judgement:
Civil Appeal No. 69 of 1952.
Appeal from the Judgment and Decree dated the 27th April, 1950, of the High Court of Judicature at Calcutta (Sen & Chunder JJ.) in Appeal from Original Decree No. 19 of 1948 arising out of the Judgment and Decree dated the 27th September, 1947, of the Court of the Subordinate Judge, Third Court of Zillah, 24Parganas at Alipore in Miscellaneous Judicial Case No. 31 of 1947.
Sukumar Ghose for the appellants.
Bankim Chandra Banerji and R. R. Biswas for respondents Nos. 1, 2, 8 & 9. 1954.
April 26.
The Judgment of the Court was delivered by BAAGWATI J.
This is an appeal against the judgment and decree of the High Court of Judicature at Calcutta reversing the order of the Third Subordinate Judge, Alipore, dismissing the respondents applications for re restoration of certain immovable properties.
One Romesh Chandra Acharji Choudhury (deceased) predecessor in interest of the appellants borrowed on the 16th August, 1918, Rs. 1,60,000 and Rs, 73,000 from the predecessors in interest of the respondents under two deeds of mortgage.
There being default in payment of the mortgage amounts a suit to realise the mortgage securities was filed on the 10th March, 1926, 152 in the Third Subordinate Judge 's Court, Alipore.
A preliminary mortgage decree for Rs. 4,21,851.1 6 was passed on the 4th April, 1929, and a decree absolute for sale was passed on the 13th September, 1929.
The mortgaged properties were put up for sale in execution proceedings in 1930 and the decree holders purchased the properties at auction sales on the 29th February, 1932, and the 23rd April, 1935, for an aggregate amount of Rs. 2,35,200.
These sales were duly confirmed and the auction purchasers took delivery of possession of different items of property on different dates between the 25th June, 1933, and the 9th March, 1936.
The aecree holders obtained on the 13th December, 1937, a personal decree under Order XXXIV, rule 6, of the Civil Procedure Code for the balance due to them, viz., Rs, 3,30,903.
This personal decree was also executed and some properties of the mortgagors were purchased by the decree holders on the 8th August, 1939, for Rs. 3,899 and delivery of possession of these properties was duly given to them on the 6th July, 1940.
Kshitish Chandra Acharji Choudhury, since deceased, the predecessor in interest of the appellants Nos.
1 to 3 and Jyotish Chandra Acharya Choudhury, the appellant No. 4, sons of the mortgagor filed on the 9th December, 1940, a petition under section 36 of the Bengal Money Lenders Act (Act X of 1940) for reopening the mortgage decree and the personal decree.
By an order dated the 25th August, 1941, the learned Subordinate Judge reopened the decrees and on the 10th May, 1943, passed a new decree for a sum of Rs. 3,76,324 12 4.
The said sum was directed to be paid by the judgment debtors to the decree holders in fifteen equal annual instalments.
He also directed the restoration of the properties purchased by the decree holders.
The present respondents preferred, on the 19th June, 1943, an appeal to the High Court of Judicature at Calcutta and cross objections were filed by the said Kshitish Chandra Acharji Choudhury and appellant No. 4.
By their judgment and decree dated the 29th June, 1944, the High Court affirmed the decree of the Court below with some substantial variations and 153 passed a new decree in favour of the mortgagors.
The mortgagees were ordered to put the mortgagors in possession of all the properties they had purchased in ' execution of the reopened decrees and render to them an account of the mesne profits of those properties from the 15th September, 1941, till they restored or relinquished possession to the mortgagors of the collection papers of those properties.
The sum of Rs. 3,76,324 12 6 was declared to be due by the mortgagors to the mortgagees and the mortgagors were to pay the same in twenty equal annual instalments the first of such instalments to be paid on or before the first anniversary of the date on which the mortgagees restored or relinquished possession of all the properties purchased by them in execution to the mortgagors or of the date on which they delivered to the mortgagors the collection papers as therein mentioned, whichever date was later.
The mortgagors were to pay to the mortgagees the successive annual instalments on or before the same date of the succeeding years on which the first instalment became payable and they were also to pay the annual revenue of the aforesaid properties that would become payable after they were restored to possession kist by kist, as they fell due, at least three days before the kist dates and file the challans in the Court below in proof of payment within ten days of the payments.
The road, public works and education cesses and rent due to the superior landlords were also to be paid similarly by the mortgagors and in default of payment of any one instalment or cesses or rent within the time prescribed, the mortgagors were entitled to get back possession of the said properties from the mortgagors and in that event the sum of Rs. 2,39,099 at which the mortgagees had purchased those properties would be balanced against the amount then due to them under the decree.
If thereafter any amount still remained due to the mortgagees under the decree they were entitled to apply in the Court below for a decree for the balance under Order XXXIV, rule 6, of the Civil Procedure Code.
An enquiry was ordered into the mesne profits for the period between the 15th September, 1941, till the restoration of possession to the mortgagors and 20 154 the mortgagors were at liberty to set off the amount that might be decreed in their favour for mesne profits towards the instalment that fell due in the year in which the amount was declared by the Court below and the next succeeding years till the said amount was wiped off.
Possession was delivered to the mortgagors on the 5th October, 1944.
The delivery of the collection papers was however given on the 28th March, 1945.
The mortgagors were alleged to have committed default in the payment of the second instalment which was due in any event on the 28th March, 1947, and also in the payment of the revenue kist and the cesses which were due on or about that date.
The mortgagees therefore made applications in the Court of the Third Subordinate Judge at Alipore on the 6th September, 1946, and the 18th April, 1947, asking for re restoration of the properties.
Several defaults were alleged but only two defaults were pressed, one in regard to the payment of the second instalment which was due on the 28th March, 1947, and the other in regard to the payment of the revenue and the cesses of the Noakhali properties due also on the same date.
The learned Subordinate Judge rejected these applications by his order dated the 27th September, 1947, holding that there was no default in the payment of revenue and cess and that the default in payment of the second instalment though it had accrued was due to the wrongful acts of the decree holders themselves and that the, decree holders were not entitled to take advantage of their own wrong.
An appeal was preferred to the High Court of Judicature at Calcutta.
The appeal was allowed on the 27th April, 1950.
The High Court held that a default had been committed by the mortgagors and ordered rerestoration of the properties.
This appeal has been filed against that order of the High Court with certificate under article 133(1)(a) of the Constitution.
Shri section Ghosh appearing for the appellants before us urged that the bulk of the properties which were the subject matter of the new decree had gone to Pakistan after the 26th January, 1950, being situated in East Pakistan and the High Court at Calcutta had 155 after the 26th January., 1950, no jurisdiction and power to determine the appeal and to pass an order relating to the immovable properties situated in foreign territories.
He further urged that the order of rerestoration of the properties was not appealable and that in any event no default had been committed by the mortgagors.
In support of his first contention reliance was placed on paragraph 4(2) of the Indian Independence (Legal Proceedings) Order, 1947, which ran as under: "4.
Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947. . . . (2) Any appeal or application for revision in respect of any proceedings so pending in any such Court shall lie in the Court which would have appellate, or as the case may be revisional jurisdiction over that Court if the proceedings were instituted in that Court after the appointed day;. . " The applications for re restoration of the properties were pending before the Third Subordinate Judge at Alipore on the 15th August., 1947, and they were saved by the provisions of paragraph 4(1) which provided for the continuance in the same Court of these proceedings as if the said Act that is, Indian Independence Act, 1947, had not been passed.
But he contended that paragraph 4(2) did not save the appeal which had been filed by the mortgagees after the 15th August, 1947.
We cannot accept this contention of the appellant.
Paragraph 4(2) provided for appeals or applications for revision in respect of proceedings which were pending in the Courts after the 15th August, 1947, and laid down that these proceedings by way of appeal or applications for revision could lie in the Courts which would have appellate or revisional jurisdiction over that Court if the proceedings were instituted in that Court after the 15th August, 1947.
It was contended that for the purpose of this provision the words "if the proceedings were instituted in that Court" should be read as meaning "if the proceedings could have been 156 instituted in that Court.
" This certainly could not be the meaning, because by reason of the transfer of the territories no proceedings in respect of the properties which had gone to Pakistan ' could ever have been maintained after the 15th August, 1947, in the Courts concerned.
The only construction which could be put upon this provision was that the Court having appellate or revisional jurisdiction over that Court would have such jurisdiction as if the proceedings had been instituted in that Court after the 15th August, 1947.
For the purpose of the appellate or the revisional jurisdiction that Court had to be treated as the Court in which the proceedings could and should have been instituted and it goes without saying that if the pro ceedings could be treated as having been properly instituted in that Court the only Court to which the appeal or the application for revision could lie was the Court which then had appellate or revisional jurisdiction over that Court.
In the case before us no proceedings could have been instituted in the Third Subordinate Judge 's Court at Alipore in respect of the properties which had gone to East Pakistan after the 15th August, 1947.
But by reason of the fact that these proceedings were pending in that Court on the 15th August, 1947, the High Court of Calcutta which had appellate or revisional jurisdiction over that Court was prescribed to be the Court in which the appeal or the application for revision in respect of such procedings would lie, because that Court, that is the Third Subordinate Judge 's Court at Alipore, was treated as the Court in which such proceedings could and should have been instituted after the 15th August, 1947.
Learned counsel for the respondents drew our attention to the case of Tirlok Nath vs Moti Ram and Others(1).
In that case a suit for possession of land at place X was filed in Court at B in 1943.
On the 15th August, 1947, the suit was pending before the Court at B which dismissed the suit in 1948.
An appeal from the decision was filed in the East Punjab High Court as the place B was included in the East Punjab.
On (1) A.I.R. 1050 East Punjab I49. 157 objection regarding jurisdiction of the High Court being taken on the around that the land in suit was at A, now included in Pakistan, the High,Court held that the suit being pending at place B on 15th August, 1947, appeal from the decision of that Court lay to the East Punjab High Court and not to Lahore High Court under paragraph 4(2) of the Indian Independence (Legal Proceedings) Order, 1947.
This decision is on all fours with the case before us and we are of the opinion that the contention urged on behalf of the appellants is untenable.
The next contention of the appellants is equally untenable.
The Calcutta High Court considered these applications as applications in the suit for a special remedy given under a special law and held that the rules of the Code of Civil Procedure applied and an appeal lay against the orders because they were decrees within the definition of section 2(2) of the Civil Procedure Code.
We cannot accept this reasoning.
These applications were in truth and in substance applications for execution of the new decrees which had been passed in favour of the mortgagors by the High, Court on the 29th June, 1944.
The only thing competent to the mortgagees under the terms of the new decree was to apply for execution of the decrees on default committed by the mortgagors and the applications made by the mortgagees in the Court of the Third Subordinate Judge at Alipore were really applications for execution of the decree though not couched in the proper form and could be treated as such.
If they were treated as such it is clear that the orders passed on such applications for execution were appealable and no objection could be sustained on the ground that no appeals law against these orders.
Treating these applications therefore as applications for execution we see no substance in this contention of the appellants.
if the matter is approached in this way no objection could be urged by the appellants against the decision of the High Court.
The executing Court could not go behind the decree and it is clear on the facts that default was committed by the mortgagors both in 158 regard to the payment of the revenue and the cess as also the second instalment under the new decree.
The contention which was therefore urged on behalf of the appellants that there was no default committed by the mortgagors also could not be sustained.
The High Court of Judicature at Calcutta was therefore rightly seized of the appeal and it had jurisdiction to decide whether the mortgagors had committed default in carrying out the terms of the new decree.
The appeal being a mere rehearing the appellate Court was entitled to review the judgment of the trial Judge and declare that it was wrong and that the decree holder was entitled to re restoration.
The question whether he would be able to obtain possession of the immovable properties in fact was foreign to such an enquiry.
By appropriate proceedings in another jurisdiction he may be able to do so; but this difficulty could not be a deterrent to the High Court passing the necessary orders for re restoration of the properties.
The appeal therefore fails and must stand dismissed.
There will be no order as to costs.

summary/full:
4(2) of the Indian Independence (Legal Proceedings) Order, 1947, runs as under: " 4.
Notwithstanding the creation of certain new Provinces and the transfer of certain territories from the Province of Assam to the Province of East Bengal by the Indian Independence Act, 1947. . . (2)Any appeal or application for revision in respect of any proceedings so pending in any such Court shall lie in the Court which would have appellate, or as the case may be, revisional jurisdiction over.
that Court if the proceedings were instituted in that Court after the appointed day. . .
An application by the decree holder for re restoration of properties by reason of the default made by the judgment debtor after a new decree had been passed under section 36 of the Bengal Money Lenders Act, 1940, was pending in the Court of the Subordinate Judge, Alipore, on 15th August, 1947, when the bulk of the properties, which were the subject matter of the new decree, went to East Pakistan as being situated there.
The application was saved by the provisions of para.
4(1) which provided for the continuance in the same Court of these proceedings as if the said Act (Indian Independence Act) had not been passed.
It was con tended that the appeal to the High Court filed by the decreebolder was not saved by para.
4(2) as it was filed after 15th August, 1947, as the words "if the proceedings were instituted in this Court" in the said para.
should mean "if the proceedings could have been instituted in that Court.
" Held, that the appeal from the Court of the Subordinate Judge was competent to the Calcutta.
High Court because the only construction that could be put upon this provision was that the Court having appellate or revisional jurisdiction over that Court would 151 have such jurisdiction as if the proceedings had been instituted in that Court after the 15th August, 1947.
An application by the decree holder was in substance an application for the execution of the new decree which had been passed under section 36 of the Bengal Money Lenders Act, 1940.
Orders passed on such applications for execution would be clearly appealable.
The reasoning of the High Court that such an application was an application in the suit for a special remedy given under a special law and that the rules of Civil Procedure Code applied and an appeal lay against such orders because they were deerees within the definition of section 2(2) of the Civil Procedure Code was not sustainable and could not be accepted.
Tirlok Nath vs Moti Ram and Others (A.I.R. 1950 East Punjab 149) referred to.


judgement:
ivil Appeal No. 549 of 1966.
Appeal by special leave from the order dated October 23, 1964 of the Punjab High Court, Circuit Bench at Delhi in Civil Revision No. 438 D of 1964.
V.A. Seyid Muhammad and S.P. Nayar, for the appellant.
S.V. Gupte and A.K. Nag, for respondents Nos. 1 and 2.
A.G. Ratnaparkhi, for respondent No. 5.
225 The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by Special leave against the judgment of the Punjab High Court in Civil Revision No. 438 D of 1964 by which the revision petition of the appellant against the order of Shri D.R. Khanna, Subordinate Judge, 1st Class, Delhi dated 20th April, 1964 in Suit No. 128 of 1 '963 was dismissed in limine.
Suit No. 128 of 1963 was an application by the Union of India under sections 5, 12(2),31(3), 32 and 33 of the for obtaining a declaration that the reference of the claim of the respondent firm in respect of excess quantity of timber alleged to have been delivered and certain other matters was not covered by the arbitration agreement and for leave to revoke the authority of the Arbitrators and Umpire.
The petition was rejected by the Subordinate Judge by his order dated 20th April, 1964.
By a savingram dated 21st December, 1953 the Union of India (hereinafter called the appellant) entered into a contract of purchase of '1,01,750 cubic feet of teak logs at Rs. 9/12/ Vet c.ft.
to be delivered F.O.R. Halisahaar and Lillooah, both in West Bengal near Calcutta.
The consignee was the District Controller of Stores, Eastern Railway.
The formal acceptance of tender confirming the savingram and containing the other terms of the contract was issued on 13th January, 1954.
Besides the quantity of teak logs originally contracted to be supplied, the respondent firm subsequently supplied a quantity of 1676.95 c.ft.
Burma teak squares at the same rate and the contract was accordingly amended on 13th December, 1957.
It was provided in clause 17(c) of the acceptance of tender that the respondent firm was to offer the timber for inspection at its own premises at Halisahaar and Lillooah.
Although the delivery time was extended from time to time, upto 26th January, 1958.
the respondent firm supplied only 77,21/.89 cubic feet of timber and the contract in respect of the unsupplied quantity was cancelled on 20th june, 1958 and that the supplied quantity was repurchased by Government from third party at a loss of Rs. 1,54,541.36 on 23rd July, 1958.
Including this item the appellant made a claim of Rs. 3,50.085.99 against the respondent firm out of which it recouped Rs. 1,79.366 from the sums due to the respondent firm leaving a balance of Rs.1.70,719.99.
The contract in question is governed by the arbitration agreement contained in clause 21 of the form W.S.B. 133 which states as follows : "Arbitration: In the event of any question or dispute arising under these conditions or any special conditions of contract or in connection with this contract (except as to any matters the decision of which is specially provided for 226 by these conditions) the same shall be referred to the award of an arbitrator to be nominated by the Purchaser and an arbitrator to be nominated by the Contractor, or in case of the said arbitrators not agreeing then to the award of an Umpire to be ,appointed by the arbitrators in writing before proceeding on the reference and ' the decision of the arbitrators, or in the 'event of their not agreeing, of the Umpire appointed by them, shall be final and conclusive and the provisions of the Indian , and of the Rules thereunder and any Statutory modification thereof shall ' be deemed to apply to and be incorporated in this contract.
Upon every and any such reference, the assessment of the costs incidental to the reference and award respectively shah be in the discretion of the arbitrators or in the event of their not agreeing of the Umpire appointed by them." In pursuance of the arbitration .clause the respondent firm appointed one Mr. T.R. Sharma as its arbitrator and the appellant appointed Mr. R.R. Desai, Deputy Legal Adviser, Ministry of Law, Government of India as its nominee.
Mr. P.S. Bindra, a retired District Judge was appointed as the Umpire by order of the Sub Judge dated 2 8 1961.
Both the parties filed their respective claims before the arbitrators.
The respondent firm claimed a sum of Rs. 73,50,000 while the appellant contended that the respondent committed breach of the contract by not supplying the stipulated quantity of timber under the contract and as such claimed damages to the extent of Rs. 3,00,000.
The case of the respondent firm was that in order to cover up possible rejection, a quantity of timber much in excess of the contracted quantity was despatched to the consignees and the excess quantity measuring 3,400 tons i.e. 1,70,000 cubic feet was still lying with the Lillooah consignnee and 1,500 tons i.e. 75,000 cubic feet with the Halisahaar consignee and had not been returned despite repeated requests.
The respondent firm claimed return of this quantity of timber and compensation for its deterioration.
It was alternatively contended that in case the Government failed to return the whole or part of the excess timber, then payment for that quantity at the market rate should be made.
The appellant in its reply denied the allegation relating to the delivery and retention of excess quantity.
It was specifically denied that 4,900 tons or any quantity was due to be returned to the respondent firm or that it was entitled to recover Rs. 73,50,000 or any amount as claimed.
It was contended that in terms of the contract the respondent firm was to offer inspection of the store at its own premises 'at Lillooah and Halisahaar but instead doing so, the respondent firm started to despatch the logs to the DCO 's Lillooah and Halisahaar to be 227 inspected at the consignees ' premises.
This was done for its own convenience and at its own risk.
The inspected stores were retained by the consignee while the rejected stores were to be removed by the respondent firm from the consignee 's premises at their own expense.
It was submitted that the dispute raised by the respondent firm was outside the scope of the arbitration agreement and that the arbitrators had no jurisdiction to entertain such a claim.
After hearing the parties, the Subordinate Judge rejected the application of the appellant by his order dated 20th July, 1964.
It is necessary at this stage to quote the relevant clauses of the contract.
Clause 13 ( 1 ) provides: "Inspection and Rejection: Facilities for Test and Examination: The Contractor shall afford at his own expense the Inspector all reasonable accommodation and facilities for satisfying himself that the stores are being or have been manufactured in accordance with the particulars and for this purpose the Inspector shall have full and free access at any time during the contract to the Contractor 's work and may require the Contractor to make arrangements for anything to be inspected at his premises or at any other place and the Contractor shall reserve a similar right as regards any sub contract he may make.
The Contractor shall pay all costs connected with such tests and provide, without extra charge, all materials, tools, labour and assistance of every kind which the Inspector may consider necessary for any test and examination other than special or independent tests which he shall require to be made on the contractor 's premises, and shall pay all the costs attendant thereon,failing these facilities (in regard to which the inspector will be the sole judge) at his own premises for making the tests, the Contractor shall bear the cost of Carrying out such tests elsewhere".
Clause 13(4) reads as follows : "Inspection and rejection: The whole of a consignment may be rejected, if, on inspection, a portion upto 4 per cent of the consignment (at the sole discretion of the Inspector) is found ' to be unsatisfactory.
" Clause 13(5) states: "Rejection: If any stores are rejected as aforesaid then, without prejudice to the foregoing provisions, the Secretary, Department of Supply shall be at liberty to : 228 (a) allow the contractor to resubmit stores in replacement of those rejected within a time specified by the Secretary, Department of Supply, the contractor bearing the cost of freight in such replacement without being entitled to any extra payment, or (b) buy the quantity of the stores rejected or others of a similar nature elsewhere at the risk and cost of the contractor without affecting the contractor 's liability as regards supply of any further consignment due under the contract, or (c) terminate the contract and recover from the con tractor the loss the purchaser thereby incurs".
On behalf of the appellant Dr. Seyid Mohammad presented the argument that the dispute regarding the respondent 's claim in respect of the excess quantity of timber measuring 4,900 tons said to have been tendered but not inspected was not a dispute 'arising under the contract" 0r 'in connection with the contract ' and hence the arbitrators had no jurisdiction to adjudicate upon that claim.
It was stated that the terms of contract did not require the respondent firm to tender for inspection any quantity in excess of the contracted quantity of timber and the alleged placing of unlimited stocks of timber at the disposal of the Government officials far in excess of the quantity ordered was beyond the scope of the contract.
It was argued that the claim should be treated as a claim relating to a transaction of involuntary bailment and not to anything done in the performance.
implementation or execution of the contract.
It was said that the claim for return of these goods and damages for deterioration or in the alternative for their market value was a claim in detinue and the dispute was not hence a dispute "arising out of the contract" or 'in connection with the contract ' but was a dispute relating, to a tort of wrongful detention.
We do not think that there is any justification for the argument put forward on behalf of the appellant.
In our opinion.
the claim made by the respondent firm was a claim arising out of the contract.
The test for determining the question is whether recourse to the contract by which both the parties are bound is necessary for the purpose of determining whether the claim of the respondent firm iS justified or otherwise.
If it is necessary to take recourse to the terms of the contract for the purpose of deciding the matter in dispute.
it must be held that the matter is within the scope of the arbitration clause and the arbitrators have jurisdiction to decide this case.
In Herman & lint.
vs Darwins Ltd.(1) the law on the point is very clearly stated in the following passage: (1) at 365. 229 "An arbitration clause is a written submission agreed to by the parties to the contract, and, like other written submissions to arbitration, must be construed according to its language and in the light of the circumstances in which it is made.
if the dispute is whether the contract which contains the clause has ever been entered into at all, that issue cannot go to arbitration under the clause, for the party who denies that he has ever entered into the contract is thereby denying that he has ever joined in the submission.
Similarly, if one party to the alleged contract is contending that it is void ab initio (because, for example, the making of such a contract is illegal), the arbitration clause cannot operate, for on this view the clause itself also is void.
But, in a situation where the parties are at one in asserting that they entered into a binding contract, but a difference has arisen between them whether there has been a breach by one side or the other, or whether circumstances have ,arisen which have discharged one or both parties from further performance, such differences should be regarded as differences which have arisen 'in respect oF or "with regard to", or "under" the contract, and an arbitration clause which uses these, or similar expressions should be construed accordingly".
In Stebbing vs Liverpool & London and Globe Insurance Company Ltd. (1) the policy of insurance contained a clause referring to the decision of an arbitrator "all differences arising out of this policy".
It also contained a recital that the assured had made a proposal and declaration as the 'basis of the contract, and a clause to the effect that compliance with the conditions indorsed upon the policy should be a condition precedent to any liability on the part of the insurers.
One of the conditions provided that if any false declaration should be made.
e or used in support of a claim all benefit under the policy should be forfeited.
In answer to a claim by the assured, the insurers alleged that statements in the proposal and declaration were false.
When the matter came before tire arbitrator, the assured objected that this was not a difference in the arbitration and that the arbitrator had no power to determine whether the answers were true or not, or to determine any matters which called in question the validity of the policy.
In holding that the arbitrator had jurisdiction to decide the matter, Viscount Reading, C.J. observed: "If the company were seeking to avoid the contract in the true sense they would have to rely upon some matter outside the, contract, such as a misrepresentation (1) 230 of some material fact, inducing the contract, of which force and effect are not declared by the contract itself.
In that case the materiality of the fact and its effect in inducing the contract would have to be tried.
In the present case the company are claiming the benefit of.
a clause in the contract when they say that the parties have agreed that the statements in question are material and that they induced the contract.
If they succeed in escaping liability that is by reason of one of the clauses in the policy.
In resisting the claim they are not avoiding the policy but relying on its terms.
In my opinion, therefore, the question whether or not the statement is true is a question arising out of the policy".
The principle has been reiterated by this Court in Ruby General Insurance Co '.
Ltd. vs Pearey Lal Kumar & Anr.(1).
In that case the appellant company insured a car belonging to respondent No. 1 and issued the policy which contained, inter alia, the following terms : "All differences arising out of this policy shall be referred to the decision of an arbitrator to be appointed by the parties .
If the company shall disclaim liability to the insured for any claim hereunder and such claim shall not within twelve calendar months from the date of such disclaimer have been referred to arbitration then the claim shall have been deemed to have been abandoned and shall not be recoverable".
The car was lost and company through its Branch Manager dis claimed liability on three different dates.
The insured did not take any action in regard to the appointment of an arbitrator until more than twelve months after the last disclaimer by the company.
The case of the company was that the insured must be deemed to have abandoned his claim by virtue of the contract of insurance policy while the respondent averted that there was never any valid disclaimer by the company of its liability as the Branch Manager had no authority to disclaim the liability and it could have been disclaimed only by the resolution of the company.
The company made an application under section 33 of the Indian praying for a declaration that the reference to arbitration was illegal and the award if made by the arbitrator would not bind the company.
It was contended on its behalf that the arbitration clause had ceased to be operative and the question as to the existence and validity of the arbitration agreement was triable by the court under section 33 of the and not by the arbitrator.
The argument was rejected by this Court.
It was held that the point on which the parties were in dispute was a difference (1) [1952] 3.C.R. 501.
231 arising out of the policy, because recourse to the contract by which both the parties were bound was necessary for the purpose of determining the matter in dispute between them.
As there was no contention raised by either of the parties that there was no contract entered into at all or that it was void ab initio the arbitrator had jurisdiction to decide the matter referred to him.
In our opinion, the principle applies to the present case and it follows that the dispute between the parties falls within the scope of the arbitration clause.
On behalf of the appellant reliance was 'placed upon the decision of Court of Appeal in Percy vs Young(1) in which it was held that the clause "that any differences or disputes that may arise between the partners shah be settled by an arbitrator" does not include a dispute whether the partnership has been terminated, or whether certain shares have been paid on account to the partnership or to one partner alone.
In our opinion, the principle does not apply in the present case where the question presented for determination is quite different.
Counsel for the appellant also referred to Turnock vs Sartoris(2).
In that case the lessor was under a covenant to supply his lessee with a specific quantity of water.
The lease contained a comprehensive arbitration clause.
Dispute having arisen as to the supply of water, an agreement was subsequently entered into, binding the lessor to take certain steps to secure the supply and varying the rights of the parties in respect of the supply.
The lessee brought an action alleging that the steps agreed upon had not been taken and that he had not been fully supplied with water and asking for an action of the .damages to be taken.
The lessor moved to have the action stayed.
lit was held that the disputed matters arose partly under the agreement and were outside the arbitration clause in the lease and that even if all the matters for which damages were claimed could be brought within the arbitration clause it would not be proper to refer them to an arbitration who would not have the authority to construe the agreement to determine its effect upon the lease.
It is manifest that the decision has no bearing upon the question p.resented for determination in the present case.
For the reasons.
already expressed, we hold that the claim of the respondent firm was within the scope of the arbitration clause and the application made by the appellant in Suit No. 128 of 1963 was.
rightly dismissed by the Subordinate Judge.
Accordingly, the appeal fails and is dismissed with costs.
V.P.S. Appeal dismissed.
(1) 14 oh. D. 200.
(2) 43 Cn. D. 150.

dataset_name: IN-Abs

summary/full:
There was a dispute between the appellant and respondent regarding the supply of timber.
In pursuance of the clause in the contract which provided that in the event of any question or dispute arising under the. contract or in connection with the contract it should be referred to arbitration, the dispute was so referred.
One of the items in dispute was a 'claim by the respondent that there was an excess supply of timber to cover up possible rejection, which should be returned by the appellant with compensation for deterioration, or that payment should be made for it at the market value.
The appellant contended that the terms of the contract did not require the respondent to tender for inspection an,of quantity in excess of the contracted quantity, that the claim was in detinue relating to an involuntary bailment and not in relation to anything done in the performance, implementation or execution of the contract; and therefore.
, it was not a dispute arising out of the contract or in connection with the contract.
On the question whether the arbitrators had jurisdiction to adjudicate upon the claim, HELD: The test for determing the question is whether recourse to the contract, by which both the parties are hound, was necessary for the purpose of determining whether the claim of the respondent was justified or otherwise.
Since it was necessary to have recourse to the terms of the, contract for the purpose of deciding the matter in dispute, the matter was within the scope of the arbitration clause and the arbitrators had jurisdiction to decide it.
Ruby General Insurance Co. Ltd. vs Peary Lal Kumar, [1952] 5.C.R. 501, followed.
Piercy vs Young, and Turnock vs Sartoris 43 Ch.
D.150, explained.


judgement:
Appeal No. 2354 of 1966.
Appeal from the judgment and order dated July 1963 of the Punjab High Court in Civil Writ No. 1559 of 1962.
M.C. Chagla and Janardan Sharma, for the appellants.
B.C. Misra, S.K. Mehta and K.L. Mehta, for respondent No. 3. 211 The Judgment of the Court was delivered by Sikri, J.
This appeal by certificate granted to the appellants by the High Court of Punjab under article 133(1)(c) of the Constitution raises one point, namely, whether a sub tenant is entitled to purchase the land from the land owner under section 18 of the Punjab Security of Land Tenures Act (Punj.
Act X of 1953) hereinafter referred to as the Act.
It would be sufficient to give few facts.
The appellants, Jaimal and Ram Singh, applied under section 18 of the Act to.
the Assistant Collector, 1st Grade, Hissar, to purchase 280 kanals 4 marlas of land situate in village Mehnda, Tehsil Hansi, District Hissar.
The land was originally owned by respondents.
4 to 10, who had given this land on lease to Sheo Parshad, respondent No. 3.
It is not in dispute that the appellants and their fathers had been in occupation of the land in dispute for the last 30 years, as sub tenants under Sheo Parshad, respondent No. 3.
During the pendency of the application, respondents Nos. 4 to.
10 sold the land in dispute, on October 25, 1957, to.
Sheo Parshad, and also in favour of his two.
The Assistant Collector, by his order dated November 30, 1959, accepted the application of the appellants and allowed them to purchase 274 kanals of land for Rs. 6,730/ .
On appeal, the Collector varied the order but the variation is not material for the purpose of this appeal.
appellants then preferred an appeal to the Commissioner and Sheo Parshad filed Revision Petition to him against the order of the.
Collector.
The Commissioner upheld the claim of the appellants to purchase the land under section 18 of the Act at the price assessed by the Assistant Collector, but he modified the order in respect of 85 kanals 8 marlas which had been sold to the sons of Sheo Parshad.
The final order in the proceedings was passed by the Financial Commissioner who, by his order dated August 27, 1962, held that the appellants.
were not entitled to purchase the land under section 18 of the Act.
Thereupon the appellants filed a petition under article 226 of the Constitution, seeking to quash the order of the Financial Commissioner.
The High Court was also of the opinion that the appellants being sub tenants were not entitled to apply under section 18 of the Act.
The answer to the question whether the appellants are entitled to apply under section 18 of the Act depends upon the interpretation.
of section 18, which reads as follows: "18.
Right of certain tenants to purchase land.
(1) Notwithstanding anything to the contrary contained in any law, usage or contract, a tenant of a land owner other than a small land owner 121 (i) who has been in continuous occupation of the land comprised in his tenancy for a minimum period of six years, or (ii) who has been restored to his tenancy under the provisions of this Act and whose periods of continuous occupation of the land comprised in his tenancy immediately before ejectment and immediately after restoration of his tenancy together amount to six years or more, or (iii) who was ejected from his tenancy after the 14th day of August, 1947, and before the commencement of this Act who was in continuous occupation of the land comprised in his tenancy for a period of six years or more immediately before his ejectment, shall be entitled to purchase from the land owner the land so held by him but not included in the reserved area of the land owner, in the case of a tenant falling within clause (i) or clause (ii) at any time, and in the case of a tenant falling within clause (iii) within a period of one year from the date of commencement of this Act: Provided that no tenant referred to in this subsection shall be entitled to.
exercise any such right in respect of the land or any portion thereof, if he had sublet the land or the portion, as the case may be, to any other person, during any period of his continuous occupation, unless during that period the tenant was suffering from a legal disability or physical infirmity, or if a woman, was a widow or was unmarried; Provided further that if the land intended to be purchased is held by another tenant who is entitled to preempt the sale under the next preceding section, and who is not accepted by the purchasing tenant, the tenant in actual occupation shall have the right to pre empt the sale.
(2) A tenant desirous of purchasing land under sub section (1) shall make an application in writing to an Assistant Collector of the First Grade, having jurisdiction over the land concerned, and the Assistant Collector, after giving notice to the landlord and to all other persons interested in the land and after making such inquiry as he thinks fit, shall determine the value of the land which shall be the average of the price obtaining for similar land in the locality during 10 years 213 immediately preceding the date on which the application is made.
(3) The purchase price shall be three fourth of the value of land as so determined.
(4) (a) The tenant shall be competent to pay the purchase price either in a lump sum or in six monthly instalments not exceeding ten in the manner prescribed.
(b) On the purchase price or the first instalment thereof, as the case may .be, being deposited, the tenant shall be deemed to have become the owner of the land, and the Assistant Collector shall, where the tenant is not already in possession, and subject to the provisions of the Punjab Tenancy Act (XVI of 1887), put him in possession thereof.
(c) If a default is.
committed in the payment of any of the instalments, the entire outstanding balance shall on application by the person entitled to receive it, be recoverable as arrears of land revenue.
(5) If the land is subject to a mortgage at the time the purchase, the land shall pass to the tenant unencumbered by the mortgage but the mortgage debt shall be a charge on the purchase money.
(6) If there is no such charge as aforesaid the Assistant Collector shall, subject to any 'direction which he may receive from any court, pay the purchase money to the landowner.
(7) If there is such a charge, the Assistant Collector shall, subject as aforesaid, apply in the discharge of the mortgage debt so much of the purchase money as is required for that purpose and pay the balance, if any, to the land owner, or retain the purchase money pending the decision of a civil Court as to the person or persons entitled thereto." "Land owner" is defined in section 2( 1 ) of the Act to mean person defined as such in the Punjab Land Revenue Act, 1887 (Act XVII of 1887) and shall include an "allottee" and "lessee".
as defined in clauses (b) and (c) respectively, of section 2 of the East Punjab Displaced Persons (Land Resettlement)Act, 1949 (Act XXXVI of 1949), hereinafter referred to as the "Resettlement Act".
The explanation to section 2 (1) reads: "In respect of land mortgaged with possession, the mortgagee shall be deemed to be the land owner.
" The word "tenant" is defined in section 2 (6) as follows: 214 "Tenant" has the meaning assigned to it in the Punjab Tenancy Act, 1887 (Act XVI of 1887) and includes a sub tenant and self cultivating lessee, but shall not include a present holder, as defined in section 2 of the Resettlement Act." In the Land Revenue Act, 1887, "land owner" has been defined as follows,in s.3 (2) "land owner" does not include a tenant or an assignee of land revenue, but does include a person to whom a holding has been transferred, or an estate or holding has been let in farm, under this Act for the recovery of an arrear of land revenue or of a sum recoverable as such an arrear and every other person not hereinbefore in this clause mentioned who is in possession of an estate or any share or portion thereof, or in the enjoyment of any part of the profits of an estate.
" It will be noticed that before a person can apply under section 18 of the Act he must be a tenant of a land owner other than a small land owner.
There is no dispute that the land owner in this case is not a small land owner.
The only question is whether the appellants, who were sub tenants, can be said to be tenants of the land owner within the meaning of section 18.
If we look at the definitions of the words "tenant" and "land owner", it seems clear that a tenant of a tenant cannot be a tenant of the land owner, because the definition expressly says that a land owner does not include a tenant.
Apart from this, the first proviso to sub section
( 1 ) of section 18 makes it clear that a tenant who has sublet the land or a portion, as the case may be, to any other person during the period of his continuous occupation is disabled from applying under section 18 unless during the period of his continuous occupation the tenant was suffering from legal disability or physical infirmity or if a woman was a widow or was unmarried.
In other words, for example, a tenant who is a widow would be entitled to apply under section 18 even though she had sublet the land which she desired to purchase.
No satisfactory answer was given by the learned counsel for the appellants as to what would happen if both the sub tenant and the widow applied to purchase.
Both sides have relied on the scheme of the Act, but it seems to us that the scheme of the Act and the objects underlying the Act do not assist us in determining this question.
It is well known that the main objects of the Act were to provide security to the tenants.
settle tenants on land declared surplus and fix a ceiling on the total holding of land owners and tenants.
It is also well known that it was a measure of agrarian reform.
But these matters do 215 The answer must depend upon the language of section 18, fairly construed.
If it was intended that a sub tenant should be entitled to purchase under section 18, we would have expected some provision in the Act to solve the difficulties which would arise if there was competition between the tenant and the sub tenant.
There was some debate before us whether a tenant who has sublet would be treated to be in continuous occupation of the land during the period of sub tenancy within section 18 ( 1 ) (i), but we think that the proviso to section 18 (1 ) proceeds on the basis that the tenant is in continuous occupation even though he has sublet the land.
It will again be noticed that under sub section
(4)(b) of section 18 on the purchase price being deposited, the tenant becomes owner of the land.
If the contention of the appellant was correct, the subtenant would become the owner under sub section
(4)(b); but what will happen to the rights of the tenant ? No satisfactory answer was given to this question.
Again it will further be noticed that sub section
(5) of section 18 talks of the mortgage of the land but it does not speak of the mortgage the rights of a tenant.
It seems to us that the High Court was right in holding that the legislature did not intend to confer any rights under section 18 on the sub tenant.
The fact that by sub letting the tenant is also not able to apply under section 18 by virtue of the first proviso to sub section
(1 ) cannot confer rights on the sub tenant because he must himself be a tenant of land owner within section 18 of the Act.
Mr. Chagla says that it is a very hard case for the appellants have been in possession for over 30 years, but if it is a hard case it is for the legislature to intervene and provide for such hard cases.
In the result the appeal fails and is dismissed.
There will be no order as to costs.
Y.P. Appeal dismissed.

summary/full:
The appellants, who had been in occupation of certain agricultural lands for more than 30 years as sub tenants., applied under section 18 of the Punjab Security of Land Tenures Act, 1953 to purchase the lands.
The final authority under the Act, held that the 'appellants were not entitled to purchase the land.
The appellants flied a writ petition in the High Court.
The High Court held that the appellants being sub tenants were not entitled to apply under section 18 of the Act.
Dismissing the appeal, this Court, HELD: The Legislature did not intend to confer any rights under section 18 on the sub tenant.
The word 'landowner ' is defined in section 2(1) of the Act to mean a person defined as such in the Punjab Land Revenue Act, 1887.
Under the latter Act, a landowner does not include a tenant.
The definitions of the words 'tenant ' and 'land owner ', make it clear that 'a tenant of a tenant cannot be a tenant of the land owner, Further, [213 G; 214 E] (a) The first proviso to sub section
(1) of section 18 makes it clear that a tenant who has sublet the land or a portion, as the case may be.
to any other person during the period of his continuous occupation is disabled from applying under section 18 unless during the period of his continuous occupation the tenant was suffering from legal disability or physical infirmity or if a woman was a widow or was unmarried; [214 E F] (b) If it was intended that a sub tenant should be entitled to purchase under section 18, some provision in the Act would have been there to solve the difficulties which would arise if there was competition between the tenant and the sub tenant; [215 A B] (c) If the contention of the appellant was correct, the sub tenant would become the owner of the land under section 18(4)(b) on the purchase price being deposited.
No satisfactory answer was given 'as to what will then happen to the rights of the tenant; and [215 C] (d) Section 18(5) refers to mortgage of the land but it does not refer to the mortgage of the rights of a tenant.
[215 D]


judgement:
: Criminal Appeal NO. 32 of 1965.
Appeal by special leave from the ,judgment and order dated April 5, 1963 of the Madhya Pradesh High Court, Indore Bench in Criminal Misc., Case No. 135 of 1962.
Niren De, Solicitor General, H.L. Anand, 1. M. Bhardwaj and K.B. Mehta, for the appellant.
B.C. Mishra and C.P. Lal, for respondents Nos. 1 and 2.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought from the order of the High Court of Madhya Pradesh dated 5th April, 1963 in Criminal Miscellaneous Case No. 135 of 1962 under section 520 of the Code of Criminal Procedure directing the return of 21 currency notes of the denomination of Rs. 1,000 each to respondents Rajendra Kumar Singh and Virendra Singh.
The currency notes of the total value of Rs, 21,000 were seized by the Madhya Pradesh Police from the Beawar Branch of the State Bank of India in the course of an investigation of a case under sections 420, 406 and 120B of the Indian Penal Code registered in P.S. Thuko Ganj, Indore City as Crime No. 113 of 1961 against Kishan Gopal, the third respondent.
It appears that the third respondent had come into possession of a sum of Rs. 1,50,000 in Government currency notes by cheating the first and second respondents.
The currency notes seized from the appellant were said to be part of the property obtained by Kishan Gopal by the commission of the said offence.
The case of the appellant was that it had come into possession of the said currency notes in the usual course of its business partly through the Bank of Rajasthan Limited and partly through the Mahalaxmi L2SuP CI 69 15 218 Mills Company Limited without any knowledge that the said currency notes had been the subject matter of an offence.
In the proceedings that followed on the investigation of the said case, the accused persons including the third respondent were acquitted by the Court of the Fourth Additional Sessions Judge, Indore in Sessions Case No. 3 of 1962 by an order made on 24th April, 1962.
In the course of the trial, the appellant made an application under section 517 (1 ) of the Code of Criminal Procedure asking for delivery of the aforesaid 21 currency notes to it on the ground that the said currency notes had been seized by the police from the appellant and that the appellant was an innocent third party who had received the said notes without any knowledge or suspicion of their having been involved in the commission of an offence.
By his order dated 24th April, 1962 the 4th Additional Sessions Judge, Indore allowed the application and directed that the currency notes should be returned to the appellant.
Subsequently, an appeal was filed to the High Court by the State of Madhya Pradesh being Criminal Appeal No. 205 of 1962.
The appeal was allowed and the High Court set aside the order of acquittal of the third respondent and ' convicted him under sections 420, 406 and 120B of the Indian Penal Code and sentenced to undergo imprisonment.
The first respondent, Rajendra Kumar Singh, made an application to the High Court asking for delivery of the currency notes as they belonged to him and the second respondent and as they had been deprived of the said property by the third respondent by the commission of the aforesaid offence.
The application was allowed by the High Court by its order dated 5th April, 1963 and the currency notes were ordered to be handed over to the first and the second respondents.
The relevant portion the order of the High Court reads as follows : "Now the bulk of the recovered property consists of Government currency notes either of the denomination of rupees one thousand each or money obtained after the tender of one thousand rupee notes by Kishan Gopal.
The position of the recovered money in short is this : 1.37, one thousand rupee notes were recovered from the pillow of accused Kishan Gopal after his arrest amounting to: 37,000 2.
Money directly traceable to one thousand rupee notes recovered from Dayabhai P.W.52, with whom it was deposited by accused Kishan Gopal and Mst.
Tulsabai.
59,500 3.
Money recovered from Mst.
Tulsa bai the sister of accused 's cuncubine 10,000 219 4.
Money in Beawar Bank consisting of two drafts of ten thousand each; on in the name of accused Kishan Gopal and the other in the name of Rukmanibai, his witness for which the accused ten dered twenty one thousand rupee notes and one thousand rupee notes.
with which he opened an account with his Bank.
21,000 Total : 1,27,500 This amount (Rs. 1,27,500) is directly traceable to the conversion of one thousand rupee notes.
We, therefore, direct it be given to Virendra Singh P.W. 1, and Rajendra Kumar P.W. 73, who shall proportionately divide it between themselves.
No other order is made in respect of other property and., the parties are left to establish their claim in Civil Court".
Section 517 o.f the Code ' of Criminal Procedure states: "517.
(1) When an inquiry or a trial in any Criminal Court is concluded, the Court may make such order as it thinks fit for the disposal by destruction, confiscation, or delivery to any person claiming to be entitled to possession thereof or otherwise of any property or document produced before 'it or in its custody or regarding which any offence appears to have been committed, or which has been used for the commission of any offence.
(2) When a High Court or a Court of Session makes such order and cannot through its own officers conveniently deliver the property to the person entitled thereto, such Court may direct that the order be carried into effect by the District Magistrate. . .
Section 520 provides as follows : "Any Court of appeal,confirmation, reference or revision may direct any order under section 518, section 518 or section 519 passed by a Court subordinate thereto, to be stayed pending consideration by the former Court, and may modify, alter or annul such order and made any further orders that may be just".
220 In Support of this appeal, it was contended in the first place that the High Court had ' reversed the order of the Sessions Judge directing the return of the currency notes without giving a notice to the appellant and without giving an opportunity to it for being heard.
The argument was stressed that there was a violation of the principle of natural justice and the order of the High Court dated 5th April, 1963 was illegal.
It was, however, contended on behalf of the respondents that there was no provision in section 520 of the Code of Criminal Procedure for giving notice to the affected parties and the order of the High Court cannot be challenged on the ground that no hearing was given to the appellant.
In our opinion, there is no warrant or justification for the argument advanced on behalf of the respondents.
It is true that the statute does not expressly require a notice to be issued, or a hearing to be given to the parties adversely affected.
But though the statute is silent and does not expressly require issue of any notice there is in the eye 'of law a necessary implication that the party adversely affected should be heard before the Court makes an order for return of the seized property.
The principle is clearly stated in the leading case of Cooper vs Wandsworth Board of Works(x).
In that ease section 76 of the Metropolis Local Amendment Act, 1855 authorised the District Board to demolish the building if it had been constructed by the owner without giving notice to the Board of his intention to build.
The statute laid down no procedure for the exercise of the power of demolition, and, therefore, the Board demolished the house in exercise of the above power without issuing a notice to the owner of the house.
It was held by the Court of Common Pleas that ' the Board was liable in damages for not having given notice o,f their order before they proceeded to execute it.
Erie, C,J. held that the power was subject to a qualification repeatedly recognised that no man is to be deprived of his property without his having an opportunity of being heard and that this had been applied to "many exercises of power which in common understanding would not be at all a more judicial proceeding than would be the act of the district board in ordering a house to be pulled down".
Willes, J. said that the rule was "of universal application and rounded upon the plainest principles of justice" and Byles, J. said that "although there are no positive words in a statute requiring that the party shall be heard, yet the justice of the common law will supply the omission of the legislature." The same principle has been reaffirmed in a recent case Ridge vs Baldwin(2).
In that case, section 191 of the Municipal Corporations Act, 1881 provided that a watch committee may at any time suspend or dismiss any borough constable whom they think negligent in the discharge of his duty, or otherwise unfit for the same.
The appellant, who was the chief constable of a (1) ; (2) ; 221 borough police force, was dismissed by the watch committee on the ground that he was negligent in the discharge of his duties as thief constable.
He brought an action against the members of the watch committee by stipulating that his dismissal was illegal and ultra vires the powers.
It was held by the House of Lords that the decision of the watch committee was ultra vires because they dismissed the appellant on the ground of neglect of duty and as such they were bound to observe the principles of natural justice by informing him of the charges made against him and giVing him an opportunity of being heard.
The same principle was applied by this Court in Board of High School and Intermediate Education.
U.P. Allahabad vs Ghanshvam Day Gupta and Ors.
It was held in that case that an examination committee of the Board of Secondary Education in Uttar Pradesh was acting quasi judicially when exercising its Dower under rule 1 (1) of Chapter VI of the Regulations dealing with cases of examinees using unfair means in examination hall and the principle of natural justice which require that the examinee must be heard.
will apply to the proceedings before the Committee.
Though there was nothing express one way or the other in the Act or the Regulations casting a duty on the committee to act judicially, where no opportunity whatever was given to the examinee to give an explanation and present their case before the Committee.
the Resolution of the committee cancelling their results and depriving them from appearing at the next examination was defective.
Applying the Principle to the present case it is manifest that the High Court was bound to give notice to the appellant before reversing the order of the Sessions judge directing the disposal1 of the property under section 517 of the Code of Criminal Procedure.
As no such notice was given to the appellant.
the order of the High Court dated 5th April, 1963 is vitiated in law.
The next question which arises in this appeal is whether the High Court was justified on merits in ordering the currency notes to be returned to respondents 1 and 2.
It was argued by Mr. Mishra that the High Court hat a discretion under the statute as to whom the property was to be returned and there was no reason why this Court should interfere with such exercise of discretion by the High Court.
We are unable to accent the argument.
It iS true that sections 517 and 520 of the Code of Criminal Procedure confer a discretion on the High Court as regards the disposal of the property seized or produced before it or regarding which any offence was said to have been committed.
But as we shall presently show the High Court has not exercised its discretion according to proper legal principle and its order is hence liable to be set aside.
It was stated by Mr. Mishra that the question involved in (1) ; 222 this case is whether as to which out of two innocent parties should suffer, viz.; the person who lost the property due to the criminal, act of another or the person to whom the property (currency notes) had been delivered in the normal course of its business.
It is not, however, correct to say that respondents 1 and 2 are equally innocent because respondents 1 and 2 had admittedly handed over the currency notes to respondent No. 3 "for the criminal purpose of duplication".
It was indeed urged on behalf of the appellant that respondents 1 and2 had entered into a criminal conspiracy with respondent No. 3 for 'duplicating ' the currency notes.
In any event, we are satisfied that the High Court was in error in directing the return of the currency notes to respondents 1 and 2.
The reason is that the property in coins and currency notes passes by mere delivery and it is the clearest exception to the rule Nemo dat quod non habat.
This exception was engrafted in the interest of commercial necessity.
But the exception only applies if the transferee of the coin.
or currency notes takes in good faith for value and without notice of a defect in the title of the transferor.
The rule is stated by Wills J. in Whistler vs Forster(1) as follows : "The general rule of law is undoubted, that no one can transfer a better title than he himself possesses: Nemo dat quod non habat.
To this there ,are some exceptions; one of which arises out of the rule of the law merchant as to negotiable instruments.
These, being part of the currency, are subject to.
the same rule as money: and if such an instrument be transferred in good faith, for value, before it is overdue, it becomes available in the hands of the holder, notwithstanding fraud which would render it unavailable in the hands of a previous holder.
" In the present case the appellant asserted that it had obtained 'the currency notes in the normal course of its business and without any knowledge or suspicion of their having been involved in the commission of any offence.
The respondents have not alleged fraud or lack of good faith on the part of the appellant.
The appellant hence contended that the property in the currency notes, passed in its favour by mere delivery and the appellant "had a right to possess ' the currency notes within the meaning of section 517 of the Code of Criminal Procedure.
We do not wish to express any concluded opinion in this case on the ultimate question of liability for payment of the money as between the appellant on the one hand and respondents 1 and 2 on the other.
But we are of opinion that in the circumstances of this case the High Court should have directed the return of the said currency notes to the (1) 223 appellant which had the "right to possess" the currency notes within the language of section 517 of the Code of Criminal Procedure.
we accordingly allow this appeal, set aside the order of the High Court dated April 5, 1963 and direct that the 21 currency notes of the denomination of Rs. 1000 each seized by the Madhya Pradesh Police should be returned to the appellant.
R.K.P.S. Appeal allowed.

summary/full:
21 currency notes of Rs. 1,00.0 each were seized from the Appellant Bank by the police in the course of an investigation of a case against the third respondent of cheating the first and second respondents.
The seized currency notes were said to be part of the property obtained by the third respondent from the other two respondents.
The third respondent was acquitted by the trial court of the offence charged.
In the course of the trial the appellant made an application under section 517(1) of the Code of Criminal Procedure asking for the delivery of the currency notes to it on the ground that the appellant was an innocent third party who had received the said notes without any knowledge or suspicion of their having been involved in the commission of an offence.
By its order of 24th April 1962, the trial court allowed the application and directed that the currency notes 'should be returned to the appellant.
Subseqently an appeal filed by the State was allowed by the High Court which set aside the trial court 's order of acquittal of the third respondent and convicted him of the offence charged.
On an application made by the first respondent asking for delivery of the currency notes to him as they belonged to.
him and the second respondent, the High Court, by an order of April 5, 1963 directed that the notes be handed over to the first and second respondents.
In the appeal to this Court, it was contended, inter alia, on behalf of the appellant that the High Court had reversed the order of the trial court directing the return of the currency notes to the appellant without giving a notice to the appellant.
and without giving an opportunity of being heard; and that the order of April 5, 1963 was therefore violative of the principles of natural justice and was illegal.
The contention on behalf of the respondents was that there was no provision in section 520 of the Code of Criminal Procedure for giving notice to the affected parties and the order of the High Court could not be challenged on the ground that no hearing was given to the appellant.
It was also contended that the High Court had a discretion under the statute as to whom.
the property was to be returned and there was no reason why this Court should interfere with the exercise of discretion by the High Court.
HELD: The appeal must be allowed and the order of the High Court dated April 5, 1963 set 'aside.
The seized currency notes must be directed to be returned to, the appellant.
(1) It is mainfest that the High Court was bound to.
give notice to the 'appellant before reversing the order of the trial court directing the disposal of the property under section 517 of the Code of Criminal Procedure.
As no such notice was given to the appellant, the order of the High Court dated 5th April 1963 is vitiated in law.
Although the statute does not expressly require a notice to be issued, or a hearing to be given to the 217 parties adversely affected.
there is in the eye of law a necessary implication that the parties adversely affected should be heard before the Court makes an order for return of the seized property.
[220 C D, 221 E] Cooper vs Wandsworth Board of Works. ; , Ridge vs Baldwin, ; and Board of High School and Intermediate Education, U.P. Allahabad vs Ghanshyam Das Gupta and Ors, A.I.R. 1962 S.C. 1110, referred to.
(2) The appellant asserted that it had obtained the currency notes in the normal course of its business and without any knowledge or suspecion of their having been involved in the commission of any offence and that the respondents had not alleged fraud or lack of good faith on the part of the appellant.
In the circumstances the High Court should have directed the return of the currency notes to the appellant which had the "right to possess" the notes within the language of section 517 of the Code of Criminal Procedure.
Property in coins and currency notes passes by mere delivery and it is the clearest exception to the rule Nemo dat quod non habet.
[222 B. C] Whistler vs Forster, , referred to.


judgement:
iminal Appeal No. 73 of 1966.
105 Appeal from the judgment and order dated March 31, 1965 of the Calcutta High Court in Criminal Revision No. 921 of 1963.
P.K. Chatterjee, for the appellants.
B.K. Bhattacharya, G.S. Chatterjee for P.K. Bose, for the respondent.
The Judgment of the Court was delivered by Bachawat, J.
The complainant Sarajit Kumar Bose was a forest ranger having his headquarters at Bara Bazar range in the district of Purulia.
Bibhuti Bhusan Dasgupta was the editor and Ram Chandra Adhikari was the printer and publisher of "Mukti" a local Bengali weekly journal with its registered office at Purulia town.
At the instance of Sripati Gope, a resident of Bhuni, P.S. Patanda, district Singhbhum they published a letter in the weekly issue of Mukti dated the 4th Asar, 1388 B.S. corresponding to June 19, 1965.
The letter which bore the caption "Wild law in the land of the Nags (barbarians)", contained several defamatory statements concerning Sarajit Bose.
On his complaint, Sripati Gope and Bibhuti Dasgupta were charged with an offence punishable under sec.
500 of the Indian Penal Code and Ram Adhikari was charged with an offence punishable under sec.
501 I.P.C. They were tried jointly by Shri S.M. Chatterjee, Magistrate, First Class, Purulia.
The Magistrate convicted all of them of the offences with which they were respectively charged, and passed appropriate sentences.
The appeals filed by them against the order were dismissed by the Sessions Judge, Purulia.
The order concerning the conviction and sentence of Sripati Gope has now become final.
The two courts rejected his claim for protection under the first exception to section 499 I.P.C. A revision petition filed by Bibhuti Dasgupta and Ram Adhikari was dismissed by the High Court.
They have filed the present appeal after obtaining a certificate under Article 134(1 ) (c) of the Constitution.
All the courts concurrently found that the publication was not made by the appellant in good faith for the public good and that they were not entitled to the protection of the ninth exception to sec.
499 as claimed by them Mr. Chatterjee attacked this finding.
The ninth exception to section 499 provides that "it is not defamation to make an imputation on the character of another provided that the imputation be made in good faith for the protection of the interests of the person making it, or any other person, or for the public good.
" Section 52 provides that "nothing is said to be done or believed in "good faith" which is done or believed without due care and attention.
" The appellants ' case is that on their L2Sup C[169 8] 106 behalf one Dol Gobinda Chakravarty made enquiries and was satisfied about the truth of the defamatory statements.
It appears that Dol Govinda did not make any report to the appellants in writing.
The enquiries made by him did not reveal that all the defamatory imputations in the publication were true.
On the materials on the record it is impossible to say that the appellants published the statements in good faith or with due care and attention.
In Harbhajan Singh vs State of Punjab (1) the Court held that the accused person was entitled to the protection of the ninth exception to sec.
499 if he.
succeeded in proving a preponderance of probability that the case was within the exception.
We do not find that the courts below placed upon the appellant any heavier burden of proof.
Mr. Chatterjee next contended that the trial of Bibhuti Dasgupta was illegal as he was not personally examined under sec. '342 of the Code of Criminal Procedure.
To appreciate this argument it is necessary to refer to the following facts.
On September 27, 1961 the Magistrate examined the complainant and issued summons to.
the three accused.
On the application of Bibhuti Dasgupta the Magistrate passed an order o.n December 12, 1961 dispensing with his personal appearance and permitting him to appear by his pleader.
On September 17, 1962 the examination of prosecution witnesses was concluded.
On the same day Ram Adhikari was examined under sec.
On December 21, 1962 the lawyer representing Bibhuti Dasgupta flied a petition stating that he was undergoing an operation in Calcutta and that the lawyer may be examined on his.
behalf under sec.
On the same date the Magistrate allowed the application and examined his lawyer.
On April 17, 1963 the Magistrate delivered judgment.
The plea that the trial of Bibhuti Dasgupta was vitiated on account of his non examination under section 342 was not taken before the Magistrate or the Sessions Judge or at the hearing of the revision petition in the High Court.
It was taken for the first time in the petition for grant of the certificate under article 134( 1 )(c).
In this background let us examine the contention.
As a general rule save where the magistrate dispenses with the personal attendance of the accused person the first step in a criminal proceeding is to bring him before the magistrate.
The attendance of the accused is secured if necessary by summons or by warrant of arrest.
Thereafter the inquiry or trial proceeds in his presence.
Section 205 of the Code of Criminal Procedure empowers the Magistrate whenever he issues a summons to dispense with the personal attendance of the accused and permit him to appear by a pleader.
The section runs as follows : (1) ; 107 "205.
(1) Whenever a Magistrate issues a summons, he may, if he sees reason to do so, dispense with the personal attendance of the accused and permit him to appear by his pleader.
(2) But the Magistrate inquiring into or trying the case may, in his discretion at any stage of the proceedings, direct the personal attendance of the accused, and, if necessary, enforce such attendance in the manner hereinabove provided.
" The form of summons issued to the accused runs as follows "Whereas your attendance is necessary to answer to a charge of (state shortly the offence charged) you are hereby required to appear in person (o.r by pleader, as the case may be) before the (Magistrate) of. on the . day . of .
Herein fail not.
" Section 540A empowers the magistrate at any stage of an inquiry or trial to dispense with the personal attendance of the accused if he is represented by a pleader.
The section is as follows : "540A (1) At any stage of an inquiry or trial under this Code, if the Judge or Magistrate is satisfied, for reasons to be recorded, that the personal attendance of the accused before the Court is not necessary in the interests of justice, the Judge or Magistrate may, if the accused is represented by a pleader, dispense with his attendance and proceed with such inquiry or trial in his absence, and may, at .any subsequent stage of the proceedings, direct the personal attendance of such accused.
(2) If the accused in any such case is not represented by a pleader, or if the Judge or Magistrate considers his personal attendance necessary, he may if he minks fit, and for reasons to be recorded by him, either adjourn such inquiry or trial, or order that the case of such accused be taken up or tried separately.
" The point in issue is whether the pleader can represent the accused for purposes of sec.
342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the magistrate has dispensed with the personal attendance of the accused and permitted him to appear by a pleader.
On this question there is a sharp conflict of judicial opinion.
Most of the decisions upto 1962 are referred to in Prova Devi vs Mrs. Fernandes(1).
In that case a Full Bench of Calcutta High Court by a majority decision held that the magistrate may in his discretion examine the pleader on behalf of the (1) A.I.R. 1962 Cal.
108 accused under sec.
This view is supported by numerous decisions of other High Courts, but from time to time many judges expressed vigorous dissents and came to the opposite conclusion.
The two sides of the question are ably discussed in the majority and minority judgments of the Calcutta case.
After a full examination of all the decided cases on the subject, we are inclined to agree with the minority opinion.
The main arguments in favour of the view that the examination of the pleader is sufficient compliance with the provisions of section 342 may be summarized as follows.
The pleader authorised to appear on behalf of the accused can do all acts which the accused can do.
The representation of the pleader extends throughout the trial except as provided in section 366(2).
The form .of the summons shows that the pleader may answer to charge on behalf of the accused at every stage of the proceedings.
He may even plead guilty under secs.
242, 243, 251A, 255 and 271.
There is no reason why he cannot be examined under section 342. 'That section is subject to and controlled by.
section 205.
The accused can refuse to answer questions under sec.
342 and there is no point in insisting on his personal attendance if he has no intention to answer them.
Accused persons will suffer harassment and inconvenience if the magistrates have no discretion to dispense with their personal examination under section 342.
Having considered all these arguments we are not convinced that pleader can be examined in place of the accused under section 342.
Section 342 reads as follows : "342.
( 1 ) For the purpose of enabling the accused to explain any circumstances appearing in the evidence against him, the Court may, at any stage of any inquiring or trial without previously warning the accused, put such questions to him as the Court considers necessary, and shall, for the purpose aforesaid, question him generally on the case after the witnesses for the prosecution have been examined and before he is called on for his defence.
(2) The accused shall not render himself liable to punishment by refusing to answer such questions, or by giving false answers to them; but the Court and the jury (if any) may draw such inference from such refusal or answers as it thinks just.
(3) The answers given by the accused may be taken into consideration in such inquiry.
or trial, and put in evidence for or against him in any other inquiry into or trial for, any other offence which such answers may tend to show he has committed.
(4) No oath shall be administered to the accused when he is examined under sub section (1 ).
" 109 Sub section (1 ) of sec.
342 consists of two parts.
The first part gives a discretion to the Court to question the accused at any stage of an inquiry or trial without previously warning him.
Under the second part the Court is required to question him generally on the case after the witnesses for the prosecution have been examined and before he is called for his defence.
The second part is mandatory and imposes upon the Court a duty to examine the accused at the close of the prosecution case in order to give him an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words.
He is not bound to.
answer the.
questions but if he refuses to answer or gives false answers, the consequences may be serious, for under sub section (2) the Court may draw such inference from the refusal or the false answers as it thinks fit.
Under sub sec.
(3) the answers given by the accused may be taken into consideration in the inquiry or trial.
His statement is material upon which the Court may act, and which may prove his innocence, (see State of Maharashtra vs Laxman Jairam(1).
Under sub sec.
(4) no oath is administered to him.
The reason is that when he is examined under sec.
342, he is not a witness.
Before sec.
342A was enacted, he was not a competent witness for the defence.
His statement under sec.
342 was intended to take the place of what he could say in his own way in the witness box.
(see Hate Singh vs State of Madhya Bharat(2).
Under sec.
342A, he is now a competent witness.
But the provisions of sec.
342A does not affect the value of his examination under sec.
Under sub section (3) of section 342 his answers may be put in evidence for or against him in other inquiries or trials for other offences.
For instance, if in a trial for murder he says that he concealed the dead body and did not kill the victim his statement may be used as evidence against him in a subsequent trial for an offence under sec.
The privilege of making a statement under sec.
342 is personal to the accused.
The clear intention of the section is that only he and nobody else can be examined under it.
This conclusion is reinforced if we look at sec.
The whole of his examination including every question put to him and every answer given by him must be recorded in full and interpreted to him in a language which he understands, and he is at liberty to explain or add to his answers; and when the whole is made conformable to what he declares is the truth the record has to be signed by him and the Magistrate.
The idea that the pleader can be examined on his behalf is foreign to the language of secs.
342 and 364.
It was well observed by Rankin J. in Promotha Nath vs Emperor(3) that: (1) [1962] Supp. 3 S.C.R. 230.
(2) A.I.R. 1953 S.C. 468, 470.
(3) A.I.R. 1923 Cal.
470, 481. 110 ". the intention of the statute iS that at a certain stage in the case, the Court itself shall put aside all Counsel, all 'pleaders, all witnesses, all representatives, and shall call upon an individual accused with the authority of the Court 's own voice, to take advantage of the opportunity which then arises to.
state in his own way anything which he may be desirous.
of stating. what is necessary is.
that the accused shall be brought face to face solemnly with an opportunity given to him to make a statement from his place in the dock in order that the Court may have the advantage of hearing his defence if he is willing to make one with his own lips? ' The proposition that a pleader authorised to appear on behalf of the accused can do all acts which the accused himself can do at the trial is too wide.
If the statute gives the accused a personal privilege or imposes upon him a personal duty, only he can exercise the privilege or perform the duty.
Thus under sec.
366(2) the accused must hear the judgment in person unless the sentence is one of fine only or unless, he is acquitted.
Under sec.
342A only the accused can give evidence in person and his pleader 's evidence cannot be treated as his.
The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give as a witness under sec.
The privilege and the.
duty of answering questions under sec.
342 cannot be delegated to a pleader.
No doubt the form of the summons show that the pleader may answer the charges against the accused, but in so answering the charges, he cannot do.
what only the accused can do personally.
The pleader may be permitted to represent the accused while the prosecution evidence is being taken.
But at the close of the prosecution evidence the accused must be questioned and his pleader cannot be examined in his place.
Sections 205 and 540A do not expressly mention that the pleader cannot be examined under sec.
342, but this does not lead to the inference that the pleader can be so examined.
On the other hand, secs.
353, 360, 361 and 366 expressly provide that the pleader may represent the accused for certain purposes, but from this fact alone no inference can be drawn that the pleader cannot represent the accused for purposes of section 342 or other sections.
It is from, the scheme, purpose and language of sec.
342 that we are driven to the conclusion that the examination under the section must be of the accused person and not his pleader.
In Dorabshah vs Emperor(1) the Bombay High Court held that where the accused is permitted to appear by his pleader (1) A.I.R. 1926 Bom.
111 under sec.
205 the pleader may on his behalf be examined and may plead guilty under secs.
242 and 243.
Whether the Court can act upon an admission of guilt by the pleader under secs.
242, 243, 251A, 255 and 271 does not directly arise in this case and we express no opinion on it.
It is sufficient to say that the language of those sections and the effect of admissions under them are entirely different.
We are not impressed with the argument that an accused person will suffer inconvenience and harassment if the Court cannot dispense with his attendance for purposes of sec.
The examination under the section becomes necessary when at the close of the prosecution evidence the magistrate finds.
that there are incriminating circumstances requiring an explanation by the accused.
If there is.
no evidence implicating the accused, no explanation from him is necessary and he need not be examined under section 342.
If there is evidence implicating him, it is in his interest that he should be examined personally.
There are exceptional cases when an examination of the accused personally under sec.
342 is not necessary or possible.
Where the accused is a company or other juridical person it cannot be examined personally.
It may be that the Court may then examine a director or some other agent on its behalf [see Express Diary Ltd. vs Corporation of Calcutta(1)].
Exceptional cases apart, only the accused in person can be examined under section 342.
We therefore hold that the Magistrate should have examined Bibhuti Dasgupta personally and the examination of his pleader was not sufficient compliance with sec.
This conclusion does not dispose of Bibhuti Dasgupta 's appeal.
Under sec.
537 the conviction and sentence are.
not reversable on account of any error, omission or irregularity in any proceedings during the trial unless the error, omission or irregularity has ' in fact occasioned a failure of justice.
Mere non examination or defective examination under sec.
342 is not a ground for interference unless prejudice is established.
[see Tilakeshwar Singh vs The State of Bihar(2) K.C. Mathew vs The State of Travancore Cochin(3), Ram Shankar Singh vs State West Bengal (4)].
Looking at the facts of this case we do not find that any prejudice was caused to Bibhuti Dasgupta by his non examination under sec.
The prosecution evidence was closed on September 17, 1962.
Ram Adhikari appeared in Court and was examined personally.
Bibhuti Dasgupta did not appear in Court on that date.
After 3 months o.n December 21, 1962 his pleader was examined on his behalf at his express request.
The Magistrate delivered judgment on April 17, 1963.
(1) I.L.R. (2) (3) ; , 1061 2.
(4) [1962] Supp. 1.
S.C.R. 49, 64 112 On that date Bibhuti Dasgupta was.
present in Court.
He made no complaint at any time before the Magistrate or the Sessions Judge or the High Court that he had suffered any prejudice.
Even in this Court Mr. Chatterjee could not point out what further explanation could have been given by Bibhuti Dasgupta if he had been examined personally.
We are satisfied that the omission to examine him under sec.
342 did not cause him any prejudice and has not in fact occasioned a failure of justice.
We are, therefore, not inclined to interfere with his conviction and sentence.
In the result, the appeal is dismissed.
Y.P. Appeal dismissed.

summary/full:
In a defamation case, at the instance of the accused his personal appearance.
was dispensed .with by the Magistrate under section 540 A Cr.
His advocate was examined under section 342 at the close of the trial and the accused was convicted.
On the questions: (i) whether the pleader can represent the accused for purposes of section 342 and whether the examination of the pleader in place of the accused is sufficient compliance with the section in a case where the Magistrate has dispensed with the personal attendance of the accused 'and permitted him to appear by a pleader; and (ii) whether mere non examination of the accused or defective examination under section 342 vitiates the trial, HELD: (i) The privilege of making a statement under section 342 is personal to the accused and the scheme, purpose and language of the section lead to the conclusion that only he and no body else can be examined under it.
If the statute gives the accused a personal privilege or imposes upon him a personal duty only he can exercise the privilege or perform the duty.
The second part of section 342 is mandatory and imposes upon the court a duty to examine the accused at the close of the prosecution case in order to give him 'an opportunity to explain any circumstances appearing against him in the evidence and to say in his defence what he wants to say in his own words.
The answers of the accused under section 342 is intended to be a substitute for the evidence which he can give under section 342 A and the privilege and duty of 'answering questions under section 342 cannot be delegated to a pleader.
Though sections 205 and 540 A which empower a Magistrate to dispense with the personal appearance of the accused do not expressly mention that the pleader cannot be examined under section 342, it does not lead to the inference that the pleader can be so examined.
G H, 109 B; 110 C D, 109 E; 110 F H] Dorabshah vs Emperor, A.I.R. 1926 Bom.
218, disapproved.
(ii) Under section 537 the conviction and sentence are not reversible on account of any error, omission or irregularity in 'any proceedings during the trial unless the error, omission or irregularity has in fact occasioned a failure of justice.
Therefore the mere non examination of the accused in the present case, under section 342 was not a ground for interference since no prejudice was established.
[111 F] Tilakeshwar Singh vs The State of Bihar, [1955] 2 S.C.R. 105, K.C. Mathew vs The State of Travancore Cochin, [1955] 2 S.C.R. 1057 and Ram Shankar Singh vs State of West Bengal, [1962] Supp. 1 S.C.R. 49, 64, referred to.