Mewar could not be said to constitute any discrimination merely because no such legislation (1) ; ; 1005 existed in the other parts of Rajasthan .
This difference between the two parts did not justify that such progressive and ameliorative measures for the welfare of the people existing in a particular area should be done, away with and the State be brought down to the level of the unprogressive States.
The judgment shows that the Bench far from going back on its previous view adhered to it and expressly distinguished the case under appeal before us on its special facts.
As a result of the foregoing discussion we hold that the view taken by the High Court is correct.
We accordingly dismiss the, appeal with costs.
Appeal dismissed.

summary/full:
Hold, that section 8 A inserted in Rajasthan Ordinance XXVII of 1948 by section 4 of Rajasthan Ordinance X of, 1949 and as amended by section 3 of Rajasthan Ordinance XV of 1949 is void under article 14 of the Constitution.
Frank J. Bowman vs Edward A. Lewis ; ; 25 Law.
Ed. 989), Ramjilal vs Income Tax Officer, Mohindargarh ([1951] S.C.R. 127), The State of Punjab vs Ajaib Singh ([1953] S.C.R. 254) and Thakur Madan Singh vs Collector of Sikar (Rajasthan Law Weekly, 1954, p. 1), referred to.


judgement:
Appeal No. 2568 of 1966.
Appeal by special leave from the judgment and order dated March 23, 1966 of the Patna High Court in Misc.
Judicial Case No. 118 of 1963.
H. R. Gokhale and Sukumar Ghose, for the appellant.
M. K. Ramamurthi, Shymala Pappu and Vineet Kumar, for the respondents.
The Judgment of the Court was delivered by Bhargava, J.
The Government of Bihar, by an Order dated 14th June, 1961, referred an industrial dispute under section 10(1) of the (14 of 1947) to the Labour Court, Patna, wherein the following two issues were referred: "(1) Whether the discharge of the following forty workmen was proper? If not, whether they are entitled to reinstatement and/or any other relief? (2) Whether the above mentioned workmen are entitled to be made permanent?" Subsequently, the Government issued an Order by way of corrigendum on the 19th July, 1961, substituting "Ranchi" for "Patna" 62 in the original order of reference dated 14th June, 1961.
The effect of this corrigendum was that the reference of the dispute, instead of being made to the Labour Court, Patna, came before the Labour Court, Ranchi.
In the proceedings before that Court, the principal objections that was raised was that the Government, having once made a reference to the Labour Court, Patna, was not competent to cancel or withdraw that reference and could not make a competent reference of the same industrial dispute to the Labour Court, Ranchi, so that the latter Court had no jurisdiction to deal with the reference.
The case before the Labour Court was also contested on various other grounds, but we need only mention those grounds which have been urged before us in this appeal.
While the Labour Court was dealing with the reference, adjournments were sought on behalf of the appellant, M/s. Dabur (Dr. section K. Burman) Private Ltd.
After decision of some preliminary points by the order dated 18th August, 1962, the case was fixed for hearing on 19th November, 1962.
On that date, the management again prayed for an adjournment on the ground that their local Manager, Sri Basant Jha, had been lying ill for some time past and it was not possible for the management to prosecute their case with diligence.
The Labour Court rejected this application and, thereupon, proceeded to hear the reference ex parte.
The Labour Court held that the reference to it was competent and it had jurisdiction to deal with it, even though, by the original order of reference, the Government had purported to refer the dispute to the Labour Court, Patna.
On the first issue referred, the Court recorded the finding that the 40 workmen, who had been discharged, were not casual workers and that their discharge by the employers on the basis that they were casual workers was not proper.
It was further held that the discharge was mala fide inasmuch as the purpose of the discharge was to avoid the liability of treating these workmen as permanent employees by preventing them from completing 240 days of work in a year.
There was the further finding that the workmen were all discharged from service as they had demanded increase in rates of wages and had also claimed that Sundays should be made paid holidays.
Against this award, the appellant filed a petition under Article 226 of the Constitution in the High Court of Patna requesting that Court to quash the award.
That Court upheld the award and dismissed the writ petition.
Consequently, the appellant has come up to this Court by special leave against that judgment of the High Court.
Mr. Gokhale, appearing on behalf of the appellant, emphati cally urged that both the Labour Court, Ranchi as well as the Patna High Court were wrong in holding that,the reference to the Labour Court, Ranchi, was competent even after the reference, 63 had originally been made to the Labour Court, Patna.
He relied on the principle laid down by this Court that once the Government has made a reference to a particular Labour Court, it is that Labour Court which becomes seized of that industrial dispute and, thereafter, the Government has no jurisdiction either to withdraw that reference or cancel it.
In this case, however, as is clear from the judgment of the High Court, the question that arose was entirely different.
The High Court has clearly held that this was not a case where the Government either withdrew or cancelled the reference to the Labour Court, Patna.
The High Court has held that, from the facts stated by the appellant in the writ petition filed in that Court, it appeared that the alteration in the order of reference was a mere correction of a clerical error.
because, by mistake, Patna had been mentioned in place of Ranchi in the first notification.
The second notification merely corrected that mistake.
Mr. Gokhale wanted us to hold that the High Court was wrong in its view that the Government had merely made ' correction of a clerical error and that we should accept the submission on behalf of the appellant that, in fact, the State Government bad first intentionally referred the dispute to the Labour Court, Patna, and issued the corrigendum only when the Government decided that the reference should go to the Labour Court, Ranchi and not Labour Court, Patna, because Labour Court, Patna bad no jurisdiction to entertain the reference.
We are unable to accept this submission made on behalf of the appellant.
The High Court drew in inference from the facts stated in the writ petition filed by the appellant itself that this was a case of mere correction of a clerical error.
This finding recorded by the High Court on the basis of the facts given in the writ petition is not now open to challenge in this special appeal, particularly because even a copy of that writ petition has not been made a part of the paper book before us.
We cannot see how any objection can be taken to the competence of the State Government to make a correction of a mere clerical error.
The finding that it was a clerical error means that the Government in fact intended to make the reference to the Labour Court, Ranchi; but while actually scribing the order of reference, a mistake was committed by the writer of putting down Patna instead of Ranchi.
Such a clerical error can always be corrected and such a correction does not amount either to the withdrawal of the reference from.
or cancellation of the reference to.
the Labour Court, Patna.
The High Court was.
therefore.
right in rejecting this contention on behalf of the appellant.
On merits, Mr. Gokhale wanted to urge only two points before us. 'One was that the Labour Court committed a manifest error of law apparent on the face of the record in holding that the workmen concerned were not casual workers.
The judgment of the High Court, however, shows that before that Court 64 it was nowhere urged or argued that any such error of law apparent on the face of the record had been committed by the Labour Court.
What was urged before the High Court was that, even on the ex parte evidence on record, the Labour Court ought to have held that the workmen were mere casual labourers.
The High Court was right in holding that this point urged on behalf of the appellant essentially raised a question of fact only and that Court, in its jurisdiction under Article 226 of the Constitution, could not interfere on such a question of fact.
Since no submission was made before the High Court that the finding of the Labour Court that the workmen are not casual labourers suffers from any manifest error of law apparent on the face of the record, the appellant is not entitled to raise this point in this special appeal before us.
On the finding actually recorded by the Labour Court and upheld by the High Court, the order of the Labour Court directing reinstatement of these workmen is fully justified, so that the order made by the Labour Court, insofar as it is against the interests of the appellant, is correct and must be upheld.
In view of this position, it is unnecessary to go into the question whether the Labour Court was or was not right in recording the finding as to mala fides.
The only other point urged was that the Labour Court should not have proceeded ex parte when material was placed before that Court on behalf of the appellant to show that its local Manager, Sri Basant Jha, was in fact lying ill.
The question whether an adjournment should or should not have been granted on this ground was in the discretion of the Labour Court.
Even the order by which the Labour Court rejected that application for adjournment is not before us and, consequently, it cannot be held that the Labour Court committed any such error in rejecting the application for adjournment and proceeding ex parte as would justify interference by this Court.
The appeal fails and is dismissed with costs.
Y.P. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The Government referred an industrial dispute to Labour Court, Patna, and subsequently issued an order by way of corrigendum substituting "Ranchi" for "Patna".
In proceedings before the Labour Court, Ranchi, objection was raised that once having made the reference to the Labour Court, Patna, the Government was not competent to cancel or withdraw that reference, so the Labour Court, Ranchi had no jurisdiction.
The Labour Court, Ranchi rejected the objection.
The High Court also rejected this Contention.
In appeal to this Court: HELD: The alteration in the order of reference was a mere correction of a clerical error.
because, by mistake, Patna had been mentioned in place of Ranchi in the first notification and the second notification merely corrected that mistake.
Such a clerical error can always be corrected and such a correction does not amount either to the withdrawal of the reference from, or cancellation of the re ference to the Labour Court, Patna.
[63F H]


judgement:
Appeals Nos. 2007 and 2008 of 1966.
Appeals by special leave from the judgment and order dated September 28, 1965 of the Kerala High Court in O.P. Nos. 219 and 223 of 1964.
83 D.R. Prem, R. N. Sachthey and section P. Nayar, for the appel lants (in both the appeals).
S.T. Desai and R. Gopalakrishnan, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Sikri, J.
These appeals, by special leave, are directed against the judgment of the High Court of Kerala allowing two petitions filed by the respondent, M/s. A. section Bava, under article 226 of the Constitution.
The High Court, by this judgment, quashed two orders dated February 4, 1964, and directed the Collector of Customs, & Central Excise, Cochin, to hear the appeals preferred by M/s. A. section Bava.
The relevant facts are as follows: M / section A. section Bava.
hereinafter referred to as the petitioner, is a firm of dealers in Tobacco.
By two orders of adjudication dated March 31, 1963, the Assistant Collector of Customs demanded the payment of duty under Rule 40 of the Central Excise and Salt Rules, 1944.
The petitioner filed appeals against these orders on or about July 4, 1963, to the Collector of Customs & Central Excise.
The petitioner made a representation on October 3, 1963, requesting that it may not be required to deposit.
the duty demanded pending appeal.
The Collector, by letter dated January 9, 1964, rejected the representation and requested the petitioner to deposit the duty within 15 days of the receipt of the letter.
On the petitioner failing to deposit the amount, the appeals were dismissed on December 4, 1964.
Thereupon, as already stated, the petitioner filed two petitions under article 226 and the petitions having been allowed, and the appellant having obtained special leave, the appeals are now before us.
The High Court allowed the petitions on the ground that the notification No. 68/63 dated May 4, 1963, issued under section 12 of the Excise and Salt Act, 1944, hereinafter referred to as the Excise Act, declaring that section 129 of the , relating to matters specified therein shall be applicable in regard to like matters in respect of the duties imposed by section 3 of the Excise Act was in excess of the powers conferred under section 12 of the Excise Act.
The High Court also rejected the argument of the Collector of Customs and Central Excise that the petitioner having invoked section 129 of the , in the appeals preferred by it by praying for the dispensation of deposit, was precluded from proceeding under article 226 of the Constitution.
The learned counsel for the appellants has raised three points before us: (1)The petitions under article 226 were not maintainable as the petitioner did not avail himself of the remedy of revision provided by section 36 'of the Excise Act.
p(N)1SCI 7(a) 84 (2)The petitioner having availed of the remedy under section 12( of the was debarred from challenging the impugned notification, dated May 4, 1963.
(3)The impugned notification applying section 129 of the Custom: Act was good.
There is no force in the first point.
First, the point was no taken in the High Court.
Secondly, it is settled that the existence of a remedy by way of revision does not bar the jurisdiction of the High Court to entertain a petition under article 226.
Moreover the petitioner had alleged that the Collector had no jurisdiction to demand the deposit or duty pending the appeals as the notification dated May 4, 1963, was bad insofar as it applied section 129 of the .
In these circumstances it was not necessary for the petitioner to have filed revisions.
There is equally no force in the second point.
If the petitioner had not applied for dispensation of the deposit of the duty, the appellants would have contended that the petitions under article 226 were not maintainable.
Moreover, as already stated, the petitions raised a question of jurisdiction.
To appreciate the third point, it is necessary to extract the relevant statutory provisions.
Section 12 of the Excise Act authorises the Central Government to apply provisions of the , now replaced by the , in the following terms: "12.
The Central Government may, by notification in the Official Gazette, declare that any of the provisions of the , relating to the levy of an exemption from customs duties, drawback of duty, such modifications and alterations as it may consider necessary or desirable to adapt them to the circumstances, be applicable in regard to like matters in respect of the duties imposed by section 3".
The relevant part of the impugned notification dated May 4, 1963, reads as follows: " In exercise of the powers conferred by Sec. 12 of the Central Excise & Salt Act, 1944 (1 of 1944) the Central Government declares that the provisions of Section 129 of the , relating to matters specified herein shall be applicable in regard to like matters in respect of the duties imposed by Sec. 3 of the first mentioned Act. " Section 129 of the reads thus: "129.
(1) Where the decision or order appealed against relates to any duty demanded in respect of goods 85 which are not under the control of customs authorities or any penalty levied under this Act, any person desirous of appealing against such decision or order shall, pending the appeal, deposit with the proper officer the duty demanded or the penalty levied: Provided that where in any particular case the appellate authority is of opinion that the deposit of duty demanded or penalty levied will cause undue, hardship to the appellant, it may in its discretion dispense with such deposit, either unconditionally or subject to such conditions as it may deem fit.
(2)If upon any such appeal it is decided that the whole or any portion of such duty or penalty was not leviable, the proper officer shall return to the appellant such amount of duty or penalty as was not leviable.
" It will be noticed that section 129 requires an appellant to deposit the duty or penalty levied pending an appeal.
In other words, before an appeal can be heard the appellant must deposit the duty or penalty levied.
But under section 35 of the Excise Act, a person ,Aggrieved byany decision or order has an unfettered right to appeal.
Thequestion that arises in these appeals is whether the provisions ofs.
129 of the can be said to be provisions relating to procedure. relating to appeals ' within section 12 of the Excise Act.
As we have already said, the appeals are filed under section 35 of the Excise Act.
Section 129 of the debars the hearing of them unless the duty or penalty is paid.
This, it seems to us, is not procedure relating to appeals.
This Court in Hoosein Kasam Dada (India) Ltd., vs The State of Madhya Pradesh(1) had to consider a similar provision in section 22 of the Central Provinces and Berar Sales Tax Act, 1947.
Section 22(1), as originally enacted, read thus: " 22.
(1) Any dealer aggrieved by an order under this Act may, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order of assessment, with or without penalty, shall be entertained by the said authority unless it is satisfied that such amount of tax or penalty or both as the appellant may admit to be due from him, has been paid." (1) [1953]987;4 S.T.C 114, 86 It was amended thus: "22.
(1) Any dealer aggrieved by an order under this Act May, in the prescribed manner, appeal to the prescribed authority against the order: Provided that no appeal against an order or assessment, with or without penalty shall be admitted by the said authority unless such appeal is accompanied by a satisfactory proof of the payment of the tax, with penalty, if any, in respect of which the appeal has been preferred.
S.R. Das, J., as he then was, repelled the argument of the learned) Advocate that 'the requirement as to the deposit of the amount of the assessed tax does not affect the right of appeal itself, which still remains intact, but only introduces a new matter of procedure ', and observed: "There can be no doubt that the new requirement 'touches ' the substantive right of appeal vested in the appellant.
Nor can it be overlooked that such a requirement is calculated to interfere with or fetter, if not to impair or imperil, the substantive right.
The right that the amended section gives is certainly less than the right which was available before.
A provision which is calcu lated to deprive the appellant of the unfettered right of appeal cannot be regarded as a mere alteration in procedure.
Indeed the new requirement cannot be said merely to regulate the exercise of the appellant 's pre existing right but in truth whittles down the right itself and cannot be regarded as a mere rule of procedure.
" These observations are fully applicable in the present case.
1 Section 35 of the Excise Act gave a right of appeal, but section 129 of the whittles down the substantive right of appeal and accordingly it cannot be regarded as "procedure relating to appeals" within section 12 of the Excise Act.
The appeals accordingly fail and are dismissed with costs.
One hearing fee.
V P S Appeals dismissed.

summary/full:
Under section 35 of the Central Excise and Salt Act, 1944 (Excise Act) a person aggrieved by any decision or order under the Act and rules has an unfettered right of appeal.
Under section 12 of the Act, the Central Government may apply to appeals under the Excise Act the provisions of the (Customs Act) dealing with the procedure relating to appeals, In exercise of this power, the provisions of section 129 of the Customs Act were made applicable to Appeals under the Excise Act.
The section requires an appellant to deposit, pending the appeal, the duty or penalty imposed, and empowers the appellate authority, in his discretion, to dispense with such deposit pending the appeal in any particular case.
The respondent filed an appeal against the duty imposed on him under the Excise Act and prayed for dispensation of the deposit.
The Collector, who was the appellate authority, rejected the prayer and.
when no deposit was made within the time fixed, dismissed the appeal.
The respondent filed a writ petition in the High Court which was allowed, and the Collector, was directed to hear the appeal on merits.
The Collector appealed to this Court.
HELD:Since section 35 of the Excise Act gave a right of appeal and section 129 of the Customs Act whittled down that substantive right, section 129 could not be regarded as "procedure relating to appeals" within section 12 of the Excise Act.
The High Court was therefore right in F holding that the application of section 129 of the Customs Act to appeals under the Excise Act was in excess of the powers conferred under section 12 of the Excise Act.
The facts that an alternative remedy was available to the respondent under the Excise Act, and that he invoked the dispensing power of the appellate authority under section 129 of the Customs Act, did not bar the jurisdiction of the High Court to entertain the writ petition, especially when the jurisdiction of the Collector to insist upon the deposit of duty pending appeal was itself questioned.
[84B D; 86F G] Hoosein Kasam Dada (India) Ltd, vs The State of Madhya Pra desh; , 4 S.T.C. 114, followed.


judgement:
Appeals Nos.
1060 1064 of 1965.
Appeals by special leave from the judgment and order dated April 3.
1961 of the Madras High Court in Tax Case No. 201 of 1960.
AND Civil Appeals Nos.
1103 1107 of 1966.
Appeals by special leave from the judgment and order dated November 29, 1963 of the Madras High Court in Writ Petitions Nos.
1374 1378 of 1961.
M. M. Nambiyar, K. Narayanaswami, B. Manivannan, B. Parthasarathy, J. B. Dadachanji, O.C. Mathur and Ravinder Narain, for the appellants (in all the appeals).
section T. Desai, R. Ganapathy Iyer and R. N. Sachthey, for the respondent (in all the appeals) and for the Attorney General for India (in C. As.
1103 1107 of 1966).
The Judgment of the Court was delivered by Shah, J.
Meyyappa (1), Alagammal his wife, and Chokalingam and Meyyappa (11) his two minor sons formed in 1940 a Hindu Undivided Family which traded in the name of "M.S. M.M.".
The family carried on extensive business in money lending, rubber plantations, and in real estates in the Federated States of Malaya, Burma and India.
The property of the undivided family was divided between the three male members on February 22, 1940.
To Meyyappa (1) were allotted at the partition "business of the family" at Rangoon and at Karaikudi in the Ramnath District and three rubber estates in the Federated States of Malaya and some houses.
Even after the partition Meyyappa (1) continued to remain in management on behalf of himself and his two minor sons of all the properties 'and the businesses carried on by the family when it was joint, and the businesses were carried on in the name of "M.S.M.M.".
The houses and the three rubber estates allotted exclusively to Meyyappa (1) were entered in the books of accounts opened in the name of "M.M. Ipoh" from the date of the division.
In 68 December 1941 Alagammal gave birth to a son who was named Chettiappa.
Meyyappa (1) and Chettiappa then constituted a Hindu coparcenary which owned the property and the business as allotted to Meyyappa (1) in the partition of 1940.
On December 30, 1949 a deed of partition was executed between Meyyappa (I) and Chokalingam (who had by then attained the age of majority) in respect of the businesses carried on in the name of "M.S.M.M." The businesses were thereafter carried on in partnership between Meyyappa (1) representing himself and the minor Chettiappa and Chokalingam Meyyappa (II) was admitted to the benefits of that partnership.
On April 13, 1950 partition was effected between Meyyappa (1) and the minor Chettiappa by posting entries in the books of account of M.M. Ipoh.
It was agreed that the properties entered in the books of account of M.M. Ipoh shall be held by Meyyappa (1) and Chettiappa in two equal shares, and that the properties shall continue to remain in the management of the firm M.S.M.M. to the benefit of which Chettiappa was admitted.
A deed of partition recording the terms of that partition was executed on May 28, 1953 by Meyyappa (1) and Alagammal acting as Guardan of the minor Chettiappa.
In 1951 Meyyappa (1) acceded to a demand made by Chocka lingam on behalf of the M.S.M.M. firm for a half share in the "M.M. lpoh properties".
There was however no division of the properties by metes and bounds, and the management of those properties as a single unit continued to remain with the M.S.M.M. firm as before.
Meyyappa (1) was assessed under the Indian Income tax Act 1922 to tax year after year till the assessment year 1953 54 in respect of the income from the "M. M. lpoh properties" as a respect individual or as a karta of a Hindu undivided family.
Later the Income tax Officer, Karaikudi, Ramnath District, issued notices under section 34(1) of the Income tax Act for the assessment years 1951 52 to 1953 54 and under section 22(2) for the years 1954 55 to 1956 57 for assessment of the income of "an association of persons styled M. M. lpoh".
The Income tax Officer rejected the contentions raised by Meyyappa (1) that there was no association of persons of the nature described in the notices and brought to tax the income of the "M.M. lpoh properties" as income received by an association of persons formed by Meyyappa (1) and Chettiappa in 1951 52, and by Meyyappa (1), the M.S.M.M. firm and Chettiappa in the years 1952 53 to 1955 57.
In appeals filled by M. M. lpoh, the Appellate Assistant Commissioner confirmed the orders passed by the Income tax Officer subject to the modification that the income from the houses be assessed under section 9(3) of the Income tax Act in the hands of the members individually, and not as the collective, income of the association of persons.
The Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner, 69 The Tribunal drew up a statement of case and submitted under section 66(1) of the Indian Income tax Act, the following ques tion for determination of the High Court of Madras: "Whether the assessments on the 'Association of persons ' for assessment years 1951 52 to 1956 57 are valid?" and declined to submit a statement ' of the case on five other questions, the first out of which alone is material in these appeals and need be set out: "Whether on the facts and in the circumstances of the case, there are any materials to hold the assessee as the principal officer of M.M. lpoh assessed in the status of an association of persons?" At the hearing of the reference on the principal question, the High Court on the application of the assessee proceeded to deal apparently without any objection from the Commissioner with the additional question which had not been referred by the Tribunal.
The High Court held that the income brought to tax in the assessment year 1951 52 did not accrue to an association of persons, but the income in the years 1952 53 to 1956 57 accrued to an association of persons formed by Meyyappa (1), M.S.M.M. firm and the minor Chettiappa.
The High Court was of the view that Meyyappa (1) acted on behalf of Chettiappa in forming the association, that the affairs of this association were under the management of Meyyappa (1) during the account years relevant to the assessment years 1952 53 to 1956 57, that the association of persons was engaged in a joint enterprise for the purpose of producing income, that there being "unity purpose and objectivity" the ultimate object of the association to earn income on behalf of the members of the association was "fully established".
The High Court also held that by the notices for assessment of the income for the years 1952 53 to 1954 55 Meyyappa (1) did in fact have notice of the intention of the Income tax Officer to treat him as the principal officer of the association, and the proceedings for assessment and reassessment were properly commenced.
The High Court accordingly by order dated, April 3, 1961 answered the first question in favour of the assessee in respect of the assess ment year 1951 52 and against the assessee for the subsequent five assessment years.
The High Court recorded in answer to the second question that the Income tax Officer was justified in holding Meyyappa (1) to be the principal officer of "M.M. Ipoh".
On November 21.
1961 five petitions were moved in the High Court of Madras under article 226 of the Constitution for a writ of prohibition restraining the Income tax Officer from enforcing the demands made by him in respect of the tax assessed against 70 "the association of persons M.M. lpoh".
In support of the petitions it was urged that section 3 of the Indian Income tax Act invested the Income tax Officer with arbitrary and unguided power to assess to tax the income of an association of persons in the hands either of the association or of the persons constituting that association, and on that account section 3 offended article 14 of the Constitution, and was to that extent void the High Court rejected the petitions.
Against the orders passed by the High Court in the petitions for writs, Meyyappa (1) has appealed.
Against the orders recorded by the High Court in references under section 66 the association of persons "M.M. lpoh" has appealed.
Section 3 of the Income tax Act invests the taxing authority with an option to assess to tax the income collectively of the association of persons, in the hands of the association or in separate shares in the hands of the members of the association.
Counsel for the assessee contends that the Act sets out no principles and discloses no guidance to the Income tax Officer in exercising the option: the Act therefore confers arbitrary and uncontrolled authority upon the Income tax Officer to select either the association or its members for assessment to tax according to his fancy, and may on that account be discriminatively administered by subjecting persons similarly situate to varying rates of tax.
Counsel in support of that plea relied upon the judgment of this Court in Suraj Mall Mohta & Co. vs A. V. Visvanatha Sastri and Anr.(1) but that case is of little assistance to the assessee.
In Suraj Mall Mohta 's cave(1) this Court declared sub section
(4) of section 5 of the Taxation of Income (Investigation Commission) Act 30 of 1947 and the procedure prescribed by that Act, insofar as it affected the persons proceeded against under that sub section, invalid as a piece of discriminatory legislation and on that account offending against article 14 of the Constitution of India.
The Court held that sub section
(4) of section 5 of Act 30 of 1947 dealt with the same class of persons who fall within the ambit of section 34 of the Indian Incometax Act 1922 and whose income can be brought to tax by proceeding under that section: The result in the view of the Court was that some assessees who had evaded payment of tax by failing to disclose fully and truly all material facts necessary for assessment of tax could be dealt with under Act 30 of 1947 at the choice of the Commission, though they could also be proceeded with under section 34 of the Indian Income tax Act.
Persons discovered as evaders of income tax during an investigation under section 5(1) of Act 30 of 1947, and persons discovered by the Incometax Officer to have evaded payment of tax had in the view of the Court common properties and. . common characteristics", and since the procedure prescribed under Act 30 of 1947 was more 71 drastic and deprived the assessee of valuable rights of appeal, second appeal and revision, section 5(4) of Act 30 of 1947 under which a person could be selected for discriminatory treatment at the choice of the Investigation Commission was void as infringing tile guarantee of equality before the law.
But here no question of application of a more drastric pro cedure, or deprivation of valuable rights of appeal and revision, by the adoption of one of two alternative procedures arises.
The procedure for assessment is the same whether the income is assessed in the hands of the association or the share of each member of the association is assessed separately.
In Shri Rain Krishna Dalmia vs Shri Justice section R. Tendolkar and Ors,(1) section R. Das, C. J., observed at p. 299: "In determining the question of the validity or otherwise of. . a statute the court will not strike down the law Out of had only because no classification appears on its face or because a discretion is given to the Government to make the selection or classification but will go on to examine and ascertain if the statute has laid down any principle or policy for the guidance of the exercise of discretion or classification.
After such scrutiny, the court will strike down the statute if it does not lay down any principle or policy for guiding the exercise of discretion by the Government in the matter of selection or classification, on the ground that the statute provides for the delegation of arbitrary and uncontrolled power to the Government so as to enable it to discriminate between persons or things similarly situate and that, therefore, the discrimination is inherent in the statute itself.
" In Jyoti Pershad vs The Administrator for the Union Terri tory of Delhi(1) this Court observed that where the Legislature Jays down the policy and indicates the rule or line of action which should guide the authority, article 14 is not violated, unless the rules or the policy indicated lay down different criteria to be applied to persons or things similarly situate.
It is not however essential for the Legislature to comply with the guarantee of equal protection that the rules for the guidance should be laid down in express terms.
Such guidance may be obtained from or afforded by (a) the preamble read in the light of the surrounding circumstances which necessitated the legislation, taken in conjunction with well known facts of which the Court might take judicial notice or of which it is apprised by evidence before it in the form of affidavits, (b) or even from the policy and purpose of the enactment which may be gathered from other operative provisions (1)[1959] S.C.R. 279.
(2) [1062] 2S.C.R. 125.
72 applicable to analogous or comparable situations or generally from the object sought to be achieved by the enactment.
Section 3 of the Income tax Act does not, it is true, expressly lay down any policy for the guidance of the Income tax Officer in selecting the association or the members individually as entities in bringing to tax the income earned by the association.
Guidance may still be gathered from the other provisions of the Act, its scheme, policy and purpose, and the surrounding circumstances which necessitated the legislation.
In considering whether the policy or principles are disclosed, regard must be had to the scheme of the Act.
Under the Act of 1922 the Income tax Officer is required to issue a general notice calling upon all persons whose total income during the previous year exceeds the minimum not chargeable to tax to submit a return of income.
The Income tax Officer may also serve an individual notice requiring a person whose income in the opinion of the Income tax Officer is liable to tax to submit a return of income.
Primarily the return of income would be made by an association, where the association has earned income, and the Income tax Officer would also call upon the association to submit a return of its income, and would ordinarily proceed to assess tax on the return so made.
But for diverse reasons, assessment of the income of the association may not be possible or that such assessment may lead to evasion of tax.
It would be open to the Income tax Officer then to assess the individual members on the shares received by them.
The duty of the Income tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately due to the State.
Though an executive officer engaged in the administration of the Act the function of the Income tax Officer is fundamentally quasi judicial.
The Income tax Officer 's decision of bringing to tax either the income of the association collectively or the shares of the members of the association separately is not final, it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal.
In Commissioner of Income tax, U.P. vs Kanpur Coal Syndicate(1) it was held by this Court that the Appellate Tribunal has ample power under section 33(4) to set aside an assessment made on an association of persons and to direct the Income tax Officer to assess the members individually or to direct amendment of the assessment already made on the members.
Exercise of this power is from its very nature contemplated to be governed not by considerations arbitrary but judicial.
The nature of the authority exercised by the Income tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to tile State, constitute, in our judgment, adequate enunciation of principles and policy for the guidance of the Income tax Officer.
(1) 73 Counsel for the appellants contended that section 23 A of the Income tax Act, as it was incorporated by Act 21 of 1930, laid down certain principles for the guidance of the Income tax Officer in exercising his option, but since the Legislature by Act 7 of 1939 repealed that provision the discretion vested in the Incometax Officer to select either the income of the association or the individual members is unfettered.
To appreciate the argument it is necessary to set out in some detail the legislative history.
Under the Indian Income tax Act, 1922, as originally enacted, an association of persons or individuals was not an entity the income whereof was charged to tax.
By 11.
of 1924 "association of individuals" was added in section 3 and an entity of which the income is charged to tax under the Income tax Act, but the Act as it stood amended contained no statutory safeguard against double taxation of income earned by an association of individuals.
section 14(1) of the Act (as it then stood which aimed at avoiding double taxation of the same income was applicable to the income of a Hindu undivided family, to the income of a company distributed as dividends to share holders, and to the income of a firm profits whereof were assessed in its hands.
The Legislature amended section 14 of the Act by Act 22 of 1930 and remedied the defect by modifying cl.
(c) of sub section
(2) of section 14 of the Act and provided that "any sum which he (the assessee) received as his share of the profits or gains of an association of individuals, other than a Hindu undivided family, company or firm, where such profits or gains have been assessed to income tax", shall not be subject to tax.
The Legislature also enacted Act 21 of 1930 which made several modifications in the Income tax Act.
It provided for registration of firms and added section 23A which provided: "(1) Where the Income tax Officer is satisfied that any firm or other association of individuals carrying on any business, other than a Hindu undivided family or a company, is under the control of one member thereof, and that such firm or association has been formed or is being used for the purpose of evading or reducing the liability to tax of any member thereof, he may, with the previous approval of the Assistant Commissioner pass an order that the sum payable as income tax by the firm or association shall not be determined, and thereupon the share of each member in the profits and gains of the firm or association shall be included in his total income for the purpose of his assessment thereon.
" A similar provision with regard to companies was also incorporated in sub section
(2) of section 23A.
Broadly speaking, by the amended provision discretion was given to the Income tax Officer to treat as separate entities for the purpose of taxation the individuals formed any association carrying on business, of which only one 74 member was competent to bind the association by his acts, and to give to the Income tax Officer discretion to treat the members of a company as separate entities in certain conditions .
But section 23A (1) as enacted by Act 21 of 1930 applied only to first and association of individuals if the management was in the hands of one person: it did not in terms apply to cases where the management was in the hands of more persons than one, even if it was formed for the purpose of evading or reducing the liability to tax of any member thereof.
By Act 7 of 1939 the expression "asso ciation of persons" was substituted for "association of individuals" , section 23A(1) was deleted; and sub section
(5) was added to section 23.
Sub section (5) of section 23 prescribed the mechanism for bringing to tax the income of a firm registered or unregistered.
If the firm was registered, the share of each partner was to be separately taken into account together with his other income and brought to tax.
If it was an unregistered firm, the income of the firm itself was brought to tax, unless the Income tax Officer wits of the opinion that the correct amount of the tax including super tax, if any, payable by the partners under the procedure applicable to a registered firm would be greater than the aggregate amount payable by the firm and the partners if the firm is assessed as an unregistered firm.
In respect of unregistered firms a practical scheme which aimed at preventing evasion of tax was devised by enactment of section 23(5)(b).
After the repeal of section 23A (1) as introduced by Act 21 of 1930 no similar provision conferring discretion upon the Income tax Officer similar to the discretion which is prescribed by the terms of section 23(5)(b) in respect of the income of the unregistered firms was expressly enacted.
But it cannot be inferred that it was intended to make the discretion of the Income tax Officer qua the assessment to tax the income of an association of persons in the hands of individual members collectively, arbitrary or unfettered.
By the repeal of section 23A(1) the essential nature of the power of an Income tax Officer was not altered.
He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income.
This resume of the legislative provisions discloses that the relevant provisions were made with it view to ensure against evasion of tax, while ensuring that the same income shall not be charged more than once.
The policy and the purpose of the Act may be gathered from other operative provisions applicable to analogous or comparable situations": Jyoti Pershad 's case(1) at p. 139: and there can (1) ; 75 be no doubt that an unregistered firm and an association of persons are closely analogous.
If the income is earned by an association of persons, normally a return would be made or asked for under section 22 from the association, and the income of the association would be brought to tax.
If, it appears to the Income tax Officer that by taxing the association of persons evasion of tax or escapement of tax liability may result, he is given a discretion to tax the individual members: but the discretion is to be exercised judicially and not arbitrarily, and its exercise is capable of rectification by superior authorities exercising judicial functions.
It cannot therefore be said that there is, by investing authority in the Income tax Officer to select the association of persons or individual members thereof for the purpose of assessing to tax the income of the association, denial of equality before the law between persons similarly situate within the meaning of article 14 of the Constitution so as to render section 3 insofar as it confers power upon the Income tax Officer to select either the association of persons or the members thereof for assessment to tax in respect of the income of the association void.
Appeals Nos.
1103 1107 of 1966 must therefore fail.
In the group of appeals which arise out of the order passed by the High Court in exercise of its advisory jurisdiction under the Income tax Act, counsel for the assessee urged that there was no association in fact; that Chettiappa being at all material times a minor there could in law be no association of which the income could be brought to tax, and that in any event there was no evidence to prove that any one on behalf of Chettiappa had assented to the formation of the association.
The expression "person" is defined in section 2(9) of the Indian Income tax Act, 1922 as including "a Hindu undivided family and a local authority".
The definition is inclusive and resort may appropriately be had to the General Clauses Act to ascertain the meaning of the expression "person".
Clause (42) of section 3 of the General Clauses Act defines a "person" as inclusive of any company, association or body of individuals whether incorporated or not, and that inclusive definition in the General Clauses Act would also apply under the Income tax Act.
A firm is therefore a "Person" within the meaning of the Income tax Act, and a firm and an individual or group of individuals may form an association of persons within the meaning of section 3 of the Indian Income tax Act.
There is nothing, in the Act which indicates that a minor cannot become a member of an association of persons for the purposes of the Act.
In Commissioner of Income Tax, Bombay vs Laxmidas and Anr.(1) it was held that the fact that one of the (1) 76 individuals was a minor did not affect the existence of the association, if in point of fact, the assessees had associated together for the purpose of gain.
In Commissioner of Income tax, Bombay North, Kutch and Saurashtra vs
Indira Balkrishna(1) it was held "that the word "associate" means. . . to join in common purpose, or to join in an action '.
Therefore, and association of persons must be one in which two or more persons join in a common purpose or common action, and as the words occur in a section which imposes a tax on income, the association must be one the object of which is to produce income, profits or gains.
" In the case before us, there is abundant material, to prove that Meyyappa (1), his minor son Chettiappa and M.S.M.M. firm formed an association in the years 1952 53 to 1956 57.
To review the.relevant facts: the "M.M. Ipoh properties" which were allotted to Meyyappa (1) at the partition in 1940 became on the birth of Chettiappa, Properties of a coparcenary, and it is common ground that Chettiappa acquired a share in the income which Meyyappa (1) received from the M.S.M.M. firm: the "M.M. Ipoh properties" were,used in a trading venture and were managed by the M.S.M.M. firm the selling agency was common between M.S.M.M. firm and "M.M. Ipoh": the stocks and expenditure of the M.M. Ipoh firm were not ;separately determined and common books of account were maintained for the management of the M.M. Ipoh properties and the M.S.M.M. firm dealings.
Alagammal mother of Chettiappa had executed the deed of partition dated April 13, 1950 as the guardian of Chettiappa.
By the deed she acknowledged having received the share of Chettiappa in the property.
The Tribunal found that the management was entrusted to the M.S.M.M. firm on behalf of "M.M. Ipoh", and that in entrusting the management Alagammal must have given her consent.
In paragraph II of the statement of the case, the Tribunal observed: "The integrity and management of the estates have continued undisturbed right throughout the period, only the holding thereof by various members having changed from time to time.
The volition necessary is only all too apparent the entrustment of the management to M.S.M.M. firm for ,a proper management implies a prior agreement to which the guardian of the minor must have given her consent too," These observations relate to the entire period of six years 1951 52 to 1956 57.
In the view of the High Court division of the status of joint Hindu family on April 13, 1950 between Meyyappa (1) and.
Chettiappa was brought about not as a result of any mutual agreement between the coparceners, but by Meyyappa (1 in exercise of his power to do so under the Hindu law, and "solely from the feature that the share of minor son Chhettiappa was not separated by metes and bounds, a conclusion could (1) 77 not be "reached that Meyyappa (1) and Chettiappa continued as members of an association of persons.
The minor had no volition of his own to express, and the fact that at the partition the minor was represented for purposes of form and nothing more by his father, cannot be taken to mean that the mother as his guardian exercised any volition on behalf of the minor.
" In the view of the High Court "to form an association of persons no agreement enforceable at law was necessary": but that "is not the same thin as to say that an agreement express or implied may be inferred where none can possibly exist.
The High Court rejected the contention raised on behalf of the Revenue that the father must have acted as the guardian of the minor in forming the association in 1951 52.
The High Court however held that in the year 1952 53 and subsequent years an association of persons was formed and Meyyappa (1) joined that association on behalf of himself and Chettiappa.
Counsel for the assessee contends that once the High Court reached the conclusion that in the year 1951 52 there was no association of persons, the conclusion that an association of persons existed in the subsequent years could not be reached in the absence of positive evidence to show that after the close of the year 1951 52 an association of persons was actually formed.
We are not called upon in these appeals to consider whether the learned Judges of the High Court were right in the view which they have taken insofar as it relates to the assessment year 1951 52.
We are only called upon to consider whether the conclusion of the Tribunal that in fact an association of persons existed in the year 1952 53 Ind subsequent years was based on any evidence.
In our judgment the facts proved clearly show that there was such an association in the years 1952 53 and the subsequent years.
Pursuant to the three partitions no division by metes and bounds of the shares of the owners was made, only the shares in the income of the owner were entered in the books of account.
There was common management of the properties, and there was even a common.
selling agency.
Alagammal had acted as a guardian of Chettiappa in the deed of partition.
The Tribunal inferred that Alagammal must have assented to the formation of the association on behalf of Chettiappa and in the various transactions relating to the entrustment of management.
It is true that this finding related to the year 1951 52 as well, and the High Court has disagreed with that finding insofar as it related to the year 1951 52.
But on that account the finding of the Tribunal in respect of the subsequent years cannot be discarded.
The Association which has earned income in the years 1952 53 and thereafter is an association different from the association in 1951 52.
In 1951 Chokalingam had demanded a share in the "properties of M.M. lpoh and he was given a half share.
The shares of Meyyappa (1) and Chettiappa in the properties were 78 reduced, and thereafter ownership in the "properties of M.M. Ipoh" and its activities vested in an association formed by Meyyappa (1), the M.S.M.M. firm and Chettiappa.
It is common ground that "M.M. Ipoh" was a trading venture and its management was entrusted in the relevant years to the M.S.M.M. firm.
The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year.
The assessment and the facts found are conclusive only in the year of assessment: the findings on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year, but they are not binding and conclusive.
The finding recorded by the High Court that in the year 1951 52 there was no association of persons constituted by Meyyappa (1) and Chettiappa for earning income from M.M. Ipoh properties will not in the present case have any effect on the finding of the Tribunal that in year 1952 53 and the subsequent years such an association existed.
It must again be remembered that the association of persons which traded in 1952 53 and the subsequent years was an association different from the association in 1951 52.
After the reduction in the shares of Meyyappa (1) and Chettiappa in the "M.M. Ipoh properties" a fresh arrangement for entrustment of the management of the properties to the M.S.M.M. firm was necessary and according to the findings of the Tribunal, Alagammal assented on behalf of Chettiappa to that arrangement.
Counsel for assessee contended that for the finding that Alagammal assented on behalf of Chettiappa to form an association was not supported by any evidence on the record.
But from readjustment of the shares in the "M.M. Ipoh properties", admission of Chettiappa to the benefits of M.S.M.M. firm and the management of "M.M. Ipoh properties" to continuing F to remain with the M.S.M.M. firm, with a common selling agency, and the execution of the deed of partition by Alagammal, an inference could reasonably be made that a person purporting to act as guardian of Chettiappa concurred in forming the association and that the person so concurring was Alagammal.
The finding recorded by the Tribunal is one of fact, and was not liable a to be questioned before the High Court.
It is also pertinent to note that the finding that Alagammal acted on behalf of Chettiappa in forming the association for the years 1952 53 was never challenged and was not sought to be made the subject of a question in an application to the Tribunal under section 66(1) and no question in that behalf was referred to the High Court.
It is true that the High Court was of the view that in the years 1952 53 to 1956 57 Meyyappa (1) acted on behalf of Chettiappa in forming the association.
But the High Court in a reference under section 66 of the Income tax Act was incompetent to disturb what was 79 essentially a finding of fact recorded by the Tribunal and arrive at another finding.
On the other question which has been answered by the High Court the Tribunal declined to submit a statement of the case, because in their view it did not arise out of their order.
They pointed out that a ground in support thereof was taken in the memorandum of appeal, but as it was not pressed before the Appellate Assistant Commissioner.
they did not deal with it.
The High Court observed that the Tribunal was bound to deal with the question irrespective of whether it was agitated before the Appellate Assistant Commissioner.
Even assuming that the second question was properly raised in the form and in the manner in which it was raised by the High Court, the answer to the question must, on the facts found, be against the assessee.
Counsel for the assessee contended that there were no materials on which the Tribunal could hold that Meyyappa (1) was the principal officer of "M.M. Ipoh", and since the Income tax Officer had made no enquiry before issuing the notice treating Meyyappa (1) was the principal officer of "M.M. Ipoh", Meyyappa (1) could not be so treated for the purpose of the proceedings for assessment.
Under section 22(2), the Income tax Officer may, if in his opinion the income of a person is liable to income tax, serve a notice upon him requiring him to furnish a return in the prescribed form.
The notice under section 34 for re assessment must also contain all or any of the requirements which may be included in a notice under sub section (2) of section 22.
Such a notice may be served under section 63(2) of the Income tax Act upon the principal officer of an association of persons.
Under the definition in section 2(12) a "Principal officer"omitting parts not material "used with reference to. . any association means (a) .
. (b) any person connected with the authority, company, body, or association upon whom the Incometax Officer has served a notice of his intention of treating him as the principal officer thereof;".
The Income tax Officer Karaikudi assessed the income of "the association M.M. Ipoh by its principal officer M.S.M.M. Meyyappa Chettiyar".
No objection was ever raised before the Income tax Officer about the regularity of the proceedings and the Income tax Officer found that Meyyappa (1) was the principal officer of the association.
Even before the Appellate Assistant Commissioner it was not argued that Meyyappa (1) was not the principal officer.
For the first time that ground was taken before the Tribunal.
The notices served on Meyyappa (1) are not printed in the record prepared for use in this Court.
In the orders of assessment for the year 1952 53 and the subsequent years it is recorded that action was taken to bring to tax the income of "M.M. Ipoh", and in response to the notices the principal officer Meyyappa (1) had filed returns.
The assessee submitted an application under section 66(2) during the course of the hearing before the High Court of the question referred by the 80 Tribunal.
The High Court granted that application and without calling for a formal statement of the case on the 'question sought to be raised, heard the parties.
It may be reasonably assumed that the assessee was prepared to argue the case on the footing that the statements in the orders of the Income tax Officer were correct.
In the circumstances it must be held that the Income tax Officer did, serve a notice of his intention to treat a person connected with the association as the principal officer thereof.
The Income tax Officer assessed the income of the association as repre ented by Meyyappa (1) its principal officer.
There is, in our judgment, nothing in the Act which supports the contention of counsel for the assessee that before proceedings in assessment can commence against an association of persons a notice must in the first instance be issued and an order passed after giving opportunity to the person proposed to be treated as the principal officer opportunity to show cause why he should not be so treated.
It is open to the Income tax Officer to serve a notice on a person who it is intended to be treated as the principal officer.
The person so served may object that he is not the principal officer or that the association is not properly formed.
The Income tax Officer will then consider whether the person served is the principal officer and whether he has some connection or concern with the income sought to be assessed.
There is in the Income tax Act an analogous provision in section 43 of the Act which authorises the Income tax Officer to treat a person as a statutory agent of the non resident for the purpose of assessing him to tax, the income received by the non resident.
It was held by the Judicial Committee in Commissioner of Income tax, Punjab & N.W.F.P. vs Nawal Kishore Kharaiti Lai(1) that it is not necessary for the validity of a notice calling for a return of the income under section 23(2) served on a person as agent of a non resident under section 43, that it should have been preceded not only by the notice of intimation prescribed by section 43, but also by an order declaring the person to be agent of the non resident or treating him as such.
The Income tax Officer may postpone any final determination of the dispute until the time comes to make an assessment under section 23 of the Act.
In our judgment, the same principle applies to a case in which in the assessment of the income of an association of persons or person is to be treated as a principal officer of that association.
If the person described as a principal officer of an association is duly served with a notice under section 23(2) in the manner prescribed by section 63(2), an adjudication of his status as the principal officer before assessment proceedings may take place is not obligatory.
The order assessing the association containing a finding that the person served is the principal officer is sufficient compliance with the requirements of the statute.
It is open to the association to challenge the finding of the Income tax Officer 81 in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal.
But the order declaring him as the principal officer of an association of persons will not be deemed to be void merely because the proceeding for assessment was not preceded by a declaration of the status of the person treated as the principal officer.
The appeals Nos.
1060 1964 of 1965 must also fail and are dismissed with costs.
There will be one hearing fee in appeals Nos.
1103 1107 of 1966 and one hearing fee in appeals Nos.
1060 1064 of 1965.
R.K.P.S. Appeals dismissed.

summary/full:
The Karta of a Hindu undivided family was assessed to Incometax from year to year until the assessment year 1953 54 either as an individual or as the Karta.
But later, the Income Tax Officer issued notices to him under section 34(1) of the Income tax Act, 1922, for the assessment years 1951 52 to 1953 54 and under section 22(2) for the years 1954 55 to 1956 57 for assessment of the income as having been received by an association of persons consisting of the Karta and his minor son in 1951 52, and the Karta, his minor son and a firm in the years 1952 53 to 1956 57, and assessed the income received as income and associations of persons.
The Appellate Assistant Commissioner and the Tribunal, in appeals filed before them, substantially confirmed the order of the Income tax Officer.
The High Court, upon a reference.
held that the income for the assessment year 1951 52 did E not accrue to an association of persons, but confirmed the view taken by the Income tax Officer in respect of the income for the year 1952 53 to 1956 57.
The Karta then moved the High Court under article 226 of the Constitution and contended that section 3 of the Income tax Act, 1922, invested the Income tax Officer with arbitrary and unguided power to assess the income of an association of persons in the hands either of the association or of the persons constituting that association and it therefore offended article 14 of the Constitution.
The High Court rejected the petitions.
In appeals to this Court against the decisions of the High Court in the writ petition and the reference under section 66 of the Income tax Act.
HELD:(i) section 3 of the Income tax Act, 1922, was not violative of article 14 of the Constitution.
The duty of the Income tax Officer is to administer the provisions of the Act in the interests of public revenue, and to prevent evasion or escapement of tax legitimately ,due to the State.
Though an executive Officer engaged in the administration of the Act.
the function of the Income tax Officer is fundamentally quasi judicial.
His decision to bring to tax either the income of the association collectively or the shares of the members of the association separately is not final: it is subject to appeal to the Appellate Assistant Commissioner and to the Tribunal.
The nature of the authority exercised by the Income tax Officer in a proceeding to assess to tax income, and his duty to prevent evasion or escapement of liability to pay tax legitimately due to the State, con stitute adequate enuciation of Principles and policy for the guidance of the Income tax Officer.
[72B H] 66 Suraj Mall Mohta & Co. vs A. V. Visvanatha Sastri and Anr. , distinguished.
Shri Ram Krishna Dalmia vs Shri Justice S.R. Tendolkar and Ors.
; , Jyoti Pershad vs The Administrator for the Union Territory of Delhi. ; and Commissioner of Income tax U.P. vs Kanpur Coal Syndicate, referred to, There is no force in the contention that section 23A of the Income tax Act, as it was incorporated by Act 21 of 1930 laid down certain principles for the guidance of the Income Tax Officer in exercising his option, but since the repeal of that section by Act 7 of 1939, the discretion vested in the Income tax Officer to select either the income of the association or the individual member is unfettered.
By the repeal of section 23A(1) the essential nature of the power of the Incometax Officer was not altered.
He remained as before under a duty to administer the Act, for the benefit of public revenue, but his powers were to be exercised judicially and so as to avoid double taxation of the same income.
[73A B; 74F G] (ii) There was abundant material on the record to prove that the Karta, his minor son and the firm formed an association in the years 1952 53 to 1956 57.
Under section 2(9) of the Income tax Act, 1922, read with el.
(42) of 3 of the General Clauses Act, a firm is a person within the meaning of the Income tax Act and a firm and an individual or group of individuals may form an association of persons within the meaning of section 3 of the Income tax Act.
[75F, G] There is nothing in the Act to indicate that a minor cannot become a member of an association of persons for the purposes of the Act.
In any event the High Court had rightly held that the mother and guardian of the minor son must, on the facts, be deemed to have given her implied consent to the participation of the minor in the association of persons.
[75H] Commissioner of Income tax, Bombay vs Laxmidas & Anr.
and Commissioner of Income tax, Bombay North, Kutch Saurashtra vs Indira Balkrishna, , referred to.
(iii)The doctrine of res judicata does not apply so as to make a decision on a question of fact or law in a proceeding for assessment in one year binding in another year.
The assessment and the facts found are conclusive only in the year of assessment: the finding on questions of fact may be good and cogent evidence in subsequent years, when the same question falls to be determined in another year but they are not binding and conclusive.
The finding recorded by the High Court that in the year 1951 52 there was no association of persons constituted by the Karta and his minor son did not in 'the present case have any effect on the finding of the Tribunal that in year 1952 53 and the subsequent years such an association existed.
Furthermore, the association of persons which traded in 1952 53 and the subsequent years was different from the association in 1951 52 because in 1952 an association was formed of the Karta, his son and a firm.
[75B C] (iv)If the person described as a principal officer of an.
association is duly served with a notice under section 23(2) in the manner prescribed by section 23(2), an adjudication of his status as the principal officer, before assessment proceedings may take place, is not obligatory.
The order assessing the association containing a finding that the per.
son served is the principal officer is sufficient compliance with the 67 requirements of the statute.
It is open to the association to challenge the finding of the Income tax Officer in appeal before the Appellate Assistant Commissioner and in further appeal to the Appellate Tribunal.
But the order declaring him as the principal officer of an association of persons will not be deemed to be void merely because the proceeding for assessment was not preceded by a declaration of his status as the principal officer.
[80G 81B] Commissioner of Income tax, Punjab & N.W.F.P. vs Nawal Kishore Kharaiti Lal, (1938) 6 I.T.R. 61, referred to.