judgement:
Appeal No. 1997 of 1968.
Appeal by Special Leave from the Judgment and Order dated the 13th February, 1968 of the Bombay High Court in Special Civil Application No. 643 of 1967.
B.N. Lokur and A. G. Ratnaparkhi for the Appellant.
S.V. Gupte, R.B. Datar and Sanjeev Kumar for Respondents.
The Judgment of the Court was delivered by RAY, C.J.
This appeal by special leave is from the judgment dated 13 February 1968of the High Court of Bombay.
The appellant was owner of land covered by Survey No. 201/2, 194/13, 200/29 and 194/15.
The appellant 's wife sold this land to respondent No. 1 on 14 June 1946.
On 12 April 1962 the appellant made an application under ' section 70(b) of the Bombay Tenancy & Agricultural Lands Act (hereinafter referred to as the Bombay Act) for a declaration that he was a tenant of two of the four plots of land namely, Survey Nos. 194/15 and 200/29.
This dispute between the appellant and the respondent in regard to alleged tenancy claim for these two survey numbers went up to the Maharashtra Revenue Tribunal.
The Tribunal by order dated 19 March, 1954 rejected the claim of the appellant to tenancy in respect of the land covered by Survey Nos.
200/29 and 194/15.
Thereafter the respondent filed an application on 24 January 1963 under section 70(b) of the Bombay Act for a declaration that the appellant was not tenant of the remain ing two Survey Nos.201/2 and 194/13.
The respondent alleged that he never leased the land to the appellant.
The re spondent further said that he came to know about entry in the record of rights for the years 1955 56 on the strength of mutation alleged to have been made on 30 January 1956 and sanctioned on 13 November 1956.
This application of the respondent was resisted by the appellant on the ground that he was tenant of these two survey Nos.
201/2 and 194/13.
The matter was heard by the Mamlatdar.
By an order dated 31 July 1963 the Mamlatdar rejected the claim of the appellant to be.
a tenant.
Thereafter the matter was taken up to the District Deputy Collector.
The Deputy Collector by his order dated 27 June 1966 upheld the Mamlatdar 's order.
Before the Mamlatdar and the Deputy Collector the respondent examined himself.
He was cross examined and his attention was drawn in cross examination towards an alleged admission about the appellant being his tenant in the depo sition.
recorded by the Tenancy Aval Karkun in an earlier case on 10 September 1962.
The respondent denied that he made.any admission.
The previous deposition was not shown to him on that day.
673 On 9 July 1963 a certified copy of the deposition in the earlier proceedings was placed on record.
On that very day the.
appellant examined himself, saying that he was a tenant of the land and he had no other evidence to show in support of his case except the certified copy of the statement which was produced on that day.
The appellant also relied on the extracts of the record of rights showing that the respondent was shown as 'Kabze dar ' of Survey Nos.
201/2 and the appellant was shown as tenant of the same.
In regard to Survey No. 194/13 it also appeared from the record of rights that the respondent was shown as 'kabzedar ' and the appellant as a tenant.
On this evidence the Mamlatdar held that the appellant was not Cultivating the lands as a tenant of the respondent and he declared that the appellant was not a tenant.
The Deputy ColleCtor affirmed the order of the Mamlatdar.
The Maharashtra ReVenue Tribunal however by its order dated 9 January 1967 held that the appellant was proved to be a tenant of the land.
The respondent thereupon took the matter to the High Court under Article 227.
The High Court set aside the order of the Revenue Tribunal.
The appellant obtained special leave from this Court.
On behalf of the appellant three contentions were advanced.
First, that the respondent was bound by his admission that the appellant is a tenant.
Second, there is a presumption of the correctness of the record of rights under section 135 J of the Bombay Land Revenue Code 1879.
Third, the Maharashtra Revenue Tribunal was justified in setting aside the findings of fact of the Mamlatdar and the Deputy Collec tor because of error of law.
The admission on which reliance has been placed by counsel for the appellant suffers from three infirmities.
In the deposition of the respondent in Tenancy Case No. 6/61 62 dated 10 September 1962, the respondent gave evi dence in regard to dispute between the respondent and the appellant in relation to Survey Nos.
200/29 and 194/15 respondent said that he never kept the appellant as a tenant on the land.
In cross examination it was suggested to the respondent that the land bearing Survey No. 201/2 belonged to the respondent and that the appellant is a tenant in the land.
The respondent said as follows: "The land Survey No. '201/2 situate in Balkum belongs to me in Balkum.
The applicant is a tenant in the said land.
I do not take the rent in respect of the said land . .
I have prior to 15 20 years purchased this land from Sita ram Bhau.
Even the land bearing section No. 201/2 was purchased right from him.
I have never cultivated the land bearings section No. 201/2.
It was barren at that time.
When this land was to be acquired I learnt whether Sitaram Bhau was culti vating this land . or whether his name has been entered as a tenant against this land(?) I cannot say as to whose land is around the land beating section No. 201/2 or other Land.
" 674 This evidence read in its entirety is not an admission at all.
A person who says that 'I have taken no rent ' obviously says that there is no relationship of landlord or tenant.
The first infirmity in regard to this admission is that whatever was said by the respondent in regard to Survey No. 201/2 is irrelevant and inadmissible in the deposition of the respondent in that case.
Section 17 of the Indian Evidence Act states that 'An admission is a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact, and which is made by any of the persons, and under the circumstances, hereinafter men tioned '.
In regard to dispute between the appellant and the respondent arising out of Survey No. 194/15 and 200/29, Survey Nos.
201/2 and 194/13 were neither issues in fact nor relevant fact.
The second infirmity against this admission being used against the respondent is that as long as the respondent was under cross examination, it was not brought to his notice.
It is said by counsel for the appellant relying on the decision of this Court in Bharat Singh and Anr.
vs Bhagira thi reported in 1966(1) S.C.R. 606, that this admission was proved by the appellant and this admission on the ruling Of the decision of this Court (Supra) is substantive evidence and is therefore admissible against the respondent.
The decision of this Court in Bharat Singh 's case (Supra) is that: "Admissions have to be clear if they are to be used against the person making them.
Admissions are substantive evidence by them selves, in view of sections 17 & 22 of the Indian Evidence Act, though they are not conclusive proof of the matters admitted.
" Admission proved are said in the decision to be "admissible evidence irrespective of whether the party making them appeared in the witness box or not and whether the party when appearing as witness was confronted with those statements in case it made a statement contrary to those admissions".
Counsel for the appellant submitted that the respond ent even though not confronted with the admissions would be bound by his admissions and the appellant would be enti tled to rely on the admissions as admissible.
There is the observation in the very next sentence in the aforesaid decision of this Court that "the purpose of contradicting the witness under section 145 of the Evidence.
Act is very much different from the purpose of proving .the admission".
It, therefore.
, follows that admission is relevant and it has to be proved before it becomes evidence.
If admission is proved and if it is thereafter to be used against the party who has made it the question comes within the provisions of Section 145 of the Evidence Act.
The provisions in the Indian Evidence Act that 'admission is not conclusive proof ' are to be considered in regard ,to two features of evidence.
First, what weight is to be attached to an admission ? In order to attach weight it has to 675 be found out whether the admission is clear, unambiguous and is a relevant piece of evidence.
Second, even if the admis sion is proved in accordance with the provisions of the Evidence Act and if it is to be used against the party who has made it, "it is sound that if a witness is under cross examination on oath, he should be given an opportunity if the document are to be used against him, to tender his explanation and to clear up the point of ambiguity or dis pute.
This is a general salutary and intelligible rule" (see Bal Gangadhar Tilak vs Shrinivas Pandit 42 Indian Appeals 135 at page 147).
The Judicial Committee in that case said, "it has to be observed with regret and with surprise that the general principle and the specific statu tory provisions have not been followed".
The general prin ciple is that before any person is to be faced with any statement he should be given an opportunity to see that statement and to answer the same.
The specific statutory provision is contained in Section 145 of the Indian Evidence Act that "A witness may be cross examined as to previous statements made by him in writing or reduced into writing, and relevant matters in question, without such writing being shown to him or being proved; but if it is intended to contradict him by the writing, his attention must, before the writing can be proved, be called to those parts of it which are to be used for the purpose of contradicting him".
The fore, a mere proof of admission, after the person whose admission is alleged to be has concluded his evidence, will be of no avail a cannot be utilised against him.
The third infirmity with regard to this admission is whether this is a clear and unequivocal admission.
The High Court said that"a certified copy of the deposition was placed on record on 9 July 1973, on which day against it does not appear that the contents of the deposition were read out to the respondent or that any attempt was made to obtain leave of the Court to further cross examine the witness." .The contents of the ' alleged admission .to which reference has been made are not unambiguous and cannot be accepted as an admission.
The contents are that he was not receiving any rent and the land was fallow.
Therefore, the High Court was right in rejecting the contentions advanced by the appellants that there was any admission and in set ting aside the decision of the Revenue Tribunal.
The second ' contention on behalf of the appellant is that the certain record of rights relied on by the appellant would establish that the appellant was a tenant.
The High Court ' rightly accepted the contention of the respondent that after a careful consideration of the evidence on record the fact finding courts, i.e. the Mamlatdar and the Special Deputy Collector recorded a finding that the appellant had not cultivated the land in dispute as the tenant of the respondent.
Therefore the Revenue Tribunal had no jurisdic tion to interfere and set aside the finding of fact.
As to the record of rights it appears that the High Court referred to two important features.
It is true that the record of rights relate to Survey Nos.
201/2 and 194/13 and there is mention of the appellant as tenant.
There is also a reference to the mutation proceedings.
The name of the respondent is shown as Kabjedar.
Two of the 9 112SC1/77 676 important heads in the record are 'Mode ' and 'Crops & fal lows '.
The Mode is shown as "I" and under Crops and fallows entry 'Paddy ' is shown.
The High Court referred to this feature of the record of rights Mode "I" means that the respondent cultivated as owner of the land that was never even case of the appellant.
The High Court rightly said that the irresistible conclusion therefore is that the extracts from the record of rights contain entries which do not have any relation to true facts.
If that is the posi tion with regard to these extracts, these cannot be relied on for inference that actually the land was cultivated and paddy crops were grown on the said land.
With regard to the record of rights counsel for the appellant said that presumption arises with regard to its correctness.
There is no abstract principle that whatever will appear in the record of rights will be presumed to be correct when it is shown by evidence that the entries are not correct.
Apart from the intrinsic evidence in the record of rights that they refer to facts which are untrue it also appears that the record of rights have reference to the mutation entry that was made by the Circle Officer on 30 January 1956.
Counsel for the respondent rightly contended that no presumption could arise for two principal reasons.
First, the oral evidence in this case nullified the entries.
in the record of rights as showing a state of affairs op posed to the real state of affairs and, second, no notice was ever given to the respondent with regard to mutation proceedings.
Therefore the respondent is right in contend ing that no presumption can validly arise from the record of rights.
The third contention on behalf of the appellant that the Tribunal was justified to interfere because of error of law is also unacceptable.
The provisions contained in section 76 of the Bombay Act enumerate the grounds on which there can be revision by the Revenue Tribunal.
One of the grounds is that there is 'error of law '.
In the present case the manner in which the Maharashtra Revenue Tribunal entertained the revision was by holding, as follows: "There is evidence that the applicant (meaning thereby the appellant) has been in actual possession of land since 1956 57 onwards".
However, the authorities below have rejected the entries as well as the opponents ' (meaning thereby the respondent) admission on the ground that the applicant did not support the entries by producing the rent receipts.
According to the authorities below the burden was on the applicant to prove his case by producing evidence to corroborate the entries.
The appellate authority has also observed that the alleged admission of the opponent, made in the other case was rejected by the Revenue Tribunal.
The authorities below arrived at the conclusion that the applicant 's possession was otherwise than lawful.
This concurrent finding of the authorities below is being challenged by the applicant in this revision application.
" The Revenue Tribunal seemed to consider the approach of the a Mamlatdar and the Deputy Collector to be erroneous because according to the Revenue Tribunal the burden was shifted to the respondent 677 to rebut the entry in the record of rights and .that the respondent failed to discharge that burden.
When the entire evidence is before the Court, it is well settled that the burden of proof becomes immaterial.
Further the Revenue Tribunal fell into error of enter taining the Revision when there was no error of law on the face of the record.
The presumption which was said to arise in the record of rights was before the Deputy Collector as well as the Mamlatdar.
If the authority entrusted with adjudication goes into the question and assesses the same, the decision may be right or wrong but that will not go to show that there is any error of law on the fact of record.
All the three contentions advanced by the appellant fail.
The appeal is for the foregoing reasons dismissed with costs.
P.H.P. Appeal dis missed.

summary/full:
The appellant was owner of the suit land.
The appel lant 's wife sold this land to respondent No 1.
Thereafter, the appellant made an application under section 70(b) of the Bombay Tenancy & Agricultural Lands Act, 1948, for a decla ration that he was a tenant of two of the 4 plots of the land.
The dispute went up to the Maharashtra Revenue Tribu nal who rejected the claim of the appellant to tenancy.
Thereafter, the respondent filed an application under sec tion 70(b) of the said Act praying for a declaration that the appellant was not a tenant in respect of the remaining two survey numbers also.
The respondent alleged that he never leased the land to the appellant and that he came to know of the entry of the record of rights for the year 1955 56 on the strength of mutation alleged to have been made on 30.1.1966.
The respondent was cross examined and it was suggested to him that he had made an admission in previ ous deposition although the said deposition was not shown to the respondent.
After the cross examination of the respond ent was over, a certified copy of the said deposition was placed on record.
Thereafter the appellant was examined and he relied on the extract of the record of rights.
The Mamlatdar rejected the claim of the appellant to be a tenant which was confirmed by the Deputy Collector.
The Maharash tra Revenue Tribunal held in exercise of its revisional powers that the appellant was proved to be a tenant of the land and set aside the concurrent findings of the two au thorities below.
In a writ petition filed by the respondent under article 227 of the Constitution the High Courts set aside the order of the Revenue Tribunal.
Dismissing the appeal by Special Leave, HELD : 1.
Admission on which reliance has been placed by the appellant suffers from 3 infirmities: (i) Earlier deposition related to two different survey numbers.
Whatever was stated about another survey number is irrelevant and inadmissible.
Since under section 17 of the Indian Evidence Act an admission is a statement, oral or documentary, which suggests any inference as to any fact in issue or relevant fact.
(ii) In fact there was no admission in the earlier proceed ings; and (iii) The deposition was not brought to the notice of re spondent when he was being cross examined.
Privy Council has laid down in the case of Bal Gangadhar Tilak that before any person is to be faced with any statement he should be given an opportunity to see that statement and to answer the statement.
[673 E, 674 A C, 675 A E] Bal Gangadhar Tilak vs Shrinivas Pandit 42 Indian Ap peals 135 at page 147, applied.
There is a presumption about the correctness of the record of rights.
However, there is no abstract principle that whatever will appear in the Record of Rights will be presumed to be correct.
In the present case it is shown by evidence that the entries are not correct.
[676 B D] 672 3.
Under section 76 of the Act power of Tribunal to interfere is limited.
There was no error of law on the face of the record.
If the authority entrusted with adjudication goes into the question and assesses the same, the decision may 'be right or wrong but that will not go to show that there is any error of law on the face of record.
[676 E, 677 A B]


judgement:
l Appeal Nos.
772 773 of 1972.
From the Judgment and Order dated 9th/10th July, 1970 of the Calcutta High Court in I.T.R. No. 158 of 1966.
N. A. Palkhivala, Dr. D. Pal, U.K. Khaitan, S.R. Agar wal and Parveen Kumar for the Appellant.
V.P. Raman, Addl.
General, T.A. Ramachandran and R.N. Sachthey for the Respondents.
764 The Judgment of the Court was delivered by GOSWAMI, J.
These two appeals by certificate are from the judgment of the Calcutta High Court since reported in Commissioner Income tax, West Bengal I vs Textile Machinery Corporation( ').
The two appeals relate respectively to two assessment years 1958 59 (calendar year 1957) and 1959 60 (calendar year 1958).
The matter relates to the claim by the assessee for exemption of tax under section 15C of the Indian Income tax Act, 1922 (briefly the Act).
The matter came u13 before the High Court 'on a refer ence under section 66(1) of the Act.
The two questions referred to were as follows : "(1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Steel Foundry Division was an industrial undertaking to which section 15C of the.
Indian Income tax Act, 1922, applied ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the Jute Mill Division set up by the assessee company was an indus trial undertaking to which section 15C of the Indian Incometax Act, 1922, applied ? The facts may briefly be stated: The assessee (the appellant herein) is a heavy engineer ing concern manufacturing boilers, machinery parts, wagons, etc.
For the assessment years 1958 59 and 1959 60 the assessee claimed exemption of tax under section 15C of the Act in respect of the profits and gains derived from its Steel Foundry Division and a similar claim for relief under section 15C in respect of its profits and gains derived from its Jute Mill Division for the year 1959 60.
The assessee had previously in the earlier years bought from outside the castings manufactured in the Steel Foundry Division which was started in the assessment year 1958 59 and continued thereafter.
Again, similarly in the year '1959 60, in addition to the manufacturing of castings in the Steel Foundry Division the assessee started the Jute Mill Division where the parts made out of the raw material supplied by the Boiler Division by machining and forging them were given to the Boiler Division of the assessee.
It was found that out of a total sale of Rs.28,23,127/ of steel castings goods worth Rs.18,39,433/ were used in connection with the various Divisions of the company.
In respect of the Jute Mill Division, the Incometax Officer found that out of the total sales of Rs.13,03,509/ sales.
to the Boiler Division totalled Rs.11,89,812/ and sales to outside the Jute Mill Division totalled only a sum of Rs.1,13,6971/ .
The Income tax Officer and the Appellate Assistant Commissioner, on the above facts, held the under takings as expansion and reconstruction of the business already existing and hence the assessee was not entitled (1) 765 to exemption under section 15C of the Act.
The Income tax Appellate Tribunal, however, allowed the appeal of the assessee and accepted the claim for exemption under section 15C.
According to the Tribunal both the Steel Foundry and the Jute Mill Division of the assessee were new industrial undertakings.
The above conclusion was reached on the basis of several facts found by the Tribunal.
These arc that the machinery was new, was housed in a separate building and that industrial licences had to be obtained, for manufactur ing the parts in question.
According to the Tribunal the existing business of the assessee consisted of manufacturing boilers, wagons, etc.
and for that purpose the assessee was purchasing the spare parts, forgings and castings from outside.
The Tribunal came to the conclusion that the business of the new industrial undertakings was to manufac ture those very spare parts.
Hence the Tribunal concluded that it could not be said that the undertakings were formed out of the existing 'business to come within the mischief of the exclusion clause in section 15C(2)(i).
The Tribunal rightly relying upon the Tara Iron and Steel Co. Ltd. and Others vs State of Bihar(1) also held that even though the manufactured products of the new industrial undertakings were mostly used in the assessee 's other business of manu facturing boilers, wagons, etc.
the element of profit was there and the extent of the same could be ascertained as the assessee was maintaining separate books of account.
In the reference at the instance of the Department the High Court answered both the questions in the negative and against the assessee.
The High Court held as follows : "The goods which the steel foundry division and the jute mill division began producing for the assessee were also previous ly used by the assessee in its business, but they were purchased from outside and this purchase from outside was replaced by produc tion or manufacture from within the asses see 's own business.
This change of producing one 's own goods systematically used in the existing business instead of buying them from outside would only be a reconstruction of a business already in existence .
In so far as they started producing and manufactur ing themselves, the assessee was doing some thing which was only a reconstruction of the business already in existence . .
The newness of the machinery of the steel foundry division and the jute mill division could not by itself make them new industrial undertakings.
Separate housing of, and separate accounts for, the steel foundry division and jute mill division may be only parts of reconstruction of the same business and did not necessarily indicate a new indus trial undertaking.
The grant of a special licence for the steel foundry division did not make it an industrial undertaking to qualify for exemption from tax under section 15C, because the licence was for expansion of the existing industrial undertaking and the licence did not cover the jute mill division".
(1) 766 It is, however, admitted before us that both the units were covered by licences.
The controversy in these appeals centres round the true construction of section 15C(2)(i) of the Act and in particu lar with regard to the scope and ambit of the expression therein, namely, the reconstruction of business already in existence.
Is the High Court right in holding that the two industrial undertakings, namely, the Steel Foundry and the Jute Mill Division, are formed by reconstruction of the business already in existence differing from the con trary conclusion reached by the Tribunal ? Before we proceed further, we will read section 15C as it stood during the material time: "15C. Exemption from tax of newly estab lished industrial undertakings.
(1) Save as otherwise hereinafter provided, the tax shall not be payable by an assessee on so much of the profits or gains derived from any industrial undertaking to which this section applies as do not exceed six per cent per annum on the capital employed in the undertaking computed in accordance with such rules as may be made in this behalf by the Central Board of Revenue.
(2) This section applies to any industrial undertaking which (i) is not formed by the splitting up, or the reconstruction of, business already in existence or by the transfer to a new business of building, machinery or plant, previously used in any other business; (ii) has begun or begins to manufacture or produce articles in any part of taxable territories at any time within a period of thirteen years from the 1st day of April 1948, or such further period as the Central Govern ment may, by notification in the Official Gazette, specify with reference to any partic ular industrial undertaking; (iii) employs ten or more workers in a manufacturing process carried on with the aid of power, or employs twenty or more workers in a manufacturing process carried on without the aid of power; Provided that the Central Government may, by notifica tion in the Official Gazette, direct that the exemption conferred by this section shall not apply to any particular industrial undertaking.
767 (3) The profits or gains of an industrial undertaking to which this section applies shall be computed in accordance with the provisions of section 10.
(4) The tax Shall not be payable by a shareholder in respect of so much of any dividend paid or deemed to be paid to him by an industrial undertaking as is attributable to that part of the profits or gains on which the tax is not payable under this sec tion.
(5) Nothing in this section shall affect the application of section 23A in relation to the profits or gains of an industrial under taking to which this section applies.
(6) The provisions of this section shall apply to the assessment for the financial year next following the previous year in which.the assessee begins to manufacture or produce articles and for the four assessments immediately succeeding".
We are principally concerned in these appeals with clause (i) of sub section (2) of section 15C and that also only with one part of it, namely, whether the industrial undertakings, Steel Foundry and the Jute Mill Division, are not formed by the reconstruction of the business already in existence.
The learned Additional Solicitor General submits that these two undertakings are not entitled to exemption under section 15C(2) as rightly so held by the High Court since they were formed by the reconstruction of the assessee 's business already in existence, namely, the business of heavy engineering.
He submits that setting up of a separate unit to do something in the course of pre existing manufacturing process to aid the production of the same article as was being produced by the pre existing industrial undertaking would not amount to starting of a new industrial undertak ing.
He further emphasises that production of the articles in the Steel Foundry and in the Jute Mill Division is only ancillary activity to the main business of the assessee and since the articles produced in these two supplemental undertakings help in producing the identical article which has been the end product of the assessee 's main business, section 15C(2) (i) cannot come to the aid of the assessee.
According to Mr, Raman these two industrial undertakings cannot be said to be not formed out of the reconstruction of the business already in existence.
Section 15C(2)(i) only excludes three categories of industrial undertakings from the benefit of the section without referring to clauses (ii) and (iii) of that sub section and other limiting provisions of the section which are not applicable in the instant case.
It is contended by Mr. Palkhivala that acceptance of the Additional Solicitor General 's submission will amount to adding a fourth category of cases in sub section (2)(i), namely, an industrial under 768 taking which is an ancillary undertaking manufacturing certain articles to supplement the principal industrial activity.
This, says Mr. Palkhivala, will be adding something to the section.
Section 15C is an exemption section.
The benefit grant ed under this section is a partial benefit so far as the quantum of the exempted profits of the new industrial under taking as also for a limited period or periods as specified in the section.
If the two industrial undertakings, about the existence of which there can be no controversy, as found by the Tribunal, cannot be held to.
be formed by the recon struction of the business already in existence, the benefit of section 15C will be available to the assessee.
The principal object of section 15C is to encourage setting up of new industrial undertakings by offering tax incentive within a period of 13 years from April 1, 1948.
Section 15C provides for a fractional.
exemption from tax of profits of a newly established undertaking for five assessment years as speci fied therein.
This section was inserted in the Act in 1949 by section 13 of the Taxation Laws (Extensions to Merged States and Amendment) Act, 1949 (Act 67 of 1949) extending the benefit to the actual manufacture or production of arti cles commencing from a prior date, namely, April 1, 1948.
After the country had gained independence in 1947 it was most essential to give fillip to trade and industry from all quarters.
That seems to be the background for insertion of section 15C.
It is also significant that the limit of the number of years for the purpose of claiming exemption has been pro gressively raised from the initial 3 years in 1949 to 6 years in 1953, 7 years in 1954, 13 years in 1956 and 18 years in 1960.
The incentive introduced in 1949 has been thus stepped up ever since and the only object is that which we have already mentioned.
Under sub section (1) of section 15C the tax shall not be payable by an assessee on profits not exceeding six per cent per annum on the capital employed in the new industrial undertaking from the profits which alone exemption is claimed.
Sub section (2) of section 15C has a negative as well as a positive aspect.
Negatively, the new industrial undertaking of the assessee should not be formed (1) by the splitting up of the business already in existence, (2) by the reconstruction of business already in existence, or (3) by the transfer to a new business of building, machinery or plant used in a busi ness which was being carried on before April 1, 1948.
We agree that it is not possible to exclude any new indus trial undertaking other than the three categories mentioned above.
769 We are concerned in these appeals with the type No. (2) mentioned above.
Positively, the new industrial undertaking must produce result, that is to say, it has to manufacture or produce articles at any time within a period of 13 years from April 1, 1948.
The further requirement under sub section (2) is with regard to the personnel in the under taking, namely, that ten or more workers have to work in the manufacturing process carried on with the aid of power or twenty or more workers have to carry on work without the aid of power.
The above element with regard to the number of workers engaged in the undertaking would go to.
show that even small industrial undertakings, newly started, are within the exemption clause, where, for example, twenty workers may complete the industrial process without the aid of power.
There is no controversy about the .positive aspects in 'these appeals.
Again, the new undertaking must not be substantially the same old existing business.
The third excluded category mentioned above significant.
Even if a new business is carried on but by piercing the veil of the new business it is found that there is employment of the assets of the old business, the benefit will be not available.
From this it clearly follows that substantial investment of new capital is imperative.
The words "the capital employed" in the principal clause of section 15C are significant, for fresh capital must be employed in the new undertaking claiming exemption.
There must be a new under.taking where substan tial investment of fresh capital must be made in order to enable earning of profits attributable to that new capital.
The assessee continues to be the same for the purpose of assessment.
It has its existing business already liable to tax.
It produced in the two concerned undertakings commodi ties different from those which it has been manufacturing or producing in its existing business.
Manufacture of produc tion of articles yielding additional profit attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter, to earn benefit from the exemption of tax liability under section 15C. Sub section (6) of the section also points to the same effect, namely, production of articles.
The answer, in every particular case depends upon the peculiar/acts and conditions of the new industrial undertaking on account of which the assessee claims exemp tion under section 15C. No hard and fast rule can be laid down.
Trade and industry do not run in earmarked channels and particularly so in view of manifold scientific and technological developments.
There is great scope for expan sion of trade and industry.
The fact that an assessee by establishment of a new industrial undertaking expands his existing business, which he certainly does, would not, on that score, deprive him of the benefit under section 15C. Every new creation in business is some kind of expan sion and advancement.
The true test is no.t whether the new industrial undertaking connotes expansion of the exist ing business of the assessee but whether it is all the same a new and identifiable undertaking separate and distinct from the existing business.
No particular decision in one case can lay down an inexorable test to determine whether a given case comes under section 15C or not.
In order that the new undertaking can be said to be not formed out of the already existing business, there 770 must be a new emergence of a physically separate industrial unit which may exist on its own as a viable unit.
An undertakings is formed out of the existing business if the physical identity with the old unit is preserved.
This has not happened here in the case of the two undertakings which are separate and distinct.
It is clear that the principal business of the assessee is heavy engineering in the course of which it manufactures boilers, wagons, etc.
If an industrial undertaking produce certain machines or parts which are, by themselves, identi fiable units being marketable commodities and the undertak ing can exist even after the cessation of the principal business of the assessee, it cannot be anything but a new and separate industrial undertaking to qualify for appropri ate exemption under section 15C. The principal business of the assessee can be carried on even if the said two addi tional undertakings cease to function.
Again, the con verse is also true.
The fact that the articles produced by the two undertakings are used by the Boiler Division of the assessee will not weigh against holding that these are new and separate undertakings.
On the other hand the fact that a portion of the articles produced in these two new indus trial undertakings had been sold in the open market to others is a circumstance in favour of the assessee that the new industrial units can function on their own.
Use of the articles by the assessee is not decisive to deny the benefit of section 15C. Section 15C partially exempts from tax a new industri al unit which is separate physically from the old one, the capital of which and the profits thereon are ascertainable.
There is no difficulty to hold that section 15C is applica ble to an absolutely new undertaking for the first time started by an assessee.
The cases which give rise to controversy are those where the old business is being car ried on by the assessee and a new activity is launched by him by establishing new plants and machinery by investing substantial funds.
The new activity may produce the same commodities of the old business or it may produce some other distinct marketable products, even commodities which may feed the old business.
These products may be consumed by the assessee in his old business or may be sold in the open market.
One thing is certain that the new undertaking must be an integrated unit by itself wherein articles are pro duced and at least a minimum of ten persons with the aid of power and a minimum of twenty persons without the aid of power have been employed.
Such a new industrially recognisa ble unit of an assessee cannot be said to be reconstruction of his old business since there is no transfer of any assets of the old business to the new undertaking which takes place when there is reconstruction of the old busi ness.
For the purpose Of section 15C the industrial units set up must be new in the sense that new plants and machin ery are erected for producing either the same commodities or some distinct commodities.
In order to deny the benefit of section 15C the new undertaking must be formed by recon struction of the old business.
Now in the instant case there is no formation of any industrial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking.
There is no such transfer of assets in the two cases with which we are concerned.
771 We will now deal with the question whether the two undertak ings the assessee are formed by reconstruction of the exist ing business.
The word 'reconstruction ' is not defined in the Act but has received judicial interpretation.
In re South African Supply and Cold Storage Company, Wild vs Same Company(1), Buckley, J. dealing with the meaning of the word 'reconstruction ' in a company matter observed as fol lows : "What does 'reconstruction ' mean ? To my mind it means this.
An undertaking of some definite ' kind is being carried on, and the conclusion is arrived at that it is not desirable to kill that undertaking, but that it is desirable to preserve it in some form, and to do so, not by selling it to an outsider who shall carry it on that would be a mere sale but in some altered form to continue the undertaking in Such a manner as that the persons now carrying it on will substantially continue to carry it on.
It involves, I think, that substantially the same business shall be carried on and substantially the same persons shall carry it on.
But it does not involve that all the assets shall pass to the new company or resuscitated company, or that all the shareholders of the old company shall be shareholders in the new company or resusci tated company.
Substantially the business and the persons interested must be the same".
This concept of reconstruction was accepted by the Bombay High Court in the Commissioner of Income tax, Bombay City I vs Gaekwar Foam and Rubber Co. Ltd. (1), dealing with section 15C of the Act.
While adverting to the passage which we have just quoted the Bombay "Now fully appreciating the distinction which counsel for the Revenue has sought to make between the case of a reconstruction of a company and the case of reconstruction of a business, these observations, as we read them, are equally illuminating in the context of reconstruction of business already in existence in the case of a newly established industrial undertaking".
The Delhi High Court also in Commissioner of Income tax vs Gangs Sugar Corpora tion Ltd.(a), accepted the above concept of 'reconstruction ' in the following passage : "We have given the matter our earnest consideration and are of the view that in the reconstruction of business, as in the reconstruction of a company, there is an element of transfer of assets and of some change, however partial or restricted it may be, of ownership of the assets.
The transfer, however, need not be of all the assets.
It is none the less impera tive that there should be continuity and preservation of the old undertaking though in an altered form.
(1) (3) 772 The concept of reconstruction of business would not be attracted when a company which is already running one industrial unit sets up another industrial unit.
The new indus trial unit would not lose its separate and independent identity even though it has been set up by a company which is already running an industrial unit before the setting up of the new unit".
We endorse the above views with regard to reconstruction of business.
Reconstruction of business involves the idea of substan tially the same persons carrying on substantially the same business.
It is stated on behalf of the Revenue that the same company in the instant case continues to do the same business of heavy engineering no matter certain spare parts necessary as components to completion of the end product are now manufactured in the business itself.
The fact that the assessee is carrying on the general business of heavy engineering will not prevent him from setting up new industrial undertakings and from claiming benefit under section 15C if that section is otherwise applicable.
Howev er, in order to be entitled to the benefit under ' section 15C, the following facts have to be established by the assessee.
subject always to the time schedule in the section : (1) investment of substantial fresh capi tal in the industrial undertaking set up, (2) employment of requisite labour therein, (3) manufacture or production of articles in the said undertaking, (4) earning of profits clearly attributa ble to the said new undertaking, and (5) above all, a separate and distinct identity of the industrial unit set up.
We may add that there is no bar to an assessee carrying on a particular business to set up a new industrial undertaking on account of which exemption of tax under section 15C may be claimed.
The legislature has advisedly refrained from inserting a definition of the word 'reconstruction ' in the Act.
Indeed, in the infinite variety of instances of restructuring of industry in the course of strides in technology and of other developments, the question has to be left for decision on the peculiar facts of each case.
If any undertaking is not formed by reconstruction of the old business that undertaking will not be denied the benefit of section 15C simply because it goes to expand the general business of the assessee on some directions.
As in the instant case, once the new industrial undertakings are separate and independent production units ' in the sense that the commodities produced or the results achieved are commercially tangible products and the undertakings can be carried on 773 separately without complete absorption and losing their identity in the old business, they are not to be treated as being formed by reconstruction of the old business.
The business of the assessee is of heavy engineering.
The two new undertakings are independently producing arti cles which may be of aid to the principal business but yet the undertakings are distinct and not reconstruction out of the existing business of the assessee.
Use by the assessee of the articles produced in its existing business or the concept of expansion are not decisive tests in construing section 15C.
The High Court is not right in holding the two undertakings as formed by reconstruction of the existing business of the assessee.
Several decisions have been cited at the bar before us.
We approve of the conclusions in Commissioner of In come tax vs Ganga Sugar Corporation Ltd. (supra); Rajeswari Mills Ltd. vs Commissioner of income tax, Madras(1); Nagar das Bechardas & Brothers P Ltd. vs Commissioner of Income tax Gujarat (2); Commissioner of Income tax, West Bengal I vs Electric Construction and Equipment Company Ltd.(3); Commissioner ofIncome tax vs Hindusthan Motors Limited(4).
The decision in Commissioner of Income tax vs Naya Sahitya(5) does not represent the correct legal position and, hence, cannot be approved.
We may observe that we are not required to consider in these appeals how profit will be actually calculated in order to determine the quantum of exemption of six per cent of the profit on the capital employed.
If difficulties are insurmountable and, therefore, profit cannot be ascer tained, that will be a different question in the course of practical application of the section.
That kind of a possi ble difficulty should not weigh in the true construction of section 15C.
In the present case the assessee claimed profit and there was no difficulty about ascertainment of the exempted profit as separate books of accounts were kept and the undertakings were at separate places.
In view of the foregoing discussion, we are clearly of opinion that the High Court is not right in answering the two questions in the negative and against the assessee.
On the other hand.
the Tribunal was right in answering the two questions in the affirmative and against the Department.
The two questions referred stand answered in the affirma tive.
The judgment of the High Court, is, therefore, set aside and the appeals are allowed with costs.
P.B.R. Appeals allowed.
(1) (2) (3) (4) [1976] Taxation Law Reports.

dataset_name: IN-Abs

summary/full:
Section 15C of the Indian Income tax Act 1922, which deals with exemption from tax of newly established industri al undertakings, provides in sub section
2(i) that the section applies, among others, to any industrial undertaking which is not formed by the splitting up, or the reconstruction of business already in existence.
The assessee (appellant) was a heavy engineering con cern manufacturing boilers.
machinery parts and wagons.
In addition, it had started a Steel Foundry Division and a Jute Mill Division.
The bulk of the goods produced in both the divisions was used in the various divisions of the assessee company.
The assessee 's claim for exemption from tax under section 15C in respect of profits derived from both the companies was rejected by the Income tax Officer and its appeal was rejected by the Appellate Assistant Commissioner on the ground theft the .undertakings were an expansion and recon struction of the existing business.
On appeal, the Appellate Tribunal held that although the products manufactured in the two divisions were used in the assessee 's business, the Steel Foundry and the Jute Mill Division were new industrial undertakings, in that the machinery used in them was new, they were housed in separate buildings, were: established under separate licences and that both the new divisions were maintaining separate books of account.
On reference, the High Court held that it was a case of reconstruction of the existing business because the goods produced in the two divisions were primarily used in the assessee 's engineering concern.
Allowing the appeal.
HELD: The Tribunal was right in holding in favour of the assessee.
Section 15C is applicable to an absolutely new undertaking for the first time started and in order to deny benefit of the section, the, new undertaking must be formed by reconstruction of the old business.
[768 B C] 1.
(a) In order to be entitled to the benefit of section 15C, the assessee has to establish: (1) the investment of substantial fresh capital in the industrial undertaking; (2) employment of the requisite labour therein (3) manufacture or production of articles in the under taking; (4) earning of profits 'clearly attributable to the new undertaking; and (5) separate and distinct indentity of the industrial unit set up.
(b) Once the new industrial undertakings are separate and independent production units in the sense that the commodities produced or the results achieved are commercial ly tangible products and the undertakings can be carried on separately without complete absorption and losing their identity in the old business, they are not to be treated as being formed by reconstruction of the old business.
[772 H, 773 A] 763 (c) The object of the section is to encourage the setting up of new industrial undertakings by offering tax incentives within a certain period.
Sub section (2) has a negative as well as a positive aspect.
Negatively, a new undertakings should not be formed by splitting up of the business already in existence and by the reconstruction of business already in existence; and positively, a new undertaking must produce results, that is to say, it has to manufacture or produce articles at any time within the stipulated period.
The new undertaking must not be substan tially the same as the existing business.
The words "the capital .employed" are significant, for, fresh capital must be employed in the undertaking claiming exemption.
Manufac ture or production of articles yielding additional profits attributable to the new outlay of capital in a separate and distinct unit is the heart of the matter to earn the benefit from the exemption of tax liability under section 15C.
The fact that by establishing a new industrial undertaking the asses see expands its existing business would not deprive it of the benefit under section 15C. If an industrial undertaking produces certain machines or parts which are identifiable units being marketable commodities and the undertaking can exist even after the cessation of the principal business of the assessee, it cannot be anything but a new and separate industrial undertaking to qualify for appropriate exemption under section 15C. [769 E H, 770A] In the instant case, the principal business of the assessee can be carried on even if the two additional undertakings cease to function.
The fact that a portion the articles produced in the new undertakings had been sold in the open market to others is a circumstance in favour of the assessee that the new industrial units can function on their own.
Use of the articles by the assessee is not decisive 10 deny the benefit of section 15C.
There was no 'formation of any indus trial undertaking out of the existing business since that can take place only when the assets of the old business are transferred substantially to the new undertaking.
there ,ins no difficulty about ascertainment of the exempted profit as separate books of accounts were kept and the undertakings were at separate places.
[770 B D. G H] The High Court was not right in holding that the two undertakings were formed by reconstruction of the existing business of the assessee.
[773 B C] 2.
Reconstruction involves that substantially the same business shall be carried on and substantially the same persons shall carry it on.
But it does not involve that all the assets shall pass to the new company or resus citated company, or that all the shareholders of the old company shall be shareholders in the new company.
Substan tially the business and the person interested must be the same.
[771 C D] South African Supply and Cold Storage Company Wild vs Same Company, , followed.
Commissioner of Income tax Bombay City 1 vs Gackwar Foam and Rubber Co. Ltd. , Commissioner of Income tax vs Ganga Sugar Corporation Ltd. , Rajeswari Mills Ltd. vs Commissioner of Income tax Madras, , Nagardas Bechardas & Brothers P. Ltd. vs Commis sioner Income tax Gujarat, , Commissioner of Income tax.
West Bengal I vs Electric Construction and Equipment Company Ltd. and Commissioner of Income tax vs Hindustan Motors Limited, [1976] Taxation Law Reports 821, approved.
Commissioner of Income tax vs Naya Sahitya , not approved.


judgement:
Appeal No. 2128 of 1969.
From the Judgment and Order dated 4th May, 1968 of the Madhya Pradesh High Court in First Appeal No. 88/67.
M.S. Gupta for the Appellants.
Ram Panjwani and H.S. Parihar for Respondent.
The Judgment of the Court was delivered by SARKARIA, J.
This appeal on certificate is directed against a judgment, dated May 4, 1968, of the High Court of Madhya Pradesh.
It arises out of these facts: The appellants were owners of 7.35 acres of land being a part of Khasra No. 47/1 in the area of village Manglipeth District Seoni, Madhya Pradesh.
On November 4, 1963, a notification under section 4 read with Sub section
(1) of section 17 of the Land Acquisition Act, 1894 (to be hereinafter referred to as the Act) was published in the Government Gazette stating that this land was needed by the State Government for imple mentation of Seoni Water Supply Scheme.
The declaration under section 6 of the Act was published on December 18, 1963, and notices under section 9 of the Act were issued by the Collec tor on December 28, 1963.
In response to that notice, the appellants filed a claim 758 that they were willing to accept compensation in respect of this land at the rate of Rs.1500/ per acre, "as the lands adjoining this land and situated in a lesser advantageous position are sold at this rate".
The Collector made his award on August 17, 1964, whereby he awarded compensation for this land at the rate of Rs.450/ per acre.
The total amount awarded for this piece of land after adding solatium at the rate of 15%, was Rs.2,904/ .
He also awarded inter est at the rate of 4% from September 19, 1964, on which date, the Collector had taken over possession of the land.
Dissatisfied with the Collector 's award, the appellants made an application under section 18 of the Act for reference to the District Court for enhancement of the compensation.
The Collector accordingly made a reference.
The Additional District Judge, Seoni, who heard the reference, enhanced the compensation to Rs.11,000/ per acre.
In this way, after adding solatium, he awarded to the appellants, herein, a total amount of Rs.80,850/ together with interest at the rate of 6%.
Against that judgment, dated May 2, 1967, of the Additional District Judge, an appeal was preferred by the Collector, to the High Court.
The High Court accepted the appeal, set aside the award of the Additional District Judge and restored that of the Collector.
The High Court however, granted a certificate under Art; 133 of the Constitution.
The first contention of Shri M.S. Gupta, appearing for the appellants, is that the appeal flied in the High Court against the award of the Additional District Judge was not an appeal in the eye of law inasmuch as the Collector, who flied it, was not competent to do so.
It is stressed that no appeal was filed by the State as such, and consequently, the incompetent appeal fired by the Collector should have been dismissed summarily on this preliminary ground without entering upon the merits.
This objection was raised before the High Court, also.
The High Court fully considered it against the background of this case, and found no substance in it.
In the interests of justice we are not disposed to interfere with that find ing.
On merits, we find, in agreement with the High Court, that the District Judge was palpably wrong inasmuch as he awarded compensation at a rate far higher than what had been claimed by the appellants themselves, pursuant to the notice under section 9 of the Act.
The learned Additional District Judge acted contrary to the legislative mandate contained in section 25 (1) of the Act, according to which, the Court "shall not award" compensation to an applicant in excess of the amount claimed by him pursuant to any notice under section 9.
The only question that remains for our decision is, whether the High Court was right in scaling down the compen sation to Rs.450/ per acre ? 759 Mr. Gupta contends that the High Court was not right in holding that there was no evidence to show that the land in question had potential value as building sites.
It is submitted that the High Court has simply ignored that evi dence.
In this connection Counsel has referred to the evidence on record showing that the appellants had before the acquisition, paid diversion charges to the Government, at the rate of Rs.500/ per acre in respect of the adjoining land, for bringing it into use as building sites.
Counsel has further referred to the evidence showing that the land in question is close to a built up quarter of the town, and is within the Municipal limits.
Shri Ram Panjwani, appearing for the Respondent, submits that this evidence was much too insufficient to establish the potential value of the land as building sites, because the existing buildings in the vicinity of this land are old buildings, and the deposit of Rs.500/as diversion charges for the adjacent land made by the appellants, was only a speculative investment with an eye on the distant future In support of his contention, Shri Panjwani has referred to the decision of this Court in R.N. Singh vs
U.P. Government(1).
In our opinion, there is evidence on the record which unmistakably shows that from the view point of a willing purchaser, at the relevant time, this land had potential value as building sites.
Firstly, it was admitted even by Gokul Prasad who was examined by the Respondents as their Witness No. 1, that in front of the land in question there are buildings which are being used as the office of the Range Officer and as residential quarters for the employees of that Department.
Adjoining the Range Office is the house of Dewan Najaf Ali in which the Additional District Judge was residing.
The witness further admitted that the land in dispute abutts on Seoni Chhindwara Road.
Dadu Yogendra Nath Singh, appellant, testified in the witnessstand that apart from the office and the quarters of the Forest Department, there were other buildings also, near this land.
At a short distance was the bungalow of Shri Bhargava, Barrister.
The Municipal Octroi Post was adjacent to this land.
The land in question is within the Municipal limits of Seoni.
The appellant further stated that he intended to parcel out this land into plots and sell the same as building sites and that was why for the adjacent land, he had obtained for that purpose, the permission of the Government by depositing diversion charges at the rate of Rs.500/ per acre.
He added that negotiations for the sale of two plots had already been completed at the rate of 12 annas per foot.
He also cited other instances of sales of land in the vicinity at rates ranging from 4 annas per foot to 6 annas per foot.
The oral evidence of Dadu Yogendra Nath Singh with regard to the fact that the adjoining land had been laid out into plots for building purposes, receives full corrobo ration from unimpeachable documentary evidence on record, which shows that the appellants had (1)[1967] 1 S.C.R 489.
760 before this acquisition, in 1963, made an application to the Sub Divisional Officer, Seoni, for permission to bring 6.16 acres of agricultural land out of Kh.
No. 47/1, "in non agricultural use viz., for construction of houses".
The order of the officer concerned was that such permission.
was granted to him on depositing diversion charges in respect of that area at the rate of Rs.500/ per acre.
It is signifi cant to note that this piece of 6.16 acres was also a part of Khasra No. 47/1, out of which Khasra, the land, admeasur ing 7.35 acres, is in question.
This circumstance unerring ly indicates that the land in question was suitable for being used as building sites, and had for that purpose, a potential value substantially in excess of Rs.500/ per acre.
The High Court has not at all discussed this evi dence.
It is difficult to accept the argument advanced on behalf of the respondent that the appellant had paid Rs.500/ per acre as diversion charges for the adjacent land, merely as speculative business in the hope of making money in the remote future.
No prudent person would make such an investment if there was no reasonable chance of a good return over that investment in the present, or immedi ate future.
In our opinion this circumstance coupled with the other facts, namely, that the land in question is within the Municipal limits and is located just on the edge of an inhabited locality of the town, having other buildings in the immediate vicinity, was sufficient to establish its potential value as building sites.
The observations made by this Court in R.N. Singh vs U.P. Government (supra) do not advance the case of the respondent.
In that case, Shelat J. quoted these observa tions from an earlier decision, in N.B. Jeejabhoy vs The District Collector, Thana (C.A. Nos. 313 to 315 of 1965 decided on August 30, 1965): "A vendor willing to sell his land at the market value will take into consideration a particular potentiality or special adapt ability of the land in fixing the price.
It is not the fancy or the obsession of the vendor that enters the market value, but the objective factor namely, whether the said potentiality can be turned to account within a reasonably near future.
The question there fore turns upon the facts of each case.
In the context of building potentiality many questions will have to be asked and answered, whether there is pressure on the land for building activity, whether the acquired land is suitable for building purposes, whether the extension of the said activity is towards the land acquired, what is the pace of the progress and how far the said activity has extended and within what time, whether build ings have been put up on lands purchased for building purposes, what is the distance be tween the built in land and the land acquired and similar other questions will have to be answered.
It is the over all picture drawn on the said relevant circumstances that affords the solution.
" What has been extracted above are broad guidelines and not immutable absolutes.
The essence of the whole thing is in the sentence which has been underlined.
It shows that in the ultimate 761 analysis, the question, whether or not a land has potential value as building site, is primarily one of fact.
in the present case, the circumstance that the appellants had voluntarily paid Rs.500/ per acre as diversion charges, for laying out the adjoining land into plots as building sites, was of a clinching character, and taken in conjunction with the other facts, noticed above, conclusively showed that its potential value as building sites was much more than the rate of Rs.450/ per acre awarded by the Collector and the High Court.
In their application dated 17 10 1964, under section 18 of the Act, the appellants stated that similar land in the immediate vicinity had been sold at the rate of Rs.1,250/ per acre and another plot at the rate of Rs.1,350/ per acre.
These lands are close to the area for which they had paid the diversion charges at the rate of Rs.500/ per acre.
They filed a map also, showing the location of those lands.
On an over all view, after taking into account the potential value of the land, we think it will be reasonable to award compensation to the appellants at the rate of Rs.1,250/ per acre with interest at 6% per annum till payment, from the date on which the possession was taken over by the Collec tor.
The appellants shall also be entitled to solatium at 15% on the compensation amount awarded for the land.
Accordingly, we allow the appeal with proportionate costs and modify the decree of the High Court to the extent indicated above.
M.R. Appeal allowed.

summary/full:
Responding to a notice under section 9 of the Land Acquisi tion Act, 1894, the appellants flied a claim for Rs.1500/ per acre at which rate the adjoining lands were sold.
The Collector awarded compensation at the rate of Rs.450/ per acre.
At the instance of the appellants under section 18 of the Act, the matter was referred to the District Judge who enhanced the compensation to Rs.11,000/per acre.
An appeal by the Collector was allowed by the High Court on the ground that the District Judge had acted contrary to the mandate contained in section 25(1) of the Act, by awarding compensation in excess of the amount claimed.
The appellants contended that their land had building potentiality and its value was substantially more than Rs.500/ per acre, which had been paid by them to the Government as diversion charges for permission t.o use the adjoining land for building houses.
Allowing the appeal by certificate, the Court, HELD: The circumstance that the appellants had volun tarily paid Rs.500/per acre as diversion charges, for laying out the adjoining land into plots as building sites, taken in conjunction with the other facts, namely, that the land in question is within the municipal limits and is located just on the edge of an inhabited locality of the town, having.
other buildings in the immediate vicinity, show that its potential value as building sites is much more than the rate of Rs.450/ per acre, awarded by the Collector and the High Court.
[760 C D, 761 A B]


judgement:
262 of 1955.
Under Article 32 of the Constitution for a Writ in the nature of Habeas Corpus.
R. V. section Mani, the next friend, in person.
M. C. Setalvad, Attorney General for India (G. N. Joshi and Porus A. Mehta, with him).
Naunit Lal, for the respondent.
984 1955.
November II.
The Judgment of the Court was delivered by BOSE J.
This is a petition under article 32 of the Constitution for a writ of habeas corpus.
The petition was presented by Mr. R.V.S. Mani, an advocate of the Nagpur High Court, on behalf of Shrimati Vidya Verma and was directed against her father Dr. Shiv Narayan Verma of Nagpur.
Mr. Mani bad no power of attorney from the lady and when the office pointed out that be could not present a petition without producing the necessary authority he amended the petition and described himself as the next friend of the lady.
When the matter first came up for hearing we directed a notice to issue to the father but later the same day it was brought to our notice that the opposite party was not either the Union of India or a State, nor was it some official acting under the orders of one or the other, but a private person.
The question therefore arose of our power under article 32 to issue a writ of this kind against a private party.
Accordingly, before the notice was sent out we recalled it and set the matter down for further hearing.
Mr. Mani appeared again on the appointed date and was robed as he had been on the previous occasion.
He was asked to clarify his position and when be said he had no power of attorney and explained that he was appearing in a private capacity as next friend he was told that at the next hearing he must address the Court without his robes.
He was also warned that if he lost he might have to bear the costs of the other side personally.
After hearing Mr. Mani for a time we decided to fix a date for the hearing of a prelimi nary question only, namely, whether a fundamental right is involved when the detention complained of is by a private person and not by a State or under the authority or orders of a State.
We directed that notices be issued to the opposite party as well as to the Attorney General of India.
At the adjourned hearing Mr. Mani appeared in person, unrobed as directed, but with the advocate on 985 record sitting by his side.
He asked for permission to address us himself.
We declined to hear him unless he discharged the advocate on record.
He did that on the spot and then proceeded to address us in person.
As the question that arises here has been discussed at length in two earlier decisions of this Court we need not examine the matter, in any detail.
The fundamental right that is said to be infringed is the one conferred by article 21: the right to personal liberty.
In A. K. Gopalan vs The State of Madras(1) four of the six learned Judges who were in that case held that the word "law" in article 21 referred to State made law and not to law in the abstract.
They rejected the contention that this was the same as the due process clause in the American Constitution.
One learned Judge dissented and one expressed no opinion on this point.
Patanjali Sastri., J. (as he then was) said at page 204 that as a rule constitutional safeguards are directed against the State and its organs and that protection against violation of rights by individuals must be sought in the ordinary law; and section R. Das, J. dealing with the question of preventive detention said at page 324 that article 21 protects a person against preventive detention by the executive without the sanction of a law made by the legislature.
This principle was applied to articles 19(1) (f) and 31 (1) by a Bench of five Judges in P. D. Shamdasani vs Central Bank of India(1) who held that violation of rights of property by a private individual is not within the purview of these articles, therefore a person whose rights of property are infringed by a private individual must seek his remedy under the ordinary law and not under article 32.
Article 21 was not directly involved but the learned Judges referring to article 31(1) said at page 394: "It is clear that it is a declaration of the fundamental right of private property in the same negative form in which article 21 declares the fundamental right to life and liberty.
There is no express reference to the State in article 21.
But could it be (1) ; (2) ; 986 suggested on that account that that article was intended to afford protection to life and personal liberty against violation by private individuals? The words (except by procedure established by law ' plainly exclude such a suggestions.
They held that the language of article 31 (1) was similar and decided that article 31 (1) did not apply to invasions of a right by a private individual and consequently no writ under article 32 would lie in such a case.
For the same reasons we hold that the present petition which is founded on article 21 does not lie under article 32.
It is accordingly dismissed.
As regards costs Mr. Mani has no power of attorney and has chosen to appear as next friend despite the warning given to him at the last hearing.
This is the fourth time the matter is being agitated in the Courts.
The first attempt was an application under section 100 of the Criminal Procedure Code made by the person who, according to Mr. Mani, is the husband of the lady in whose interests he says he is acting.
It was filed on 10 9 1954 and asked for a search warrant for the recovery of the lady.
The application was dismissed and a revision filed against the order of dismissal also failed.
The same gentleman then applied to the High Court at Nagpur on 18 10 1954 under section 491 of the Criminal Procedure Code.
The learned Judges examined the lady, who is 25 years old, in person, on 20 10 1954 and on the strength of her statement, which they recorded, they held that she was not under any restraint either in the house or outside and so dismissed the application on 10 11 1954.
Mr. Mani then took up the cudgels and filled a second petition in the High Court on 6 12,1954, also under section 491.
The learned Judges again examined the lady, this time on two successive days.
On 20 12 1954 she said that she did not want to live with her father but wanted to live with her uncle at Waraseoni.
She appeared again the next day and clarified this by saying that she would go to her uncle in the company of her father.
She said, that she had no discomfort in living with her father but was not at ease with him 987 and would have more peace of mind with her uncle.
She also said: "I have no need of any counsel and have nothing to talk to Shri R. V. section Mani".
The girl was allowed to go to her uncle.
Mr. Mani then applied for leave to withdraw the petition.
This was allowed on 24 1 1955 and no order was made about costs.
Then came the present petition on 22 8 1955.
The petition does not disclose that Mr. Mani made any attempt to consult the person who he says is the husband of the lady (a fact which is disputed and on which we express no opinion) nor does it show that he made any attempt to contact either the lady or her father or even her uncle.
He has had three hearings in this Court despite the warning he was given about costs and the learned Attorney General was also asked by us to appear.
When the arguments were fully concluded and Mr. Mani found that we were against him he adopted the same tactics as in the Nagpur High Court and asked for permission to withdraw the petition.
That was refused.
We invited him to show cause why he should not be made to pay the costs and have heard all he has to say.
In the circumstances set out above, we feel this is a case in which he should be made to pay the costs personally.
We dismiss the petition and direct that Mr. Mani pay the costs of the opposite party personally in addition to those of the learned Attorney General and that he bear his own, also personally.

summary/full:
No question of infringement of any fundamental right under article 21 arises where the detention complained of is by a private person and not by, a State or under the authority or orders of a State, and the Supreme Court will not, therefore, entertain an application for a writ of have a corpus, under article 32 of the Constitution.
Consequently a petition under article 32 of the Constitution for a writ of habeas corpus founded on article 21 and directed against a father for alleged detention of his daughter does not lie.
A. K. Gopalan vs The State of Madras ([1950] S.C.R. 88) and P. D Shamdasani vs Central Bank of India ([1952] S.C.R. 391), relied on.


judgement:
l Appeals Nos.
1545 1546 of 1972.
Appeals by Special Leave from the Judgment and Order dated the 4 8 1971 of the Gujarat High Court in S.C.A. Nos. 972 and 1527 of 1970 respectively.
826 V.P. Raman, Addl.
Gen., S.N. Prasad .and
Girish Chandra, for the Appellant in CA 1182/72 and CAS.1545 46/72.
V.M. Tarkunde, V. N. Ganpule, (Miss) M Tarkunde and P.C. Kapoor for Respondents in C.A. 1182/72.
V.N. Ganpule, A.K. Srivastava and Vineet Kumar for RR.
No. 1 in C.As.
1545 46/72.
The Judgment of the Court was delivered by CHANDRACHUD, J.
Under the power conferred by Section 3 of the Essential Supplies (Temporary Powers) Act, 1946, the Central Government issued an Order called "The Cotton Tex tiles (Control) Order, 1948".
Clause 20 of that Order, as amended, reads thus : "20(1) The Textile Commissioner may from time to time issue directions in writing to any manufacturer or class of manufacturers or the manufacturers generally regarding the classes or specifications of cloth or yarn, and the maximum or the minimum quantities thereof, which they shall or shall not pro duce during such periods as may be specified in the directions, and they shall comply with such directions.
20(2) In the exercise of the powers conferred upon him by sub clause (1) the Textile Commissioner shah have regard to the capacity of the producer to produce cloth and yarn of different descriptions or specifica tions and to the needs of the general pub lic.
" The question for our determination in these appeals is whether, if the Textile Commissioner decides to issue appro priate directions to any manufacturer or class of manufac turers, it is obligatory upon him to specify therein the period for which the directions will remain in operation.
As hold by this Court in State of Uttar Pradesh vs Jogendra Singh,(1) it is well settled that the word "may" is capable of meaning "must" or "shall" in the light of the context and that where a discretion is conferred upon a public authority coupled with an obligation, the word "may" which denotes discretion should be construed to mean a command.
Considering the purpose of the relevant empower ment and its impact on those who are likely to be affected by the exercise of the power, we are clear that the power conferred on the Textile Commissioner to issue directions is coupled with the duty to specify the particular period for which the directions shall be operative.
Directions of the kind envisaged by clause 20 are influenced and justified by exigencies which render it imperative that the directions be reviewed from time to time.
That becomes feasible only if the directions as limited expressly to a determinate period of" (1) ; at 202.
827 (Chandrachud, J.) time at the end of which a fresh review of facts and circum stances becomes obligatory.
There is a fear that a direc tion not limited in point of time may continue to operate even after it has outlived its utility for the reason merely that the need to review it is not clearly perceived.
Be sides, the manufacturers must know, in order that they may organize their business in their own interest as well as in the interest of the community at large, as to how long any particular embargo is going to be operative.
Accordingly, we affirm the judgment of the High Court though on the ground only that the impugned Notification in so far as it prohibits the printing of any border or heading on sarees etc.
for an indefinite period is ultra vires clause 20 of the Cotton Textiles (Control) Order, 1948, since the aforesaid clause casts an obligation or a duty upon the Textile Commissioner to specify the period during which the prohibition shall remain in force.
We express no opinion on the other points, including Point No. 6 urged before the High Court for its consideration.
The appeals are accordingly dismissed.
The appellants will pay one set of costs of these appeals to the respond ents.
S.R. Appeals dis missed.

summary/full:
Clause 20 of the Cotton Textiles (Control) Order, 1948 empowers the Textile Commissioner, having regard to the capacity of the producer to produce cloth and yarn of dif ferent description or specification and to the needs of the general public, to issue from time to time such directions in writing to any manufacturer or manufacturers generally regarding the class or specifications of cloth or yarn and the maximum or the minimum quantities thereof which they shall or shall not produce during such periods as may be specified m the directions.
The respondents ' challenge to the vires of the notifi cation issued by the appellant which prohibited the printing of any border or heading on sarees etc.
for an indefinite period was accepted by the Gujarat High Court.
Dismissing the appeals by special leave, the Court, HELD: (1 ) The impugned notification in so far as it prohibits the printing of any border and heading on sarees etc., for an indefinite period is ultra vires clause 20 of the Cotton Textiles (Control) Order 1948 since the aforesaid clause casts an obligation or a duty upon the Textile Com missioner to specify the period during which the prohibition shall remain in force.
[827 B C] (2) It is well settled that the word "may" is capable of meaning "must" or "shall" in the light of the context and that where a discretion is conferred upon a public authority coupled with an obligation the word "may" which denotes discretion should be construed to mean a command.
Consid ering the purpose of the relevant empowerment and its impact on those who are likely to be affected by the exercise of the power, it is clear that the power conferred on the Textile Commissioner in the Cotton Textile (Control) Order 1948 to issue directions is coupled with a duty to specify the particular period for which the directions shall be operative.
[826 F G] State of Uttar Pradesh vs Jogendra Singh ; (a) 202, principles reiterated.