judgement:
Civil Appeal Nos. 95 and 96 of 1971.
From the Judgment and order dated 3rd October, 1969 of the Allahabad High Court in Writ Petitions Nos. 351 and 462/69.
section C. Manchanda and o. P. Rana, for the Appellants.
Promod Swarup and section Markendeya, for the Respondent.
The Judgment of the Court was delivered by FAZAL ALI, J.
These appeals by the sales tax officer have come up to this Court by certificate of fitness granted by the High Court of Allahabad.
The appeals involve a very short point, turning upon the interpretation of rule 7A of the U.P. Sales Tax Act (hereinafter referred to as the Act).
It appears that the respondent is a partnership firm, carrying on business in the district of Moradabad.
The assessment quarters in question are two quarters of 1968.
By an order dated 31st December, 1968, the sales tax officer found from the 777 turn over of the firm as revealed from the quarterly returns filed by the assessee that it disclose an assessable income.
The sales tax officer, therefore, proceeded to make a provisional assessment in respect of the portion of the assessment year concerned, purporting to act under section 7A of the U.P. Sales Tax Act.
The assessee being aggrieved by this order, instead of going in appeal against the order, challenging the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return.
This argument appears to have found favour with the High Court which quashed the order of the sales tax officer and held that the sales tax officer could have made a provisional assessment to the best of his judgment only if no return had been filed by the assessee.
Mr. Manchanda appearing in support of the appeals has contended that the High Court has completely overlooked the purport ambit of section 7A of the Act, which does not exclude but in fact implies the provisions of the Act, including section 7(3).
The sheet anchor of the High Court 's judgment is section 7(3) which runs thus "If no return is submitted by the dealer under sub section (1) within the period prescribed in that behalf or, if the return submitted by him ` appears to the assessing authority to be incorrect or incomplete, the assessing authority shall after making such enquiry as he considers necessary, determine the turnover of the dealer to the best of his judgment and assess the tax on the basis thereof. ' Provided that before taking action under this sub section the dealer shall be given a reasonable opportunity of proving the correctness and completeness of any return submitted by him.
" The High Court was of the opinion that as conditions mentioned in section 7(3) did not apply to the facts of the present case inasmuch as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer.
In our opinion, the High Court was in error in taking this view.
Section 7A runs thus: (1) "The State Government may require any dealer to submit return of his turn over of a portion of the assessment year, and the assessing authority may, without prejudice to the provisions of section 7 may provisional assessment in respect of such portion of the assessment year in accordance with the provisions of this Act in so far as they may be made applicable if the turn over of the dealer as determined by the assessing authority for such portion of the amount, if any, specified in or notified under sub section (2) of Section 3 or sub section (2) of Section 3 D, as the case may be, as the period under assessment years to twelve months.
19 L925SCI /75 778 (2) Where the assessing authority has made a provisional assessment under sub section(1), it shall not, by reason of such assessment,, be precluded from redetermining in the turn over and making the assessment for the whole year.
" This section clearly authorizes the assessing authority to make a provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all.
On the other hand, it applies the provisions of the Act which includes the provisions of section 7(3), which is the provision that confers power on the assessing authority to make all assessment to the best of his judgment.
The High Court was rather carried away by the language of rule 41(3) which runs thus: "(3) If no return is submitted in respect of any quarter or month, as the case may be, within the period or if the return is submitted without the payment of tax in the manner prescribed in Rule 48, the Sales Tax Officer shall, after making such enquiries as he considers necessary, determine the turnover Lo the best of his judgment, provisionally assess the tax payable for the quarter or the month, as the case may be and serve upon the dealer a notice in Form XI and the dealer shall pay the sum demanded within the time and in the manner specified in the notice.

dataset_name: IN-Abs

summary/full:
By an order dated 31st December, 1968, the sales tax officer found from the turnover of the respondent firm as revealed from the quarterly returns filed by the assessee that is disclosed an assessable income.
He proceeded to make a provisional assessment in respect of the portion of the assessment year 1968 concerned purporting to act under section 7A of ' the U.P. Sales Tax Act.
The respondent challenged the same before the High Court praying that the sales tax officer had no jurisdiction to make a provisional assessment, because the assessee had in fact filed a return.
The High Court of Allahabad accepted the contention and quashed the order of the sales tax officer.
The High Court hold that as conditions mentioned in section 7(3) did not apply to the facts of the case in as much as it was not a case in which the assessee had not filed a return at all, no assessment could have been made by the sales tax officer.
Allowing the appeal by special leave, ^ HELD: Section 7A clearly authorises the assessing authority to make provisional assessment in respect of the assessment year to the best of his judgment, and does not contain any pre conditions at all.
On the other hand it applies the provisions of the Act which includes the provisions of section 7(3) which is the provision that confers power on the assessing authority to make an assessment to the best of his judgment.
It is true that sub rule (3) of rule 41 contains a provision that the provisional assessment to the best of the judgment can be made where no return is submitted, but this rule has to be read as supplemental to the provisions of the parent Act.
What this rule implies is that whether the return is filed by the assessee or not, the assessing authority will have the power to make provisional assessment.
There is no inconsistency between section 7A and rule 41(3) of the Rules framed under the Act.
[778 A B, D F]


judgement:
Civil Appeal No 707 of 1973.
From the Judgment and Decree dated the 23rd December 1971 of the Madras High Court in Civil Suit No. 158 of 1966.
K. section Ramamurthi, section Balakrishnan, N. M. Ghatate for the appellant.
A.K. Sen, J. section Arora and H. K. Puri for respondent No. 1.
G. L. Sanghi and Girish Chandra for respondents Nos. 2 and 3.
The Judgment of the Court was delivered by CHANDRACHUD, J.
The Trustees of the Port of Madras, appellants herein, filed suit No. 158 of 1966 in the High Court of Madras for recovering a sum of Rs. 3,1 8,968.04 from the respondents by way 724 of demurrage.
The 1st respondent is a firm called M/s. Aminchand Pyarelal, the 2nd respondent is the Union of India and the 3rd respondent is the Collector of Custom, Madras.
A learned single Judge referred the suit to a Division Bench which dismissed it by a judgment dated December 23, 1971.
This is an appeal by certificate granted by the High Court under Article 133(1)(a) of the Constitution.
On April 10, 1963 a Steamer "A.P.J. AKASH" arrived at the Madras Port and landed, among other goods, a consignment of 202 bundles of black plain sheets of various sizes.
The appellants received the goods and stored them in transit sheds.
The goods were imported by the 1st respondent under an authorisation issued by the State Trading Corporation of India which held a licence dated June 16, 1962 to import the goods from Hungary.
The Clearing Agents of the 1st respondent filed a Bill of Entry with the 3rd respondent but the customs authorities detained the goods as the specifications in the import licence did not tally with the description of the imported goods.
The Customs authorities then issued a show cause notice to the 1st respondent and after considering its explanation the 3rd respondent passed an order on November 12, 1963 confiscating the goods under section 111 (a) of the .
The 1st respondent preferred an appeal against that order to the Central Board of Excise and Customs, New Delhi, which was allowed by the Board on July 27, 1964.
On August 21, 1964 the Clearing Agents of the 1st respondent requested the customs authorities to issue a certificate for the permission of the transit dues for the period during which the goods were detained.
A certificate was accordingly issued by the 3rd respondent stating that the goods were detained by the Customs Authorities from April 24, 1963 to August 21, 1964 for examination under section 17(3) and section 17(4) of the , other than in the ordinary process of appraisement and that the detention was due to no fault or negligence on the part of the 1st respondent.
Acting on this certificate, appellants waived the demurrage for the period covered by the certificate, whereupon the 1st respondent cleared the consignment on August 25 and August 27, 1964 on payment of the Harbour dues, Cranage charges and Demurrage charges for the period not covered by the certificate.
Thinking that the certificate was issued erroneously, appellants wrote a letter dated January 27, 1965 to the 3rd respondent requesting him to reconsider the matter.
By his letter of April 12, 1965 the 3rd respondent owned up the mistake and stated that the certificate was incorrect as the goods were detained in order to ascertain whether the Import Trade Control formalities were complied with and not for examination and assessment of duty under section 17(3) and (4) of the .
The case of the appellants is that due to the negligent mistake committed by the 3rd respondent in issuing the certificate, they charged to the 1st respondent a sum of Rs. 1963.60 only whereas 725 it was liable to pay a sum of Rs. 3,20,951.64 by way of demurrage.
The appellants called upon the 3rd respondent to pay up the balance but the latter, by his reply dated July 6, 1965 repudiated all liability, contending that the Union of India could not be held liable for the negligent or tortious acts of its officers done in good faith during the course of their official duties and that the appellants should seek J their remedy against the 1st respondent.
Later, the appellants brought the present suit against the three respondents to recover the demurrage.
The case of the appellants as made out in the plaint is that the liability of respondents 2 and 3 was in the region of contract or quasi contract, that the appellants were put to a loss due to the wrong certificate issued by the 3rd respondent and therefore respondents 2 and 3 could not repudiate their liability to pay the demurrage.
As regards the 1st respondent, the case of the appellants is that it had contravened the Import Trade Control regulations, that it was fully aware of the true facts that it was not open to it to take advantage of the wrong certificate issued by respondent 3 and that therefore it was also liable to pay the demurrage.
The 1st respondent disputed its liability to pay the demurrage contending that it could not be penalised either for the delay caused by the Customs authorities in clearing the goods or for the issuance by them of a wrong certificate.
According to the 1st respondent, the consignment imported in April, 1963 was one of a series of consignments which the 1st respondent had imported under a con tract with the State Trading Corporation for a fixed remuneration.
The 1st respondent had not authority to deal with he imported goods but was bound to hand them over at the agreed price to the State Trading Corporation or its nominee The 1st respondent further stated that the only controversy raised by the Customs authorities related to a difference in the size of the sheets imported under the import licence and that if the appellants had called upon it to pay by way of demurrage a sum as large as over rupees 3 lakhs, the 1st respondent would have rejected the goods as against the supplier unless the State Trading Corporation was willing to accept the goods.
The import clearance orders were granted on the recommendation of the Corporation which held the import licence and which arranged for the grant of import clearance permits to persons like the 1st respondent on the basis that the goods were imported on behalf of the Corporation.
Finally the 1st respondent contended that the scale of charges in the Port Trust Regulations under the heading "Chapter IV Demurrage" was void and ultra vires both for the reason that it was unreasonable and because the scale of charges was not within the authority of the appellants.
The unreasonableness of the demurrage charges, according to the 1st respondent, was obvious from the fact that whereas the goods were of the value of Rs. 1,31,501 appellants were claiming a sum of over rupees 3 lakhs by way of demurrage.
726 The 2nd respondent, the Union of India, set out the various facts attendant upon the import of the goods and contended that the appellants had no cause of action against it or the 3rd respondent.
The 3rd respondent adopted the written statement of the 2nd respondent.
The High Court held that the levy of demurrage ill cases where the goods were detained by the Customs authorities for no fault or negligence on the part of the importer, was unreasonable and also beyond the powers of the appellants and that the appellants were not entitled to recover demurrage from any of the respondents.
Two questions, mainly, arise for consideration in this appeal : firstly, whether the scale of fees under which the appellants charge demurrage is void as being unreasonable and as being beyond their powers; and, if the answer to the first question is in the negative, whether the 1st respondent is liable to pay the demurrage claimed by the appellants.
Counsel for the appellants did not press the claim against respondents 2 and 3.
The decision of the first question turns on the relevant statutory provisions but before considering the validity of the levy, it would be necessary to know the procedure which is adopted in the Madras Port during the process of importation and clearance of goods.
The local agents of the ship inform the Traffic Manager of the Port Trust of the probable date of arrival of the ship and submit to the customs House the "Import General Manifest" which contains a description of the goods which are at board for landing at the Port.
The Dock Labour Board supplies the labour to the Master of the ship for unloading the goods and for putting them on the quay side so as to enable the Port Trust authorities to take charge of the goods.
The Port Trust labour handles the goods on the shore and when the Port Trust takes charge of the same, it is obliged under section 39(3) of the Madras Port Trust Act, 1950, to give a receipt to the Master of the Ship.
With few exceptions, all goods received by the Port Trust are kept in the transit sheds.
The Port Trust charges Harbour Dues for receiving the goods, handling them and keeping them in tile transit sheds.
The importer then files the Import Application and the Steamer Agent 's Delivery order which is in the nature of an authority from the Steamer as bailor, to the Port Trust as the bailee, to deliver the goods to the importer or his agent.
Section 45 of the forbids the person having the custody of any imported goods in the customs area from permitting their removal except under and in accordance with the written permission of the Customs authorities.
The goods are cleared by the Customs authorities if the importation is not contrary to any law and if the importer pays the import duty assessed on the goods and the other charges payable under the .
If the customs officer is of me opinion that the goods have been imported contrary to any prohibition imposed by the or the Imports and Exports (Control) Act, or by the orders issued or the rules framed thereunder, 727 a notice is issued under section 111 or section 112 of the calling upon the importer to show cause why the goods should not be confiscated.
If the importer shows good cause" the goods are released and thereupon the Customs authorities issue a Detention Certificate stating if that be true, that the goods were detained for examination under sections 17(3) and (4) of the and that the detention was due to no fault or negligence on the part of the importer.
The Port Trusts are under a statutory obligation to perform certain duties and equally so they have statutory powers to fix scales of fees and rates.
The statute with which we are here concerned directly is the Madras Port Trust Act, 2 of 1905, (hereinafter called "the Act").
It is necessary to notice the relevant provisions thereof in order to understand the controversy in this appeal.
Section 5(1) defines the "Board" to mean the Trustee of the Port of Madras appointed under the Act.
Section 5(12) defines "Rate" as including any toll, due, rent, rate or charge leviable under the Act.
By section 7 the Board consists of 21 Trustees including the Chairman.
Section 8 provides that the Chairman of the Board shall be appointed by the Central Government and the remaining trustees shall be (1) the Collector of Customs, Madras, (2) the Municipal Commissioner for the City of Madras, (3) the General Manager, M. & section M. Railway, (4) the General Manager, South Indian Railway; (5) one representative of the Mercantile Marine Department chosen by the Central Government; (6) one representative of the Defence Services chosen by the Central Government.
(7) one representative of the State Government chosen by the State Government; (8) two representatives of labour chosen by the Central Government after consultation with the registered trade unions, if ally, composed of persons employed in the port; and (9) eleven elected trustees.
By section 8(2), of the eleven elected trustees one is elected by the Madras Municipal Corporation and the remaining by such provincial or local bodies representing commercial interests as the Central Government may, from time to time, by notification in the official Gazette, specify.
Such notification may also specify the number of trustees that each of such bodies may elect.
Section 10 which lays down disqualifications for the trustee 's office provides, inter alia, that a person shall be disqualified to be a trustee if, inter alia, he holds any office or place of profit under the Board.
This provision does not, however, apply to the Chairman.
ex officio Trustees and Trustees appointed by virtue of office.
Section 23(1) lays down the procedure governing the proceedings of the Board while section 23 (2) provides that the Board may, from time to time, appoint committees consisting of not less than five of its members for carrying into effect any part of the provisions of the Act with such powers and under such instructions, directions or limitations as shall be defined by the Board.
By section 39 the Board is under an obligation, according to its powers, to provide all reasonable facilities for, and has the power to 728 undertake the services of the description mentioned in the sub section among those services are landing of goods from vessels in the Port, and receiving, storing or delivering goods brought within the Board 's premises.
Section 39(2) imposes upon the Board the obligation, if so required by any owner, to perform in respect of goods all or any of the services mentioned in clauses (a), (b) and (d) of section 39(1).
Under section 39(3) the Board shall, if required, take charge of the goods for the purpose of performing the service and shall give a receipt in the prescribed form.
After the goods have been taken charge of and the receipt given by the Board, no liability for any loss or damage which may occur to the goods can attach to any person to whom a receipt shall have been given by the Board or to the master or the owner of the vessel from which the goods have been landed.
Under section 40 the responsibility of the Board for the loss, destruction or deterioration of goods of which it has taken charge is, subject to cerain provisions, that of a bailee under sections 151, 152 and 161 of the Indian Contract Act subject to certain modifications.
Chapter VI of the Act which appears under the heading "Imposition and Recovery of Rates" contains provisions which have direct impact on the contentions raised in this appeal.
Section 42 empowers the Board to frame a scale of rates at which and a statement of the conditions under which any of the services specified in clauses (a) to (e) of the section shall be performed by the Board.
Clause (b) refers to landing of goods from any vessel upon any land or building in the possession or occupation of the Board or at any place within the limits of the Board.
Clause (d) refers to "wharfage, storage or demurrage of goods on any such place".
Sections 43 and 43 A also confer on the Board power similar to that conferred by section 42.
By Section 44 every scale and every statement of conditions framed by the Board under sections 42, 43 and 43 A shall be submitted to the Central Government for sanction and, when so sanctioned and published in the official Gazette, such scale and statement of conditions have the force of law.
The Central Government has power under section 44(1a) at any time to cancel any of the scales framed by the Board or to call upon the Board to modify any portion of such scales whereupon the Board shall modify the scales according to the directions of the Central Government.
Section 44(2) confers power on the Board, in special cases, for reasons to be recorded in writing, to remit the whole or any portion of the rates or of any charge leviable according to any scale.
Under section 50 rates in respect of goods to be landed are payable immediately on the landing of the goods; rates in respect of goods to be removed from the premises of the Board are payable before the goods are removed.
Under section 51 the Board has a lien on the goods for the amount of all rates leviable under the Act on the goods and it may seize and detain the goods until the rates are fully paid.
This lien has by section 52 priority over all other liens and claims except for general average and the ship owner 's lien for freight and other charges where 729 such lien exists and has been preserved in the manner provided in section 53.
Under section 56, if the rates payable to the Board remain unpaid, it is competent to the Board to sell the goods by public auction after expiry of two months from the time That the goods have passed into its custody and in the case of perishable goods after the expiry of a shorter period not being less than 24 hours.
Section 57 requires that the notice of sale must be published in the official Gazette.
By section 58 notice is also required to be given to the owner of the goods, if the address of the owner is known.
Under section 58 A? notwithstanding anything contained in the Act, where any goods placed in the custody of the Board are not removed by the owner or other person entitled there to from the premises of the Board within one month, the Board may, after due notice, required that the goods be removed forthwith or that in default of compliance the goods would be liable to be sold by public auction.
In cases where all the rates and charges payable under the Act have been paid, such a notice for removal of the goods cannot be given before the expiry of two months from the date on which the goods.
were placed in the custody of the Board.
If the notice is not complied with, the Board may at any time after the expiration of one month from the date on which the notice was served or published sell the goods by public auction.
Section 62 preserves the right of the Board to recover the rates by a suit.
Section 95 of the Act which appears ill Chapter XI called "Bye Laws" empowers the Board to make bye laws not inconsistent with the provisions of the Act, inter alia, for the safe and convenient use of sheds, for the reception and storage of goods brought within the premises of the Board, for the mode of the payment of the rates leviable under the Act and generally for carrying out the purposes of the Act.
Section 109 of the Act which has an important bearing on these proceedings provides that nothing contained in the Act shall affect any power vested in the Chief officer of Customs under any Law for the time being in force.
Section 49 of the , 52 of 1962, provides that where in the case of any imported goods, the Assistant Collector of Customs, is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, the goods may, pending clearance, be permitted to be stored in a public warehouse or in a private warehouse if facilities for deposit in a public warehouse are not available.
Acting in pursuance of the power conferred by sections 42, 43 and 43 A, the appellants have framed a "Scale of Rates" payable at the Port of Madras, which has been duly sanctioned by the Central Government under section 44 of the Act.
We are concerned with the rates framed under section 42 which are contained in Chapter IV of the Scale of Rates.
The various scales of rates arc divided into three parts: Book I, Book II and Book III.
Chapter IV is headed "Demurrage " and it occurs in Book I called "Charges for certain 16 L925SupCI/75 730 services which the Board is prepared to render to the public".
The introductory part of Chapter IV says: "Demurrage is chargeable on all goods left in the Board 's transit sheds or yards beyond the expiry of the free days.
After demurrage begins to accrue no allowance is made for Sundays or Board 's holidays.
The free days are fixed by the Board from time to time.
" Scale 'A ' of Chapter IV prescribes conditions governing "Free Days", the normal rule being that two working days in the case of coast cargo and three working days in the case of foreign cargo excluding Sundays and the Board 's holidays arc treated as free after complete discharge of a vessel 's cargo, or the date when the last package was put overside.
Rule 13(b) is the focus of controversy between the parties and it would be used to read along, with it clause (a) as well: "13.
The following free periods are allowed in addition to the free periods applicable as per description of goods: (a) Periods during which goods are detained by the Collector of Customs for examination under Section 17(3) and (4) for chemical test under Section 144 of the other than the ordinary processes of appraisement and certified by the Collector of Customs to be not attributable to any fault o.; negligence on the part of the Importers plus one working day.
The Customs holidays will also be treated as free days in addition.
(b) Where goods are detained by the Collector of Customs, on account of Import Trade Control formalities or for compliance of formalities prescribed under the Drug 's Act and certified by the Collector of Customs to be not attributable to any fault or negligence on the part of Importers, demurrage shall be recovered for this period at the rate of 30 per cent of the normal rate, i.e. the rate at which the goods would in cur demurrage had there been no detention by the Customs.
This concession in demurrage shall be limited to a period of 30 days plus one working day and demurrage shall be recovered at the full rate (i.e., third slab) for detention beyond the above said period.
" Under clauses (c) and (d) of Rule 13, period during which the goods are detained by the Port Health Authority and the periods during which the Board is unable to trace packages owing lo congestion of accommodation, wrong sorting or incorrect tallying are also treated as Free Days.
The High Court dismissed the appellants suit for the following reasons: (1) The Scale of Rates fixed by the Board is in the nature of Bye Laws; (2) Bye Laws may be treated as ultra vires for the 731 reasons, inter alia, that they are repugnant to the statute under which they are made or that they are unreasonable; (3) Viewed as a bye law, Rule 13(b) under which the Board can charge demurrage for the period during which the goods are detained for no fault or negligence of the importer or his agent, is unreasonable and therefore void; (4) In principle, there can be no distinction between cases falling under clause (a) and those falling under clause (b) of Rule 13, and if no demurrage is leviable in respect of cases falling within clause (a), no demurrage could be charged in respect of cases falling within clause (b).
The distinction made by the Board between the two kinds of cases is therefore arbitrary and unreasonable; (5) 'Demurrage ', being a charge for wilful failure to remove the goods within the free period can be believed only if the failure to remove the goods is due to the fault or negligence of the importer or his agent; (6) Having regard to this well accepted meaning of the word 'demurrage ', the authority give to the Board by section 42 of the Act to frame the scale of rates can be exercised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had defaulted or was negligent in clearing the goods; (7) Since Rule 13(b) empowers the Board to charge demurrage even when the goods are detained for no fault or negligence of the importer or his agent, it is beyond the authority conferred by section 42 and is therefore void; (8) All the same, if two views are reasonably possible" a construction which favours the validity of a rule or statute should be preferred to that which renders it void Therefore, under the scale of charges for demurrage provided in Chapter IV, the appellants can levy demurrage only in cases where the delay in clearing the goods is due to the fault or negligence of the importer or his agent.
The first four of these reasons relate to the invalidity of Rule 13(b) viewed as a bye law while the last four relate to its invalidity on the ground that it is in excess of the power conferred by section 42 of the, Act.
Both of these sets of reasons appear to us unsustainable.
As stated in "Craies on Statute Law" (7th Ed., pp.
325 326), bye laws may be treated as ultra vires on the grounds, amongst others, that they are repugnant to the statute under which they are made or that they arc unreasonable.
But the error of the High Court 's judgment lies in the assumption that the "Scale of Rates and Statement of Conditions" framed by the appellants under sections 42, 43 and 43 A are bye laws.
Section 42 with which we are concerned confers authority on the Board to "frame a scale of rates at which and a statement of the conditions under which any of the services specified" in the section shall be performed.
Section 43 confers an identical power in the Board in regard to certain other matters while section 43 A authorises the Board to prescribe consolidated rates.
Provision for framing bye laws is made in Chapter XI called "Bye Laws" and section 95 which occurs in that Chapter mentions the various subjects on which the Board may frame bye laws.
Under Chapter XI, the Board has no power to frame bye laws for fixing scales of rates or a statement of the conditions under which any of the services specified in sections 42, 43 and 43 A shall be performed.
The nearest that section 95 touches the subject of rates is by clause (6) which refers to the 732 mode of the payment of the rates leviable under this Act.
The Board having expressly empowered by section 42 to frame.
I scale of rates and a statement of the conditions under which it shall perform the services specified in the section and the Board having in terms exercised that power under the aforesaid section, there is no justification for supposing that in framing the scale of rates and the statement of conditions, the Board has purported to frame a bye law.
What the High Court has done is to assume, in the first place, that the Board has not exercised the power which it undoubtedly possesses and which in fact and in terms it did exercise.
The High Court then assumed that the Board had exercised the power which it did not possess" a power which the Board has not even purported to exercise.
Making these unfounded assumptions, the High Court invalidated Rule 13 (b) on the basis that it was a bye law and a bye law could be declared ultra vires on the ground that it is unreasonable.
We are unable to accept the High Court 's view that the scale of rates prescribed by the Board under sections 42, 43 and 43 A consists, as it were, of so many bye laws or that Rule 13 is in the nature of a bye law.
A bye law has been said to be an ordinance affecting the public.
Or some portion of the public, impose by same authority clothed with statutory powers, ordering something to be done or not to be done, and accompanied by some sanction or penalty for its non observance.(1) The Board 's power to frame the scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done.
The rates and conditions govern the basis of which the Board performs the services mentioned in sections 42, 43 and 43 A.
Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed in that behalf by the Board.
Indeed, some of the services which the Board may perform are optional and if the importer desires to have the benefit of those services, he has to pay the charges prescribed therefore in the Scale of Rates.
For example, any one wanting to use the Board 's premises for any of the purposes mentioned in clauses (a) to (d) of section 43 would have to pay the charges prescribed by the Board for the use of its premises.
Similarly any one desiring to have the benefit of the Boards 's services in behalf of cranage or storage as specified in clauses (c) and (d) of section 42 shall have to pay for these services at the prescribed rates.
Whether the services are from the importer 's point of view optional in the sense that he may or may not require them or whether the importer has no option save to avail himself of the basic services of the Board as for landing and keeping the goods in the transit area, the services have to be paid for at the scale of rates prescribed by the Board.
In such matters, where services arc offered by a public authority on payment of a price, conditions governing the offer and acceptance of services are not in the nature of bye laws.
They reflect or represent an agreement between the parties, one offering its services at prescribed rates and the other accepting the services as those rates.
(1)See Halsbury 's Laws of England, 3rd Ed.
24, p. 510, paragraph 940 citing Kruce vs Johnson at p. 96.
733 As, generally, in the case of bye laws framed by a local Authority, there is in such cases no penal sanction for the observance of the conditions on which the services are offered and accepted.
If the services are not paid for, the Board can exercise its statutory lien on the goods under section 51 and enforce that lien under section 56 of the Act; or else, the Board may take recourse to the alternative remedy of a suit provided for by section 62.
With this, the entire reasoning of the High Court on the first aspect of he matter must fall because Rule 13(b) has been declared ultra vires on the basis that it is a bye law and, as such, it is arbitrary and unreasonable.
But we would like to point out, since the High Court has taken pains to go into the matter quite elaborately, that even a bye law cannot be declared ultra vires on the ground of unreasonableness merely because the court thinks that it goes further than is necessary or that it does not contain the necessary qualifications or exceptions.
In Kruse vs Johnson(1) a question was raised as to the validity of a bye law made by a county council for regulating street music.
I Lord Russell of Killowen observed in that case .
"When the Court is called upon to consider the bye laws of public representative bodies clothed with the ample authority which I have described, accompanied by the checks and safeguards which I have mentioned.
I think the consideration of such bye laws ought to be approached from a different standpoint.
They ought to be supported if possible.
They ought to be, as has been said, benevolently interpreted ' and credit ought to be given to those who have to administer them that they will be reasonably administered.
" The learned Chief Justice said further that there may be "dases in which it would be the duty, of the court to condemn by laws made under such authority as these were made (by a county council) as invalid because unreasonable.
But unreasonable in what sense ? If, for instance, they were found to be partial and unequal in their operation as between different classes; if they were manifest unjust; if they disclosed bad faith; if they involved such oppressive or gratuitous interference with the rights of those subject to them as could find no justification in the minds of reasonable men, the court might well say, 'Parliament never intended to give authority to make such rules; they are unreasonable and ultra vires. ' But it is in this and this sense only, as I conceive, that the question of reasonableness or unreasonableness can properly be regarded.
A bye law is not unreasonable merely because particular judges may think that it goes further than is prudent or necessary or convenient or because it is not accompanied by an exception which some judges may think ought to be there." (1) , at pp.
734 In Slattery vs Naylor(1) it was observed that when considering whether a bye law is reasonable or not, the court need a strong case to be made out against it, and decline to determine whether it would have been wiser or more prudent to make the bye law less absolute, nor will they hold that it is unreasonable because considerations which the court would itself have regarded in framing such a bye law have been overlooked or rejected by its framers.
n In the first place, Port Trusts are bodies of a public representative character who are entrusted by the legislature with authority to frame a scale of rates and statement of conditions subject to which they shall or may perform certain services.
Port Trusts are not commercial organisations which carry on business for their own profit.
Sections 39(1) and (2) of the Act cast on the Board an obligation, according to its powers, to provide all reasonable facilities, if so required by any owner, for various kinds of services mentioned in clauses (a), (b) and (d) of section 39(1), which include services in regard to landing of goods between vessels and docks in possession of the Board and receiving, storing or delivering goods brought within the Board 's premises.
The Board under section 39(3) shall, if required, take charge of the goods for the purpose of performing the service.
After the goods are thus taken charge of and a receipt given for them, no liability for any loss or damage which may occur to the goods attaches to any person to whom the receipt has been given or to the master or owner of the ship from which the goods have been landed.
The responsibility of the Board for the loss, destruction or deterioration of goods of which it has taken charge is, under section 40 of the Act, that of a bailee under sections 151, 152 and 161 of the Contract Act, subject to some modifications.
Thus rates which the Board levies are a consolidated charge for the various services it renders and the liability which it is compelled by statute to undertake.
The Board of Trustees is a representative body consisting of 21 Trustees out of whom eleven are elected.
The Collector of Customs the Municipal Commissioner, the General Managers of Railways, a representative each of the Mercantile Marine Department and the Defence Services of the Central Government, and two representatives of labour are the other members of the Board.
Out of the eleven elected Trustees, one is elected by the Municipal Corporation and the remaining by provincial or local bodies representing commercial interests.
The Board of Trustees is thus a broad based body representing a cross section of variety of interests.
It is the Board thus constituted that frames the Scale of Rates and Statement of Conditions under which the services shall or may be performed by it.
Every scale and every statement of conditions framed by the Board has to be submitted to the Central Government for sanction under section 44 and it is only when it is so sanctioned that it has the force of law.
The requirement of sanction by the Central Government is a restraint on unwise, excessive or arbitrary fixation of rates.
Section 44(2) confers on the Board the power, in special cases and for reasons to be record (1) , 452.
735 ed in writing, to remit the whole or any portion of rates or charges leviable according to any scale in force under section 44.
Thus, the statute provides for the necessary safeguards, checks and counter checks as an insurance against fixation and levy of harsh or unjust rates.
Section 109 of the Act provides that nothing in the Act shall affect any power vested in the Chief officer of Customs under any law for the time being in force.
Section 49 of the confers power on the Assistant Collector of Customs, if he is satisfied on the application of the importer that the goods cannot be cleared within a reasonable time, to permit that the goods may, pending clearance, be stored in a public warehouse and if such a, facility is not available, then in a private warehouse.
This provision together with section 44(2) of the Act constitutes a measure of mitigation.
In face of these considerations, it is impossible to characterise the scheme for the levy of rates as arbitrary or unreasonable.
The High Court contrasted clause (b) of Rule 13 with its clause (d) and held that there is no distinction between the two classes of cases and if cases falling under clause (a) are wholly exempt from the payment of demurrage, so ought to be those falling under clause (b).
The error of this conclusion lies in equating cases falling under clause (b) with those falling under clause (a).
The two clauses deal with different sets of cases: clause (a) deals with cases where the goods are detained for examination under sections 17(3) and (4) or for chemical test under section 144 of the , other than for the ordinary processes of appraisement; clause (b) deals with cases where the goods are detained on account of Import Trade Control formalities or for compliance of formalities prescribed under the Drugs Act.
We see no warrant for the court substituting its own view as to the allowance of Free Days in a technical matter like the fixation of rates which has been considered by an expert Board of Trustees and whose decision has been confirmed by the Central Government.
Equating the two classes of cases dealt with by clauses (a) and (b) of Rule 13 may seem to the court a more prudent or reasonable way of fixing scales of rates but that is not a correct test for deciding the validity of the impugned provision.
There is a fundamental aspect of the fixation of rates which the High Court has overlooked.
What is the object and purpose of the rates which the Board charges to the importer ? Port Trusts do not do the business of warehousing goods and the rates which the Board charges for storage of goods are not levied as a means of collecting revenue.
The Board is under a statutory obligation to render services of various kinds and those services have to be rendered not for the personal benefit of this or that importer but in the larger national interests.
Congestion in the ports affects the free movement of ships and of essential goods.
The scale of rates has therefore to be framed in a manner which will act both as an incentive and as a compulsion for the expeditious removal of the goods from the transit area.
Ships, like wagons, have to be kept moving and that can happen only if there IS pressure on the importer to remove the goods from the Board 's pre 736 mises with the utmost expedition.
The appellants in their reply statement filed in the High Court have referred to the Report of the Committee set up in 1967 by the Ministry of Transport and Shipping, Government of India.
The Committee consisted of top level experts, one each from the Ports of New York, London and Notterdam who made a general survey of the Ports and Harbours in India.
The Committee observed in its Report: "To effect quick clearance of the cargo from the Harbour, the demurrage rates may be so fixed as to make it unprofitable for importers to use the port premises as a warehouse.
"Viewed from this angle, the scale of rates cannot be characterised as unreasonable.
That takes us to the question whether the scale of rates fixed by the Board is beyond the power conferred on it by section 42 of the Act.
If section 42 were to authorise the Board to fix rates of 'Demurrage '.
it might perhaps have been arguable that the Scale of Rates and the Statement of Conditions must conform to the accepted meaning of the word 'Demurrage '.
But the statute has placed no such limitation on the power of the Board to fix the rates.
By Section 42 power is conferred on the Board to frame "a scale of rates at which and a statement of the conditions under which any of the services 1> specified" in the section "shall be performed".
And the Board has fixed the scale of rates and the statement of conditions for the services it may have to perform.
It is difficult to see in what manner or respect the Board has exceeded its power under section 42.
The High Court seems to have thought that the Board had the limited right to fix rates of demurrage and therefore rates could only be levied on goods which were not removed from the Board 's premises due to some fault or negligence on the part of the importer or his, agent.
The High Court was probably misled in this conclusion by the use of word 'demurrage ' in clause (d) of section 42.
But 'demurrage ' is surely not a service to be performed by the Board and is, on any view, a charge leviable on goods.
Clauses (a) lo (d) of section 42 refer to various services like transshipment of passengers and goods, landing and shipment of passengers or goods, cranage or porterage of goods and wharfage or storage of goods.
It is these services in respect of which section 42 authorises the Board to frame a scale of rates and the statement of conditions.
The circumstances that the Board has used the expression 'Demurrage ' as a heading for Chapter IV of the Scale of Rates or that it has used that expression in Rules 13(b) and (c) cannot constitute a fetter on its powers to fix the rates.
The validity of the exercise of that power has to be judged on the language of section 42 which is the source of the power.
The High Court has cited many texts and dictionaries bearing on the meaning of 'Demurrage ' but these have no relevance for the reason that demurrage being a charge and not a service, the power of the Board is not limited to fixing rates of demurrage.
Besides, it is plain that the Board has used the expression 'Demurrage ' not in the strict mercantile sense but merely to signify a charge which may be levied on goods after the expiration of Free Days Rule 13(b) itself 737 furnishes a clue to the sense in which the expression 'demurrage ' is used by the Board.
It provides, inter alia, that "demurrage" shall be recovered at a concessional rate for a period of thirty days plus one working day where the goods are detained for compliance with certain formalities and where the Collector of Customs certifies that tile detention of goods is "not attributable to any fault or negligence on the part of Importers".
The High Court was therefore in error in holding the scale of rates fixed by the Board as ultra vires and void on the grounds that it is unreasonable and that it is in excess of the power conferred by section 42 of the Act.
The only question which now remains to be considered is whether the respondents are liable to pay the demurrage demanded of them by the appellants.
The appellants ' claim against respondents 2 and 3 has no foundation in law and was rightly not pressed by the appellants ' counsel.
Respondent 3 is the Collector of Customs who, obviously., cannot be made personally liable to pay the demurrage.
Respondent 2 is the Union of India against whom and respondent 3.
the appellant 's claim is said to reside partly in the region of "contract or quasi contract".
We are unable to spell out any such basis on which the claim of the appellants could rest.
The issuance of an incorrect 'Detention Certificate ' by the 3rd respondent cannot also help the appellants to fasten the liability for demurrage on respondents 2 and 3 on the ground of their negligence.
As observed by the High Court, all the relevant facts were before the appellants who could, with reasonable care, have avoided the consequences flowing from the Certificate issued by the 3rd respondent.
As regards the appellants ' claim against the 1st respondent, the High Court was prepared to hold the latter liable to pay the demur rage except for the fact that the scale of rates was unreasonable and beyond the power of the Board.
As we have set aside the High Court 's findings on those points, it has to be examined whether the 1st respondent is liable to pay the demurrage.
Unfortunately, parties fought in the High Court a legal battle and gave no importance to facts on which the liability of the 1st respondent may be said to rest.
Facts must come before the law for, legal principles cannot be applied in a vacuum.
No oral evidence was led by the parties and we find it difficult on a mere Perusal of documents to say that respondent 1 ought to be held liable to meet the appellants ' claim.
Documents do not prove themselves nor indeed is the admissibility of a document proof by itself of the truth of its contents.
Import Licence No. CL/ 53/3/02105 1 dated June 16, 1962 under which the goods were imported stood in the name of the State Trading Corporation of India.
It issued an authorization in favour of the 1st respondent which, as the documents go, was liable to deliver the consignment to the nominees of the Corporation.
The 1st respondent.
it would appear, was only entitled to charge a commission for the work done by it in pursuance of the authorisation issued by the Corporation.
The 1st respondent had no title to or interest in the goods except to deliver them 738 in accordance with the instructions of the Corporation.
If the appellants were to enforce their statutory lien, the incidence of the demurrage would have fallen on the Corporation in whom the title to the goods was vested.
The appellants permitted the goods to be cleared without then demanding the demurrage which they claimed later, thereby depriving the 1st respondent of an opportunity to reject the goods as against the supplier unless, of course, the Corporation was within to accept them and along with them the liability for the payment of demurrage.
In the absence of any more facts we find it impossible on the record as it stands, to accept the appellants ' claim against the 1st respondent.
Out of 15 issues framed in the suit, issues 1 and 10 only pertain to the liability of the 1st respondent and on those issues, the facts appearing; on the record are too scanty to support the appellants ' claim against the 1st respondent.
We., therefore, hold that the claim against the 1st respondent must also fail In the result, we confirm the decree of the High Court dismissing the appellants ' suit, though for entirely different reasons.
In the circumstances, there will be no order as to costs.
P.H.P. Appeal dismissed .

summary/full:
On 10 4 1968, a steamer arrived at the Madras port and landed inter alia a consignment or 202 bundles of black plain sheets of various sizes.
The appellants received the goods and stored them in the transit sheds.
The goods were imported by the first respondent under an authorisation issued by the State Trading Corporation of India which held a licence to import the goods from Hungary.
The clearing agents of the first respondent filed a bill of entry with the Collector of Customs.
But, the Customs authorities detained the goods as the specifications in the import licence did not tally with the description of the imported goods.
The Customs Authorities then issued a show cause notice to the 1st respondent and after considering his explanation passed an order confiscating the goods.
The first respondent preferred an appeal against that order to the Board which allowed the appeal.
On an application of respondent No. 1 the Customs Authorities issued a certificate stating that the goods were detained by the Customs Authorities from 24 4 1963 to 21 8 1964 for examination under sections 17(3) and 17(4) of the other than in the ordinary process of appraisement and that the detention was due to no fault or negligence on the part of the correspondent.
Acting on this certificate, the appellants waived the demurrage for the period covered by the certificate.
As a result of the said certificate, the appellant charged respondent No. 1, Rs. 1963/ instead of Rs. 3,20,951/ by way of demurrage.
Thereafter, the respondent No. I cleared the consignment.
In January, 1965, the appellants wrote a letter to the Customs Authorities stating that the certificate was issued erroneously and that the Customs Authorities should reconsider the matter.
In April, 1965, the Customs Authorities owned the mistake that the certificate was incorrect as the goods were detained in order to ascertain whether the Import Trade Control formalities were complied with and not for examination and assessment of duty under Sections 17(3) and 17(4) of the .
The appellants brought the present suit against respondent No. 1.
and the Union of India and Customs Authorities to recover the balance of ' demurrage amounting to about Rs. 3 Lacs.
The first respondent disputed is liability to pay the demurrage on the ground that it could not be penalised either for the delay caused by the Customs Authorities in clearing the goods or in the issuance by them of a wrong certificate.
The first respondent also contended that the scale of charges in the Port Trust Regulations under the heading Demurrage was void and ultra vires both for the reason that it was unreasonable and because the scale of charges was not within the authority of the appellants.
The High Court dismissed the suit for the following reasons (1) The Scale of rates fixed by the Board is in the nature of bye laws.
(2) Viewed as a bye law Rule 13(b) under which the Board can charge demurrage for the period during which the goods are detained for.
no fault or negligence of the importer or his agent, is unreasonable and therefore void.
(3) In principle, there can be no distinction between cases falling under clause (a) and those falling under clause (b) of Rule 13 and if 722 no demurrage is leviable in respect of cases falling within clause (a) no demurrage could be charged in respect of cases falling within clause (b).
The distinction made by the Board between the two kinds of cases was therefore arbitrary and unreasonable.
(4) 'Demurrage ', being a charge for wilful failure to remove the goods, can be levied only if the failure to remove the goods is due to the fault or negligence, of the importer or his agent.
(5) Having regard to this well accepted meaning of the word 'demurrage ', the authority given to the Board by section 12 of the Act to frame the scale of rates can be exercised only for the purpose of levying charges where the importer was not prevented by any lawful authority from clearing the goods from the transit area and he had defaulted or was negligent in clearing the goods.
(6) Since Rule 13(b) empowers the Board to charge demurrage even when the goods are detained for no fault or negligence of the importer or his agent, it is beyond the authority conferred by section 42 and is therefore, void.
Allowing the appeal, ^ HELD:(1) The High Court erred in holding that the sale of rates and statements of condition framed by the appellant under sections 42, 43, and 43A are by laws.
Those sections confer authority on the.
Board to frame a sale of rates at which and a statement of conditions under which any of the services specified therein shall be performed.
[732 C, 731 F] 2.
A bye law has been said to be an ordinance affecting the public, or some portion of the public, imposed by some authority clothed with statutory powers, ordering something to be done or not to be done and accompanied by some sanction or penalty for its non observance.
The Board 's power to frame a scale of rates and statement of conditions is not a regulatory power to order that something must be done or something may not be done.
The rates and conditions govern the basis on which the Board performs the services.
Those who desire to avail of the services of the Board are liable to pay for those services at prescribed rates and to perform the conditions framed by the Board.
In fact some of the services which the Board renders are optional.
Where services are offence by a public authority on payment of a price, conditions governing the offer and acceptance of services are not in the nature of bye laws.
They reflect or represent an agreement between the parties one offering his services at the prescribed rates and the other accepting the service at those rates.
[732 D H] 3.
Bye laws may be treated as ultra vires on the grounds, amongst others that they are repugnant to the statute under which they are made or that they are unreasonable.
But even a bye law cannot be declared ultra vires on the ground of unreasonableness merely because the court thinks that it goes further than is necessary or that it does not contain the necessary qualifications or exceptions.
Kruse vs Johnson , relied on.
[731 F. 733 B] 4.
Port Trusts are bodies of a public representative character who are entrusted by the Legislature with authority to, frame a scale of ' rates and a statement of conditions subject to which the shall or may perform certain services.
Port Trusts are not commercial organisations which carry on business for their own profit.
The Board of Trustees is broad based body representing a cross section of a variety of interests.
The requirement of sanction by the Central Government is a restraint on unwise, excessive, or arbitrary fixation of rates.
section or a variety of interests.
The requirement of sanction by the Central whole or any portion of rates or charges leviable according to any scale in force under section 44.
Thus the Statute provides for the necessary safeguards, checks and counter checks as an insurance against fixation and levy of harsh or unjust rates.
Section 49 of the Act confers power on the Assistant Collector of Customs if he is satisfied that the goods cannot be cleared within a 723 reasonable time to permit that the goods might pending clearance be stored in a public warehouse or in a private warehouse.
In face of these considerations it is impossible to characterise the scheme for the levy of rates as arbitrary or unreasonable.
[734 & G H, 735 A C] 5.
The High Court erred in equating cases falling under clause (h) with those falling under clause (a) of Rule 13.
The two classes deal with different sets of cases.
Clause (a) deals with cases where goods are detained for examination under sections 17(3) and 17(4) or for chemical test under section 144 whereas clause (b) deals with cases where the goods are detained on account of Import Trade Control formalities or for compliance of formalities prescribed under the Drugs Act.
There is no warrant for the court substituting its own view as to the allowance of three days in a technical matter like the fixation of rates which has been considered by an export Board of Trustees and whose decision has been confirmed by the Central Government.
Equating the two clauses of cases dealt with by clauses (a) and (b) of Rule 13 might seem to the court a more prudent or reasonable way of fixing scales of rates but that is not a correct test for deciding the validity of the impugned provision.
[735 D F] 6.
The High Court overlooked a fundamental aspect of fixation of rates.
The Board is under a statutory obligation to render services of various kinds and those services have not to be rendered for the personal benefit of this for that importer but in the larger national interest.
Congestion in the ports affects the free movement of ships and of essential goods.
The scale of rates has, therefore, to be framed in a manner which will act both as an incentive and as a compulsion for the expeditious removal of the goods from the transit area.
Ships, like wagons, have to be kept moving and that can happen only if there is pressure on the importer to remove the goods from the Board 's permises with the utmost expedition.
1735 F H; 736 A] 7.
As regards the appellants ' claim against the first respondent.
facts must come before the law because legal principles cannot be applied in a vacuum.
No oral evidence was let by the parties and documents do not prove them selves nor indeed is the admissibility of a document proof by itself of the truth of its; contents.
The Import Licence stood in the name of the State Trading Corporation.
It issued an authorisation in favour of the first respondent.
The first respondent was only entitled to charge a commission for the work done by it in pursuance of the authorisation issued by the Corporation.
If the appellants were to enforce the statutory lien.
the incidence of the demurrage would have fallen on the Corporation in whom the title to the goods was vested.
The appellants permitted the goods to be cleared without demanding the demurrage which they claimed later, thereby depriving the respondent of the opportunity and the right to reject the goods as against the supplier.
In the absence of any more faces, it is impossible on the record as it stands, to accept the appellants ' claim against the first respondent.
[737 F H, 738 A B]


judgement:
Civil Appeals Nos.
814 815 of 1968.
From the Judgment and Order dated 7th September.
1966 of the Andhra Pradesh High Court in Writ Appeal Nos. 71 and 72 of 1964 respectively.
R. V. Pillai, for the appellant.
P Ram Reddy and C. N. Rao, for the respondents.
The Judgment of the Court was delivered by KRISHNA IYER J.
A forest contractor the appellant who had allegedly excess felled trees beyond the permitted number under two contracts entered into by him with the State of Andhra Pradesh, was directed by the Conservator of Forests the firs, respondent to suffer two.
levies.
One item represented the loss sustained by the State on account of the illicit cutting and the other was a penalty imposed under r. 29 of the Forest Contract Rules (for short, the Rules) issued in exercise of the powers conferred under sections 44 and 79 of the Hyderabad Forest Act, 1355F (for short, the Act).
The factual story out of which the legal controversy springs may be narrated in simple terms.
Admittedly, the appellant was granted two forest contracts to fell and remove a specific number of trees from government forest, in accordance with the Act and the Rules.
The Contracts were of two years ' duration ending with 31st December 1960.
It was found by the Forest officers that the appellant contractor had felled more trees and so he was given a notice calling for his explanation about this detected breach of condition.
In C.A. 814 of 1968 such notice was issued on June 25, 1960 but no explanation was forthcoming.
So the Conservator determined the amount representing the loss caused by the unauthorised cutting of trees.
On July 22, 1960 the District Forest officer informed the appellant that the Conservator of Forest, who is the appropriate authority under the Rules, had fixed Rs. 11,426/ as representing the loss sustained by Government and Rs.11,250/ as penalty under r. 29.
The contractor.
thereupon, prayed for re enumeration of the 772 trees cut from the forest by his application, dated July 30, 1960.
He was informed by the forest authorities, by communication dated August '24, 1960 to check the stumps in the coupe as desired by the petitioner before September 15, 1960.
This opportunity was also not availed of by the appellant.
Consequently, the Conservator levied a penalty, as earlier proposed.
Thus there were two items (1) the loss caused by illicit cutting; (ii) the penalty imposed under the rules for breach of conditions of the contract.
There were three small amounts of fine also, all together resulting in a sum of Rs. 23,088.00.
Eventually, the contract was terminated on December 28, 1960 under r. 30 of the Rules.
Long later, in January 1962, the amount stated above was sought to be realised by revenue recovery process by the Tahsildar, `by his attachment order, dated January 8, 1962.
Thereupon a writ petition was filed by the appellant challenging the demand.
He succeeded before the learned Single Judge but a Division Bench, in appeal carried by the State, reversed this order and the appellant has invoked the jurisdiction of this Court under article 133(1) (a) and (b) of the Constitution.
In C.A. 815 of 1968 a similar excess felling by the same contractor was detected by the concerned officials and notice was issued to the appellant to explain how he had felled 255 trees in excess of the contractual figure.
The appellant denied the illicit felling whereupon a date was fixed for checking the coupe in his presence, as requested by him.
The contractor however did not avail himself of the opportunity so afforded despite a second date for inspection being fixed to suit his convenience.
Eventually the Conservator of Forests fixed the loss sustained by government on account of the illicit felling of trees and also the penalty for breach of the conditions of the contract.
This was done on October 16, 1960 and the appellant was asked to pay the sum by notice.
dated October 28, 1960.
On the same date, the lease was also terminated.
Long later, on January 9, 1962 proceedings for realisation of the amounts were initiated by the Tahsildar.
This step drove the contractor to move a writ petition, which shared the fate, at the single Judge 's level and in appeal, of the sister writ petition already adverted to.
In the same manner he has moved this Court in appeal, by certificate.
Two points were urged by Mr. R V. Pillai, learned counsel for the appellant, one relating to the loss assessed and sought to be realised by the State under the two contracts on account of excess felling, the other relating to the imposition of penalty under r. 29 and its validity.
The first point does not survive because in both the writ petitions which were disposed of together by a common judgment the learned Single Judge rejected the contention with the observation 'I find no substance in the arguments advanced in this behalf .
No provision was brought to any notice which disentitles the government to collect those items '.
If the appellant had been aggrieved by the negation of his plea under this head he should have challenged it in appeal which he did not.
Thus the matter has become final and he` cannot, in this Court, revive it at all.
There is only a single question that therefore deserves our consideration.
773 Was the penalty in the two cases imposed validly ? The learned Single Judge held, on a study of rr. 29 and 31 that the impost was illegal for reasons which we find difficult to accept.
The Division Bench, in appeal, disagreed with the learned Single Judge for reasons which are unclear although our conclusion concurs with theirs.
The rules regulating the consequence of a breach of the conditions of forest contracts were originally promulgated in Urdu in the Hyderabad State but we have been handed up the Manual of Civil Laws, Andhra Pradesh, which contains those rules in English.
Rule 29(3) reads slightly obscurely but, in the absence of the original Urdu rules, we have to make do with the English version.
There are two types of penalties which we may conveniently designate as 'major ' and 'minor ', in the contemplation of the Forest Rules Rule 29 deals with the major penalties while r. 31 relates to minor penalties.
Where the breach of the conditions of the contract committed by the forest contractor is serious, the contract itself is to be terminated and a substantial penalty is to be imposed which 'shall not exceed one quarter of the total consideration paid by the contractor '.
If the branch is of lesser significance, then the authority may not propose to terminate the contract on account thereof but may recover a portion of the 'whole penalty provided for in r. 29 ' not exceeding Rs. 100/ .
In short, if the contravention is grave, the contract is cancelled and a heavy penalty imposed but if the breach is inconsequential the contract continues but a lighter penalty is imposed.
In the present case it is apparent that the authorities terminated the contract and it is equally clear that the breach was serious.
Rule 31 which deals with trivial breaches and lighter penalties is inapplicable.
The only question then is whether the exercise of the power to impose a penalty under r. 29 has been (a) in compliance with natural justice; and.
(b) in fulfilment of the conditions precedent for the exercise of the power.
The facts we have set out earlier make it clear that an opportunity had been afforded in the case of both the contracts before finally quantifying the penalty to be levied but, the contractor did not avail himself of the opportunity.
While it is clear that in the absence of a statutory exclusion of natural justice any exercise of power prejudicially affecting another must be in conformity with the rules of natural justice, we are satisfied that in the present case there is no foundation for the grievance of the petitioner on this score.
The substantial issue is as to whether the termination of the contract for breach of conditions should precede the impost of penalty.
According to Shri Pillai, that is the meaning of r. 29 read in the light of r. 30(3).
There is seeming varbal support for this contention but n closer scrutiny pricks the bubble.
Rule 29 may well be read at this stage '29.
(1) Penalty on termination of a contract for breach of conditions.
Every forest contract shall be in writing in the form annexed hereto and shall contain a provision whereby the 774 forest contractor binds himself to do all the duties and acts A required to be done by or under the contract, and covenants that he and his servants and agents shall abstain from all the acts forbidden by or under such contract.
(2) The sums to be mentioned in a forest contract as payable in case of a breach of any such stipulation shall not exceed one quarter of the total consideration to be paid by the contractor, and shall be recoverable in accordance with the provisions of the Hyderabad Forest Act 1355 F and of this rule: Provided that where such consideration is not an ascertained amount the forest officer executing the contract shall make an estimate of the total amount that would be payable if the contract were fully complied with, and such estimate shall be deemed to be., for the purpose of this sub rule, the total consideration to be paid by the contractor.
(3) This sum shall be realized from the contractor if the contract has been duly terminated in accordance with the provisions of rule 30, and then only under the written order of the forest officer executing the contract." Shri Ram Reddy, for the respondent, urges that ascertaining the amount which is to be levied as a penalty need not be preceded by the termination of the contract.
Indeed, according to him, it is only` if there is an investigation of the nature of the breach, the quantum of loss inflicted on the State and other circumstances that a decision as to whether the contract should be terminated or not can be taken.
If it is found that the breach of condition be willful and the damage substantial, the penalty will be imposed under r. 29 and a decision will be taken for termination of the contract.
However, the sum fixed as penalty shall not be realised from the contractor until the contract has been duly terminated in accordance with the provisions of r. 30.
This is because you cannot keep a contract alive and claim that a grave breach of conditions has been committed.
That would be too inconsistent a stance for the State to adopt.
It is true that the termination of the contract under r. 30 is a condition precedent to realisation of the penalty from the contractor but realisation is different from imposition.
The forest authorities quantify and impose the penalty.
The revenue authorities as well as the forest authorities adopt the various steps prescribed in r. 30(3) for realisation of the sum In the present case it was the Tehsildar who sought to realise the penalty and he did this after the contract was terminated.
Indeed, r. 30(3) uses the expression 'recover ' which is in consonance with 'realise ' in r. 29(3) .
We think that the true meaning of rr. 29 and 30, read together, is that the forest authorities must move from stage to stage in the following manner.
Once they detect a breach, they must investigate to understand and estimate, the nature and degree of damage caused by the breach.
If it is serious, they must proceed to ascertain the 775 sum to be fixed as penalty.
In doing this, a reasonable opportunity must be given to the affected party.
After that the penalty shall be quantified and the contract shall be terminated, in the event of the authorities coming to the decision that the breach is grave enough for that drastic step.
Once the contract is terminated, the last procedure is realisation which can in no case be before the termination of the contract.
The realisation of the penalty may be in one or other of the was set out for recovery under r. 30.
Of course, if the breach is of a venial nature, r. 31 is attracted, the contract is continued and only a small portion of the penalty envisaged in r. 29 is collected.
The view we have taken of the scheme of the rules leaves us in no doubt that the order of penalty is right and the judgment of the Division Bench is correct in the conclusion and the appeals, in the result, must fail.
The circumstances are such that the litigation is purely induced by the obscure official translation of r. 29 from Urdu to English with an obvious omission of 'not '.
This and the other attendant features of the case persuade us to direct that the parties shall bear their costs throughout.
V.M.K. Appeals dismissed.

summary/full:
The appellant & Forest Contractor felled trees in excess of the permitted number authorised by the contract entered into by him with the State of Andhra Pradesh Certain penalty was imposed on the appellant under rule 29 of he Forest Contract Rules framed in exercise of the powers conferred by Hyderabad Forest Act The Forest Officer found that the appellant felled more trees and therefore, gave a show cause notice to the appellant The appellant prayed for re enumeration of the trees given from the forest.
He was given an opportunity which was not availed by him to check the stumps in the coupe as desired by him Consequently, a penalty was levied.
Thereafter, the contract was terminated After the termination of the contract the process for recovery of the penalty was started Rule 29 reads as under: (1) Penalty on termination of a contract for breach of conditions: Every forest contract shall be in writing in the form annexed hereto and shall contain a provision whereby the forest contractor binds him self to do all the duties and acts required to be done by or under the contract, and convenants that he and his servants and agents shall abstain from all the acts forbidden by or under such contract (2) The sums to be mentioned in a forest contract as payable in case of a breach of any such stipulation shall not exceed one quarter of the total consideration to be paid by the contractor, and shall be recoverable in accordance with the provisions of the Hyderabad Forest Act 1355 and of this rule Provided that where such consideration is not an ascertained amount the forest officer executing the contract shall make an estimate of the total amount that would be payable if the contract were fully complied with, and such estimate shall be deemed to be for the purpose of this sub rule the total consideration to be paid by the contractor.
(3) This sum shall be realized from the contractor if the contract has been duly terminated in accordance with the provisions of rule 30, and then only under the written order or the forest officer executing the contract" The appellant filed a Writ Petition in the High Court challenging the validity of the imposition of the penalty.
The learned Single Judge allowed the Writ Petition but the Division Bench allowed` the appeal filed by the State In an appeal by certificate, it was contended by the appellant before this Court that the termination of the contract for breach of conditions mentioned in rule 29 should precede the impost of penalty.
It was further contended that the principles of natural justice were violated The respondent contended that ascertaining the amount which is to be levied as a penalty.
need not be preceded by the termination of the contract.
Dismissing the appeal, ^ HELD: 1 It is clear that in the absence of a statutory exclusion of natural justice any exercise of power prejudicially affecting another must be in conformity with the rules of natural justice.
In the present case.
we are satisfied 771 that there is no foundation for the grievance of the appellant on the score of natural justice since an opportunity was afforded to the appellant before finally quantifying the penalty to be levied but the appellant did not avail himself of the opportunity.
[773 E F] 2.
On a true construction of rule 29 once a Forest Authority detects a breach it must investigate the extent and estimate, the nature and degree of damage caused by the breach, If it is serious they must proceed to ascertain the sum to be fixed as penalty.
In doing this, a reasonable opportunity must be given to the affected party.
After that, the penalty shall be quantified and the contract shall be terminated in the event the authorities come to the conclusion that the breach is grave enough for that drastic step.
Once the contract is; terminated the last procedure is realisation which can in no case be before the termination of the contract.
[774H, 775 A B.]


judgement:
Civil Appeal No. 732 of 1975.
Appeal by Special Leave from the Judgment and Order dated the 19th March, 1975 of the Allahabad High Court in Civil Misc.
Writ No. 5935 of 1974.
R. K. Garg, section C. Agarwala, V. J. Francis, T. M. Ansari for the Appellants.
M. C. Bhandare, R. Nagarathnam, section Bhandare, for Respondent No. 1.
The Judgment of the Court was delivered by ALAGRISWAMI, J.
To fill up a casual vacancy in the office of the President of the Municipal Board, Soron in the district of Etah in Uttar Pradesh, the District Magistrate issued notices to he members of the Board informing them that nomination papers should be filed in his of lice by 26th of September, 1974 and if necessary the election will take place on 1st October, 1974.
The 1st respondent thereupon filed a petition under Article 226 of the Constitution challenging the validity of the procedure adopted by the District Magistrate for holding the election and prayed for an order to the District Magistrate not to hold the election on 1st October, 1974.
The election programme had been notified in the U.P. Gazette dated 21 9 74 but it was published in the Gazette dated 24 9 74.
The objection to the procedure for election was based on the allegation that it did not conform to the provisions of Rule 6 of the U.P. Municipalities (Conduct of Election of Presidents and Election Petitions) Order, 1964, which reads as follows: "6.
Appointment of date for nomination, etc. (1) As soon as may be after the election of members of a board is completed at a general election within the meaning of section 43 of the Act or a equal vacancy occurs in the office of President of a board.
the District Magistrate shall, by notification in the official Gazette, appoint for the election to the office of President of the Board.
(a) the date for making nominations which shall be a date at least four days after the date of notification; and (b) the date for scrutiny of nominations which shall be me date next following the date fixed under clause (a); and (c) the last date for withdrawal of candidatures which shall be the third day after the date fixed for scrutiny of nominations; and 811 (d) the date on which and the hours during which a poll shall, if necessary, be taken: Provided that the date for taking the poll shall be a date not more than five days after the last date fixed under clause (c) .
(2) on the issue of notification under sub para (1), the Returning Officer shall give public notice of the election in Hindi in form I by affixing a copy of the notice at his office and another copy at the office of the Board and in such other manner, if any, as he may think fit and shall also cause to be dispatched by post under certificate of posting a copy of the notice to the last known address of each member.
" Though there was a prayer in the writ petition for all order to the District Magistrate not to hold the election on 1 10 74 the learned Judges who admitted the writ petition directed that the election would be subject to ultimate decision in the writ petition.
Consequently the election took place on the 1st of October and the 1st Appellant was declared elected.
Thereafter the 1st respondent filed an application for impleading the 1st appellant and the Municipal Board as parties and also claimed a further relief for quashing the election proceedings that took place on the 1st of October, 1974.
The learned Judges allowed the petition and set aside the entire election proceedings relating to the election of the 1st Appellant as the President of the Municipal Board.
We are of the opinion that the whole approach of the learned .
Judges of the High Court to this problem was mistaken.
After the decision of this Court in N. P. Ponnuswami vs Returning Officer, Namakkal Constituency & Ors.(1), there is hardly any room for Courts to entertain applications under Article 226 of the Constitution in matters relating to elections.
Before dealing with this question we may set out section 43 B of the U.P. Municipalities Act, which is the provision of law dealing with cases where the election of the President is questioned: "43 B. Judicial officer to decide the question of validity of election to the office of President. (1) No election of the President shall be called in question except by any election petition presented in accordance with the provisions of this Act.
(2) An election petition may be presented by any member entitled to vote at the election or by a candidate who has been defeated at the election on one or more of the following 'grounds, that is to say (a) that the returned candidate has committed any corrupt practice within the meaning of section 28; (1) ; 812 (b) that the nomination of, any candidate has been wrongly rejected, or the nomination of the successful candidate or any other candidate who has not withdrawn his candidature has been wrongly included; (c) that the result of the election has been materially affected by (i) the improper rejection or refusal of a vote, or (ii) any non compliant with the provisions of this Act or of any rules or orders made under this Act.
(3) An election petition shall be presented to the District Judge, or in a district where there is no headquarters of the District Judge, to the Civil Judge, within whose jurisdiction the municipality to which the election petition relates is situate: Thus the only way by which the election of a President can be called in question is by means of an election petition Presented in accordance with the provisions of this Act.
The election itself can be questioned only on one of the three grounds mentioned above.
The only ground in the present case on the basis of which the election of the appellant was questioned is that there was a non compliance with the provisions of rule 6, already referred to.
Under the Act the non compliance with any rule or order made under the Act or any provision of the Act does not ipso facto result in the election being set aside.
That result can be set aside only if the election Tribunal comes to the conclusion that the result of the election has been materially affected by such noncompliance.
The jurisdiction to decide the validity of the election of a President is an exclusive one conferred on the District Judge.
In the circumstances there was no room for the High Court exercising its powers under Article 226 in order to set aside the election.
In keeping aside the election the High Court plainly erred because it did not consider whether the result of the election had been materially affected by non compliance with the rule in question.
In any case that is a matter within the exclusive jurisdiction of the District Judge.
As early as 1928 in its decision in Desi Chettiar vs Chinnasami Chettiar(1) the Madras High Court observed: "It is clear that there is another side of the question to be considered, namely, the inconvenience to the public administration of having elections and the business of Local Boards held up while individuals prosecute their individual grievances.
We understand the election for the elective seats in this Union has been held up since 31st May because of this petition, the result being that the electors have been unable since then to have any representation on the Board, and the Board is functioning, if indeed it is functioning, with a mere (1) A. 1.
R. 813 nomination fraction of its total strength; and this state of affairs the petitioner proposes to have continued until his own personal grievance is satisfied".
These observations were quoted with approval by this court in Ponnuswami 's case (supra) In that decision this Court arrived (supra).
In that decision this Court arrived at the following conclusions: "(1) Having regard to the important functions which the legislatures have to perform in democratic countries, it has always been recognised to be a matter of first importance that elections should be concluded as early as possible according to time schedule and all controversial matters and all disputes arising out of elections should be postponed till, after the elections are over, so that the election proceedings may not be unduly retarded or protracted.
(2) In conformity with this principle, the scheme of the election law in this country as well as in England is that no significance should be attached to anything which does not affect the "election"; and if any irregularities are committed while it is in progress and they belong to the category or class which, under the law by which elections are governed, would have the effect of vitiating the "election" and enable the per son affect ed to call it in question, they should be brought up before a special tribunal by means of an election petition and not be made the subject of a dispute before any court while the election is in progress.
" In absence of any express provisions in the Act to the contrary these principles are applicable equally to cases of elections to local bodies also.
This Court also pointed out that the right to vote or stand as a candidate for election is not a civil right but is a creature of statute or special law and must be subject to the limitations imposed by it.
It referred to the decision in Wolverhampton New Water Works Co. vs Hawkesford(1) where it had been held: "There are three classes of cases in which a liability may be established founded upon statute.
One is, where there was a liability existing at common law, and that liability is affirmed by a statute which gives a special and peculiar form of remedy different from the remedy which existed at common law; there, unless the statute contains words which expressly or by necessary implication exclude the common law remedy, the party suing has his election to pursue either that or the statutory remedy.
The second class o cases is, where the statute gives the right to sue merely, but provides not particular form of remedy: there, the party can only proceed by action at common law.
But there is a third class, viz., where a liability not existing at common law is created by a statute which at the same time gives a special and particular remedy (1) 814 for enforcing it.
The remedy provided by the statute must be followed, and it is not competent to the party to pursue the course applicable to cases of the second class.
The form given by the statute must be adopted and adhered to." and after referring to the provisions of the Representation of the People Act pointed out that it will be a fair inference that the Act provides for only one remedy, that remedy being by an election petition to be presented after the election is over, and there is no remedy provided at any intermediate stage.
This Court also held that the word 'election ' connotes the entire procedure to be gone through to return a candidate whenever we talk of elections in a democratic country.
It follows that the right to vote or stand for election to the office of the President of the Municipal Board is a creature of the statute, that is, the U.P. Municipalities Act and it must be subject to the limitations imposed by it.
Therefore, the election to the office of the President could be challenged only according to the procedure prescribed by that Act and that is by means of an election petition presented in accordance with the provisions of the Act and in no other way.
The Act provides only for one remedy, that remedy being an election petition to be presented after of the election is over and there is no remedy provided at any intermediate stage.
These conclusions follow from the decision of this Court in Ponnuswami 's case (supra) in its application to the facts of this case.
But the conclusions above stated were arrived at without taking the.
provisions of Article 329 into account.
The provisions of Article 329 are relevant only to the extent that even the remedy under Article 226 of the Constitution is barred as a result of the provisions.
But once the legal effect above set forth of the provision of law which we are concerned with is taken into account there is no room for the High Courts to interfere in exercise of their powers under Article 226 of the Constitution.
Whether there can be any extraordinary circumstances in which the High courts could exercise their power under Article 226 in relation to elections it is not now necessary to consider.
All the considerations applied in coming to the conclusion that elections to the legislatures should not be delayed or protracted by the interference of Courts at any intermediate stage before the results of the election are over apply with equal force to elections to local bodies.

summary/full:
To fill up a casual vacancy in the office of the President of the Municipal Board, Soron in the district of Etah in Uttar Pradesh, the District Magistrate issued notices to the members of the Board informing them that nomination paper should be filed in his office by 20th of September, 1974 and if necessary the election will take place on 1st October, 1974.
The 1st respondent thereupon filed a petition under Article 226 of the Constitution challenging the validity of the procedure adopted by the District Magistrate for holding the election and prayed for an order to the District Magistrate not to hold the election on 1st October, 1974.
The objection to the procedure for election was based on the allegation that it did not conform to the provisions of Rule of the U.P. Municipalities (Conduct of Election of Presidents and Election Petitions) order, 1964.
The High Court admitted the Writ Petition and directed that the election would be subject to ultimate decision in the Writ Petition.
Consequently the election took place on the 1st of October and the 1st appellant was declared elected.
Thereafter the 1st respondent filed an application for impleading the 1st appellant and the Municipal Board as parties and also claimed a further relief for quashing the election proceedings that took place on the 1st of October, 1974.
The High Court allowed the petition and set aside the entire election proceedings relating to the election of the 1st appellant as the President of the Municipal Board.
Allowing the appeal by special Leave, ^ HELD: The right to vote or stand for election to the office of the President of the Municipal Board is a creature of the statute, that is the U.P. Municipalities Act and it must be subject to the limitations imposed by it.
Therefore the election to the office of the President could be challenged only according to the procedure prescribed by that Act and that is by means of an election petition presented in accordance with the provisions of the Act and in no other way.
The Act provides only for one remedy, that remedy being an election petition to be presented after the election is over and there is no remedy provided at any intermediate stage.
[813 E, 814A B, 814C D] N. P, Ponnuswami v, Returning officer, Namakkal Constituency & Ors. ; relied on.
Desi Chettiar vs Chinnasami Chettiar A.I.R. 1928 Mad. 1271 and Wolverhamption New Water Works Co. vs Hawkesford ; referred to.
(ii) These conclusions in Punnuswami case were arrived at without taking the provisions of Article 329 of the Constitution into account.
Tho provisions of Article 329 are relevant only to the extent that even the remedy under Article 226 is barred as a result of the provisions.
But on e the legal effect of the provisions of law contained in Article 329 and in section 43 B of the U.P. Municpalities Act is taken into account there is no room for the High Courts to interfere in exercise of their powers under Article 226 of the Constitution.
810 Quaere: Can there be any extraordinary circumstances in which the High courts could exercise their power under Article 226 of the Constitution in relation to elections ? [814 E]