judgement:
Appeal No. 290 of 1963.
Appeal from the judgment and order dated January 19, 1960, of the Andhra Pradesh High Court in case referred No. 7 of 1958.
K. N. Rajagopal Sastri and R.N. Sachthey, for the appellant.
K. Bhimasankaram and K.R. Sharma, for the respondent.
November 20, 1963.
The Judgment of the Court was delivered by SHAH, J.
Baba Gowd, P.V. Rajareddy and Rajareddy Mallaram formed an association of persons called "Nizamabad Group Liquor Shops" called for the sake of brevity 'the Group '.
For the Fasli year 1358 i.e. October 1, 1948 to September 30, 1949 the Group carried on business in liquor contracts obtained from the former State of Hyderabad.
With the end of Fasli year 1358 the contracts came to an end.
The business was then discontinued, and the Group was dissolved.
The Group did not make a return of its income pursuant to the general notice under section 22(1)of the Indian Income tax Act.
The Incometax Officer, Nizamabad Circle, issued a notice under section 34 of the Income tax Act calling upon Baba Gowdone of the members of the Group to file a return of the income of the Group, but Baba Gowd failed to file the return on the due date.
The Incometax Officer then assessed the taxable income of the 511 Group under section 23(4) at Rs. 51,000, and determined Rs. 8,826 14 0 as the tax payable.
Attempts made by the Income tax Department to recover the tax from Baba Gowd having proved unsuccessful, on March 13, 1954, the Income tax Officer issued a notice of demand addressed to Rajareddy Mallaramanother member of the Group.
The latter then applied under section 27 of the Indian Income tax Act for can cellation of the assessment.
The application was rejected by the Income tax Officer.
In appeal to the Appellate Assistant Commissioner, the order was set aside and the Income tax Officer was directed to cancel the order of assessment under section 23(4) and to make a fresh assessment after giving an opportunity to Rajareddy Mallaram to file a return and to produce the books of account of the dissolved Group.
The Income tax Appellate Tribunal, Hyderabad Branch modified the order of the Appellate Assistant Commissioner.
The Tribunal held that a valid order of assessment under section 23(4) having already been made in the case there could be no occasion to issue a fresh notice to Rajareddy Mallaram or to make a fresh assessment, but somewhat inconsistently with that opinion, 'the Tribunal directed that the Appellate Assistant Commissioner do consider whether Rajareddy Mallaram had been prevented by sufficient cause from making the return.
At the instance of Rajareddy Mallaram the following two questions were referred to the High Court of Andhra Pradesh by the Tribunal. "(1) On the facts and in the circumstances of the case, was the order of assessment made by the Income tax Officer under section 23(4) on 30 9 1953 bad in law? (2) If the answer to the above question is in the negative, was not the applicant liable for the amount of tax payable as determined in that order of assessment by reason of the terms of section 44 of the Income tax Act?" The High Court answered the first question in the affirmative and held that the second question did 512 not fallto be determined.
In arriving at its conclusion the HighCourt recorded the following findings: "(1)On the facts and in the circumstances of this case, the order of assessment made by the Income tax officer under section 23 on 30 9 1953 is bad in law, (a) absolutely, because he Made the assess ment of the association and not of those who were members of the association at the time of the dissolution jointly and severally; and (b) particularly as against any member on whom notices under sections 34 and 22(4) were not served because of such failure to serve notices on him.
The assessment is not binding on the petitioner, as no notice under section 22 was issued to him and as he was not assessed severally or jointly with others referred to above.
(ii) The applicant is not liable for the amount of tax payable as determined in the order of assessment dated 30 9 1953, as that assessment was not made in conformity with section 44 of the Income tax Act.
" The sole question which fell to be determined before the taxing authorities was whether the order of assessment made by the Income tax Officer, subsequent to the dissolution of the Group, assessing its income, after serving a notice upon one and not all the members of the Group, could be enforced against members of the Group who were not served.
The material part of section 44 of the Indian.
Income tax Act (insofar as it dealt with the liability of discontinued associations) before it was amended by section 11 of Finance Act XI of 1958 with effect from April 1, 1958, stood as follows: "Where any business, profession or vocation carried on by a association of persons has been discontinued, or where an 513 association of persons is dissolved, every person who was at the time of such discontinuance of dissolution a member of such association shall, in respect of the income, profits and gains of the .
association, be jointly and severally liable to assessment under Chapter IV and ,for ' the amount of tax payable and all the provisions of Chapter IV shall, so far as may be, apply to any such assessment.
" The section declares the liability for assessment under Ch.
IV of the Act in case of discontinuance, of the business of or dissolution of an association.
The Group admittedly discontinued its business at the end, of Fasli year 1358 and it was also dissolved.
Every person who was at the time of such discontinuance or dissolution a member of the Group was by the express terms of section 44 liable to be assessed jointly and severally in respect of, the,, income, profits and gains of the Group and was also liable for the amount of tax payable.
This Court in examining the scheme of section 44 as it ' stood before its amendment in 1958 in its application to a firm which had discontinued its business observed: C.A. Abraham, Uppoottil, Kottayam Y. The Income tax Officer, Kottayam and another "In effect, the Legislature has enacted by section 44 that the assessment proceedings may be commenced and continued against a firm of which business is discontinued as if discontinuance has not taken place.
It is .enacted manifestly with a view to ensure continuity in the application of the machinery provided for assessment and imposition of tax liability notwithstanding dis.
,continuance of the business of firms.
By a fiction, the firm is deemed to continue after discontinuance for the purpose of assessment under, Chapter IV." In Abraham 's case (1) the Court was concerned with;the assessment of a firm of which the business was discontinued because of the ' dissolution of the (1)[1961] 2 S.C.R. 765 at p. 770.
514 firm, by the death of one of the partners.
But section 44 as it stands amended by Act, 7 of 1939 applies to 'discontinuance of the business of associations of persons as well as of firms, and the question which directly fell to be determined in that case was whether penalty for concealing the particulars of income or for deliberately furnishing inaccurate particulars of income in the return could lawfully be imposed after discontinuance of the business.
It is true that the validity of the order assessing the firm was not expressly challenged, though at the date of the order of assessment the firm stood dissolved, and its business was discontinued, but the 'Court could not adjudicate upon the validity of the order imposing penalty without deciding whether there was a valid assessment, for an order imposing penalty postulates a valid assessment.
Counsel for the respondent contended that even if the assessment after dissolution of the Group be regarded as valid, it is binding upon only those persons who were served with the notice calling for a return, and in support of this plea.
relied upon the clause "every person who was at the time of such dissolution, a member of such association shall in respect of the income of the association be jointly and severally liable to assessment".
He urged that the expression "every person" in section 44 means all persons, and that by enacting that such persons shall be liable to assessment "jointly and severally" it was intended that after the association is dissolved only the members at the date of dissolution can be assessed in, respect of the income of the association.
As: a, corollary to the argument it was submitted that all members who are sought to be assessed must be individually served with notice of assessment, and those not, served will not be bound by the assessment.
The argument is plainly inconsistent with what, was observed by this Court in Abraham 's case(".
If, by section, 44 the continuity of the. firm or association ,is for the purpose of assessment ensured, (1) at P. 770.
515 no question of assessing the individual members of the association can arise.
Under Ch.
IV of the Income tax Act an association of persons may be assessed as a: unit of assessment, or the individual members may be assessed separately in respect of their respective shares of the income, but the Act contains no machinery for assessing the income received by an association, in the hands of its members collectively.
The unit of assessment in respect of the income earned by the. association is either the association or each individual member in respect of his share in the income.
This is so when the association is existing, and after it is dissolved as well.
There can be no partial assessment of the income of an association, limited to the share of the member who is served with notice of assessment.
For the purpose of assessment the Income tax Act invests an association with a personality apart from the members constituting if, and if that personality is for the purposes of Ch.
IV, insofar as it relates to assessment, continued, the theory of assessment binding only upon members who were served with the notice of assessment can have no validity.
This view is supported by the use of the expression "tax payable" in section 44 which in the context in which it occurs can only mean tax which the association but for dissolution, or discontinuance of its business would have been assessed to pay.
Since the primary purpose of section 44 is to bring to tax the income of the association after it is dissolved or its business is discontinued, assessment of an aliquot share of that income is not contemplated by section 44 of the Income tax Act.
The effect of section 44 is as we have stated, merely to ensure continuity in the application of the machinery provided in Ch.
IV of the Act for assessment and for imposition of tax liability notwithstanding discontinuance of the business of the association or its dissolution.
By virtue of section 44 the personality of the association is continued for the purpose of assessment and Ch.
IV applies thereto.
What can be assessed is the income of the association received prior to its dissolution and the members of the association would be 516 jointly and severally assessed thereto in their capacity as members of the association.
For the purpose of such assessment, the procedure is that 'applicable for assessment of the income of the association as if it had continued.
A notice to the appropriate person under section 63(2) would, therefore, be sufficient to enable the authority to assess to tax the association.
The plea 'that the respondent not having been served personally with the, notice of assessment is not liable to pay the tax, assessed cannot therefore be sustained.
Counsel for the respondent then contended that the original assessment made under section 23(4) was invalid, because notice of assessment was not served upon the Group in the manner provided by section 63(2) of the lndian Income tax Act, Baba Gowd who was served with ' the notice not being the principal officer who .could be served, with notice on behalf of the Group.
But no such contention was raised before the Tribunal.
It does not arise out of the order of the Tribunal and the question referred by the Tribunal to the High Court does not.
justify consideration of that plea.
The respondent . 'cannot be permitted to raise a question which did not arise out of the order of the Tribunal, and has not been referred.
The case must be decided on the footing that notice of assessment was properly served on Baba Gowd and that the assessment, was properly , made by the Income tax Officer tinder section 23(4).
We hold that the answer to the first question will be in the negative.
If the order of assessment is held to be valid, the application made by the respondent for setting aside the assessment on the ground that he was not served with the notice of assessment must fail.
, The second question will be answered as follows "The applicant was liable 'for the amount of tax payable under the order of assessment.
" The appeal is allowed.
The respondent will pay the costs of this appeal in this Court and in the High Court.
Appeal allowed.

dataset_name: IN-Abs

summary/full:
An association of three persons carrying on business in liquor was dissolved.
No return was filed on behalf of the association or the individual members.
The Income tax Officer issued a notice under section 34 of the Income tax Act calling upon Baba Gowd, one of the members of the association, to file a return of the income of the association but he did not so.
The Income tax Officer then assessed the taxable income of the association under section 23(4) of the Act and determined the tax payable.
Attempts to recover tax from Baba Gowd were not successful.
The Income tax Officer then issued a notice of demand to the respondent, another member of the dissolved association.
The respondent applied under section 27 for cancellation of the assessment.
The application was rejected by Income tax Officer.
The Appellate Assistant Commissioner ordered cancellation of the assessment and directed that fresh assessment be made after giving an opportunity to the respondent to file a return and to produce evidence in support thereof.
The Income tax Appellate Tribunal held that a valid order of assessment had already been made and there was no occasion to issue a fresh notice to the respondent or to make a fresh assessment.
At the instance of the respondent, the Tribunal referred to the High Court two questions whether the order of assessment made by the Income tax Officer under section 23(4) on September 30, 1953 was bad in law or not and whether the respondent was or was not liable for the amount of tax payable as determined in that order of assessment by reason of the terms of section 44 of the Incometax Act.
The High Court held that the order of assessment under section 23 (4) was bad in law and the respondent was not liable.
In appeal to this Court.
Held:The order of assessment made by the lncome tax Officer under section 23(4) on September 30, 1953 was not bad in law and the respondent was liable for the amount of tax payable under the order of assessment.
Under Chapter IV of the Income tax Act, an association of persons can be assessed as a unit of assessment or the individual members can be assessed separately in respect of their respective shares of income.
The Act does not contain any machinery for assessing the income received by an association, in the hands of its members collectively.
The unit of assessment in respect of the income earned by the association is either the association or each individual member in respect of his share in the income.
This is so when the association is existing and the same is true after its dissolution.
There can be no partial assessment of the income of an association, limited to the share of the member who is served with notice of assessment.
The theory of assessment binding only those members who were served with the notice of assessment, is not valid.
The use of the expression "tax payable" in section 44 in the context in which it occurs can only mean tax which the association but for its dissolution or discontinuance of its business, would have been assessed to pay.
510 By virtue of section 44, the personality of the association is continued for the purposes of assessment.
What can be assessed is the income of the association recieved prior to its dissolution and the members of the association would be jointly and severally assessed thereto in their capacity as members of association.
For the purpose of such assessment, the procedure is that applicable for the assessment of the income of association as if it had continued.
A notice to the appropriate person under section 63(2) would, therefore, be sufficient to enable the authority to assess to tax the association.
The plea that the respondent was not served personally with the notice of assessment and was therefore not liable to pay the tax assessed, cannot be sustained.
C.A. Abraham, Uppoottil, Kottayam vs Income tax Officer, Kottayam, ; , referred to.


judgement:
Appeal No. 13 of 1963.
Appeal by special leave from the award dated January 20, 1962, of the Industrial Tribunal No. 307 of 1961.
M.C. Setalvad and A.N. Goyal.
for the appellant.
B.P. Maheshwari and O.P. Singh for the respondent.
November 14, 1963.
The Judgment of the Court was delivered by GAJENDRAGADKAR J.
The short question of law which arises in this appeal by special leave relates to the construction of section 25 FF of the (No. 14 of 1947) (hereinafter called 'the Act ') This question arises in this way.
Between the appellant, the Management of R.S. Madhoram & Sons (Agencies) (P) Ltd., and the respondents, its workmen an Industrial dispute arose in regard to the transfer of 57 employees from the management of R.S. Madho ram & Sons, which was their original employer, to the appellant.
This dispute was referred for adjudication by the Delhi Administration to the Industrial Tribunal, New Delhi.
The case of the respondents was that the impugned transfer is invalid, whereas the appellant contended that the said transfer was fully valid and justified under section 25FF of the Act.
Certain other pleas were 381 raised by the parties before the Tribunal and they have been considered by it, but it is not necessary for the purpose of the present appeal to refer to them, since the only point which has been urged betoken us by Mr. Setalvad on behalf of the appellant is in relation to the finding of the Tribunal that section 25FF does not apply to the present case.
R.S. Madhoram & Sons, and R.S. Madhoram & Sons (Agencies) (P) Ltd. are the two concerns involved in this dispute.
The first is a firm consisting of the members of a joint Hindu family and the second is a company formed by the said members.
The firm has been in existence since April 1, 1946 whereas the company came into existence on August 29, 1961.
The head office of the firm is at Dehra Dun and it runs branches at Delhi, New Delhi, Mussoorie and Amritsar.
The firm acts as selling representatives of Obeetee (Private) Ltd., Mirzapur: Commonwealth Trust Ltd., Calicut, and United Coffee Supply Co. Ltd., Coimbatore.
It also acts as Government contractors as well as stockists of the Elgin Mills Co. Ltd., Kanpur.
The 57 employees whose transfer from the firm to the company has given rise to the present dispute were originally employed by the firm.
On the muster roll of the firm, 92 employees were entered.
Out of these, 57 have been transferred by the firm to the company as a result of the agreement between the two concerns.
The company was formed as a separate and different concern, and in accordance with its memorandum and articles of association and in pursuance of the agreement between it and the firm, it has taken over the retail business of the firm together with the staff employed by the firm in the said retail business as from September 15, 1961.
The agreement shows that when the staff was taken over by the company from the firm, continuity of service was guaranteed to the staff and the terms and conditions of service enjoyed by them before the taking over also remained unaffected.
The appellant contends that it is the successor in interest of the firm in regard to the retail business 382 which was one of the businesses carried on by the firm, and it argues that since the conditions prescribed by the proviso to section 25FF have been complied with, the grievance made by the respondents that the transfer of the 57 workmen in question is unjustified cannot be sustained.
On the other hand, the respondents contend that section 25FF is inapplicable to their case, because the ownership or management of the undertaking has not been transferred by the firm to the company within the meaning of the said section.
If the said section does not apply, then there is no scope for applying the provisions of the proviso.
The Tribunal has upheld the plea raised by the respondents, and Mr. Setalvad contends that the finding of the Tribunal is based on a misconstruction of section 25FF of the Act.
Before dealing with this point, it would be useful to refer to the relevant facts which preceded the transfer of 57 employees.
It appears that on September 14, 1961, there was an agreement between the transferor and the transferee as a result of which the employees engaged by the transferor were transferred to the transferee company.
This agreement provided that the service of the said workmen shall not be interrupted by reason of the transfer, that the terms and conditions of service applicable to the said workmen shall not be less favorable than those applicable to them immediately before the transfer, and that the transferee concern shall be liable to pay to the workmen in the event of their retrenchment, compensation on the basis that their service had been continuous and had not been interrupted by the transfer.
Another agreement was executed between the firm and the company on September 15, 1961, as a result of which the company took over the entire retail business hitherto run by the firm.
Clauses 2 to 5 of the said agreement provide the other terms and conditions subject to which the transfer of the retail business was effected between the firm and the company.
383 After this transaction was thus completed between the firm and the company, notice was issued to the workmen in question intimating to them that as a result of the transfer their services would be taken over by the transferee company.
These workmen were told that in computing the length of their service, the period of their service with the transferor firm would be taken into account.
They were also told that if any of them did not want to work with the transferee company, they should intimate accordingly to the said company within three days from the receipt of the notice whereupon their legal dues would be paid to them.
For reasons which it is not easy to understand or appreciate, the respondent Union representing the appellant 's employees does not appear to have responded favourably to this notice and correspondence that passed between the respondent and the appellant shows that the workmen were not prepared to be treated as the employees of the transferee company.
It seems that they were willing to do the work of retail business which had been transferred to the company, but they were unwilling to forego the status as the employees of the transferor firm.
Attempts at conciliation were made, but the differences between the parties could not be resolved, and so, the matter ultimately went to the Industrial Tribunal for its adjudication.
That is bow the only question which arises for our decision is whether section 25FF and its proviso apply to the present case.
Section 25FF of the Act provides, inter alia, that where the ownership or management of an undertaking is transferred, whether by agreement or by operation of law, from the employer in relation to that undertaking to a new employer, every workman who satisfies the test prescribed in that section shall be entitled to notice and compensation in accordance with the provisions of section 25FF as if the workman had been retrenched.
This provision shows that workmen falling under the category contemplated by it, are entitled to claim retrenchment compensation in 384 case the undertaking which they were serving and by which they were employed is transferred.
Such a transfer , in law, is regarded as amounting to retrenchment of the said workmen and on that basis section 25FF gives the workmen the right to claim compensation.
There is, however, a proviso to this section which.
excludes its operation in respect of cases falling under the proviso.
In substance, the proviso lays down that the provision as to the payment of compensation on transfer will not be applicable where in spite of the transfer, the service of the workmen has not been interrupted.
The terms and conditions of service are not less favorable after transfer then they were before such transfer, and the transferee is bound under the terms of the transfer to pay to the workmen in the event of their retrenchment, compensation on the basis that their service had been continuous and had not been interrupted by the transfer.
The proviso, therefore, shows that where the transfer does not effect the terms and conditions of the employees, does not interrupt the length of their service and guarantees to them payment of com pensation, if retrenchment were made, on the basis of their continuous employment, then section 25FF of the Act would not apply and the workmen concerned would not be entitled to claim compensation merely by reason of the transfer.
It is common ground that the three conditions prescribed by clauses (a) (b) and (c) of the proviso are satisfied in this case and so, if section 25FF were to apply, there can be little doubt that the appellant would be justified in contending that the transfer was valid and the 57 employees can make no grievance of the said transfer.
The question, however, is: does section 25FF apply at all? It would be noticed that the first and foremost condition for the application of section 25FF is that the ownership or management of an undertaking is transferred from the employer in relation to that undertaking to a new employer.
What the section contemplates is that either the ownership or the management of an undertaking should be transferred; normally this would 385 mean that the ownership or the management of the entire undertaking should be transferred before section 25FF comes into operation.
If an undertaking conducts one business, it would normally be difficult to imagine, that its ownership or management can be partially transferred to invoke the application of section 25FF.
A business conducted by an industrial undertaking would ordinarily be an integrated business and though it may consist of different branches or departments they would generally be inter related with each other so as to constitute one whole business.
In such a case, s.25FF would not apply if a transfer is made in regard to a department or branch of the business run by the undertaking and the workmen would be entitled to contend that such a partial transfer is outside the scope of section 25FF of the Act.
It may be that one undertaking may run several industries or businesses which are distinct and separate.
In such a case, the transfer of one distinct and separate business may involve the application of section 25FF.
The fact that one undertaking runs these businesses would not necessarily exclude the application of section 25FF solely on the ground that all the businesses or industries run by the said undertaking have not been transferred.
It would be clear that in all cases of this character the distinct and separate businesses would normally be run on the basis that they are distinct and separate; employees would be separately employed in respect of all the said businesses and their terms and conditions of service may vary according to the character of the business in question.
In such a case, it would not be usual to have one muster roll for all the employees and the Organisation of employment would indicate clearly the distinctive and separate character of the different businesses.
If that be so, then the transfer by the undertaking of one of its businesses may attract the application of section 25FF of the Act.
But where the undertaking runs several allied businesses in the same place or places, different 1/SCI/64 25 386 considerations would come into play.
In the present case, the muster roll showing the list of employees was common in regard to all the departments of business run by the transferor firm.
it is not disputed that the terms and conditions of service were the same for all the employees and what is most significant is the fact that the employees could be transferred from one department run by the transferor firm to another department, though the transferor conducted several branches of business which are more or less allied, the services of the employees were not confined to any one business, but were liable to be transferred from one branch to another.
In the payment of bonus all the employees were treated as constituting one unit and there was thug both the unity of employment and the identity of the terms and conditions of service.
In fact, it is purely a matter of accident that the 57 workmen with whose transfer we are concerned in the present appeal happened to be engaged in retail business which was the subject matter of the transfer between the firm and the company.
These 57 employees had not been appointed solely for the purpose of the retail business but were in charge of the retail business as a mere matter of accident.
Under these circumstances, it appears to us to be very difficult to ' accept Mr. Setalvad 's argument that because the retail business has an identity of its own it should be treated as an independent and distinct business run by the firm and as such, the transfer should be deemed to have constituted the company into a successor in interest of the transferor firm for the purpose of section 25FF.
As in other industrial matters, so on this question too, it would be difficult to lay down any categorical or general proposition.
Whether or not the transfer in question attracts the provisions of section 25FF must be determined in the light of the circumstances of each case.
It is hardly necessary to emphasise that in dealing with the problem, what industrial adjudication should consider is the matter of substance and not of form.
As has been observed by this Court in Anakapalla Cooperative Agricultural and In 387 dustrial Society vs Workmen and others(1) the question as to whether a transfer has been effected so as to attract section 25FF must ultimately depend upon the evaluation of all the relevant factors and it cannot be answered by treating any one of them as of overriding or conclusive significance.
Having regard to the facts which are relevant in the present case, we are satisfied that the appellant cannot claim to be a successor in interest of the firm so as to attract the provisions of section 25FF of the Act.
The transfer which has been affected by the firm in favour of the appellant does not, in our opinion, amount to the transfer of the ownership or management of an undertaking and so, the Tribunal was right in holding that section 25FF and the proviso to it did not apply to the present case.
The result is, the appeal fails and is dismissed with costs.
Appeal dismissed.

summary/full:
An industrial dispute arose between the appellant the Management of R.S. Madhoram & Sons (Agencies) (P) Ltd., and the respondents its workmen, in regard to the transfer of 57 employees from the Management of R.S. Madhoram & Sons, which was there original employer, to the appellant.
By agreement the transferor firm transferred its retail business to the appellant.
This dispute was referred for adjudication to the Industrial Tribunal.
The case of the respondents was that section 25FF is inapplicable to their case, because the ownership or management of the undertaking has not been transferred by the firm to the company within the meaning of that section.
The case of the appellant was that the said transfer was fully valid and justified under section 25FF of the Act.
In the present case, the muster roll showing the list of employees was common in regard to all the departments of business run by the transferor firm.
The employees could be transferred from one department run by the transferor firm to another department.
In the payment of bonus all the employees were treated as constituting one unit and there was thus both the unity of employment and the identity of the terms and conditions of service.
The respondents succeeded before the Tribunal.
The appellant has come to this Court against the award of the Tribunal.
Held: (i) The first and foremost condition for the appli cation of section 25FF is that the ownership or management of an undertaking is transferred from the employer in relation to that undertaking to a new employer.
Normally this would mean that the ownership or the management of the entire undertaking should be transferred before section 25FF comes into operation.
If an undertaking conducts one business it would normally be difficult to imagine that its ownership or management can be partially transferred to invoke the application of section 25FF.
It may be that one undertaking may run several industries or businesses which are distinct and separate.
In such a case, the transfer of one distinct and separate business may involve the application of section 25FF.
On the facts of this case it was held that the retail business of the transferor firm was not a separate and distinct business and as such, the impugned transfer did not amount to the transfer of 380 the ownership or management of an undertaking so as to attract the provisions of section 25FF of the Act.
In the present case.
the appellant cannot claim to be a successor in interest of the firm so as to attach section 25FF of the Act.
(ii)It would be difficult to lay down any categorical or general proposition as to the application of section 25FF.
Whether or not the transfer in question attracts the provisions of section 25FF must be determined in the light of the circumstances of each case.
The question as to whether a transfer has been effected so as to attract section 25FF must ultimately depend upon the evaluation of all the relevant factors and it cannot be answered by treating anyone of them as of over riding or conclusive significance.
Anakapalle Co operative Agricultural and Industrial Society vs Its Workmen, [1963] Supp.
1.S.C.R. 730, relied on.


judgement:
Civil Appeal No. 150 of 1963.
Appeal by special leave from the judgment and decree dated January 9, 1962 of the Calcutta High Court in Appeal from Original Decree No. 48 of 1961.
N.C. Chatterlee, R.K. Garg, S.C. Agarwal, M.K. Rarnatnurthi and D.P. Singh, for the appellant.
M.C. Setalvad and B.P. Maheshwari, for the respondent.
October 10, 1963.
The Judgment of the Court was delivered by RAGHUBAR DAYAL J.
Raj Kishore Tewari, appellant in this appeal by special leave, was occupying certain premises as sub tenant of Susil Chandra Banerjee, under a registered lease dated April 10, 1954.
His tenancy commenced from April 1, 1954.
The rent fixed was Rs. 220 per mensem.
Subsequent 123 ly it was reduced to Rs. 205 by an agreement dated June 9, 1954.
The tenancy was monthly.
Susil Chandra Banerjee was the tenant of Govindaram Bhansali from September 15, 1943, at a monthly rental of Rs. 153 plus certain other charges.
On June 16, 1955, the landlord obtained a decree of ejectment against Susil Chandra Banerjee.
In view of sub section
(2) of section 13 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950 (Act XVII of 1950), hereinafter called the Act, the appellant became the tenant of the landlord after the determination of the tenancy of Susil Chandra Banerjee.
On March 19, 1957, the land lord respondent gave a notice to the appellant asking him to deliver possession of the premises on the expiry of the last day of April 1957, on the ground that he, being the statutory tenant, had not paid rents to him since June 16, 1955, and, as such, was not entitled to any protection under the West Bengal Premises Tenancy Act, 1956 (Act XII of 1956).
Subsequently, on June 10, 1957, the respondent instituted the suit for ejectment of the appellant from the premises.
The suit was resisted by the appellant on various grounds.
His defence was however struck off due to certain default.
Ultimately, the suit was decreed on December 15, 1959.
An appeal to the High Court was unsuccessful.
The High Court refused to give leave to appeal to this Court.
Thereafter, the appellant obtained special leave from this Court and filed the appeal.
The only point urged for the appellant is that the notice of ejectment dated March 19, 1957, was invalid in view of the fact that under the law the notice must be to require the appellant to deliver possession on the expiry of the month of tenancy, that the tenancy was from the 16th of a month as the decree for ejectment against the tenant of the first degree was passed on June 16, 1955, and that this notice required the delivery of possession on the expiry of the last day of April.
We may say that this point was not raised in the written statement.
It was however allowed to be raised in the appellate Court but was repelled.
124 The only point to determine in this appeal is the date from which the tenancy of the appellant vis a vis the respondent commenced.
The relevant portion of sub s.(2) of section 13 of the Act is: "(2) Where any premises or any part thereof have been or has been sub let by 'a tenant of the first degree ' or by a tenant inferior to a tenant of the first degree ', as defined in explanation to sub section (1), and the sub lease is binding on the landlord of such last mentioned tenant, if the tenancy of such tenant in either case is lawfully determined otherwise than by virtue of a decree in a suit obtained by the landlord by reason of any of the grounds specified in clause (h) of the proviso to sub section (1) of section 12, the sub lessee shall be deemed to be a tenant in respect of such premises or part, as the case may be, holding directly under the landlord of the tenant whose tenancy has been determined, on terms and conditions on which the sub lessee would have held under the tenant if the tenancy of the latter had not been so determined.
" There is nothing in these provisions which should persuade us to hold, as urged for the appellant, that the sub tenant becomes a tenant of the landlord from the date on which the tenancy of the tenant against whom a decree for ejectment is passed is determined.
The provisions only lay down that the sub tenant would become the tenant of the landlord if the tenancy in chief is determined lawfully.
On the other hand, this sub section lays down that the subtenant would be tenant on the terms and conditions on which the sub lessee would have held under the tenant if the tenancy of the tenant had not been determined.
This means that the terms and conditions of the tenancy between the erstwhile sub tenant and the landlord continue to be the same which were the terms and conditions of the sub tenancy.
Such terms and conditions of the tenancy in the case of the appellant were that he was to be a monthly tenant on the payment of a certain rent and that his tenancy was to 125 commence from the first day of April 1954.
It is clear therefore that his tenancy was by the calendar month.
It commenced on the first day of the month and expired on the last day of the month.
This period of monthly tenancy was in no way affected by the provisions of sub section
(2) of section 13 whose effect was simply this that the sub tenant instead of being sub tenant of the tenant who had been ejected, got a direct connection with the landlord and became his tenant in chief or, as the Act describes, tenant in the first degree.
The statutory provision just brought about a change in the landlord of the sub tenant.
The proprietor landlord took the place of the tenantin chief from whom the sub tenant had secured the tenancy.
We are therefore of opinion that the High Court was right in rejecting the contention of the appellant with respect to the invalidity of the notice for ejectment dated March 19, 1957.
The result is that the appeal fails and is dismissed with costs.
Appeal dismissed.

summary/full:
The appellant was a sub tenant of S on a monthly basis commencing from April 1, 1954.
S was the tenant of the Respondent from September 15, 1943 on a monthly rental.
On June 16, 1955, the respondent obtained a decree of ejectment against section In view of sub s(2) of section 13 of the West Bengal Premises Rent Control (Temporary Provisions) Act, 1950, the appellant became the tenant of the respondent after the determination of the tenancy of section The respondant gave a notice to the appellant asking him to deliver possession of the premises on the expiry of the last day of April 122 1957, since he being a statutory tenant had not paid rent since June 16, 1955.
The respondant instituted a suit for ejectment, which was decreed, and an appeal to the High Court by the appellant was unsuccessful.
On appeal by special leave, it was contended that the notice was invalid for under the law the notice must be to require the appellant to deliver possession on the expiry of the month of tenancy, that the tenancy was from the 16th of a month as the decree for ejectment against S was passed on June 16, 1955 and that this notice required the delivery of possession on the expiry of the last day of April.
Held: The contention was untenable and rightly rejected by the High Court.
The provisions of Sub section
(2) of section 13 of the West Bengal Rent Control (Temporary Provisions) Act, 1950 only lay down that the sub tenant would become the tenant of the landlord if the tenancy in chief is determined, on the same terms and conditions on which the sub lessee would have held under the tenant if the tenancy of the tenant had not been determined.
This means that the terms and conditions of the tenancy between the erstwhile sub tenant and the landlord continue to be the same which were the terms and conditions of the sub tenancy.
The period of monthly tenancy commencing from the first of the month and expiring on the last day of the month, was in no way affected by the provisions of Sub section
(2) of section (13) whose effect was simply that the sub tenant instead of being sub tenant of the tenant who had been ejected, got a direct connection with the landlord and became his tenant in chief.


judgement:
Appeal No. 514 of 1963.
Appeal by special leave from the judgment Award dated August 21, 1962, of the Fourth Industrial Tribunal, West Bengal in Case No. VIII 332 of 1961.
A.V. Viswanatha Sastri, D.N. Gupta, S.C. Mazumdar and B.N. Ghosh, for the appellant.
D.L. Sen Gupta and Janardan Sharma, for the respondents.
November 29, 1963.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The industrial dispute between the appellant, Mcleod & Company Ltd., and the respondents, its workmen, which has given rise to the present appeal centered round two items of claim made by the respondents.
The respondents claimed that they should be given cash allowance in lieu of the tiffin arrangements at present made by the appellant, and they urged that the practice started by the appellant of re employing retired persons should be discontinued.
The Tribunal has granted the first claim and has directed that the clerical staff should be paid As.
/8/ per day and the subordinate staff As. /6 ' per day on all working days in lieu of the tiffin arrangements which are at present made by the appellant.
In regard to the second claim, the Tribunal has ordered that the appellant should stop the re employment of retired workmen in the category of clerks above 'C ' grade.
In respect of the 570 subordinate staff as also in regard to the lowest grade clerks, the Tribunal thought it unnecessary to make any such direction.
That is how the latter claim has been partially allowed.
It is against this award that the appellant has come to this Court by special leave.
The total number of employees in the employment of the appellant is about 453.
36 of them are officers; 90 are junior grade Assistants, while 196 are clerks and 131 belong to the subordinate staff.
It is in regard to the last two categories of the appellant 's employees that the two items of dispute have reference in the present proceedings.
It appears that in 1956 there was an industrial dispute between the parties, one of the items in dispute being the claim made by the respondents in respect of tiffin on working days.
In those proceedings, however, the said claim was not pressed and the matter was left to the discretion of the appellant.
After the award was published, the parties entered into direct negotiations in respect of the claim of tiffin allowance and according to the evidence of Mr. Mazumdar, the General Secreatry of the respondents ' Union, the management then assured the respondents that it would consider the quantum and value of free tiffin afterwards and a settlement was then reached.
Accordingly, two cups of tea and two biscuits are given by the appellant to the clerical staff, whilst one cup of tea and one biscuit is given to the members of the subordinate staff.
On Saturdays the same ration of tiffin is supplied to the clerks and the sub staff alike.
In the present dispute, the respondents contended that the tiffin arrangements made by the appellant were unsatisfactory and they urged that a cash allowance should be given to them in that behalf.
This claim has been allowed by the Tribunal.
Mr. Sastri for the appellant contends that the Tribunal has erred in law in making an award in respect of the cash allowance for tiffin, because he argues that it is not obligatory on the part of the appellant to make any provision for the tiffin of its employees.
Under the relevant 571 provisions of the Factories Act, a canteen had been started by the appellant, but there is no obligation on the appellant, either statutory or otherwise, for providing any further facility to the employees by way of giving them a cash allowance for tiffin.
He also emphasised the fact that the wage structure which prevails in the appellant 's concern represents a fair wage structure and the dearness allowance is paid to the respondents according to the Bengal Chamber of Commerce Formula; the said formula takes care substantially of the rise in the cost of living from time to time.
That is another reason on which Mr. Sastri relies in resisting the respondents ' claim for cash allowance in lieu of tiffin.
Prima facie, there is some force in these contentions.
But, on the other hand, the evidence shows that in the region as many as 31 comparable concerns are supplying free tiffin to their employees (Ext. 10).
Besides, as we have already seen, the appellant has throughout been making provision for tiffin of its employees and, in fact, when after the award was pronounced in the proceedings of 1956 and this question was taken up for direct negotiations between the parties, the appellant agreed to consider the claim sympathetically and make a suitable provision in that behalf That is how the prevailing arrangements for tiffin came to be introduced.
Under these circumstances, if the Tribunal took the view that the appellant was under an obligation to provide some cash allowance for tiffin to its employees, we do not see how we can interfere with it on the ground that the impugned decision is erroneous in law.
The history of the relations between the parties coupled with the prevailing practice in the comparable concerns in the region strongly supports the view taken by the Tribunal that in the appellant 's concern it was an implied condition of service that in addition to the wages and dearness allowance, a provision for tiffin was an amenity to which the employees were entitled.
That being so, we do not think that the appellant 's grievance against the direction in the award that 572 As.
/8/ and As.
/6/ per day should be paid respectively to the members of the clerical staff and the substaff on all working days, can be upheld.
That takes us to the respondents ' claim that the practice of employing retired men should be stopped.
Mr. Sastri contends that in acceding partially to the demand made by the respondents, the Tribunal has overlooked the fact that the re employment of retired persons was mainly inspired by humanitarian considerations.
When it appeared to the appel lant that some employees who had retired found it difficult to maintain themselves and their families, the appellant sympathetically and generously considered their request for re employment and that is, the basis on which some of the re employments have been made.
It may be conceded that some of the re employments may have been actuated by humanitarian motives and the appellant cannot, therefore, be blamed on that account; but there are some other factors in relation to this problem of re employment which cannot be ignored.
It appears that as many as 6 persons have been re employed and the correspondence between the parties on this subject shows that the respondents felt that the policy adopted by the appellant in re employing the retired personnel was not based solely on humanitarian grounds.
When the respondents had raised a dispute on this point in 1960, the State Government had refused to make a reference on the ground that only 4 cases of reemployment had been brought to its notice, and so, the problem did not call for any consideration at that stage.
Thereafter, the respondents represented to the State Government that though the company gave assurances to its employees that re employment would not be resorted to on a liberal scale, those assurances were disregarded and the practice was being followed in many cases and that posed a serious problem to the respondents.
Besides, it does appear that when retired persons are re employed, they are paid a much smaller salary for doing the same work than they were drawing before retirement.
Take, 573 for instance, the case of Chandi Charan Banerjee.
Before he retired, he was drawing a basic salary of Rs. 380 and dearness allowance.
On his re employment, he got a consolidated salary of Rs. 250 without any dearness allowance.
and that means that the re appointed employee was getting about half his former wages for doing the same work .
This aspect of the matter introduces a serious infirmity in the, appellant 's case as it was presented before us by Mr. Sastri.
If re employments are made on the basis of reduced salary, that really means that the appellant is introducing a wage structure in respect of the reemployed personnel which is definitely inferior to the wage structure devised for the employees of the appellant by the award , and that clearly cannot be permitted under industrial law.
Besides, if senior persons are re employed after retirement, that is apt to retard or hamper the prospects of promotion to which the junior employees are entitled to look forward.
It is in the light of these facts that the question posed by the respondents ' demand must be considered.
Thus considered, we see no justification for Mr. Sastri 's grievance that the limited direction issued by the award is either improper or unjustified.
The fact that the re employed persons have made an affidavit supporting the practice adopted by the appellant can have no material bearing in dealing with the point; in the very nature of things, the said re employed persons are bound to support the appellant.
The result is, the appeal fails and is dismissed with cost.
Appeal dismissed.

summary/full:
The disputes between the appellant company and its workmen were referred to the Industrial Tribunal.
The workmen claimed that (1) they should be given cash allowance in lieu of the tiffin :arrangements made by the company, and (2) the practice started ,by the company of re employing retired persons should be discontinued.
The Tribunal directed : (1) the clerical staff should be paid As.
/8/ per day and the subordinate staff As.
/6/ per day on all working days, and (2) the company should stop the reemployment of retired workmen in the category of clerks above C grade.
In respect of the subordinate staff as also in regard to the lower grade clerks, the Tribunal thought it unnecessary to make any such direction.
The evidence showed that in the region 31 comparable concerns were supplying free tiffin to their employees and that the appellant company had been throughout making .provision for tiffin to its employees.
It was also found that the policy adopted by the company of re employing the retired personnel was not based solely on humanitarian grounds and that when retired persons were re employed they were paid a much smaller salary for doing the same work than they were drawing before retirement.
569 Held:(i) Though under the provisions of the Factories Act there was no obligation on the company, either statutory or otherwise, for giving the workers a cash allowance for tiffin, the history of the relations between the parties coupled with the prevailing practice in the comparable concerns showed that it was an implied condition of service that in addition to the wages and dearness allowance a provision for tiffin was an amenity to which the employees were entitled, and that the decision of the Tribunal could not be interfered with.
(ii) The limited direction issued by the Tribunal in respect of the re employment of retired persons was neither improper nor unjustified.


judgement:
minal Appeal No. 143 of 1962.
Appeal from the judgment and order dated December 2, 1961 of the Judicial Commissioner 's Court at Manipur in Criminal Revision No. 20 of 1961.
B.K. Khanna and R.N. Sachthey, for the appellant.
W.S. Barlingay, and A.G. Ratnaparkhi, for the respondent.
November 29, 1963.
The Judgment of the Court was delivered by GAJENDRAGADKAR, J.
The short question of law which arises in this appeal relates to the construction of cl.
3(2) of the Manipur Foodgrains Dealers Licensing Order, 1958.
This question arises in this way.
The respondent was charged with having committed an offernce punishable under section 7 of the in that on February 9 , 1960, he was found storing 178 Mds.
of paddy in his godown without any licence in violation of cl. 3 of the said Order.
The case against the respondent was that on February 9, 1960, his godown was searched and 178 Mds.
of paddy was found stored in it.
This fact was not denied by the respondent though he pleaded that the paddy which was found in his godown was meant for the consumption of the members of his family who numbered fifteen.
He also pleaded that out of the stock found in his godown 40 Mds.
of paddy belonged to Lalito Singh, his relation.
The learned Sub Divisional Magistrate, Bishanpur, who tried the case of the respondent did not believe his statement that the stock was meant for the consump 576 tion of the members of his family.
He, however, believed the evidence of Lalito Singh that.
40 Mds.
out of the stock belonged to him, and so he passed an order directing that out of the stock which had been attached 40 Mds.
should be released in favour of Lalito Singh.
In regard to the rest of the stock, conclusion the learned trial Magistrate came to the that as a result of the provisions contained in cl.
3(2) of the Order a presumption arose against the respondent and that presumption took his case under cl.
3(1) of the Order.
That in turn attracted the provisions of cl. 7 of the Order and made the respondent liable under section 7 of the .
On these findings the learned Magistrate convicted the respondent if the offence charged.
He, however, held that it was not necessary to direct the forfeiture of the paddy and that the ends of Justice would be met if he was fined to Day Rs. 500/ in default to suffer rigorous imprisonment for three months.
Against this Order the respondent preferred an appeal before the learned Sessions Judge at Manipur The learned Sessions Judge substantially agreed the view taken by the learned Magistrate.
He believed the witnesses who had referred to the circumstances under which the paddy stored in the godown of the respondent was recovered, and he held that the respondent had been properly convicted under section 7 of the .
The order of sentence also was confirmed.
The respondent then moved the Judicial Commissioner, Manipur, by a Revision Application and his Revision Application succeeded.
It appears that before the present Revision Application came on for hearing before the learned Judicial Commissioner he had examined the question of law in regard to the construction of clause 3(2) of the Order in a group of revision applications Nos. 7, 11 and 13 of 1961, and had pronounced his judgment on June 5, 1961.
He had held in that judgment that the effect of the presumption which can be legitimately raised under cl.
3(2) is not that the person against whom the said 577 presumption has been drawn is a dealer in respect of the said goods; and so, merely on the strength of the said presumption, clause 3(1) cannot be attracted; following his earlier decision the learned Judicial Commissioner allowed the respondent 's Revision Application and set aside the order of conviction and sentence passed against him.
It is against this order that the Manipur Administration has come to this Court by special leave, and on behalf of the appellant Mr. B.K. Khanna has contended that the view taken by the learned Judicial Commissioner is based on a misconstruction of cl.
3(2) of the Order.
That is how the only question which falls for our decision in the present appeal is in regard to the construction of the said clause.
At this stage, it would be convenient to refer to the relevant provisions of the Order.
Clause 2(a) defines a dealer as meaning a person engaged in the business of purchase, sale or storage for sale, of any one or more of the foodgrains in quantity of one hundred maunds or more at any one time.
Clause 2(b) defines foodgrains as any one or more of the foodgrains specified in the Order including products of such foodgrains other than husk and bran.
It is common ground that paddy is one of the foodgrains specified in Schedule 1.
Clause 3 with which we are directly concerned in this appeal reads thus: "(1) No person shall carry on business as a dealer except under and in accordance with the terms and conditions of a licence issued in this behalf by the licensing authority; (2) For the purpose of this clause, any person who stores any foodgrains in quantity of one hundred maunds or more at any one time shall, unless the contrary is proved, be deemed to store the foodgrains for the purpose of sale.
" Clause 7 provides that no holder of a licence issued under this Order shall contravene any of the terms and conditions of the licence, and if he has been 1 SCI/64 37 578 found to have contravened them his licence is liable to be cancelled or suspended.
These are the main provisions with which we are concerned in the present appeal.
In dealing with the point raised by Mr. Khanna before us, it is necessary to bear in mind that clause 3 in question ultimately imposes a penalty on the offender and as such, it is in the nature of a penal clause.
Therefore, it is necessary that it must be strictly construed.
There is no doubt, as Mr. Khanna has contended, that if cl.
3(2) which is in the nature of a deeming provision provides for a fiction, we ought to draw the fiction to the maximum extent legitimately permissible under the words of the clause.
Mr. Khanna contends that the effect of cl. 3 is that as soon as it is shown that the respondent had stored more than 100 mds.
of paddy he must be deemed to have stored the said foodgrains for the purpose of sale; and his argument is that in drawing a statutory presumption under this clause, it is necessary to bear in mind that this presumption is drawn for the purpose of sub clause (1) of cl. 3.
Therefore, it is urged that it would be defeating the purpose of cl.
3(2) if the view taken by the learned Judicial Commissioner is upheld, and the presumption raised under cl.
3(2) is not treated as sufficient to prove the charge against the respondent.
In dealing with the question as to whether the respondent is guilty under section 7 of the , it is necessary to decide whether he can be said to be a dealer within the meaning of cl. 3 of the Order.
A dealer has been defined by cl. 2(a) and that definition we have already noticed.
The said definition shows that before a person can be said to be a dealer it must be shown that he carries on business of purchase or sale or storage for sale of any of the commodities specified in the Schedule, and that the sale must be in quantity of 100 mds.
or more at any one time.
It would be noticed that the requirement is not that the person should merely sell, purchase or store the foodgrains in question, 579 but that he must be carrying on the business of such purchase, sale, or storage, and the concept of business in the context must necessarily postulate continuity of transactions.
It is not a single, casual or solitary transaction of sale, purchase or storage that would make a person a dealer.
It is only where it is shown that there is a sort of continuity of one or the other of the said transactions that the requirement as to business postulated by the definition would be satisfied.
If this element of the definition is ignored, it would be rendering the use of the word 'business ' redundant and meaningless.
It has been fairly conceded before us by Mr. Khanna that the requirement that the transaction must be of 100 mds.
or more at any one time governs all classes of dealings with the commodities specified in the definition.
Whether it is a purchase or sale or storage at any one time it must be of 100 mds.
or more.
In other words, there is no dispute before us that retail transactions of less than 100 mds.
of the prescribed commodities are outside the purview of the definition of a dealer.
The forms prescribed by the Order support the same conclusion.
The form for making an application for licence shows that one of the cloumns which the applicant has to fill requires him to state how long the applicant has been trading in foodgrains, and another column requires him to state the place or places of his business.
Similarly, Form B which prescribes the licence shows that the licence authorises the licence holder to purchase, sell or store for sale, the foodgrains specified in the licence, and clause 2 of the licence says that the licensee shall carry on the aforesaid business at the place indicated in the licence.
Similarly, Form C which pertains to stocks shows that the particulars of the godown where stocks are held have to be indicated and the quantity sold and delivered as well as the quantity sold but not delivered have to be separately described.
These Forms, therefore, support the conclusion that a dealer who comes within the definition prescribed by clause 2(a) should be carrying on the business of purchase, 580 sale or storage, and that would exclude solitary or single cases of sale, purchase or storage.
Bearing in mind this necessery implication of the definition of the word "dealer".
let us proceed to inquire whether the respondent 's case falls under cl.
Clause 3(1) prohibits persons from carrying on business as dealers except under and in accordance with the terms of the licence issued to them.
In other words, whoever wants to carry on the business of a dealer must obtain a licence.
There is no doubt that if a person carries on a business as described by cl 2(a) and does it without obtaining a licence as required by cl.
3(1), he would be guilty under section 7 of the .
In this connection, cl.
3(2) raises a statutory presumption.
It is no doubt a rebuttable presumption which is raised by this provision.
If it is shown by a person with whom a storage of more than 100 mds.
of one or the other of the prescribed foodgrains is found that the said storage was referrable to his personal needs or to some other legitimate cause unconnected with and distinct from the purpose of sale, the presumption would be rebutted, in case, of course, the expla nation given and proved by the person is accepted by the Court as reasonable and sufficient.
What does this presumption amount to? It amounts to this and nothing more that the stock found with a given individual of 100 or more maunds of the specified foodgrains had been stored by him for the purpose of sale.
Having reached this conclusion on the strength of the presumption, the prosecution would still have to show that the store of the foodgrains for the purpose of sale thus presumed was made by him for the purpose of carrying on the business of store of the said foodgrains.
The element of business which is essential to attract the provisions of cl.
3(1) is thus not covered by the presumption raised under cl.
That part of the case would still have to be proved by the prosecution by other independent evidence.
It may be that this part of the case can be proved by the prosecution by showing 581 that store of 100 mds.
or more of the foodgrains was found with the said person more than once.
How many times it should be necessary to prove the discovery of such a store with the said person, is a matter which we need not decide in the present case.
All that is necessary to be said in connection with the presumption under cl.
3(2) in this case is that after the presumption is raised under it, some evidence must be led which would justify the conclusion that, the store which was made for the purpose of sale was made by the person for the purpose of carrying on the business.
Mr. Khanna contends that in construing the effect of cl.
3(2) we must remember that this clause makes direct reference to cl.
3(1), and that no doubt is true; but the fact that cl.
3(2) directly refers to cl.
3(1) does not help to widen the scope of the presumption which is allowed to be raised by it.
The presumption would still be that the store is made for the purpose of sale, and that presumption would be drawn for the purpose of cl.
That is the only effect of the relevant words in cl.
3(2) on which Mr. Khanna relies.
Mr. Khanna then urges that if the Legislature had intended that after drawing the presumption about the storage for the purpose of sale, the prosecution should still have to cover some further ground and lead additional evidence to prove that the said store had been made for the purpose of business of storage, then the statutory presumption would really serve no useful purpose.
There may be some force in this contention.
But, on the other hand, in construing cl.
3(2), it would not be open to the Court to add any words to the said provision; and in fact as we have already indicated, the words reasonably construed cannot justify the raising of a presumption would take in the requirement as to business which is one ingredient of the definition of a dealer.
There,,fore, we do not think that the argument urged by Mr. Khanna about the general policy underlying cl.
3(2) can assist his contention in view of the plain words used by cl 3(2) itself.
582 It appears that cl.
3(2) may have been deliberately worded so as to raise a limited presumption in order to exclude cases of cultivators who may on occasions be in possession of more than 100 mds.
of foodgrains grown in their fields.
If a cultivator produces more than 100 mds.
in his fields or otherwise comes into possession of such quantity of foodgrains once in a year and casually sells them or stores them, the Order apparently did not want to make such possession, sale or storage liable to be punished under cl.
3(1) read with section 7 of the .
However that may be, having regard to the words used in cl.
3(2), we are unable to hold that the Judicial Commissioner was wrong in coming to the conclusion that cl.
3(2) by itself would not sustain the prosecution case that the respondent is a dealer under cl.
3(1); and that inevitably means that the charge under section 7 of the is not proved against him.
That being so, we must hold that the order of acquittal passed by the Judicial Commissioner is right.
The appeal accordingly fails and is dismissed.
Appeal dismissed.

summary/full:
The respondent was found storing over 100 mds.
of paddy in his godown without any licence in violation of cl. 3 of the Manipur Foodgrains Dealers Licensing Order.
He was charged with having committed an offence under section 7 of the Essential Commodities Act.
The respondent 's main defence was that the paddy was meant for the consumption of the members of his family, which was disbelieved by the Trial Magistrate.
The Trial Magistrate held that as a result of the provisions contained in cl.
3(2) of the Order a presumption arose against the respondent, taking his case under cl.
3(1) of the Order, which in turn attracted the provisions of cl. 7 of the Order and made the respondent liable under, section 7 of the Essential Commodities Act.
On these findings the Magistrate convicted the respondent under section 7 of the Act.
An appeal by the respondent to the Sessions Judge was dismissed.
The respondent then filed a Revision Application to the Judicial Commissioner, which succeeded.
The Judicial Commissioner held that the effect of the presumption which can be legitimately raised under cl.
13(2) of the Order is not that the person against whom the said presumption has been drawn is a dealer in respect of the said goods; and so, merely oil the strength of the said presumption, cl.
3(1) of the Order cannot be attracted.
In appeal by special leave, Held: (i) Under cl. 2(a) of the Order before a person can be said to be a dealer, it must be shown that he carries on business of purchase or sale or storage for sale of any of the commodities specified in the Schedule and that sale must be in quantity of 100 minds.
or more at any one time; the concept of business in the context must necessarily postulate continuity of transactions.
A single, casual or solitary transaction of sale.
purchase or storage would not make a person a dealer.
(ii) Cl.
3(2) raises a statutory presumption that the stock of 100 mds.
or more of specified goods found with ail individual, had been stored by him for the purpose of sale.
After the presumption is raised under cl.
3(2), some evidence must be led which would justify the conclusion that the store which was made for the purpose of sale was made by the person for the purpose of carrying on the business.
The element of business which is essential to attract the provisions of el.
3(1) is not covered by the presumption raised under cl.
575 (iii)Cl.
3(2) may have been deliberately worded so as to raise a limited presumption in order to exclude cultivators who may on occasions be in possession of more than 100 mds.
of foodgrains grown in their fields; the Order, apparently did.
not want to make such possession, sale or storage liable to be punished under cl.
3(1) read with section 7 of the Essential Commodities Act.