judgement:
ivil Appeal No. 2705 of 1977.
From the Judgment and Order dated 28.10.1975 of the Madras High Court in Tax Case No. 492 of 1975.
AND Civil Appeal No. 512(NT) of 1989.
From the Judgment and Order dated 13.2.1978 of the Madras High Court in Tax Case No. 332 of 1975.
R. Mohan and R.A. Perumal for the Appellant.
A.T.M. Sampath for the Respondent in C.A. No. 2705 of 1977.
Mrs. Janaki Ramachandran for the Respondent in C.A. No. 5 12 (NT) of 1989.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
The question involved in these two matters is the same.
So we ant leave in SLP 2440 of 1979 and proceed to dispose of both the appeals together.
The respondent assessee in each of these cases acquired a reserve forest.
It is common ground that the acquisition was effected with a view to raise a coffee and cardamom plantation thereon.
For doing this, the assessee had to clear a portion of the forest and in the process fell the unwanted trees standing thereon as natural growth.
The cut trees were sold by the assessee in the form of firewood as well as in the form of cut sizes of timber as well as sleep ers.
Some of the growth was also converted into charcoal and the resultant charcoal sold.
On these facts, the question arose in each of these cases whether the price 411 realised by the assessee on the sale of firewood, timber, sleepers and charcoal was assessable to sales tax.
We are concerned with the assessment year 1969 70.
The assessee 's turnover, in respect of these items in the case of Shanmugha Estate was Rs.3,00,396.16 which included a turnover in charcoal of Rs.86,829.24.
In the case of Shakti Estate, the disclosed turnover was as follows: Firewood 1,98,687.08 Sized timber 83,490.89 Sleepers 28.
164,00 _____________ 3,10,47.97 _____________ The Deputy Commercial Tax Officer added 5% towards omissions and assessed a turnover of Rs.3,25,859.07.
The further facts disclosed in the case of Shakti Estate are these.
The assessee is a firm of 10 individuals.
It had not purchased the forest but had got a lease which entitled them to enjoy the usufruct of the forest by its exploita tion.
Clause (4) of the partnership deed recites that "the firm will carry on the development and exploitation of the lands".
The firm had been functioning for the past 7 years and had been paying sales tax on its sales of firewood, timber and sleepers.
But for the first time in assessment year 1968 69, it put forward a claim that the above turnover was not assessable in its hands.
The full facts in the case of Shanmugha Estate are not on record but, except for the fact that this was a case of a purchase of a forest by the assessee, and that the plantation does not seem to have started yielding crops, the facts are broadly similar to those in the case of Shakti Estate.
The assessing officers and the first appellate authorities held the turnover in question to be taxable.
But the Tribunal reversed this and held that the turnover was not liable for assessment to sales tax.
The High Court had dismissed the revision filed by the State in the case of Shakti Estate in respect of assessment year 1968 69 by a short order which read: "We are of the view that the Tribunal was right in its order.
This was a case of a lease.
It did not involve any sale of trees.
Merely because the trees cut were sawn to sizes, that would not by itself make out a sale.
" 412 In respect of assessment year 1969 70 also, the States revision was dismissed following the above order.
In the case of Shanmugha Estate the department challenged the Tribunals finding only in respect of sales of sized timber.
The suggestion that the sizing of trees into timber or their conversion into sleepers would make a difference was not accepted by High Court, which, following the decision of the Kerala High Court in Kuttirayin & Co. vs State, [1976] 38 STC 282, affirmed the Tribunals order by its judgment re ported in (1979) 43 STC 226.
The State appeals from the judgments in both the cases.
The answer to the question posed depends on the inter pretation of the expressions "dealer" and "business", as defined under the Tamil Nadu General Sales Tax Act.
These definitions read thus: "Business includes: (i) any trade, or commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture whether or not such trade, commerce, manufacture, adventure or concern is carried on with a motive to make gain or profit and whether or not any profit accrues from such trade, com merce, manufacture, adventure or concern; and (ii) any transaction in connection with, or incidental to ancillary to such trade, com merce, manufacture, adventure Or COnCern.
" "Dealer means: any person who carries on the business of buying, selling, supplying or distributing goods, directly or otherwise, whether for cash or for deferred payment, or for commission, remuneration or other valuable consideration and includes (i) a local authority, company or Hindu undi vided family, firm or other association of persons which carries on such business; (ii) a casual trader . . " It is seen that, in the case of Shakti Estate, the planta tion has 413 started functioning and there is turnover in coffee and cardamora to the extent of Rs.58,000 while it is stated that the Shanmugha Estate has not yet started deriving income from its plantation.
The principal contention of the asses sees is that they are, or may, no doubt, become, dealers in coffee or cadamore or other crops grown, or to be grown, on the estates but that they are by no means dealers in fire wood, timber, sleepers or charcoal.
They say that their intention in acquiring the forest or rights therein was not to deal in the forest produce whether as firewood, timber, charcoal or otherwise but to start a plantation thereon.
That business could not be started or carried on without clearing the forest trees and so the activity of clearing the jungle was one that was not only unconnected with the assessees business as such but was something the assessees were constrained to indulge in.
This amounted to nothing more than a mere realisation by an owner of a part of his property to the best advantage and cannot be described as a trading activity or as partaking of the character of an adventure or concern in the nature of trade.
We do not, however, think that the above contention of the assessees can be accepted.
The facts show that each of the assessees has acquired a huge forest area which contains a large number of trees.
When the asseessee purchased the forest or got it on lease for starting a plantation thereon, it was aware of the existence of trees (some of them quite valuable) on the land and the price paid must inevitably have included some value for these trees as well.
The asses sees also knew full well that before they could start the plantation, as well as during the running of it, they would have to clear the forest in stages by cutting off the trees standing thereon and disposing of the same from time to time.
Each of these assessees is a firm the purpose of which is to carry on business.
It will be quite proper and natural to infer that the intention of the assessees at the time of purchase included not only an intention to grow and sell coffee and cardamom and other crops but also an intention to dispose of the trees standing on the land to the best advan tage in the circumstances.
Indeed the lease deed in the case of Shakti Estate clearly talks of an intention of "develop ment and exploitation of the lands", words which cannot be merely confined to the cultivation of commercial crops thereon.
In the face of such a declared purpose, it is of no relevance whether the exploitation and development was under the terms of a lease deed or a purchase deed and the dis tinction made by the High Court between the two would appear immaterial.
The extent of the lands acquired or leased out is so vast that the clearance has to be done in stages and the sale of forest trees extends over several years.
Indeed, it is bound to be a 414 recurring feature even after the plantation starts working as there will always be a certain number of trees retained in the plantation as shade trees and the like.
The nature of the task undertaken by the assessee is really one in the nature of a venture to carry out sustained, systematic and organised activities in the nature of business.
These activ ities do not merely cover the running of a plantation.
They commence right from the beginning when the assessee went in for the land with a view to developing it.
They fully in tended, as a first stage in the business which they intended to start, to exploit the trees standing on the land to the maximum advantage.
Moreover, they did not merely sell the forest trees haphazardly.
They took steps to exploit them in a commercial manner.
When the trees yielded timber, the assessee not only had them sawn and cut to sizes but even converted them into sleepers and sold them.
They reduced a part of the jungle growth to charcoal and sold the same.
Taken all together, one is left in no doubt that when the assessees went in for a purchase or lease of the forest for starting a plantation they also knowingly let themselves in for engaging in a trade in the forest produce.
The fact that the assessees are business entities, the size of the tract developed, the extent and value of the trees standing on the land, the inevitability of the jungles having to be cleared and the standing trees disposed of before commercial crops could be grown, the manner in which the forest trees were disposed of are all, we think, insignia that mark out the entire set of activities as a concern in the nature of trade.
It is true that, in the area of income tax law, it has been held that no adventure in the nature of trade can be spelt out where all that a person does amounts to a mere realisation of his capital assets.
It has been held thus that an owner of a huge estate who does not want to retain it any longer cannot be taxed on the surplus accruing to him on the sale of his capital assets even though he might carry out the realisation to best advantage in a commercial manner such as by forming a company, developing the lands, plotting them out, advertising them for sale, waiting for a favour able market and selling them over a period of several years.
But this line of cases is of no help in the context of the facts of the present case and in the view we have taken above of the assessees transactions.
Here the assessees did not merely realise the value of a capital asset belonging to them.
They went in for the acquisition of an asset fully realising its potentialities for exploitation not merely as a plantation but also, incidentally, by disposing of the existing growth on the land.
It seems impossible to say that they did not intend to do this also while going in for the acquisition.
If one purchases an asset with a view to turn it to account in such manner, we 415 think, one is certainly carrying out an adventure in the nature of trade.
Moreover, we have also to give full effect to the defi nitions in the statute we are concerned with.
The definition of a "business" also includes "any transaction in connection with or incidental to or ancillary" to a trade and thus, even on the assessees own arguments, these activities were incidental and ancillary to the business which the assessee was carrying on or definitely intended to carry on.
It is also immaterial, on this definition, that the assessees may not have had a "motive of making a profit or gain" on these sales though on the facts, it is clear that such motive must have existed and, in any event could not be ruled out.
The reference to a "casual" dealer in the second definition also renders it immaterial that the assessees may not have in tended to be regular dealers in sleepers, timber, firewood or charcoal but that this was something casual or incidental to the acquisition and exploitation of a forest for running a plantation.
Before concluding, we may refer to the decisions cited before us.
The decisions of the High Court in the present cases and in Kuttirayin 's case (supra) support the assesses contention but, for reasons given above, we are unable to accept them as correct.
The decision of the Madras High Court in L.N. Plantation Co. vs State, [1981] 47 STC 210 supports the department 's contention and we approve of the same.
In Tamil Nadu Trading Co. vs State, [1981] 52 STC 7 the Madras High Court was dealing with a case where the assessee was found to be a dealer in timber.
But, in the course of their judgment, the Court made the following observations which support the case of the department: "Even if it were to be assumed, without ac cepting, for the sake of argument, that the assessee purchased the land for the purpose of coffee plantation, the sale of timber and firewood fall under "any transaction" in connection with or incidental or ancillary to the business of coffee plantation and would therefore, fail within the definition of "business" under section 2(d) of the Act.
" We agree.
There decisions of this Court were also referred to by counsel.
State vs Burmah Shell, [1973] 31 STC 426 and Dis trict Controller of Stores vs Assistant Commercial Tax Officer, [1976] 37 STC 423 were cases where an assessee, carrying on a business, had to dispose of unserviceable or useless material and such disposals were held taxable 416 as "business" sales, the transactions being incidental or ancillary to the principal business carried on by the asses see.
The disposals effected by the Shakti Estate whose plantation business had started in full swing will certainly fall squarely within the principle of these decisions.
But, as we have discussed above, in our view, even the sales effected before the plantation started yielding results would be covered by the definitions as the venture undertak en by the assessee has to be considered as an integral whole and there can be no doubt that the sale of the forest pro duce was part of the activities in the contemplation of the assessees right from the beginning.
As against the above decisions, reliance was placed, on behalf of the assessees, on Deputy Commissioner vs Palampa dam Plantation, [1969] 24 STC 231 where, it is said, it was held that an assessee could not be held taxable as a dealer on the sale of trees of spontaneous growth in a plantation.
But that decision clearly turned on the specific language of the definition of "dealer" contained in section 2(viii)(e) of the Kerala General Sales Tax Act, 1963, and does not lay down any general proposition as contended for on behalf of the assessees.
For the reasons discussed above, we allow the appeals and set aside the order of the High Court and Tribunal in these cases.
In the result, the turnovers in dispute in the two cases before the High Court will stand included in the assessees turnover and the assessments modified accordingly.
We, however, make no order regarding costs.
N.V.K. Appeals allowed.

summary/full:
The respondent in each of the appeals is the assessee.
It was a firm of 10 individuals.
They acquired a reserve forest, by a lease which entitled them to enjoy the usufruct of the forest by its exploitation.
The partnership deed provided that the firm will carry on the development and exploitation of lands.
The acquisition was effected with a view to raise a coffee and cardamom plantation thereon.
For doing this, the assessee had to clear a portion of the forest and in the process fell the unwanted trees standing thereon as natural growth.
The cut trees were sold by the assessee in the form of firewood as well as in the form of cut sizes of timber as well as sleepers.
Some of the growth was also converted into charcoal and the resultant charcoal sold.
The firm had been functioning for the past 7 years and had been paying sales tax on its sale of firewood, timber and sleepers.
But for the first time in the assessment year 1968 69, it put forward a claim that the above turnover was not assessable in its hands.
The assessing officer and the first appellate authori ties held that the turnover in question to be taxable.
But the Tribunal reversed this decision, and held that the turnover was not liable for assessment to sales tax.
The High Court dismissed the revision petition filed by the State.
It held that it was a case of a lease.
It did not involve any sale of trees.
Merely because the trees were sawn to sizes, would not by itself make out a sale.
The suggestion that the sizing of trees into timber of their conversion into sleepers could make a difference was not accepted by the High Court, which following the decision of the Kerala High Court in Kuttiravin & Co. vs State of Kera la, [1976] 38 STC 282 affirmed the Tribunal 's order.
409 The State appealed to this Court.
Allowing the appeals and setting aside the order of the High Court and Tribunal, the Court, HELD: l(a) The fact that the assessees are business entities, the size of the tract developed, the extent and value of the trees standing on the land, the inevitability of the jungles having to be cleared and the standing trees disposed of before commercial crops would be grown, the manner in which the forest trees were disposed of, are all insignia that mark out the entire set of activities as a concern in the nature of trade.
[414D E] l(b) In the area of income tax law, it has been held that no adventure in the nature of trade can be spelt out where all that a person does a mounts to a mere realisation of his capital assets.
[414E F] l(c) The assessees in the instant case, did not merely realise the value of a capital asset belonging to them.
They went in for the acquisition of an asset fully realising its potentialities for exploitation not merely as a plantation but also, incidentally, by disposing of the existing growth on the land.
[414G H] l(d) If one purchases an asset with a view to turn it to account in such manner, one is certainly carrying out an adventure in the nature of trade.
[414H; 415A] 2(a) The definition of 'business ' in the T.N. General Sales Tax Act, 1959, includes 'any transaction in connection with or incidental to or ancillary ' to a trade.
The activi ties carried on by the assessee were incidental and ancil lary to the business which the assessee was carrying on or definitely intended to carry on.
It is also immaterial, on this definition, that the assessee may not have had a 'm otive of making a profit or gain ' on these sales, though on the facts, it is clear that such motive must have existed and, in any event, could not be ruled out.
[415B C] 2(b) Even the sales effected before the plantation started yielding results would be covered by the definition, as the venture undertaken by the assessee has to be consid ered as an integral whole and there can be no doubt that the sale of the forest produce was part of activities in the contemplation of the assessees right from the beginning.
[416B] 410 Kuttiravin & Co. vs State, [1976] 38 STC 282, over ruled.
L.N. Plantation Co. vs State, [1981] 47 STC 210; Tamil Nadu Trading Co. vs State, [1981] 52 STC 7, approved.
Deputy Commissioner vs Shree Shamungam Estates, [1979] 43 STC 226 Mad.
reversed State vs Surmah Shell, [1973] 31 STC 426; District Controller of Stores vs Assistant Commercial Tax Officer, [1976] 37 STC 423 referred to, Deputy Commis sioner vs Palampadam Plantation, [1969] 24 STC 231, distin guished.


judgement:
vil Appeal No. 19531954 of 1980.
From the Judgment and Order dated 23.1.1980 of the Bombay High Court in S.C.A. No. 240 of 1974.
N.M. Ghatate for the Appellants.
B. Kanta Rao for the Respondents.
The Judgment of the Court was delivered by SHARMA, J.
These appeals arise out of a proceeding under the C.P. and Berar Letting of Houses and Rent Control Order, 1949 (hereinafter referred to as the Rent Control Order) initiated by Shah Gokuldas, appellant in C.A. No. 1954 of 1980 (respondent in the other appeal) for permission to determine the lease of Bhagwanji, the original tenant.
After the death of Bhagwanji during the pendency of the case, Rashiklal and others, the appellants in C.A. No. 1953 of 1980 were substituted as his legal representatives.
The landlord 's prayer was based on alleged wilful default in payment of rent and bona fide requirement under sub clauses (ii) and (vi) respectively of Clause 13(3) of the Rent Control Order.
The allegations were denied by the tenant and the Rent Controller dismissed the application.
The landlord 's appeal was also rejected by the appellate authority, the Resident Deputy Collector.
The landlord thereafter approached the High Court which confirmed the impugned orders so far as the ground of bona fide necessity was concerned, but allowed the application under Article 227 of the Constitution of India holding that the tenant was a habitual defaulter in payment of rent and, therefore, liable to eviction.
The appellants in C.A. No. 1953 of 1980 have challenged the order of their eviction and the landlord Shah Gokuldas has appealed against the finding of the courts below negativing his case of bona fide requirement.
So far as C.A. No. 1954 of 1980 is concerned, both the Rent Controller and the Resident Deputy Collector have on a careful consideration of all the relevant circumstances held that the landlord 442 applicant has failed to prove his case of bona fide require ment.
The High Court while confirming the finding has again considered the materials on the record.
The learned counsel for the landlord has not been able to point out any accept able ground for interfering with the concurrent findings of the three courts and C.A. No. 1954 of 1980 is, therefore, dismissed.
So far as the other appeal is concerned, the High Court has disagreed with the view of the Rent Controller which was affirmed by the appellate court.
It has been contended on behalf of the appellants Rashiklal and others that having regard to the conduct of the parties in payment and receipt of rent of several months at a time, it should be held that there was an implied agreement between them to do so and the landlord is now not entitled to insist on the rent to be paid every month.
Reliance was placed on the decision of this Court in S.P. Deshmukh vs Shah Nihal Chand Waghajibai Gujarati, 5.
The case of the landlord has been that rent was payable on the expiry of each month, and since this was not done the tenant was liable to eviction.
The landlord filed a schedule in the trial court showing the intervals at which rents had been paid by the tenant during the period of 2 years immediately preceding the filing of the case.
The schedule indicates that the rent was paid, according to the alleged stipulation, only for a brief period, and the rent for the rest of the period was paid in lump sums represent ing the rent of several months together.
Admittedly the accumulated rents were accepted by the landlord without any objection at any point of time and the tenant had no occa sion to assume that the landlord was aggrieved by the manner in which rents were being paid.
The question arises as to whether in these circumstances the High Court was entitled to reverse the concurrent finding of the two courts below.
The tenant denied in express terms and arrangement pleaded by the landlord as mentioned above and asserted that rent was payable at his convenience.
Mr. Kanta Rao, the learned counsel for the landlord contended that a plea about an alleged agreement to pay rent at the convenience of the tenant has to be rejected as untenable in law.
According to the learned counsel an inference of implied agreement is possible by the conduct of the parties only if it is shown that the rent was being paid and accepted on a fixed inter val, as for example, if it could be shown that the rent was always paid after every 3 months (or for that matter every 2 months or every 4 months) then a clear cut 443 pattern emerges on the basis of which an implied agreement can be assumed to have come in existence.
No such inference is permissible from mere irregular and erratic payment.
Reliance was placed on the decisions of Pandurang Tukaram Rajkondawar vs Balaram Madhaorao Chavan, [1985] Mh.
L.J. 109; Shishir Hari Mahajan vs Banarasibai Rodmal Sharma and another, [1982] Mh.
L.J. 908 and Nathuji Narayanrao Udapure vs Narendra Vasanjibhai Thakkar and another, [1981] Mh.
L.J. 446.
The relevant provisions of the Rent Control Order require a tenant to be "habitually in arrears with the rent" as a condition for the grant of the permission by the au thority to the landlord to determine the lease.
It is sig nificant to note that the condition mentioned in the Rent Control Order is different from the condition in several other statutes where mere non payment of rent for a particu lar period, has been provided as adequate ground for evic tion of the tenant.
The question whether the tenant was a "habitual defaulter" arose before the Supreme Court in S.P. Deshmukh 's case (supra) and was answered in the negative in the following words: "Normally, a monthly tenant is under an obli gation to pay rent from month to month but this obligation is subject to a contract to the contrary.
Such a contract need not be re flected in a formal document and can be spread out from the conduct of the parties, spread over a fairly long period of time.
The evi dence in the case, which was believed by the two tribunals of fact, shows that the tenant has been paying rent at an interval of 3 or 4 months, which the landlord has been willingly accepting and always without even so much as a murmer.
We do not see any reason for holding that unless the rent was paid and accepted at a fixed period of interval, no such implied agreement can be inferred.
In the S.P. Desh mukh 's case (supra) the rent had been paid at the varying interval of 3 or 4 months.
The crucial test appears to be the conduct of the landlord in receiving the rent offered belatedly.
If he receives the same under a protest and warns the tenant to be regular in payment in the future, he cannot be assumed to have agreed to a modified agreement in this regard.
But if he, without any objection and without letting the tenant know his thought process, continues to receive rent at intervals of several months, he cannot be allowed to spring a surprise on the tenant by suddenly starting a proceeding for eviction.
Having lulled the tenant in the belief that things 444 were all fight, the landlord was under a duty to serve him with a notice demanding regular payment, if he wished to insist upon it.
In the case before us there was no objection whatsoever, raised on behalf of the landlord against the delayed payments.
We, therefore, hold that the High Court was not fight in reversing the concurrent finding of the two courts below.
Accordingly the impugned judgment is set aside, that of Resident Deputy Collector is restored and the appeal is allowed with costs throughout.
Before closing, however, we would like to observe that in view of the atti tude of the parties disclosed in the present case the appel lant should hereafter pay the rent regularly in the succeed ing month failing which he may be liable to be adjudged a habitual defaulter.
N.V.K.
C.A. No. 1953/80 allowed and C.A. No. 1954/80 dismissed.

dataset_name: IN-Abs

summary/full:
The landlord filed a petition for eviction of his tenant on the ground of wilful default in payment of rent and bona fide requirement under sub clauses (ii) & (vi) respectively of Clause 13(3) of the C.P. and Berar letting of Houses and Rent Control Order, 1949.
The landlord alleged that the rent was payable on the expiry of each month, and pleaded that as the tenant paid the rent in lump sums representing the rent of several months together, he had committed wilful default and was liable for eviction.
The tenant contested the peti tion and pleaded that the accumulated rents were accepted by the landlord without any objection, and consequently he had no occasion to assume that the landlord was aggrieved by the manner in which the rents were paid.
The tenant further asserted that the rent was payable at his convenience.
The Rent Controller dismissed the application of the landlord both on the ground of bona fide requirement and wilful default.
The Appellate Authority the Resident Deputy Collector confirmed the order of the Rent Controller in appeal.
The landlord thereafter approached the High Court under Article 227 of the Constitution.
The High Court while con firming the order of the Rent Controller in so far as the ground of bona fide necessity was concerned, held that the tenant was a habitual defaulter in payment of rent, and was therefore, liable for eviction.
The tenants appellants in CA No. 1953 of 1980 challenged the order of their eviction, while the landlord appellant in CA No. 1954 of 440 1980 challenged the order rejecting his eviction application on the ground that he failed to prove his case of bona fide requirement.
Allowing Civil Appeal No. 1953 of 1980, and dismissing Civil Appeal No. 1954 of 1980 the Court, HELD: 1.
The relevant provisions of the Rent Control Order require a tenant to be "habitually in arrears with the rent" as a condition for the grant of the permission by the authority to the landlord to determine the lease.
This condition in the Rent Control Order is different from the condition in several other statutes where mere nonpayment of rent for a particular period, has been provided as adequate ground for eviction of the tenant.
[443C] 2.
The crucial test to determine whether the tenant was a 'habitual defaulter ' is the conduct of the landlord in receiving the rent offered belatedly.
If he receives the same under a protest and warns the tenant to be regular in payment in the future, he cannot be assumed to have agreed to a modified agreement in this regard.
But if he, without any objection and without letting the tenant know his thought process, continues to receive rent at intervals of several months, he cannot be allowed to spring a surprise on the tenant by suddenly starting a proceeding for eviction.
[443G H] In the instant case, there was no objection whatsoever, raised on behalf of the landlord against the delayed pay ments.
The High Court, therefore was not right in reversing the concurrent finding of the two courts below.
The judgment is set aside, and that of the Resident Deputy Collector is restored.
[444B] S.P. Deshmukh vs Shah Nihal Chand Waghajibai Gujarati, , followed.
Pandurang Tukaram Rajkondawar vs Salaram Madhaorao Chavan, [1985] Mh.
L.J. 169; Shishir Hari Mahajan vs Sanara siobai Rodmal Sharma and Anr., [1982] MH.
L.J. 908 and Nathuji Narayanrao Udapure vs Narendra Vasanjibhai Thakkar and Anr., [1981] MH.
L.J. 446, referred to.
Both the Rent Controller and the Resident Deputy Collector have on a careful consideration of all the rele vant circumstances held that the landlord has failed to prove his case of bona fide requirement.
The High Court while confirming the finding has again considered the 441 materials on the record.
No acceptable ground for interfer ing with the concurrent findings of the three Courts has been shown.
Civil Appeal No. 1954 of 1980 has therefore to be dismissed.
[441H; 442A B]


judgement:
ivil Appeal No. 2820 of 1984.
From the Order dated 25.4.84/4.5.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal No. F.D. (SB)(T) A. 999/80 C in Order No. 223/84.
Harish N. Salve, Mrs. P.S. Shroff, J.M. Patel and S.A. Shroff for the appellant.
B. Dutta, Additional Solicitor General, Ms. Indu Malho tra and C.V.S. Rao for the respondent.
The Judgment of the Court was delivered by 385 SABYASACHI MUKHARJI, J.
This is an appeal under Section 35L of the (hereinafter referred to as 'the Act ') from the order passed and judgment delivered on 25th April, 1984/4th May, 1984 by the Customs, Excise and Gold (Control) Appellate Tribunal, New Delhi (hereinafter referred to as 'the Tribunal ').
The question involved is whether the crude PVC film is dutiable.
The appellant is, inter alia, a manufacturer of crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes both insula tion and adhesive.
The said crude PVC films are manufactured by the appellant in a continuous process in the factory premises of the appellant which are licensed premises under the Act.
The appellant filed classification list No. XIV/75 dated 20th November, 1975 in respect of crude PVC films used for lamination with jute and for tapes claiming that the said PVC films were non excisable on the ground that the same were nonmarketable intermediate products used exclu sively for captive consumption.
The said classification was approved by the Assistant Collector, Central Excise on 9th December, 1977.
There was an order passed by the Appellate Collector on 14th June, 1974 holding that crude PVC films were not mar ketable and were not liable to excise duty.
It is necessary to refer to the Tariff Entry involved in this case.
Tariff Item 15 A(2) of the Central Excise Tariff reads as follows: "Articles made of plastics, all sorts includ ing tubes, rods, sheets, foils, sticks, other rectangular or profile shapes.
whether lami nated or not, and whether rigid or flexible, including levy flat tubings and polyvinyl chloride sheets, not otherwise specified.
" The same crude PVC films which have been manufactured by the appellant and used in the manufacture of some other end product were subject matter of adjudication by the concerned authorities in the period 1.3.1970 to 29.5.1971.
The Appel late Collector of Central Excise in an order dated 14th January, 1974 held that the said PVC films manufactured by the appellant are not marketable intermediate products and hence not liable to duty.
The Appellate Collector, Central Excise in his order noted the contentions of the appellant that the appellant had produced sufficient evidence to prove that the crude PVC sheets which were the subject matter of the Show Cause Notice in that case and which are also the subject matter of the present show cause notice were not known in the market as PVC sheets nor were 386 these marketable as PVC sheets.
After reference to the rival contentions, the said Appellate Collector in his order held, inter alia, as follows: "PVC films/sheets for the clearance of which demand letters are issued are not marketable as the same are neither embossed nor printed nor any finishing Work is done when compared to PVC films/sheets which are marketed by them.
It was further stated that the tensile strength of PVC sheets which is marketed by the appellants is as per the international standards laid down by A.S.T.M./I.S.I. and is much higher than the crude PVC sheets manufac tured by them as an intermediate product for further manufacture of leather cloth.
As such, it was contended that the product manufactured by the appellants is not liable to central excise duty.
Shri Patel further stated that it was not necessary to prove from technical angle that the curde PVC sheets manufactured by the appellants for manufacturing leather cloth are different from PVC sheets which are manufactured by them and sold in the market as such.
Crude PVC sheets used in the appellants ' factory for further manufacture of leather cloth can be distinguished from PVC sheets which are marketed by them as such by naked eye.
Moreover, all the processes which are required in case of PVC sheets which are marketed by the appellants so as to make these sheets marketable are not carried out in the case of crude PVC sheets which are used by the appellants in their factory for the manufac ture of leather cloth . . " The Appellate Collector further held in the said order that from the technical point of view, crude PVC sheets are different from marketable PVC sheets inasmuch as the tensile strength of crude PVC sheets is much lower than that of marketable PVC sheets.
He further held that: "This is so because marketable PVC sheets are passed through the calender at very high temperature and at a slow speed to that gela tion/curing fusion takes place while in the case of crude PVC sheets, the same are passed through the calender at very fast speed and lower temperature with the result that gela tion fusion in the course of heating and ageing is not formed resulting in lower ten sile strength.
When these crude PVC sheets are coated with textile 387 fabrics, the two layers are passed through the rollers at slow speed and at high temperature and it is only at this stage that the GEL is properly formed and resin particles become swollen by diffusion of plasticizer into them that they touch each other.
As heating progresses, the swollen particles begin to weld together, resulting in the required degree of strength.
" Thereafter, the Classification List was filed in respect of crude PVC films manufactured for use in adhesive tapes on 9th December, 1975 and the said list was approved by the Assistant Collector of Central Excise after making an in quiry in that behalf.
On 15th February, 1977, however, a Show Cause Notice was issued by the Assistant Collector, calling upon the appellant to show cause as to why crude PVC films should not be classified under teriff Item 15A(2) and appropriate duty not recovered under Rule 10 of the Central Excise Rules, as these then stood, read with Rule 173 J of the Central Excise Rules.
There was a corrigendum issued on February 23, 1977 to the said Show Cause Notice dated 15th February, 1977 substituting the words 'Rule 10 ' by the words 'Rule 10A '.
A reply was given by the appellant to the said Show Cause Notice.
In the said reply, the appellant stated as follows: "We have repeatedly pointed out that the issue of "Crude Film" has been decided by the Appel late Collector and also by the Assistant Collector while approving classification.
However, the Superintendent persisted in pressing us for giving information about production figures of 'Crude Film ' possibly with a view to raise demand.
We had requested the Superintendent to let us know the provi sion under which he required us to give the information in regard to a product which was non excisable.
He was not able to clarify this and tried to invoke wrong sections and rules according to us.
The present action of re classification, in order to make the product excisable some how or other, seems to us to be a continuation of the matter which the Super intendent was not able to enforce on us.
There is no change in the market terminology of "PVC Film".
Our product is not known in the market as "PVC Film".
Even technically also a further process is required to be carried out on our product before it is "PVC Film" as is known to the market.
The various decisions of Supreme Court on this point are well known to the Department.
It is also known 388 that the Appellate Collector 's decision is binding on you.
The principles of natural justice cannot be served by serving a show cause notice on us in order to change the Appellate Collector 's decision in some manner or other.
We have an uneasy feeling that an attempt is being made to some how bring the product under excise duty.
" There was an order passed on 16th February, 1978 by the Assistant Collector confirming the Show Cause Notice.
On 10th October, 1979 an appeal was preferred by the appellant against the order of the Assistant Collector dated 16th February, 1978 which was rejected by the Appellate Collector of Central Excise.
On 6th February, 1980 a revision applica tion was preferred, by the appellant to the Joint Secretary, Government of India.
That was transferred to the Tribunal and by the impugned order, the Tribunal has rejected the appeal under challenge.
The Tribunal in the order has set out the contentions and observed that the question for determination was whether crude PVC film fell for classification under Item 15A(2) of the Central Excise Tariff or not.
A submission was made that the Appellate Collector had held that the crude PVC sheets were not marketable and had not acquired the character and status of PVC films as known to the market.
It was contended on behalf of the appellant that only marketable PVC film would fall within the said item.
On the other hand, the Department 's contention was that there was nothing to show that the film/sheet was crude and the test of marketability was not relevant.
According to the Tribunal, the crude PVC films/sheets would fall under the Tariff Item.
The Tribunal was of the view that the tariff entry did not spell out whether it covered only finished film/sheet or whether it covered also crude film/sheet.
The Tribunal came to the conclusion that the tariff item covered all types of films/sheets.
The Tribunal also came to the conclusion that the concept of marketability was not relevant and all sorts of crude films would be covered by the entry.
The Tribunal was of the view that the Appellate Collec tor 's observations were made entirely in different context.
In that view of the matter, the Appellate Collector 's order was confirmed subject to the modification that duty in respect of clearances prior to the issue of the Show Cause Notice was restricted to the period permissible in terms of Rule 10 read with Rule 173 J, that is to say, for 12 months.
In other words, the Tribunal 's view was that if the descrip tion of the 389 goods in question fell into the entry, it was dutiable in the intermediate list and as such the goods had become goods as known to the market and the question of marketability or being capable of being sold in the market was not relevant.
In support of this appeal, on behalf of the appellant, it was contended by Shri Harish Salve that it was only the 'goods as specified in the Schedule ' to the Central Excise that could be subject to the duty.
It appears to us that under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufacture goods must come into existence.
For articles to be goods these must be known in the market as such or these must be capable of being sold in the market a goods.
Actual sale in the market is not necessary, user in the captive consumption is not determinative but the articles must be capable of being sold in the market or known in the market a goods.
That was necessary.
This has been clearly spelt out by this Court in Union of India vs Delhi Cloth & General Mills, [1963] Supp.
1 SCR 586.
There this Court held that excise duty being leviable on the manufacture of goods and not on their sale, the manufacturer could not be taxed unless manufacturing process resulted in production 'of goods as known in the market ' (empahsis supplied).
In that case, the respondents, who were manufacturers of vegetable products known as Vanas pati, were assessed to excise duty under Item 23 of the First Schedule to the , on what the taxing authorities called the manufacture of 'r efined oil ' from raw oil which according to them fell within the description of "vegetable non essential oils, all sorts, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power".
The common case made by the respondents in their petition under Article 226 of the Constitution challenging the imposition was that for the purpose of manufacturing Vanaspati they purchased groundnut and til oil from the market and subjected them to different processes before applying hydrogenation to produce Vanaspati and that nothing that they produced at any stage was covered by that item.
Affidavits by experts were filed by both the parties and the High Court found in favour of the respondents and allowed the petitions.
The Union of India appealed.
It was urged on its behalf before this Court that before finally producing Vanaspati the respondents produced at an intermediate stage what was known as 'refined oil ' in the market and although they might not sell it and although Vanaspati, when produced, was liable to excise duty under another item, that could not affect their liability.
It was held that excise duty being leviable on the 390 manufacture of goods and not on their sale, the petitioners in that case no doubt be liable if they produced 'refined oil ', as known in the market, at an intermediate stage.
But the Court found that it was clear that there could be no 'refined oil ' as known in the market without deodorisation according to the specification of the Indian Standards Institute and the affidavits of the experts.
Since, however, the process of deodorisation was admittedly applied in the respondents ' factories only after hydrogenation was com plete, they could not be said to produce 'refined oil ' at any stage.
Nor could the respondents be held to manufacture some kind of 'non essential vegetable oil '.
K.C. Das Gupta, J., who spoke for the Court, at page 595 of the report, observed as follows: "On a consideration of all these materials we have no doubt about the correctness of the respondents ' case that the raw oil purchased by the respondents for the purpose of manufac ture of Vanaspati does not become at any stage "refined oil" as is known to the consumers and the commercial community." After considering the definition of the word 'manufac ture ' and several authorities and Words and Phrases, Perma nent Edition, Vol. 18, from a judgment of the New York Court and also other relevant authorities, this Court held that the definitions made it clear that to become "goods" an article must be something which can ordinarily come to the market to be bought and sold.
(Emphasis supplied).
In that view of the matter this Court agreed with the High Court and dismissed the appeal.
Therefore, the first principle that emerges is that excise was a duty on goods as specified in the Schedule.
In order to be goods an article must be some thing which can ordinarily come to the market and is brought for sale and must be known to the market as such.
Therefore, the marketability in the sense that the goods are known in the market or are capable of being sold and purchased in the market is essential.
This principle was again reiterated by this Court in South Bihar Sugar Mills Ltd., etc.
vs Union of India & Ors.
, ; , where this Court held that the gas generated by the appellant companies in that case was kiln gas and not carbon dioxide as known to the market, i.e., to those who deal in it or who use it.
Therefore, the kiln gas in question is neither carbon dioxide nor com pressed carbon dioxide known as such to the commercial community and could not attract duty under Item 14 H of the First Schedule.
It was held by this Court that the duty being on the manufacture and not on the sale, the mere fact that kiln gas generated by those concerns was not actually 391 sold did not make any difference if what they generated and used in their manufacturing process was carbon dioxide.
Justice Shelat speaking for the Court at page 31 of the report observed: "The Act charges duty on manufacture of goods.
The word "manufacture" implies a change but every change in the raw material is not manu facture.
There must be such a transformation that a new and different article must emerge having a distinctive name, character or use.
The duty is levied on goods.
As the Act does not define goods, the legislature must be taken to have used that word in its ordinary, dictionary meaning.
The dictionary meaning is that to become goods it must be something which can ordinarily come to the market to be bought and sold and is known to the market.
(emphasis supplied).
That it would be such an article which would attract the Act was brought out in Union of India vs Delhi Cloth & General Mills Ltd., [1963] Suppl 1 SCR 586.
" In that view of the matter, the Court came to the conclusion that the gas generated by these concerns was kiln gas and not carbon dioxide as known to the trade, i.e., to those who deal in it or who use it.
It must be capable of being sold in the market and known in the market as such.
Then only it would be dutiable.
This view was reiterated again in Union Carbide India Ltd. vs Union of India, where Pathak, J. as the learned Chief Justice then was, speaking for the Court observed that in order to attract excise duty the article manufactured must be capable of sale to a consumer.
The expression "goods manufactured or produced" must refer to goods which are capable of being sold to the consumer.
This Court observed as follows: "It does not seem to us that in order to attract excise duty the article manufactured must be capable of sale to a consumer.
Entry 84 of List I of Schedule VII to the Constitu tion specifically speaks of "duties of excise on tobacco and other goods manufactured or produced in India . ", and it is now well accepted that excise duty is an indirect tax, in which the burden of the imposition is passed on to the ultimate consumer.
In that context, the expression "goods manufactured or produced" must refer to articles which are capable of being sold to a consumer.
In Union of India vs 392 Delhi Cloth & General Mills, this Court con sidered the meaning of the expression "goods" for the purposes of the and observed that "to become 'goods ' an article must be something which can ordinarily come to the market to be bought and sold", a definition which was reiterated by this Court in South Bihar Sugar Mills Ltd. vs Union of India.
" It is necessary in this connection to reiterate the basic fundamental principles of excise.
The Judicial Commit tee of the Privy Council in Governor General in Council vs Province of Madras, , this Court observed at page 1287 of the report that excise duty was primarily a duty on the production or manufacture of goods produced or manufactured within the country.
This Court again in Re The Bill to Amend section 20 of the , And Sec tion 3 of the ; , at page 822 of the report referring to the aforesaid observations of the Judicial Committee reiterated that taxable event in the case of duties of excise is the manu facture of goods and the duty is not directly on the goods but on the manufacture thereof.
Therefore, the essential ingredient is that there should be manufacture of goods.
The goods being articles which are known to those who are deal ing in the market having their identity as such.
Section 3 of the Act enjoins that there shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or 'man ufactured ' in India.
"Excisable goods" under section 2(d) of the Act means goods specified in the Schedule to the Central Tariff Act, 1985 as being subject to a duty of excise and includes salt.
Therefore, it is necessary, in a case like this, to find out whether there are goods, that is to say, articles as known in the market as separate distinct identi fiable commodities and whether the tariff duty levied would be as specified in the Schedule.
Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not "goods" known to the market.
Marketability, therefore, is an essential ingre dient in order to be dutiable under the Schedule to Central Tariff Act, 1985.
It appears from the facts as aforesaid before that the crude PVC films as produced by the appellant in this case were not known in the market and could not be sold in the market and was not capable of being marketable.
The learned Solicitor General submitted before us that the Tri 393 bunal was right in considering that as the article fell within the Entry the marketability was irrelevant and the Tribunal was right in not considering whether the articles in question, namely, crude PVC films used in this case, were marketable or capable of being sold and used in the market.
Mr Harish N. Salve on the other hand submitted that as it was found that the goods were not marketable by the Appellate Collector in the order of 1974 and no evidence was adduced before the Tribunal to the contrary and the Tribunal refused to consider the question of marketability no useful purpose would be served in remanding the matter to the Tribunal.
The appeal should be allowed and no duty should be charged.
As mentioned before, the Appellate Collector has on 14.1.
1974 held that the crude PVC sheets/films which formed the subject matter of the appeal are manufactured by the appellant for the production of leather cloth in the factory are not marketable as PVC sheets and had allowed the appeal because he found that: " . because PVC sheets of the gauges manufactured by the appellants are invariably either embossed or printed or both.
The nature of embossing may be with an engraving roll or with a mirror finished roller or a mat finish.
The manufacture or PVC sheets marketable as such involves the following processing se quences, namely: Polyvinyl chloride resin is formulated with plasticizer, colorants, heat stabilizers, etc.
and the formulation is thoroughly mixed.
When homogeneous, this mix is fed through a two roll mill to give heavy sheet stock, which in turn is fed to the calender, where it is reduced to the desired width, thickness etc.
The temperature at which PVC sheets which are marketed as such are passed through the calender is about 178o C (330 350x) and the speed of the roller is adjusted accordingly.
The speed of the roller and the temperature at which the sheets are passed through the calender are important factors in order to achieve the minimum stand ard of tensile strength of the sheets.
Gela tion, i.e., the change of state from the liquid to the solid condition that occurs during the heating and/or ageing, when the plasticizer has been absorbed by the resin to an extent resulting in a dry but weak and crumbly mass, and thereafter within normal proportions of resin and plasticizer, this state is 394 attained when the resin particles have become so swollen by diffusion of plasticizer into them that they touch each other, is an impor tant process in the case of PVC sheets which are marketed as such.
As heating progresses the swollen particles begin to weld together, resulting in some degree of strength.
After the GEL is formed in such PVC sheets and resins get fused with plastisizer, they are further subjected to the processing of finish ing, embossing/printing.
On the other hand, crude PVC sheets manufactured by the appel lants for production of leather cloth in their factory are passed through the rollers at a temperature of 130o 1400 (280 F) and the speed of the roller is, therefore, faster.
Due to low temperature and faster speed of the rollers fusion is not completed in such crude plasticizers thus resulting in the tensile strength of such crude PVC sheets which is much less than the tensile strength of the PVC sheets which are marketable as such.
The tensile strength of PVC sheets which are marketed as such and the crude PVC sheets which are used by the appellants in their factory for the manufacture of leather cloth are as under: (1) Marketable PVC sheets Thickness Tensile strength Per cm.
in Kgs.
Longitudinal Transverse 0.08 mm 239 185 O. 10 mm 230 201 O. 15 mm 268 2 13 0.20 mm 230 200 (2) Crude PVC sheets Thickness Tensile strength Per cm.
sq. kgs.
Longitudinal Transverse O. 11 mm 127 98 0.22 mm 144 107 The thickness of crude PVC sheets of O. 11 mm ultimately comes to 10 mm when it is coated with textile fabrics and rolled.
Similarly, the thickness of crude PVC sheets of 0.22mm ultimately comes to when it is coated with fabrics and rolled.
395 The idea behind producing crude PVC sheets at low temperature and at high speed of the rollers is that when such crude PVC sheets are coated with textile fabrics and passed through a coating machine, high temperature is required to be maintained and the speed at which the rollers move has also got to be slow so that these partially fused crude PVC sheets are eventually fully fused at the time of coating these sheets with textile substrates.
No finishing, embossing or printing is done in case of such crude PVC sheets.
I, therefore, hold that the crude PVC sheets manufactured by the appellants are used by them in the manu facture of leather cloth in their factory are not marketable as PVC sheets and as such the same are not liable to duty under Item 15A(2) of the said Schedule.
" In view of the Appellate Collector 's order dated 14.1.1974 it was the duty of the revenue to adduce evidence or proof that the articles in question were goods.
No evi dence or proof was produced.
The Tribunal went wrong in not applying the proper test.
The test of marketability or capable of being marketed was not applied by the Tribunal.
In that view of the matter that there being no contrary evidence found by the Tribunal in this case subsequent to the finding by the Appellate Tribunal, we are of the opinion that the appeal should be allowed and no excise duty should be charged under section 15A(2) of the Central Excise Tariff on the Crude PVC sheets.
In the facts and circumstances of the case, there will be no order as to costs.
T.N.A. Appeal allowed.

summary/full:
The appellant is a manufacturer of Crude PVC films for the purpose of use in final products such as leather cloth and laminate jute mattings and PVC tapes both insulation and adhesive.
The films manufactured by the appellant were subject matter of adjudication by the Excise authorities during the period commencing from 1st March, 1970 to 29th May, 1971.
The Appellate Collector of Central Excise by an order dated 14.1.1974 held that the appellant had produced sufficient evidence to prove that the said Crude PVC films were not marketable and were therefore not liable to excise duty.
On 20.11.1975 the appellant filed a classification list in respect of Crude PVC films used for lamination with jute and for tapes claiming that the said PVC films were non excisable on the ground that the same were non marketa ble intermediate products used exclusively for captive consumption.
On 9.12.1975 the classification list was ap proved by the Assistant Collector, Central Excise.
On 15.2.1977, however, the Assistant Collector issued a show 383 cause notice calling upon the appellant to show cause as to why the aforesaid films should not be re classified as excisable under Item No. 15A(2) of the Central Excise Tariff Schedule and appropriate duty not recovered under Rule 10 of the Central Excise Rules, as these then stood, read with Rule 173 J.
By a corrigendum, dated 23.2.1977, to the said show cause notice Rule 10 A was substituted in place of Rule 10.
The appellant contested the notice but the Assistant Collector vide his order dated 16th February, 1978 confirmed the said show cause notice by holding that the said PVC films were classifiable under Item No. 15A(2) and directed the appellant to pay duty at the appropriate rate on past clearances under Rule 10 A read with Rule 173 J.
The appeal filed against the aforesaid order was reject ed by the Appellate Collector of Central Excise on 10th October, 1979.
A revision was preferred before Customs, Excise and Gold (Control) Appellate Tribunal.
The Tribunal confirmed the order of the Appellate Collector and held that the goods in question fell under Tariff Item No. 15A(2) and were dutiable in the intermediate list and the question of marketability or being capable of being sold in the market was not relevant, but modified the order to the extent that duty in respect of clearances prior to the issue of show cause notice was restricted to the period permissible in terms of Rule 10 read with Rule 173 J viz. 12 months.
In the statutory appeal to this Court under Section 35 L, of the the question for consideration was whether the Crude PVC film was dutiable under Item No. 15A(2).
Allowing the appeal, HELD: 1.
In view of the Appellate Collector 's order holding that the Crude PVC films were not marketable goods and there being no contrary evidence found by the Tribunal subsequent to the finding by the Appellate Collector no excise duty should be charged under Item No. 15A(2) of the Central Excise Tariff on the Crude PVC Sheets.
The Tribunal went wrong in not applying the proper test.
The test of marketability or capable of being marketed was not applied by the Tribunal.
[395D E] 2.
Under the Central Excise Act, as it stood at the relevant time, in order to be goods as specified in the entry the first condition was that as a result of manufac ture goods must come into existence.
For articles to be goods these must be known in the market as such or these 384 must be capable of being sold in the market as goods.
Actual sale in the market is not necessary, user in the captive consumption is not determinative but articles must be capa ble of being sold in the market or known in the market as goods.
Taxable event in the case of duties of excise is the manufacture of goods and the duty is not directly on the goods but on the manufacture thereof.
The manufacturer could not be taxed unless manufacturing process resulted in pro duction 'of goods as known in the market '.
The expression "goods manufactured or produced" must refer to goods which are capable of being sold to the consumer.
[389B C; 391F] Union of India vs Delhi Cloth and General Mills, [1963] Suppl.
1 S.C.R. 586; South Bihar Sugar Mills Ltd. etc.
vs Union of India & Ors, ; ; Union Carbide India Ltd. vs Union of India, ; Governor General in Council vs Province of Madras, [1945] 7 F.C.R. 179; In Re. the Bill to Amend section 20 of the and Section 3 of the , ; applied.
Simply because a certain article falls within the Schedule it would not be dutiable under excise law if the said article is not 'goods ' known to the market.
Marketabil ity, therefore, is an essential ingredient in order to be dutiable under the Schedule to the Central Tariff Act, 1985.
[392F G] 3.1.
In the instant case, the Crude PVC films as pro duced by the appellant were not known in the market and could not be sold in the market and were therefore not capable of being marketable.
[392G H]


judgement:
ivil Appeal No. 1347 of 1981 From the judgment and Order dated 24.1.
1981 of the Madras High Court in C.R.P. No. 44 of 1981.
B.N. Nayar, T.V.S.N. Chaff, K. Srinivasan, C.H. Badri Nath, R.K. Gupta and Ms. Sudha Srivastava for the Appel lants.
U.R. Lalit and Ambrish Kumar for the Respondent.
The Judgment of the Court was delivered by KANIA, J.
This is an appeal filed by Special Leave under Article 136 of the Constitution by the appellants who are the tenants against the respondent landlady.
The appellants are a partnership firm and are the ten ants of premises situate at No. 6 Kasi Chetty Street, G.T. Madras.
They carry on business there.
The respondent filed an eviction petition being H.R.C. No. 641 of 1975 in the Court of Small Causes, Madras against the appellants and one other partnership firm, carrying on business in the name and style of M/s. Adeshwar Glass Mart on the ground that the appellants had unlawfully and without the consent of the respondent sublet the said shop let out to the said M/s. Adeshwar Glass Mart and were liable to be evicted for unlaw ful subletting under the provision of Section 10(2)(ii)(a) of the Tamil Nadu Buildings (Lease and 419 Rent Control) Act, 1960 (hereinafter referred to as "the said Rent Act").
M/s. Adeshwar Glass Mart were also joined by the respondent herein as respondents in the eviction petition on the ground that they were unlawful sub tenants.
The Trial Court held this ground established and passed a decree for eviction as sought by the respondent.
The appel lants preferred an appeal against this decision to the Appellate Authority under Section 23 of the said Rent Act, being the Court of Small Causes at Madras.
The said appeal was numbered as H.R.A. 156 of 1979.
The Appellate Authority dismissed the said appeal upholding the finding of unlawful subletting by the appellants.
The appellants then preferred a Civil Revision Petition being C.R.P. No. 44 of 1981 in the High Court of Judicature at Madras against the aforesaid decision.
This Revision Petition was dismissed by the then learned Chief Justice of the Madras High Court.
It is against the decision the present appeal is directed.
Mr. Nayar, learned counsel for the appellants has urged before us that the impugned judgment must be set aside as the eviction petition was filed against the appellants firm and one other partnership firm, M/s. Adeshwar Glass Mart without joining any of the partners of the said firms as respondents or serving them as partners and hence, the eviction petition was not maintainable at all.
He placed strong reliances on the decision of this Court in Chhotelal Pyarelal, the partnership firm and others vs Shikharchand, In that case an eviction petition was filed by the respondent landlord against the appellant a partnership firm under clause 13(3)(iv) and (vii) of the Central Provinces and Berar Letting of Houses and Rent Control Order, 1949.
The appellant raised a preliminary objection that the application against the partnership firm was not maintainable without joining its partners as re spondents.
It was held by this Court that it is only by virtue of the provisions of order 30 of the Code of Civil Procedure, 1908, that a firm can sue and be sued in its own name without the partners being impleaded.
It was pointed out by Mr. Nayar that the Code of Civil Procedure was not applicable to the proceedings under the said Rent Act either and hence, the ratio laid down in the aforesaid decision was directly applicable to the case before us.
In our view, it is not open to Mr. Nayar to raise this contention at this stage at all.
This contention is not one which would have been fatal to the eviction petition.
Had this contention been raised in the Trial Court or even in the first Appel late Court, it would have been open to the respondent to amend the eviction petition and join the partners as re spondents.
In the aforesaid decision in Chhotelal Pyarelal 's case, relied upon by Mr. Nayar the objection to the main tainability of the 420 petition was raised at the earliest stage and was wrongly negatived by the Trial Court.
In fact, this Court observed as follows: "But we agree with the Division Bench of the High Court that this cannot by itself result in the dismissal of the application.
It would be merely a case of misdescription of the respondents to the application and this misde scription can be corrected at any stage of the proceedings.
There can be no doubt that the partners of the firm are before the Court though in a wrong name." In the case before us, no such objection has been raised at all till the stage of Special Leave and it is surely not open to the appellants to raise such an objection at a very late stage and thereby delay matters for a number of years.
This contention must, therefore, be negatived.
It was next submitted by Mr. Nayar that there was no evidence in the case to come to the conclusion that the appellants had sublet the shop to M/s. Adeshwar Glass Mart.
In our view, there is no substance in this contention.
There is evidence to show that M/s. Adeshwar Glass Mart was carry ing on business at the said premises and that firm was carried on business in the said premises even for some time during which the appellants firm had ceased to carry on the business there.
Moreover, although a notice was given by the respondent to the appellants and M/s. Adeshwar Glass Mart to produce their income tax returns, assessment orders as well as account books and ledgers for the relevant period, these were not produced.
It was surely open to the Trial Court from these circumstances to come to the conclusion that had the account books and ledgers been produced, they would have shown that rent was received by the appellants from M/s. Adeshwar Glass Mart which would justify the finding of subletting.
In these circumstances, this contention of Mr. Nayar must fail.
Although Mr. Nayar wanted us to undertake detailed scrutiny of the evidence and to reappreciate the same, we fail to see how we are called upon to do so in an appeal under Article 136 of the Constitution.
In the result, the appeal fails and is dismissed with costs.
G.N. Appeal dis missed.

summary/full:
The appellants are tenants of the premises belonging to the Respondent, and have been carrying on business as a partnership firm in the said premises.
The respondent filed an eviction petition against the appellant firm and another firm, on the ground that the appellant had unlawfully and without the consent of the Respondent sub let the premises to the other firm.
The Trial Court passed a decree for eviction, against which the appellants preferred an appeal to the Appellate Authority.
The Appellate Authority dis missed the appeal and upheld the finding of unlawful sub letting by the appellants.
The appellants preferred a Civil Revision petition before the High Court, which was also dismissed.
The present appeal by special leave is against the High Court 's decision.
On behalf of the appellants, it was contended that since the eviction petition had been filed without joining the partners of the other firm (the sub tenant) the eviction petition was not maintainable at all.
Dismissing the appeal, HELD: 1.
The objection that the eviction petition was filed against the appellants firm and the other firm, was not maintainable as it had been filed without joining any of the partners of the said other firm as respondents or serv ing them as partners, had not been raised at all till the stage of special leave and it is not open to the appellants to raise such an objection at a very late stage and thereby delay matters for a number of years.
[419F; 420C] 418 Chhotelal Pyarelal, the partnership firm and others vs Shikharchand, , distinguished.
There is evidence to show that the other firm was carrying on business at the said premises and that the said firm carried on business in the said premises even for some time during which the appellants firm had ceased to carry on the business there.
Moreover, although a notice was given by the respondent to the appellants and the other firm to produce their income tax returns, assessment orders as well as account books and ledgers for the relevant period, these were not produced.
It was open to the Trial Court, from these circumstances, to come to the conclusion that had the account books and ledgers been produced, they would have shown that rent was received by the appellants from the other firm which would justify the finding of subletting.
[420D F]