judgement:
No. 1 of 1960.
Under article 32 of the Constitution of India for the enforcement of Fundamental Rights.
A. V. Viswanatha Sastri, 'K.K. Jain and Ganpat Raj, for the Petitioners.
C. K.Daphtary, Solicitor General of India, V.A. Saiyed Mohamad and T. M. Sen, for the Respondents.
August 8.
The Judgment of the Court was delivered by SHAH, J.
Controls on exports and imports imposed as an emergency measure during the last war in respect of certain commodities were kept alive after the lapse of the Defence of India Rules by the Emergency Provisions (Continuance) Ordinance, 1946 which was later replaced by the Imports and Exports (Control) Act,.
1947 ( 18 of 1947), by s.(3) of the Act, the Central Government was authorised by order published in the Official Gazette, to provide for prohibiting, restricting or otherwise controlling, in all cases or in specified classes of cases, and subject to such exceptions if any, as may be made by or under the order, inter alia the import, export, carriage xxx xxx of goods of any specified description.
By sub sec(2) of s.3.
, it was provided that all goods to which an order under sub s.(1) applied shall be deemed to be goods of which the import or export has been prohibited or restricted under s.19 of the Sea Customs Act.
Exercising authority under s.3 of the Imports and Exports (Control) Act, 1947, the Central Government issued notifications from time to time prohibiting, restricting or otherwise controlling the export and import of diverse commodities.
By a consolidated order dated 75 December 7, 1955, known as the Imports (Control) Order, 1955, restrictions on the import of certain goods were imposed by el. 3 of the said order.
By el. 3, it was provided that save as otherwise, provided in the order, no person shall import any goods of the description specified in Schedule I, except under, and in accordance with, a licence or a customs clearance permit granted by the Central Government, or by an officer specified in Schedule II.
For implementing the scheme of controlling imports, diverse provisions were made in cls.
3 to 11 of the Imports (Control) Order.
The Government of India makes known its import policy every six months by issuing in the Government Gazette the procedure and the conditions for eligibility of licences and for the grant of import licences.
This policy is published for the use of the public in a hand book called the "Import Trade Control Policy".
The policy is obviously framed having regard to requirements for home consumption of commo dities to be imported, the foreign currency situation and the economy of the country as a whole.
By para 51 of the Import Trade Control Policy for the licensing period October 1958 to March 1959, a scheme of "Export Promotion" permitting imports depending upon the value of specified varieties of goods exported by the impro per was devised.
It was recited in that paragraph that in certain items, the inter relation between imports and exports was direct and intimate and the ability to export some manufactured goods depended largely on the facility with which the exporter or the manufacturer could procure the basic raw materials required in the manufacture.
With a view to promoting the export of such goods, a scheme was therefore devised for the grant of special import licences to 76 replace the imported raw material component of the product exported or to provide an incentive for larger exports.
Artsilk yarn and artsilk fabrics were covered by the Export Promotion Scheme.
In Appendix 42, cl.2 of the Import Trade Control Policy.
for October 1958 to March 1959, it was stated: "With a view to stimulate exports of Indian artsilk fabrics, sarees, garments, hosiery and other artsilk manufactures, it has been decided to grant import licences at the ports under the Export Promotion Scheme for the import of permissible varieties of artsilk yarn to actual exporters upto the following percentage of the rupee equivalent of foreign exchange earned on the basis of the f. o. b. value of The artsilk goods exported, or the value assessed by customs, whichever is less.
(i) 66 2/3 per cent in the case of Indian artsilk sarees, (ii) 100 per cent in the case of other Indian artsilk fabrics including Indian artsilk hosiery goods.
" The petitioners, M/s. Ram Chand Jagadish Chand are a firm engaged in.
business as exporters and importers.
In the period October 1958 to March 1959, the petitioners exported to Singapore, Bush Shirt Cloth, Glass Nylon, Art silk Piece Goods and Superior Class Nylon of the total C.I.F. value of Rs. 7,10,817/ , and relying upon cl.
(2) of the Export Promotion Scheme as outlined in the Import Trade Control Policy, called upon the Controller of Imports to issue licences for artsilk yarn for Rs. 4,04,218.62 np.
and Rs. 3,03,490.93 np.
respectively for the months of February and 77 March 1959.
The petitioners claimed that they had, pursuant to the Export Promotion Scheme, exported artsilk goods to Singapore and had earned net foreign exchange of the value of Rs. 7,07,709.55 np.
and that they were entitled to import licences for artsilk yarn of that amount.
In September 1959, the petitioners were informed by the Assistant Controller of Imports and Exports that a consolidated licence for the months of February and March, 1959 was granted to them for import of artsilk goods of the value of Rs. 3,19,354/ .
It appears that the Government of India, having come to learn of certain malpractice by the importers of artsilk yarn, while suspending the Export Promotion Scheme as from March 9, 1959, announced that applications which were pending with the port licensing authorities will be scrutinised by a Committee and in May 1959, the Government of India appointed a Committee for verification of the value of good exported.
The petitioners appeared before the Committee and furnished documentary evidence in support of their claim for 100% of the rupee equivalent of the cloth exported.
The Committee accepted as reasonable the rates at which the exported " 'Flock Printed Nylon Dyed" cloth was exported by the petitioners, but in their view, the rates at which ",Bush Shirt Cloth" was exported could not be accepted as reasonable and for the purpose of the Export Promotion Scheme, the value of that cloth should be computed at the rate of Re. 1.50 np. per yard of 36" width.
The Controller of licences accepted the recommendation of the Committee and issued to the petitioners an import licence for Rs. 3,19,354/ only.
The petitioners after making, an in fructuous demand for a licence for the value of the goods exported, filed this petition under article 32 of the Constitution for a writ or direction in the nature of mandamus directing the Chief Controller of Imports and ,Exports to Avant to the petitioners an import.
78 licence for the months of February and March 1959 equivalent to 100% of the goods exported by them in relevant previous months and in the alternative, to issue a writ of certiorari calling for the records and proceedings resulting in the issue of a licence of the value of Rs. 3,19,354/ and for an order quashing the same and granting to the petitioners a licence for the full amount claimed by them.
The petitioners submitted that the Controller of licences had arbitrarily reduced the value of their import licence under the Export Promotion Scheme and had thereby unlawfully infringed their fundamental right to carry on business.
They also claimed that the Controller was bound to grant licence to import artsilk yarn under the Export Promotion Scheme for the full value of the goods exported by them, and in failing to do so, had practiced discrimination against the petitioners, because several other importers of artsilk yarn who were the petitioners ' rivals in trade during the identical period were given licences for amounts "ranging between 85 and 100 per cent of their exports".
In paragraph 22 of their petition, the petitioners submitted a table setting out the names of eight such exporters, the amount and the percentages granted to such exporters.
The fundamental right of a citizen to carry on any occupation, trade or business under article 19 (1)(g) of the Constitution is not absolute : it is subject to reasonable restrictions which may be imposed by the state in the interests of the general public.
The right of the State to impose controls in the larger interest of the general public on imports has accordingly not been denied: nor has the authority of the 'State to issue the Imports (Control) Order, 1955 in exercise of the powers conferred by the Imports and Exports (Control) Act providing for imposition of restrictions by permitting import of certain goods only in accordance with,,licences or customs permits granted by the 79 Central Government,, been challenged.
It was suggested.
somewhat faintly by Mr. Viswanatha Sastri on behalf of the petitioners that the power granted under c 1.
(3) of the Imports (Control) Order, 1955 was uncanalised power in the matter of fixing percentages and to that extent, the authority imposed an unreasonable restriction on the freedom to carry on business.
But the authority to grant or refuse to grant licences is conferred upon high officers of the State and the grant of licences is governed by the Import Trade Control Policy which is issued from time to time and detailed provisions are made in the Imports (Control) Order getting 'out the grounds on which licences may be refused, amended, suspended or cancelled (see cls.
6 to 9 of the Order).
Provision to afford a bearing to the licence before action is taken under cls.
6 to 9 is also made.
It cannot therefore be said that the power conferred is uncanalised or arbitrary.
The argument seriously canvassed by counsel for the petitioners was that relying upon cl. 2 of appendix 42 of the Import Trade Control Policy, the petitioners had exported artsilk fabrics, and had earned foreign currency, and they could not, except for good and adequate reasons, be deprived of import licence to the full extent of 100% of the value of the artsilk fabrics exported.
The petitioners say that they purchased the goods from various merchants and by exporting those goods earned foreign exchange which was duly credited to their account by their bankers, and in reducing the import licence to approximately 45% of the value of the goods exported, the State has, by executive order, imposed an unreasonable restriction upon their right to carry on business.
But under el. 2 of the Export Promotion Scheme as outlined in appendix 42 in so far as it related to licences for import of artsilk yarn, the Controller of Imports is authorised to grant licences upto the percentages specified in that clause : there is no right thereby 80 created to the exporter to obtain a licence for the full value of the commodity exported.
Under el. 2 of the, scheme the Controller has the power to grant a licence for any amount upto 100% of the rupee equivalent of the foreign exchange earned on the basis of the F.O.B. value of the goods exported.
By that clause, the exporter is not given the option to claim an import licence for any amount not exceeding the value of the foreign exchange earned by export of goods.
The clause invests the Controller with authority, it does not impose an obligation upon him enforceable at the instance of the exporter, to issue a licence for the amount (subject to the maximum prescribed.
claimed by the exporter.
The power is plainly discretionary.
It is true that the discretion has to be exercised reasonably and not arbitrarily.
The, licensing authority would normally issue an import licence for 100% of the value of the goods exported, but having regard to special considerations such as difficult foreign exchange position or other matters which have a bearing on the general interest of the State, import licences for a smaller percentage may be granted to the exporters.
But by the use of the expression "upto the following percentage of the rupee equivalent" power to fix arbitrarily a percentage of the value of the goods exported for awarding an import licence is not granted.
In granting a licence to the petitioners for Rs. 3,19,354/ , has the authority been exercised arbitrarily or is it supported by some reasonbly discernible principle? Ram Murth Sharma, Deputy Chief Controller of Imports and Exports in his affidavit stated that of the Export Promotion Scheme wrongful advantage was taken by some exporters of artsilk fabrics : it was found by the Government of India that invoice values or artificial silk fabrics were inflated.
by the exporters by more than 100% of the value with the object of exporting "speculative" commodities like artificial 81 silk yarn. , Sharma stated that ",as against 381 thousand yards of artificial silk fabrics exported during the period January June, 1957 at a value of about Rs. 456 thousand i.e., at about Rs.2 0 L. per yard the merchants sought to show the rise in price for the export of such goods during October March 1959 at Rs. 2 9 0 per yard so that for 986 thousand yards exported, the invoice value shown was 28,799 thousand rupees, even though the actual price of the goods in the wholesale market had not at all risen to that extent between those two periods.
The index number of wholesale price in India in respect of "silk and rayon" fabrics during the month of June 1957 was 85 and during the month of March 1959 it rose to 95.7 only thus showing a rise of about 11%.
Against this rise, the rise in the price invoiced by the exporters showed a rise of over 125% during the span of the same period.
This will clearly show that the aforesaid rise was shown by merchants merely with a view to get licences for higher value for the import of speculative item like "Art Silk Yarn.
" Relying upon this evidence, counsel for the Union contended that this perversion of the Export Promotion Scheme had serious repercussions on the foreign exchange position, and the scheme was suspended by notification dated March 6, 195 , and government directed that the pending applications for import licences for artsilk yarn be scrutinised by a Committee appointed in that behalf.
The Committee scrutinised the cases of 1106 parties including the petitioners, and the petitioners were given a, licence for Rs. 3,19,354/ , and by reducing the value of ' the import licence, no fundamental right of the petitioners under article 19 of the Constitution was infringed.
A scrutiny of the applications for licences in view of the misuse of.
the Export Promotion Scheme and granting of licences on the result of such scrutiny cannot be regarded as imposing an 82 unreasonable restriction.
The State is as much concerned with earning foreign exchange as maintaining and consolidating its export trade.
if a large quantity of goods be dumped at excessive prices foreign markets to meet a temporary demand in the ultimate result the export trade of the State may suffer.
If taking advantage of temporary demands in the foreign market, the exporters charge excessive prices which axe not commensurate with reasonable profits on the real value of the goods and seek to invest the profits earned, in speculative commodities thereby endangering the internal economy of the country, the State may be justified in taking steps to prevent the exporters from obtaining advantage of such excessive profits by refusing to afford facilities for importing goods to the exporters who seek to rely upon the export Value of the goods at inflated rates.
, The affidavit of Sharma shows that in a number of cases,, the importing firm in the foreign country was only a " 'sister concerns of the exporting house, and the exporters adopted the expedient of inflating the price with the object of adjusting the excess value received by them.
It appears therefore that some exporters under cover of the Export Promotion Scheme by inflating the prices were found not only to import speculative varieties of goods for very much larger values than the real prices justified, but were suspected by the authorities even to repatriate foreign assets without disclosing the same to the State as required by law.
It cannot therefore be said that the power granted to the licensing authorities to grant licences only upto the maximum spec ified in el.
2 of the Scheme is by itself an unreasonable restriction; nor will the notification directing scrutiny of all applications amount to imposing an unreasonable restriction.
Counsel for the petitioners however submitted that the Controller had placed no evidence on the record that the petitioners have, for the goods 83 purchased by them in the Indian market, not paid M. 7,67,709.55 np.
or that any part thereof represented foreign assets intended to be repatriated contrary to law.
Counsel submitted that M/s. V. M. section Abdul Razak & Company to whom the goods were consigned are not a " 'Sister concern" of the petitioners and that in the affidavit of the Deputy Chief Controller of Imports and Exports it is not denied bat the petitioners bad received the full value for which the goods were exported by them.
But in considering the case of the petitioners, the Committee observed : "The party has purchased Bush Shirt Cloth from J. C. Vakaria & Sons, Govardhandas Iswardass International Trading Agency, Agwarwla Brothers and Calcutta Silk Manufacturing Co., Ltd. Rates vary from Rs. 3.87 to Rs. 3.92.
x x x x neither the purchase vouchers nor the export invoices contain any description nor give any idea as to whether the material was Nylon, Rayon, Nynon, etc.
" The committee also observed that the petitioners were "not able to produce adequate justification of the prices of Art Silk Bush Shirting Cloth.
Samples cannot be linked with the relative purchase vouchers or export invoices.
" They then pointed out that the correspondence with M/s. Abdul Razak & Company did not give any "justification nor contained ' any description to link the goods with the materials sent," and in the light of these findings, the Committee recommended that.
the value of bush shirt ' cloth for the purposes of import licence be calculated at the rate of Re. 1.
50 nP. per 'Yard.
It is somewhat unfortunate that the Committed have not stated in the reasons given by them that Re. 1.
50 nP. was the prevailing: market rate in respect of Bush Shirt Cloth at the time of the export in the Indian market.
But in paragraph 22 of the respondents ' affidavit, it is stated that "the petitioner firm has behalf granted licence equal to 84 100% of the value which has been arrived at as reasonable value of the exports effected by the firm.
" The petitioners alleged that the decision of the Committee was arbitrary the licensing authority contends that the decision was made after ascertaining the reasonable value in the Indian market at the material time of the goods exported by the petitioners.
The petitioners have not placed before the court any independent evidence to show that the current market rate of "bush shirt cloth" which was exported, substantially exceeded the rate of Re. 1.
50 nP. per yard of 36" width.
In the circumstances, we would not be justified in assuming that the Committee made an arbitrary decision in arriving at the value of the bush shirt cloth exported for the purpose of recommending the grant of import licence.
The contention that the order passed by the Controller granting a licence only for 45% of the value of the goods exported infringes the fundamental right of the petitioners under article 19 (1) (g) by imposing an unreasonable restriction cannot therefore be sustained.
Does the fact that the petitioners have been granted licence approximately for 45% of the total value of the goods exported amount to discrimination entitling them to protection of article 14 of the Constitution ? Under the Export Promotion Scheme, the petitioners have exported artsilk goods of the value of Rs. 7,07,709.55.nP. and may in the normal course have been entitled to import licence for 100% of the value of the goods exported unless there was a reduction in the value of the licence for imports on account of certain circumstances such as general deterioration of the foreign exchange position or necessity to conserve a particular currency or other circumstances justifying a departure from the maxima set opt in cl. 2 of 85 appendix 42 of the Export Promotion Scheme.
The reduction may also be justified on grounds personal to the petitioners or to a, group to which they belonged, Any malpractice or tinder hand dealing may warrant such a reduction.
It was the case of the respondents that many exporters were guilty of malpractices and with a view either to speculate in artsilk goods or to repatriate unlawfully foreign assets, the value of the goods exported was unduly inflated.
In the order passed by the Committee appointed by the Government of India, dealing with the case of the petitioners, it was observed that the petitioners had business relations with certain firms and that the rates at which bush shirt cloth were purchased varied from Rs. 3.87 to Rs. 3.92 nP.
The Committee was not satisfied that the documentary evidence produced by the petitioners related to the goods exported by them.
These findings disclosed that, in the view of the Committee, there was reason to believe that the claim of the petitioners that they had purchased goods approximately for the prices at which they were exported, was not made out.
The Committee accordingly recommended that the value of "bush shirt cloth" should be computed at the rate of Rs. 1.50 nP. per yard.
It is true that there is no definite evidence on the record indicating that was the current market rate, but the court may be justified in holding that the members of the Committee who were vitally concerned with the trade in artsilk goods were conversant with the current market rates of the cloth which was exported by the petitioners.
Counsel for the Union has placed before us in the course of the hearing the report of the Committee in respect of seven out of the eight exporters who the petitioners claimed had been given import licence for the full value of the exports.
The report of the Committee with regard to M/s. Rajasthan Exporters I and Importers, Calcutta 86 is not placed before us on the plea that.
, it is not immediately available.
On a perusal '.of the report of the Committee with regard to, the other exporters, it may be stated that the claim of the petitioners that Raghunath Rai Piyarilal were given import licence for the full value of the goods exported is not correct.
It appears from the record that only 40% of 'the F.O.B. value was to be taken for "Glass, Nylon dved" exported in respect of application No. 36.
Similar larly, in respect of application No. 35, 40% (if the F.O.B. value was to be taken for the purpose of granting import licences.
It is true that in the cases of the other importers Premsukhdass Sitaram, Indian Exporters and Importers Corporation, M/s. Universal Watch Emporium, M/s. Jawahar Knitting Hosiery, M/s. Vastralaya Ltd. and M/s. Agarwala Trading Co., Ltd., the Committee have recommended acceptance of the purchase prices submitted by the exporters in granting import licences.
It may, therefore, be assumed that these importers were, given licence for 1000% of the export value of the goods.
But the Committee have given reasons which appear to be prima facie good for accepting the claims of these exporters ' If, on the materials placed before.
them, the Committee were satisfied that there, was some misconduct or under hand dealing on the part of the petitioners, or that the evidence led before them justified the Committee in holding that the goods exported were not of the value ' claimed by the petitioners in their invoices, an order recommending that import licence may be granted for the value of bush shirt cloth computed on the basis of Re.1.50 nP. per yard does not.
amount to discriminatory treatment of the petitioners.
Article 14 confers a guarantee of the equal protection of the law a guarantee against arbitrary discrimination between persons similarly circumstanced.
On the materials placed before the Committee. .there. evidence to show that the record produced by the 87 petitioners was unsatisfactory ; they were not satisfied that the prices which the petitioners said they had paid for purchasing the goods were in truth paid.
If there was evidence to show that in respect of other persons who were in the opinion of the Committee found also to have inflated the prices 'in the manner adopted by :,the petitioners and still the Controller had granted import licences to those persons for the full amount of the. export value or a percentage substantially in excess of the percentage for which import licence was granted to the petitioners, a case of discrimin ation could have been made out ; but in the absence of such evidence, we do not think that any case of discrimination is made out.
The petition fails and is dismissed with costs.
The application filed by M/s. M. Shaams and Company for intervention is dismissed, because Miscellaneous Application No. 264 of 1960 which was filed by the applicants in the High Court of Judicature at Bombay for a writ of mandamus, direction or order under article 226 of the Constitution has been dismissed by the High Court and the remedy applicants is to file an appeal to.
this Court.
Petition dismissed.

summary/full:
Government of India published a 'scheme known as the "Export Promotion Scheme" according to which the value of import licence for raw materials in an industry depended upon the value of specified varieties of goods exported by the applicant for an import licence.
It also empowered the Controller of Imports and Exports under cl. 2 'of Appendix 42 of the Import (Control) order 1955 to issue a license up to 66 2/3 per cent of the export value in the case of Indian artsilk sarees and up to 100 per cent in the case of other Indian artsilk fabrics.
The appellant firm R of exporters and importers relying upon cl.2 of the Export Promotion Scheme applied for an import licence equivalent to the value of the goods it had exported and earned foreign exchange.
In view of certain malpractices the Government of India suspended the "Export Promotion" scheme and set up a committee for verification of the values of goods exported.
The Committee after scrutinising the firm 's claim found that rates of some of the items could not be accepted as reasonable, and recommended an import licence approximately of the value of 45 per cent of the goods exported.
The firm R after making an infructuous demand for a licence for the full value of the goods exported filed a writ petition.
They submitted that the Controller of Licences had arbitrarily reduced the value of their import licence and had thereby unlawfully infringed their fundamental right.
They also claimed that the Controller was bound to grant licence under the Export Promotion Scheme for the full value of the goods exported by them and in failing to do so had practised discrimination 73 against them, because several other importers during the identical period were given licences for the full value of goods exported.
Held, that the fundamental right of a citizen to carry on any occupation, trade or business under article 19(1)(g) of the Constitution is not absolute; it is subject to reasonable restrictions which may be imposed by the State in the interest of the general public.
The right of the State to impose control in the larger interest of the general public on imports has accordingly not been denied; nor is the authority of the State to issue the Imports (Control) Order, 1955 in exercise of the powers conferred by the Imports and Exports (Control) Act providing for imposition of restrictions by permitting import of certain goods only in accordance with the licences or customs permits granted by the Central Government, open to challenge.
The authority to grant or refuse to grant the licence is conferred upon high officers of the State and the grant of licence is governed by the Import Trade Control Policy and detailed provisions are made setting out the grounds on which licences may be refused, suspended or cancelled and provision to afford a hearing before action is taken is also made; thus the powers conferred under cl.3 of the Imports (Control) Order, 1955 are not uncanalised or arbitrary.
The power granted to the licensing authority to grant licences only up to the maximum specified in cl.2 of the appendix 42 is by itself not an unreasonable restriction, nor will the notification directing scrutiny of all applications amount to imposing an unreasonable restriction.
The clause invests the Controller with authority, it does not impose an obligation upon him enforceable at the instance of the exporter, to issue a licence for the amount (subject to the maximum prescribed) claimed by the exporter.
The power is plainly discretionary and the orderd by the Controller granting a licence only for 45% of the goods exported does not infringe the fundamental right of the petitioner under article 19(1)(g) of the Constitution by imposing an unreasonable restriction.
Held, further that in the absence of evidence to show that discriminatory treatment was made between the aggrieved person and to persons similarly circumstanced, there can be no violation of article 14 of the Constitution which confers a guarantee against arbitrary discrimination between persons similarly circumstanced .
Held, also that where an application for writ of mandamus, direction or order under article 226 of the 74 Constitution is dismissed by the High Court, the only remedy to the aggrieved person is to come up by appeal and he has no right to be heard as an intervener.


judgement:
Appeal No. 517 of 1960.
Appeal from the Judgment and order dated November 20, 1958, of the Mysore High Court in Civil Writ Petition No. 234 of 1957.
Porus A. Mehta, J. R. Gagrat and G. Gopalakrishnan, for the appellants.
N. C. Chatterjee, G. Channappa, R. Gopalakrishnan and T. M. Sen, for the respondent.
August 8.
The Judgement of the Court was delivered by KAPUR, J. This is an appeal against the judgment and order of the High Court of Mysore dismissing the petition of the appellants made under article 226 of the Constitution.
The appellants.
were conducting since the month of August 1948, what were called "prize competitions" in the State of Mysore with the permission of the Government of the erstwhile State of Mysore.
An Act called the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951 (Act 27 of 1951), hereinafter called the "Mysore Act" was passed by the Mysore Legislature and came into force as from June 21, 1951.
The Rules made thereunder came, into force on February 1, 1952.
Previous to that the Bombay Legislature had passed a similar Act called the Bombay Lotteries and Prize Competitions Control and Tax Act, 1948, which was amended in November 1952.
by the Bombay Act 30 of 1952.
In December 1952 and January 1953 petitions under article 226 were filed in the High Court of Bombay challenging the Bombay Act.
On January 12, 1955 233 the Bombay High Court held that the provisions of the Bombay Amendment Act above referred to were unconstitutional and that the taxes imposed under the provisions of that Act were hit by article 301 of the Constitution.
The result of that judgment was that though prize competitions could be controlled by the States within their respective borders, their ramifications beyond those borders could only be dealt with by action under article 252(1) of the Constitution.
It was for that reason that the States of Andhra, Bombay, Madras U. P., Hyderabad, Madhya, Bharat, Pepsu and Saurashtra passed resolutions under article 252(1) of the Constitution authorising Parliament to legislate for the control and regulation of prize competition% and in pursuance thereof Parliament passed the (Act 42 of 1955) hereinafter called the "Central Act" which Received the assent of the President on October 22, 1955, and came into force on April 1, 1956.
On February 24, 1956, the Mysore Legislature passed a, resolution adopting the said Act.
The resolutions passed by the various States and the resolution passed by the Mysore Legislature will be quoted in a later part of this judgment.
On April 7, 1956, the appellants filed a petition under article 32 of the Constitution in the Supreme Court challenging the validity of the Central Act but that petition was dismissed and is reported as R.M.D.C. Chamarbaugwala vs The Union of India (1).
The appeal against the Bombay judgment declaring the Bombay Act to be unconstitutional was brought in this court and, was allowed and that case is reported as State of Bombay vs R. M. D. Chamarbaugwala (2) .
During the pendency of their petition under article 32 the appellants applied for and wore granted a stay of the operation of the Central Act pending the disposal of the said writ petition.
This was on April; 16, 1956.
The judgment of the Supreme Court in that petition was given.
on April 9, 1957.
On August 31, 1957, the (1) ; , 939.
(2) ; , 929.
234 Mysore Lotteries & Prize Competitions Control and Tax (Amendment) Ordinance, 1957 (Ord. 6 of 1957) was issued by the Governor of Mysore and thus for the period of about 16 months the appellants carried on prize competitions as before.
The Ordinance was enacted into an Act on September 28, 1957, which is Mysore Act 26 of 1957.
Certain amendments were made by this in the Mysore Act as originally passed in 1951.
As a result of this amendment the definition of prize competition was amended the definition as given in the Central Act was adopted and sections 8 & 9 of the Mysore Act.
were omitted with retrospective effect from April 1, 1956; cl.(b) of sub section
(1) of s.12 was amended and certain words referring to licences under s.8 were retrospectively omitted and retrospective effect was given to the Mysore Act as amended.
By adding a proviso to s.15 of the Mysore Act all 'prize competitions conducted between March 31,1956, and August 31 1957, were brought within the purview of the amended Act.
Thus the prize competitions which as a result of the stay of the operation of the Central Act were conducted by the appellants became subject to the operation of the Mysore Act as amended.
The appellants on September 10, 1957, were called upon to file their returns but at their request for extension of time, they were given another 15 days in which to file their return.
They filed their return but under protest.
The gross collections were of a sum of Rs. 26,47,147 5 9 and on that the appellants were "called open to pay up provisionally" a sum of Rs. 3,30,893 7 0.
As the money was not paid within the time specified proceedings were taken under section 6 (1) of the (Central Act 1 of 1890), and certain properties moveable and immoveable were attached 'and one of the properties was sold and the price so realised was deposited in the Government treasury.
The Mysore amending Act was challenged in the High Court of Mysore by a petition under Art, 226 which was dismissed on November 20, 1958 235 and against that judgment and order this appeal has been brought pursuant to a certificate of the, High Court under article 132 (1) of the Constitution.
The Certificate was confined to the interpretation of article 252 of the Constitution.
The respondent in the present appeal is the State of Mysore.
The challenge to the constitutionality of the Mysore Act was on the ground that (1) the Mysore Legislature by.
adopting the Central Act was no longer competent to pass any law in regard to prize, competitions because the whole matter including the power of taxation was surrendered in favour of Parliament.
(2) Even if the whole power had not been surrendered the impugned Act i.e. the, Mysore Act as amended violated Art.252(2) of the Constitution inasmuch as it indirectly amends the Central Act by adding a new method of control by imposition of penalties of a monetary nature.
(3) The Mysore Legislature could not amend an Act which stood repealed as a result of the enactment of the Central Act.
(4) The Mysore Act as amended was repugnant to the Central Act and is therefore, to the extent of repugnancy, void under article 254 (1) of the Constitution and (5) it was color able legislation in as much as the tax was imposed on the prize competitions with the object of controlling them.
Certain other questions relating to the legality of the imposition of the tax and the proceedings for the recovery of the tax were also raised but on all these points the High Court found against the appellants The first question, raised before us is the effect of the; resolution passed by the, legislatures of the States above mentioned and of the resolution passed by the Mysore legislature adopting,the central Act.
The resolution Passed by the States was in the following terms. "This Assembly do resolve that it is desirable that control and regulation of Prize 236 Puzzle competitions and all other matters consequential and incidental thereto insofar as these matters are matters with respect to which Parliament has no power to make laws for the States should be regulated by Parliament by law.
" The two Houses of the Mysore Legislature passed the following resolution on February 23, 1956 *and February 21, 1956, respectively : Resolution passed by the Mysore Legislative Assembly on 23rd, February, 1956.
"Whereas for the purpose of securing uniformity in legislation it is desirable that the control and regulation of Prize Compe titions and all other matters ancillary thereto should be regulated in the State of Mysore by the (Central Act 42 of 1955) passed by Parliament; Now, therefore, in pursuance of Clause, (1) of Article 252 of the Constitution, this Assembly resolves that the Act aforesaid be adopted by the State of Mysore.
" It was contended that by these resolutions the legislatures of the various States had surrendered their power of legislation in regard to the "control and regulation of prize puzzle competitions and all other matters consequential and incidental thereto and had thus no legislative power left in regard to that matter including the power to tax.
Article 252 provides article 252(1) "If it appears to the legislature of two or more, States, to be desirable that any of the matters with respect to which Parliament has no power to make laws for the States except as provided in articles 249 and 250 should be regulated in such States by Parliament by law, and if resolutions to that effect are passed by all the Houses of the legislatures of those States, it shall be lawful 237 for Parliament to pass an, Act for regulating that matter accordingly, and any Act so passed shall apply to such States and to any other State by which it is adopted afterwards by resolution passed in that behalf by the House or, where them are two Houses, by each of the Houses of the Legislature of that State.
(2) Any Act so passed by Parliament maybe amended or repealed by an Act of Parliament passed or adopted in like manner but shall not, as respects any State to which it applies, be amended or repealed by an Act of the Legislature of that State.
" The result of the passing of a, resolution under article 952(1) is that any matter with respect to which Parliament has no power to enact laws becomes a matter for the regulation of which Parliament becomes empowered to pass any Act, and such Act, if passed by the Parliament, becomes applicable to the States passing the resolution or adopting that Act.
Sub clause (2) of that Article provides that any such Act may be amended or repealed by an Act of Parliament in the like manner i.e. in the manner provided in cl.
(1) and it cannot be amended or repealed by the Legislature of the State or States passing the resolution.
The question then arises do the resolutions as passed and particularly the words "control and regulation of prize puzzle competitions and all other matters ancillary thereto" surrender the whole subject of prize competitions to the Central Parliament i.e. every matter and power connected therewith including the power to tax.
The argument raised was that the language of the resolutions was wide enough to comprise the legislative power under entries 34 and 62 of List II the former dealing with betting and gambling" and the latter with taxation of luxuries including "betting and gambling".
One of the methods of control and regulations, it was submitted, is by 238 taxation and as the power ; to control, and regulate and all powers ancillary to the subject were surrendered the power to 'tax, being included therein was also surrendered.
In support of this Argument reliance was placed on.
certain judgments of the American Supreme Court.
The first case relied upon was.
Rudolph Helen V. United States (1).
In that ease the question was about the jurisdiction of the United States District Court which, depended upon the nature .
of the, imposition of an, additional duty i.e. whether it was penalty or ' not.
The imposition, was held to be a penalty as it was not imposed for the purpose of revenue but was based upon the particular act of the importer i.e. his undervaluation of the goods imported ; in other words this additional sum was a penalty for undervaluation whether innocently done or not and whether it was called a further sum or an additional duty 'the amount imposed was not a duty upon imported article but a penalty and nothing else.
The next case relied upon was J. W. Bailey vs Dexel Furniture Company (2).
That was a case of colorable exercise, of legislative power.
.Under the Child Labour Tax Law a tax of 10% of the net profits of the year could be imposed upon an employer and knowingly during any portion of the taxable period employed children within certain age limits irrespective of whether only one child was employed or several, This was held not to be a valid exercise by Congress of power of taxation but an unconstitutional regulation by the use of the tax as a penalty for the employment of child labour in the States which was exclusively a State function.
That case was one in which the Congress exercised its.
power of regulation by imposing a tax by way of penalty in,order to prevent the employment of child. labour and thus by If the exercise of the power which it possessed i.e. of (1) (1903)188 U.S.605: ; (2) (1922)259 U.S.33: ; 239 taxation it tried to regulate a subject over which it had no jurisdiction and that really was the matter which was decided by the American Supreme Court.
The next case relied upon was Gloucester Perry Th (company vs Commonwealth of Pennsylvania (1).
That was a case of interstate commerce and it was hold that no State could impose a tax on that portion of interstate commerce which is involved in the transportation of persons and property what ever be the instrumentality by which it is carried on.
The tax there was levied upon receiving and landing of passengers and freight which was held to be a tax on transportation i.e., upon commerce.
between the two States involved in such transportation.
The following passage in the judgment of Field, J., at p. 162 was relied upon by counsel for the appellants "The Power to regulate that commerce, as well as commerce with foreign nations, vested in Congress is the power to prescribe the rules by which it shall be governed that is, the conditions upon which it shall be conducted ; to determine when it shall be free, and when subject to duties or other exactions.
" But these observations were made in a different context, i.e., whether the tax could be levied upon transportation made in ferry boats which passed between States every hour of the day and as this transportation was within the commerce clause no tax could be levied by the States.
Reference was next made to certain observations made in the State of Bombay vs R.M.D. chamarbaugwala (2) which was an appeal against the judgment of the.
Bombay High Court.
Das, C. J., observed at p. 926 "The fact that regulatory provisions have been enacted to control gambling by issuing (1) ; (2) ; , 929.
240 licences and by imposing taxes does not in any way alter the nature, of gambling which is inherently vicious and pernicious.
" In that case no question as to the meaning of the word "control and regulation" arose nor whether those words included the power 'of taxation.
All that the Court was called upon to decide was whether prize competitions were trade, commerce or business or were anti social activities.
It was then argued that it was because of the decision by the Bombay High 'Court in State of Bombay vs R. M. D. Chamarbaugwala (1) whereby the tax imposed on prize competitions was struck down as contravening article 304(b), that the various States combined together and passed the resolution under article 252(1) of the Constitution.
The object of the resolutions, it was submitted, was to get over the unconstitutionality pointed out by the Bombay High Court and therefore the resolutions were passed in the language used therein, i.e., for the control and regulation of prize competitions which power was transferred and surrendered to Parliament along with the powers incidental and ancillary thereto which must include taxation.
It was further argued that as Parliament had failed to impose any tax it implied that it had refused to do so.
In support of this argument reliance was placed on Sabine Robbins vs Taxing District of Shelby County, Tennessee (2).
It was there held that where the power of the Legislature is exclusive its failure to make express regulation indicated its will that the subject shall be left free from any restriction or imposition.
The pivot of the appellants ' argument is that the words "control and regulation" and , 'incidental and ancillary thereto" included power of taxation but this argument is not well founded.
The power in regard to betting and gambling is contained in entry 34 of the State List which as follows .
Entry 34: "Betting and gambling".
(1) I. L. R. (2) ; 241 The power of taxation is contained in entry 62 which is as under Entry 62 : "Taxes on luxuries including taxes on entertainments.
, amusements, betting and gambling.
" In the Indian Constitution as it was in the Government of India Act the power of legislation is distributed between the Union and the States and the subjects on which the respective Legislatures can legislate are enumerated in the three 'Lists and in the Articles of the Constitution, provision is made as to what is to happen if there is a conflict between the Statutes passed by Parliament and the Legislatures of the States.
The peculiar nature of the Indian Constitution in regard to the enumeration of powers in the entries in the Lists was emphasised by Gwyer, C. J., in re The Central Provinces & Berar Act No. XIV of 1938 (1) at p. 38 and by Sulaiman, J., at pp.
73 and 74.
Gwyer, C.J., said: "But there are few subjects on which the decision of other Courts require to be treated with greater caution than that of federal and provincial powers, for in the last analysis the decision must depend upon the words of the Constitution which the Court is interpreting ; and since no two Constitutions are in identical terms, it is extremely unsafe to assume that a decision on one of them can be applied without qualification to another.
This may be so even where the words or expressions used are the same in both cases ; for, a word or a phrase may take a colour from its context and bear different senses accordingly." (1) [1939] F.C.R.18,38,73,74. 242 At p. 74 Sulaiman, J., observed: "The heads have been separately specified in great detail ; and a special head " 'taxes on the sale.
of goods" has been assigned to the Provinces, which did not at all find a separate and distinct place in the State or Provincial List of any of the Dominions.
This peculiarity is a unique feature of the Indian Constitution, having an important bearing on the present case, as taxes on Bales have been adopted as a post war measure in most countries.
" The entries in the Lists have to be read in accordance with the words employed and it will be wholly unjustified in forcing into them a meaning which they cannot reasonably bear.
See Brophy vs Att.
Gen. of Manitoba (1) Similar observations were made by Lord Wright, M. R. in James vs Commonwealth of Australia (2) and both these oases were quoted with approval in re The Central Provinces and Berar Act No. XIV of 1938 (3) by Sulaiman, J.
Thus the subject of "betting and gambling" given in entry 34 of List II and the taxes on betting and gambling as given in entry 62 of List II have to be read separately as separate powers and therefore when control and regulation of prize competitions was surrendered to Parliament by the resolutions above quoted the power to tax under entry 62 of List II which is a separate head, cannot be said to have been surrendered.
See the observations of Das, C. J., in State of Bombay vs R. M. D. Chamarbaugwala quoted a little later in this judgment.
The scheme of the Indian Constitution and distribution of powers under it are entirely different from what it is in America and therefore the construction of the entries in the manner contended for by the appellants would be erroneous.
It was then contended that a tax must be (1) , 215.
(2) , 613.
243 levied for the purpose of revenue and cannot be for purpose of control and that in the Mysore Act was really colourable legislation in that the impugned tax had been levied for the purpose of controlling prize competitions although it was given the form of a tax.
It may be remarked that the Court in construing and interpreting the Constitution or provisions of an enactment has to ascertain the meaning and intention of Parliament from the language used in the statute itself and it is not concerned with the motives of Parliament.
To use the language of Gwyer, C.J., in re, The Central Provinces and Berar Act No XIV of 1938 (1) : "It is not for the Court to express, or indeed to entertain, any opinion on the expediency of a particular piece of legislation, if it is satisfied that it was within the competence of the Legislature which enacted it ; nor will it allow itself to be influenced by any considerations of policy, for these lie wholly outside its sphere.
" Similar observations in regard to the doctrine of colourable legislation were made by Mukherjea, J., (as he then was), in K. C. Gajapati Narayan Deo & Others vs The State of Orissa (2), where it was observed : "It may be made clear at the outset that the doctrine of colourable legislation does not involve any question of bona fides or mala fides on the part of the legislature.
The whole doctrine resolves itself into the question of competency of a particular legislature to enact a particular law.
If 'the legislature is competent to pass a particular law, the motives which impelled it to act are really irrelevant.
On the other hand, if the legislature lacks competency, the question of motive does not arise at all.
Whether a (1) , 38, 73, 74.
(2) ; , 10.
244 statue is constitutional or not is thus.
always a question of power.
" Therefore if the Mysore Legislature had the power, which in our opinion, it had and it had not surrendered its power to Parliament which, in our opinion, it had not then it cannot be said that the imposition of the tax is a piece of colourable legislation and is on that ground unconstitutional.
It will be opposite to quote at this stage the observations of Das, C.J., in the State of Bombay vs R.M.D. Chamarbaugwala (1): "For the reasons stated above, we have come to the conclusion that the impugned law is a law with respect to betting and gambling under entry 34 and the impugned taxing section is a law with respect to a tax on betting and gambling under entry 62 and that it was within the legislative competence of the State legislature to have enacted it.
There is sufficient territorial nexus to entitle the State legislature to collect the tax from the petitioners who carry on the prize competition s through the medium of a newspaper printed and published outside the State of Bombay.
" Thus the Central Act is with respect to betting and gambling under entry 34 of List II and the taxing sections of the Mysore Act are with respect to a tax on betting and gambling under entry 62.
It is also instructive to note that Venkatarama Ayyar, J., in B. M.D. Chamarbaugwala vs The Union of India (2) in construing the language of the resolution was of the opinion that the use of the word "control and regulation" was requisite in the case of gambling and as regards regulation of competitions involving skill mere regulation would have been sufficient.
In view of our finding that by passing the resolution the States did not surrender their power of taxation it cannot be said that al.
(2) of article 252 (1) ; , 929.
(2) ; , 939.
245 of the Constitution was violated by the amendment of the Mysore Act ; nor can it be said that in reality it was a piece of colourable legislation by an indirect attempt to amend the Central Act and a new method of control was devised by imposing a penalty under the name of tax.
We have already held that the tax imposed under the Mysore Act was not by way of penalty but was the exercise of the power which the legislature possessed of imposing tax under entry 62.
The next contention raised was that after the passing of the Central Act, s.12(1)(b) of the Mysore Act became, void because of the provisions of article 254(1) of the Constitution which provides : article 254(1) "If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent List, then, subject to the provisions of clause (2) the law made by Parliament whether passed before or after the law made by the Legislature of such State or as the case may be, the existing law shall prevail and the law made by the Legislature ' of the State shall, to the extent of the repugnancy, be void.
" It was contended that because of the repugnancy between the Central Act and the Mysore Act in regard to licensing all provisions which had any reference to licensing became void under article 254(1) and if they were void they could not be amended.
On behalf of the State it was submitted that article 252(1) was a complete code by itself and article 254 was inapplicable because the latter Article like its predecessor, s.107 of the Government of India Act, 1935, applied where the repugnancy arose under List III of the Constitution i.e., the 246 Concurrent List.
It is not necessary to decide this latter contention or to refer to cases which have been relied upon i.e. Megh Raj vs Allah Rakhia (1) or Deep Chand vs The State of Uttar Pradesh & Others (2) The inconsistency would operate on that portion of the Mysore Act which became repugnant to sections 4 and 5 of the Central Act as to prohibition of prize competitions and licensing.
of prize competitions e.g., s.8 of the Mysore Act and consequently that portion of s.12(1)(b) which deals with taxes in respect of prize competitions for which a licence had been .Obtained under s.8 might be said to have become void and not the rest.
Therefore by the omission of words "for which a licence had been obtained", under s.8, the rest of the clause would be valid.
The effect of the amending Act is that the above mentioned words were deemed to have been omitted as from April 1, 1956, and the rest of clause (b) is not repugnant to any of the provisions of the Central Act.
Article 254(1) therefore did not make s.12(1)(b) wholly void.
All that it did was that the portion which refers to licensing became repugnant but it did not affect the rest of the section.
At the time when the Mysore Act was passed it was within the legislative power of the Mysore Legislature and it may be that it was rendered unconstitutional by reason of sections 4 and 5 in the Central Act but that portion which deals with taxation cannot be held to be void because as a result of the Amending Act the words which were repugnant to the provisions of the Central.
Act were subsequently declared by.
the Mysore Legislature to be deemed to have been omitted as from April 1, 1956, the day when the Central Act came into force.
This is in accord with the view taken in Deep Chand vs The State of Uttar Pradesh and Others(2), i.e., the doctrine of eclipse could be invoked in the case of a 'law which was valid when made but was rendered invalid by a supervening constitutional inconsistency.
This (1).(1947) L. R. 74 I.A. 12,19.
(2) [1959] Supp. 2 section C. R. 8, 24,42.
247 disposes of the challenge to the constitutionality of the Mysore Act on the five points set out above.
Therefore the law may be summed up as follows (1) By passing the resolutions as to control and regulation the power to tax had not been surrendered to Parliament.
(2) The amending Act was not a new method of controlling prize competitions nor was it a piece of colourable legislation.
(3) There was no amendment of an Act which stood repealed nor was the retroactive operation of the Amending Act affected by article 254(1) of the Constitution.
The next three objections to the legality of the assessment were: (1) that the assessment was provisional which was not contemplated under the Act ; (2) there should have been a fresh notification after the amendment of the Mysore Act and (3) at the time when the recovery proceedings were taken the tax had not become due as it was payable within a week which had not expired.
On September 10, 1957, the Deputy Commissioner, Bangalore, called upon the appellants to produce accounts in respect of prize competitions conducted as from April 1, 1956, up to the date of the closure of the competitions and three days were given to comply with that notice.
Their reply was that the Ordinance under which the notice was issued was unconstitutional and illegal and they also asked for thirty days in which to prepare their statements but they were granted a period of fifteen days only.
They agreed to file their statements within the time allowed though under protest.
These statements were submitted on October 9, 1957, and at the end of the statements which showed a gross collection of Rs. 26,47,147 5 9, there was the following endorsement : "The above figures of collections are verified partly with available bank statements and partly with the books of accounts and are 248 subject to reconciliation between the amount as per ledger and that as above.
The commis sion and expenses deducted by Collectors are accepted as per certificate of the Management and the State Account.
Collections are verified only with.
the Collection Register.
(Sd.). . . . . .
Chartered Accountants.
" Under this the Deputy Commissioner wrote a letter on October 16,1957, in which it was said: "You are, hereby called upon to pay up provisionally a sum of Rs. 3,30,893 7 0 towards tax amount to the Reserve Bank of India and forward the challan in token of pay ment to this office within a week.
" As the tax was not paid the provisions of the were resorted to.
This cannot be said to be a provisional assessment.
The return submitted by the appellants as far as it went was accepted and on that the tax was demanded which was not a case of provisional assessment at all but as was held by the High Court it must be taken to be a final assessment and if and when any further assessment or a revised assessment is made the question may become relevant.
The next question As to the necessity of a fresh notification, the submission is equally unsubstantial.
Its legality depends upon the constitutionality of amended s.12(1)(b) and if that is valid, as we have held it to be, the notification is equally valid.
The notification was only in regard to the rate of taxation and had no reference to the obtaining or not obtaining of the licence.
The last point raised was that the tax was payable within a week which had not expired.
As we have pointed out the notice of demand called upon the appellants to pay the sum therein specified and to produce the challan in token of payment 249 within a week.
It is not the case of the appellants that they had paid or were in a position to produce the challan within a week.
It was not an order making the tax payable within a week.
These objections, in our opinion, are without substance and are therefore overruled.
In the result this appeal fails and is dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, was passed by the Mysore Legislature arid came into force on February 1, 1952.
Some of the States comprising the Union of India passed resolutions under article 252(1) of the Constitution of India authorising Parliament to legislate for the control and regulation of Prize Competitions, and in pursuance thereof Parliament passed the , which came into force on April 1, 1956, On February 23, 1956, the Mysore Legislature adopted the said Act by passing a resolution under article 252(1) that "for the purpose of securing uniformity in legislation . the control and regulation of Prize Competitions and all other matters ancillary thereto should be regulated in the State of Mysore by the Prize Com petitions Act, 1955".
The appellants who were conducting prize competitions in the State of Mysore since 1948 filed a petition under article 32 of the Constitution challenging the constitutional validity of the Act, and obtained a stay of the operation of the Act pending disposal of the petition.
The judgment of the Supreme Court dismissing the petition was given on April 9, 1957, and on August 31, 1957, an Ordinance was issued, which later was enacted into an Act, Mysore Act 26 of 1957, by which the Mysore Act of 1951 was amended under which, inter alia, all prize competitions conducted between March 31, 1956, and August 31, 1957, were brought within the purview of the amended Act.
As a result of this, the prize competitions which, as a result of the stay of the operation of the Central Act of 1955, were conducted by the appellants for the said period became liable for taxation.
The appellants challenged the constitutional validity of the amendment on the grounds that (1) the Mysore Legislature by adopting the Central Act was no longer competent to pass any law in regard to prize competitions because the whole matter 231 including the power of taxation was surrendered in favour of Parliament; (2) even if the whole power had not been surren dered the impugned Act i.e., the Mysore Act as amended violated article 252(2) inasmuch as it indirectly amended the Central Act by adding a new method of control by imposition of penalties of a monetary nature; (3) the Mysore Legislature could not amend an Act which stood repealed as a result of the enactment of the Central Act; (4) the Mysore Act as amended was repugnant to the Central Act and was, therefore, to the extent of repugnancy, void under article 254(1) of the Constitution; and (5) it was colourable legislation inasmuch as the tax was imposed on the prize competitions with the object of controlling them.
Held: (1) that by the adoption of the words "control and regulation of prize competitions and all other matters ancillary thereto" in the resolution dated February 23, 1956, the Mysore Legislature did not surrender every matter and power connected with prize competitions including the power to tax: B.R.M.D. Chamarbaugwala vs The Union of India, (1957) S.C.R. 930, relied on.
(2) that the subject of "betting and gambling" in entry 34 of List II of the Seventh Schedule to the Constitution of India and that of II taxes on betting and gambling" in entry 62 of List II have to be read separately as separate powers, and, therefore, when control and regulation of prize competitions was surrendered to Parliament by the resolution dated February 23, 1956, the power to tax could not be said to have been surrendered; In re The Central Province8 & Berar Art No. XIV of and State of Bombay vs B.M.D. Chamarbaug wala; , , relied on.
(3) that the tax imposed under the Mysore Lotteries and Prize Competitions Control and Tax Act, 1951, was not by way of penalty but was in the exercise of the power which the State Legislature possessed of imposing tax under entry 62, and, consequently, the amendment of the Mysore Act of 1951 could not be said to be a new method of controlling prize competitions nor was it a piece of colourable legislation.
K. C. Gajapati Narayan Deo vs The State of Orissa, ; , relied on.
(4) that the , dealt with "betting and gambling" in entry 34, whereas the taxing sections of the Mysore Act related to "tax on betting and gambling" under entry 62 and, therefore, article 252(2) was not contravened by the amendment of the Mysore Act, 232 State of Bombay vs R.M.D. Chamarbaugwala, (1957) S.C.R. 874,relied on.
(5) that there was no amendment of the Mysore Act which stood repealed nor was the retroactive operation of the remending Act affected by article 254(1) of the Constitution.
Deep Chand vs The State of Uttar Pradesh and others (1959) Supp. 2 S.C.R. 8, relied on.


judgement:
Appeal No. 529 of 1958.
Appeal from the judgment and decree dated March 6,1956, of the Allahabad High Court in Civil Misc.
Writ No. 464 of 1954.
C. B. Agwarwala, K. B. Asthana and C. P. Lal, for the appellants.
M. C. Setalvad, Attorney General of India, A. V. Viswanatha Sastri and section P. Varma, for the respondent.
August 22.
The Judgment of the Court was delivered by SHAH, J.
Under a treaty between the East India Company and Nawab Asafuddaula, the Province of Banaras was ceded about the year 1775 to the East India Company.
The Company then granted a sanad to Raja Chet Singh, the former ruler of Banaras, and under that sanad, the rights and powers previously held by Raja Chet Singh were conferred afresh.
Raja Chet Singh granted in jagir, pargana "Syudpore Bhettree" in perpetuity to his Diwan Ousan Singh as remuneration for services rendered to his family.
Raja Chet Singh having renounced his gadi, the East India Company confirmed the grant made by the Raja in favour of Ousan Singh.
Raja Chet Singh was succeeded by Raja Mahip Narain Singh who executed a sanad in favour of Ousan Singh affirming the grant.
Land revenue settlements were made in the Province of Banaras about the year 1789 90, but the jagirs including "Syudpore Bhettree" were excluded from that settlement.
Ousan Singh died in or 216 about the year 1800, and his son Sheo Narain Singh succeeded to the jagir.
In the enquiry held by the Collector of Ghazipore into the proprietary right claimed by the jagirdar under Regulation 11 of 1819, it was declared that the grant to Ousan Singh was for life only and did not confer a heritable or transferable tenure in the parganas.
The decision of the Collector was confirmed by the Commissioner of Bihar and Banaras, subject to the recommendation that Sheo Narain Singh should be maintained in possession of the parganas for life.
The Government then directed in 1828 that a detailed settlement be made with the village zamindars, and offered Sheo Narain Singh allowance for life of one half of the revenue to be assessed on the pargana.
Sheo Narain Singh declined to accept the offer and commenced an action in the civil court contesting the validity of the order resuming the jagir.
The Government considered the question afresh, and resolved to revise the order of resumption and in July 1830, ordered that Sheo Narain Singh be considered Tahsildar of parganas "Syudpore Bhettree," and that the office be treated as hereditary devolving upon the descendants of the jagirdar and held so long as the incum bent did not infringe the privileges found to belong to other classes at the time of formation of the settlement.
Sheo Narain Singh died before the resolution of the Government was communicated to him and he was succeeded by his son Harnarain Singh who withdrew the suit and signed a compromise incorporating the terms of the resolution.
On August 19, 1831, the Secretary to the Government addressed to the Agent of the Governor General at Banaras a letter requesting the Secretary to the Governor General in the Pension department to prepare the necessary documents relating to the grant of a sanad specifying, that parganas "Syudpore Bhettree" were granted on an "istmrar" tenure to Harnarain Singh for his own benefit and of his heirs and successors in perpetuity_on condition of their 217 paying to Government 3/4ths of the Jamma which the revenue officers may in a resettlement of the parganas assess thereon, and that all claims to proprietary right to any village or villages situate in the Raid parganas shall be fully enquired into and in the event of any such claims being established to the satisfaction of the Government, the village or villages forming the subject of the claim shall be considered distinct from and independent of the grant and that a settlement shall be made with the proprietors as in other cases, that the office of Tahsildar shall belong to Harnarain Singh and be hereditary in his family so long as the conditions prescribed for the duties of that office be not infringed, and that in virtue of such office, the separate proprietors shall continue to pay the Jamma which may be assessed on their villages through Harnarain Singh or such other member of the family as the Government may appoint, provided that 1/4th of the Jamma of such separated villages shall be deducted from the payment to be made to the Government in lieu of all remuneration for discharging the duties of Tahsildar, and provided further that until the settlement shall be completed, Harnarain Singh shall continue to pay Jamma to Government.
This proposal calling upon Harnarain Singh to bear all the expenses of the administration and any loss in collection which may occur, departed from the terms of the compromise.
Harnarain Singh refused to accept the offer of a sanad on the terms set out in that letter and also the office of Tahsildar.
In the meanwhile, proceedings for settlement were commenced and on November 16, 1832, the Settlement Officer reported on the conclusion of a summary settlement of the parganas that in 166 mahals, the village zamindars established proprietary rights and the revenue.
assessed upon them was Rs. 1,28.1960.
He further reported that 12 mahals of which the gross revenue was Rs. 22,840 were settled with the jagirdar at a reduced revenue of Rs. 17,130.
Harnarain Singh having refused to undertake 218 the office of Tahsildar on the terms offered by the Government, the Board of Revenue suggested that Harnarain Singh should receive 1/4th of the net collections after deducting from the gross collection the cost of Tahsil establishment thereby giving him an income of Rs. 36,322 8 0.
The Board of Revenue recommended that a sanad be issued under the authority of the Lt. Governor conferring "the pension of Rs. 36,322 8 0 on Babu Harnarain Singh and his heirs in perpetuity".
In a letter dated September 13, 1837, it was recorded that the Lt. Governor of N.W.F. Province was of the view that it would be more conformable with the terms of the agreement if the allowance on Harnarain Singh 's villages (12 mahals) were given in the form of a remission of revenue to the amount of one fourth, the Jamma being fixed at Rs. 17,130 instead of Rs. 22,940 and in the villages settled with zamindars (166 mahals) Harnarain Singh be paid annually a pension of 1/4th of the collections after deducting the Tahsildari charge, and on that footing Rs. 30,612 8 0 be granted to Harnarain Singh.
By letter dated October 19, 1837, from the Secretary to the Lt. Governor, N.W.F. Province, the Secretary to the Board of Revenue was informed that the Lt. Governor had resolved to adopt the Board 's recommendation made in their letter dated September 26, 1837, and to allow Harnarain Singh 1/4th of the not collections after deducting the, expenses of the Tahsildari establishment i. e., Rs. 30, 612 8 0 out of a net Jamma of the villages amounting to Rs. 1,28,960.
About the 12 mahals settled with Hamarain Singh, the allowance was directed to be made in the form of a remission of 1/4th of revenue assessed.
Finally, by letter dated September 14, 1838, from the Secretary to the Sadar Board of Revenue to the Officiating Commissioner 5th Division, Banaras, it was stated that " 'what the Government intended to give is a clear fourth of the net revenue of the Pargana to the Muqurrureedar as pension".
The letter further stated.
219 "2.
The arrangement of paying a portion of that pension by a remission of revenue on certain mauzas settled, as was supposed, directly with the muqurrureedar was proposed by the Board and allowed by Government as a mere matter of convenience to the parties.
Neither Government nor Board intended to alienate any part of the 'muqurrureedar 's pen sion to his son or to any other person.
If the mauzas supposed to have been settled with the muqurrureedar for his own use and behalf, turn out to be held by another person on a distinct interest, it will be necessary, the Board observe to modify the arrangement previously allowed and to collect the, whole assessed revenue of those mauzas as of all others ; and when the same shall have been collected to pay the Muqurrureedar his clear fourth of the net collections.
As however, these mauzas were settled by the Government with the Muqurrureedar his responsibility for the Jumma any portion of revenue which may fall in arrear by person or the arrangement made by him, or of the domes tic differences of his family, must be made good from his pension, before the assignment of the fourth share of the net collections can have effect.
The Board must consider the Muqurrureedar as the owner of these villages during his life.
With his family arrangements they have no concern.
But if it will be his wish that the whole revenue be collected from these villages, and one fourth be returned to him from the treasury instead of receiving tha t fourth in the shape of a remission, he is at liberty to make the election.
He is also the Board remark of course at liberty to cause those mauzas to be 220 transferred or sold in the case of arrear, but his responsibility for the assessed Jumma as fixed by the act of settlement will remain the same.
It is manifest that the recommendations made by the Board of Revenue and the Secretary to the Government in the lengthy correspondence varied from time to time, but in the final letter it appears to have been made clear that an amount equivalent to 1/4th of the net revenue of the 166 mahals be given as pension annually to the jagirdar.
A formal sanad, though contemplated, was, it appears, never issued, but it is common ground that the allowance was paid through the Treasury Office of the Collector of Ghazipor year after year since the year 1838 to Harnarain Singh and his descendants.
This allowance to the jagirdar of "Syudpore Bhettree" was called sometimes in the revenue papers "malikana" sometimes pension" and sometimes a "share in the revenue of the entire pargana '.
In 1951, the U. P. Legislature enacted the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1 of 1951, and relying upon section 6(b) of the Act, the revenue authorities stopped payment of the allowance to the descendants of Harnarain Singh.
The respondent who is a descendant of Harnarain Singh then presented Writ Petition No. 464 of 1954 in the High Court of Judicature at Allahabad for a writ in the nature of mandamus calling upon the State of Uttar Pradesh to forbear from interfering with his right to regular payment of the "pension, allowance or malikana" payable in.
lieu of the hereditary estate of Harnarain Singh in respect of parganas "Syudpore Bhettree" and for an order for payment of the "pension, allowance or malikana" as it fell due.
The respondent claimed inter alia that by virtue of the notification issued under section 4 of the Act, his right to receive the pension did not cease, especially when the scheme of the Act and the principle of assessment did not contemplate payment 221 of compensation in respect of extinction of his right to the allowance, and that in any event, there was no nexus between the pension and the estates sought to be acquired under Act 1 of 1951 or the zamindari: system so tight to be abolished, because the pension was neither land nor Immovable property nor an estate within the meaning of the Act and being merely compensation payable to him in lieu of the rights of his ancestors over the estates comprised within the pargana "Syndpore Bhettree", it was not liable to vest in the State.
The High Court rejected certain preliminary objections to the maintainability of the petition (which objections are riot canvassed in this appeal) and held that the right of .the respondent to receive Rs. 36,330 per annum was not an "estate" within the meaning of the Act and that the right was not acquired under the Act nor did compensation fall to be paid for the same.
In the view of the High Court, under section 6 of the Act, only the rights of the intermediaries in respect of land revenue of the lands comprised in the estate were extinguished and that the rights of third parties under a contract with the State not relating to the rights and privileges of intermediaries, tenants or other persons having interest in land were not effected, and the predecessors in interest of the respondent having been granted an allowance.
annually in lieu of abandonment of the right to realise land revenue, the arrangement did not come to an .end because of the "abolition of the zamindari" under the Act.
The question which falls to be determined in ,this appeal by the State of Uttar Pradesh, is whether the right of the respondent to receive the allowance under the arrangement of the year 1838 was extinguished as a consequence ensuing from the vesting of the "Sudpore Bhettree" parganas in the State of Uttar Pradesh under section 4 of the Act.
By the preamble.
it was recited that the Act was enacted to provide for the abolition of the 222 zamindari system which involved intermediaries between the tiller of the soil and the State and for the acquisition of their rights, title and interest and to reform the Law relating to land tenure consequent upon such abolition and acquisition and to make provision for other matters connected therewith.
By s.3 (8) which was retrospectively are ended by Act 14 of 1958, , 'estate" was defined as meaning the area included under one entry in any of the registers described in cls.
(a) to (d) and in so far as it relates to a permanent tenure holder in any register described in el.
(e) of section 32 of the U. P. Land Revenue Act 1901 as it stood immediately prior to the coming into force of the Act or subject to the restrictions mentioned with respect to the register described in el.
(e) in any of the registers maintained under any other Act, Rule, Regulation or Order relating to the preparation or maintenance of record of rights in force at any time and included share in or of an estate. " 'Intermediary" was defined as meaning with reference to any estate, a proprietor, under proprie tor, sub proprietor, the kadar, permanent lessees in Avadh and permanent tenure holder of such estate or part thereof.
"Land" was defined as meaning,, except in sections 143 and 144, as land held or occupied for purposes connected with agriculture, horticulture or animal husbandry which included pisciculture and poultry farming.
By s.4, provision was made for vesting of estates in the State of Uttar Pradesh.
By sub s.(1), it was enacted, insofar as it is material, that the State Government may by notification declare that as from a date to.
be specified, all estates situate in Uttar Pradesh shall vest in the State and from the date so specified, all such estates shall stand transferred to and vest, except as provided in the Act, in the State free from all encumbrances.
Section 6 provided for the consequences of an estate in the State.
On the publication of a notification under section 4 of the Act, notwithstanding anything contained in any contract or document or in any other law for the time being in force and, nave as 223 otherwise provided in the Act, the consequences set forth in cls.(a) to (j) of section 6 were to ensue in the area to which the notification related.
By cl.(a), all rights, title and interest of intermediaries in every estate in such area and in the sub soil in such estate including rights, if any, in mines and minerals ceased and vested in the State.
Clause (b) on which the dispute primarily turns, provided : "All grants and confirmations of title of or to land in any estate so acquired, or of or to any right or privilege in respect of such land or its land revenue shall, whether liable to resumption or not determine." By cl.
(c), all rents, local rates and sayar in respect of any estate or holding therein for any period after the date of vesting and which, but for the acquisition, would be payable to an intermediary, vested in and became payable to the State Government and not to the intermediary ; and where under an agreement or contract made before the date of vesting any rent, cess, local rate or sayar for any period after that date had been paid to or compounded or released by an intermediary, the same, notwithstanding the agreement or the contract, became recoverable by the State Government from the intermediary.
By cls.
(d) and (e), liability of intermediaries in respect of any estate incurred for any period prior to the date of vesting remained enforceable.
By cl.
(f), the interest of intermediaries in any estate was exempt, from attachment or sale in execution of any decree or other process of any court and any attachment existing at the date of vesting or any order for Attachment passed before such date, subject to the provisions of section 73 of the , ceased to be in force.
By cl.
(a), mortgages with possession on any estate or part of an estate on the date immediately preceding the date of vesting were to be deemed to have been substituted by simple mortgages without prejudice to the rights 224 of the State Government '.
By el.
(h), no claim or liability enforceable or incurred before the date of vesting by or against an intermediary for any money charged on or secured by a mortgage of an estate or part thereof was, except as provided in 73 of the , to be enforceable against his interest, in the estate.
By el.
(i), all suits and proceedings of the nature to be prescribed pending in any court at the date of vesting and. ' all proceedings upto any, decree or order passed in any such suitor proceeding previous to the, date of vesting were stayed.
By cl.
(j), all mahals and their subdivisions existing on the date immediately preceding the date of vesting and all engagements for the payment of land revenue or rent by a proprietor, under proprietor, sub proprietor co sharer, or lambardar as such determined and ceased to be in force.
Section 37 to 40 of the Act provided for the preparation of the Compensation Assessment Roll of intermediaries as respects mahals and for preparation of gross assets of mahals.
It was on this Compensation Assessment Roll that the compensation payable for loss of interest of the intermediaries was to be computed and paid.
Section 42 provided for computation of gross assets of an intermediary and section 44 for computation of the net assets of an intermediary.
Section 45 provided that in the case of proprietors to whom section 78 of the U.P. Land Revenue Act, 1901 applied or who were as.
signers of land revenue whose.
names were recorded in the record of rights, maintained under cls.
(a) to (d) of section 32 of the said Act, under proprietors, sub proprietors, permanent tenure holders and, permanent lessees in Avadh, the provisions of sections 39 to 44 were to apply subject to such incidental changes and modifications as may he Prescribed and the gross assets and net assets of such intermediaries were to be computed accordingly. ' 225 By the definition, in section 3 (8) of the Act an "estate" is an area included under one entry in the registers described in cls.(a) to (d) of the Land Revenue Act.
The High Court upheld the contention of the respondent that allowance paid to him could not be regarded as an "estate".
That view is not challenged before this Court by counsel for the State of Uttar Pradesh.
The right to receive the allowance of Rs. 30,612 8 0 from the Government under the arrangement cannot, in the absence of an express provision to that effect, be called "an area included under one entry in any of the registers" described in the various clauses.
The first part of section 6(b) does not therefore assist the claim made by the State.
But of the 12 mahals the respondent was a proprietor : the land of the mahals was "estate" within the meaning of section 3(8) of the Act and by section 4, the right of the respondent in that estate stood vested in and transferred to the State.
It is true that by the arrangement of the year 1838, confirming the earlier compromise, remission of 25% as granted to the respondent 's predecessors in respect of payment of land revenue.
If the right of the respondent in the 12 mahals ceased, the right to remission could not be converted into a positive right to receive the amount thereof, notwithstanding the extinction of his right in those 12 mahals.
The right to remission of land revenue was a right in respect of land revenue in the estate which stood vested in the State.
The letters dated September 13, 1837, October 19, 1837 and June 15, 1838 make it abundantly clear that the difference of Rs. 5710 between the amount originally assessed and the Jamma recoverable was to be remission of revenue.
The right of the respondent to the 12 mahals was transferred to the State by virtue of the notification under section 4, and the consequences set out in sub section
(b) of section 6 relating to those 12 mahals ensued.
We are therefore unable to agree with the 226 High Court that for the amount of Rs. 6710 which was treated as remissions the respondent was entitled to obtain relief on the footing that right was not affected by the issue of the notification under section 4 of the Act.
The claim of the respondent in respect of the allowance granted as consideration for abandonment of the right to 166 mahals rests on a firmer ground.
It is true that this allowance ",as computed as 1/4th share of the revenue assessed on the 166 mahals.
But the respondent under the arrangement has no interest in the land of the 166 mahals or in the land revenue payable in respect thereof.
By the order of the Government, the right of Sheo Narain Singh to the entire pargana "Syudpore Bhettree" was resumed.
Sheo Narain Singh challenged the authority of the Government to resume his interest in the Jagir and dispute pending in the civil court was compromised on the terms which were finalised in the year 1838 whereby Harnaram Singh and his descendants were given an allowance in amount equal to 1/4th of the net revenue of the 166 mahals.
Because the annual allowance is equal to a fourth share of the net revenue of the mahals, the right of the respondent does not acquire the character of an interest in land or in land revenue.
Under the arrangement, the entire land revenue was to be collected by the Government and in the collection Harnarain Singh and his descendants had no interest or obligation.
As a consideration for relinquishing the right to the land and the revenue thereof, the respondent and his ancestors were given an allowance of Rs. 30,612 13 0.
The allowance was in a sense related to the land revenue assessed on the land, i.e., it was fixed as a percentage of the land revenue : but the percentage was merely a measure, and indicated the source of the right in lieu of which the allowance was given.
The amount is described as "pension" in the letters dated September 14, 1838, July 7, 1837 and June 15,1838.
The words used in el.
(b) are undoubtedly wide 227 any right to a grant which has relation to land or land revenue would be determined by the operation of that clause.
But the allowance to Harnarain Singh was not in respect of land or its revenue; it was granted as consideration for settlement of a claim litigated in a civil court relating to that land.
The primary object of the legislature, as set out in the preamble of the Act, was to abolish the zamindari system and to acquire the rights of the intermediaries and to pay compensation for acquisition of those rights.
By section 4, estates in the area for which a notification was issued, vest in the State free from all encumbrances and as a consequence of vesting, the rights of intermediaries, but not their preexisting liabilities are extinguished as from the date of vesting.
Clauses (a),(c) to (f) and (b) expressly deal with the rights and obligations of interme diaries, and the interaction thereon of the notification of vesting.
Clause (g) deals with the derivative rights of mortgagees of estates.
By el.
(i), the mahals and sub divisions are obliterated, and the engagements for payment of land revenue or rent by proprietors, under proprietors, sub proprietors, co sharers and sub sharers cease.
There is no express reference in section 6 (b) to the right of intermediaries ; by the first part of that clause, the grant and confirmation of title to land in an estate are determined and by the second part, the rights and privileges in land or in the land revenue in the estates are determined.
The key words of the second part of the clause are "in respect of" indicating a direct connection between a right or privilege and land in an estate or its revenue.
The intention of the legislature is manifestly to extinguish estates and all derivative rights in estates and to extinguish the interest of intermediaries between the State and the tiller of the soil.
If the grant or confirmation of title is in respect of a right or privilege to land in an estate or its revenue, it must determine under cl.
(b) ; but a right to receive an allowance which is 228 granted in consideration of extinction of a right to land or land revenue does not, by the force of cl.
(b) determine.
The allowance has not the quality of land or land revenue : its quantum only was measured by equating it with a fourth share in the net revenue of a part of land which was the subject matter of the suit in which the arrangement for payment of the allowance was made.
Absence of a provision in the Act for payment of compensation for a right such as the one claimed by the respondent strongly supports the plea that the right is not intended to be acquired or extinguished.
Section 37 to 44 deal with the assessment of compensation to be paid to intermediaries.
Compensation Assessment Roll of intermediaries in respect of the mahals has to be prepared and detailed instructions in that behalf are contained in sections 39 to 44.
By section 45, in computing the gross assets and net assets of proprietors who are assignees of land revenue and of under proprietors, sub proprietors, permanent tenure holders and permanent lessees in Avadh sections 39 to 44 of the Act are applicable subject to such modifications and incidental changes as may be prescribed.
It is common ground that s.78 of the U. P. Land Revenue Act has no application to "Syudpore Bhettree" pargana.
To proprietors who are assignees of land revenue and whose names are recorded in the record of rights maintained under s.32 cls.
(a) to (d), the provisions of ss 39 to 44 may undoubtedly apply subject to modifications as may be prescribed, and computation of their gross and net assets may be made accordingly.
But the respondent is not an assignee of land revenue whose name is so recorded in the record of rights nor is he qua the allowance an under proprietor, sub proprietor, permanent tenure holder or permanent lessee.
Section 45 is a machinery provision : it does not purport to extend the field of s.6 by prescribing consequences which are not incorporated in that section.
There is in s.45 nothing to warrant the submission of counsel for the State that rights of a 229 land holder to receive allowances from the Government are extinguished even without compensation, merely because he was an assignee of land revenue of some land or was a proprietor, sub proprietor, permanent tenure holder or permanent lessee in respect of other land in Avadh.
The scheme for payment of compensation prescribed by sections 39 to 44 is extended to amongst others, proprietors of land who are assignees of land revenue whose names are recorded in the record of rights maintained under cls.
(a) to (d) of s.32 : but, a person receiving an allowance from the State of the character received by the respondent is not a proprietor who is an assignee of land revenue, and in any event, if his name is not entered in the revenue record under cls.
(a) to (d) of s.32, the provisions relating to computation of gross and net assets will not apply to him.
Absence of a provision in the Act for awarding compensation to persons holding interest such as the respondent has strongly supports the view that such interest was not to be extinguished by the operation of s.6(b) of Act 1 of 1951.
We accordingly hold that the High Court was right in granting the application preferred by the respondent insofar as it related to the allowance of Rs. 30,612 13 0 granted as a consideration for extinction of the right of Harnarain Singh to 166 mahals : but for reasons already stated, we are unable to agree with the High Court that the respondent was entitled to receive in respect of the 12 mahals the land revenue which was remitted.
The order passed by the High Court will therefore be modified and the petition of the respondent in so far as it deals with remission of land revenue in respect of the 12 mahals of "Syudpore Bhettree" will stand dismissed.
The order of the High Court in respect of the allowance of Rs. 30,612 13 0 will stand confirmed.
Subject to the above modifications, the appeal will stand dismissed with costs.
Appeal dismissed.

summary/full:
By the order of the then Government the right of S, an ancestor of the respondent, to the entire parganas "Syudpore Bhettree" was resumed.
S challenged in a civil court the authority of the Government to resume his interest in the jagir.
During the pendency of the dispute, settlement proceedings were commenced and in 1832 the Settlement Officer reported that to 166 mahals of the "Syudpore Bhettree" pargana, the village zamindars had established their proprietary rights and only on 12 mahals the proprietary right of S had been established.
The dispute pending in the Civil Court was compromised, and the terms were finalised in 1838 with H, son of S (who had died in the meantime).
The terms, inter alia, were that for 214 166 mahals settled with the Zamindars, H, and his heirs in perpetuity, be paid annually a pension of 1/4th of the collections after deducting the Tehsildari charges and for 12 mahals settled with H allowance be made in the form of remission of 1/4th of the revenue assessed.
The Government under the settlement intended to give a clear fourth of the net revenue of the parganas as pension.
The allowance and/ or pension was paid through Treasury Office year after year from 1838 to H and his descendants.
In 1951 the U.P. Legislature enacted the Uttar Pradesh Zamindari Abolition and Land Reforms Act 1 of 1951, and under s.6(b) of the Act the revenue authorities stopped payment of the allowance to the respondent.
The respondent claimed that by virtue of the notification issued under s.4 of the Act his right to receive pension did not cease because the pension was neither land nor immovable property nor an estate within the meaning of the Act and being merely compensation payable to him in lieu of the rights of his ancestors over the estates comprised within the pargana "Syudpore Bhettree", it was not liable to vest in the State.
Held, that the right to receive the allowance of Rs.30,612 8 0 for 166 mahals from the Government under the, arrangement was not in respect of land or its revenue; it was granted as consideration for settlement of a claim litigated in a civil court relating to that land, and could not in the absence of an express provision to that effect be called "an area included under one entry in any of the registers" described in various clauses, (a) to (d) of s.32 of the U.P. Land Revenue Act, 1901.
The intention of the Legislature was to extinguish estates and all derivative rights in estates and to extinguish the interest of intermediaries between the State and the tiller of the soil.
The grant of confirmation of title which is in respect of a right or privilege to land in an estate or its revenue; it must determine under cl.(b) of s.6 of the Act; but a right to receive an allowance granted in consideration of extinction of a right to land or land revenue does not by the force of cl.
(b) determine.
The allowance has not the quality of land or land revenue; its quantum only was measured by equating it with a fourth share in the net revenue of a part of land which was the subject matter of the suit in which arrangement for payment of the allowance was made.
A person receiving an allowance from the State in consideration "of extinction of a right to land or land revenue is not a proprietor who is an assignee of land revenue," and in particular if his name is not entered in the revenue record under cls.(a) to (d) of s.32 of the U.P. Land Revenue Act, 1901, the provisions relating to computation of gross and net assets will not apply to him.
The Act does not intend to extinguish the right to receive allowance granted in 21 considerations of extinction of right to land or land revenue by the operation of s.6(b) of the Act 1 of 1951.
Held, further, that the respondent was a proprietor of the 12 mahals, of the "Syudpore Bhettree" Parganas.
The said 12 mahals were an "estate" within the meaning of s.3(8) of the Act and by section 4 the right of the respondent in that estate stood vested in and transferred to the State.
The right of the respondent in the 12 mahals having ceased, the right of remission could not be converted into a positive right to receive the amount thereof.