judgement:
No. 36 of 1960.
Petition under article 32 of the Constitution of India for the enforcement of fundamental rights.
N. C. Chatterjee, D. R. Prem, B. Ganapathy Iyer and G. Gopalakrishnan, for the petitioner.
412 B. Sen, R. H. Dhebar and T. M. Sen, for the respondents.
April 26.
The Judgment of Gajendragadkar, Wanchoo and Ayyangar, JJ., was delivered by Ayyangar, J., and that of Sarkar and Das Gupta, JJ., was delivered by Das Gupta, J. AYYANGAR, J. This is a petition, under article 32 of the Constitution praying for a writ, order or direction in the nature of certiorari calling for the records relating to the levy of customs duty and penalty on certain cycles and cycle parts imported by the petitioners, to quash the said order and for a direction to the respondents to restore and refund to the petitioners the customs duty and the penalties realised from them for releasing their goods.
The Chief Controller of Imports and Exports, Pondicherry, The Collector of Customs, Pondicherry, The Central Board of Revenue, New Delhi, Chief Commissioner, Pondicherry and the Union of India have been made respondents to the petition.
From the nature of the order sought and the array of the respondents it would be apparent that the matter involved in this petition is whether the respondents were justified in (a) levying customs duties on the goods imported by the petitioner and (b) imposing a penalty on them for effecting these imports.
We shall now briefly narrate the facts necessary to understand the points arising for decision.
The petitioners who are citizens of India placed an order on August 6, 1954, with certain firms in the United Kingdom for the despatch of cycles and cycle parts to Pondicherry which was at that date the principal French establishment in India.
According to the law which then obtained in Pondicherry territory, merchants desiring to do business there had to have "a patent" or licence from the authorities for carrying on such business.
The petitioners applied for such a "patent" to the authorities on August 14, 1954, and they were granted one on August 18, which was to be effective from August 1, 1954.
The order placed with U. K. firms was accepted and the goods covered by the indents were shipped from the U. K. ports on 413 October 11, 1954.
The foreign exchange needed for effecting this import could under the French Law have been obtained either from or on the authorization of the Head of the Department of Economic Affairs at Pondicherry or by what has been termed purchase in the open market.
In pursuance of these facilities the moneys required were transmitted through bankers who made payments on behalf of the petitioners in the United Kingdom and the goods arrived in Pondicherry on December 4, 1954, the Bill of Entry being presented to the Customs Authorities for clearance on the 17th of that month.
Meanwhile, political changes took place in the governance of Pondicherry and other French settlements.
An agreement was entered into between the Governments of the Union of India and of France under which the administration of the French Settlements, including Pondicherry, was ceded to the Union Government.
This agreement which was signed on behalf of the two Governments on October 21, 1954, was to be effective from November 1, 1954.
On October 30, 1954, two notifications were issued by the Ministry of External Affairs in pursuance of the agreement dated October 21, 1954, between the two Governments.
They were respectively S.R.O. 3314 and S.R.O. 3315.
As the questions arising for decision in the petition turn on the proper construction and legal effect of these two notifications, it would be necessary to deal with them in some detail, but for the purpose of the narration of facts, it would be sufficient to say that while S.R.O. 3314 saved the operation of the pre existing French Law except in so far as it had been affected by S.R.O. 3315, the latter repealed such laws to the extent they were inconsistent with the Indian enactments set out in the Schedule whose operation was extended to Pondicherry and the French settlements.
Among the Indian enactments so applied to Pondicherry were the Foreign Exchange Regulation Act, 1947, the Import and Export (Control) Act, 1947, the , and the Tariff Act, 1934.
53 414 The Bill of Entry was, as stated earlier, presented to the Customs Authorities at Pondicherry on December 17, 1954, and it would be seen that by that date Pondicherry was being administered as part of the Union territory with the Indian laws referred to operating in the area.
The customs authorities at Pondicherry took the view that as the, consignment imported by the petitioners did not reach the port of Pondicherry before November 1, 1954, when the Union Government took over the territory, the importation was without authorization of the Indian law and therefore in contravention of the Import and Export Control Act and the Orders issued therein, the , the Tariff Act and the provisions of other relevant enactments.
After a notice to the petitioners to show cause why the goods should not be treated as having been imported without a licence granted under the lmport and Export (Control) Act, the Customs authorities at Pondicherry after considering their explanation decided against the petitioners and directed them to clear the goods on payment of duty and of a penalty which was levied under section 167(8) of the .
This order was passed on March 3, 1955.
The petitioners thereupon preferred an appeal to the Central Board of Revenue who dismissed it by their order dated July 31, 1956, and thereafter the petitioners filed a revision to the Cen tral Government who dismissed it by their order dated January 8, 1957, but reduced the penalty imposed.
It is in these circumstances that the petitioners have approached this Court for the reliefs set out at the beginning of this judgment.
The following facts would emerge from the above narration: (1) that firm contracts had been entered into by the petitioners with the foreign sellers long before November 1, 1954 the date of the transfer of Pondicherry, (2) that the petitioners had the authorization of the French law by holding the "patent" granted to them on August 18, 1954, and effective from August 1, 1954, to carry on business in Pondicherry, (3) that the foreign exchange requirements for effecting the importation had been provided for by the 415 petitioners in a manner authorized by the French law, (4) the goods, however, arrived in Pondicherry after the date of the de facto transfer.
In these circumstances the questions raised for decision are: (1) whether under the terms of the relevant notifications, to which we shall immediately refer, the importation was unauthorized for want of an import licence so as to render the petitioners subject to the levy of a penalty under section 167(8) of the , (2) whether the petitioners have a right under the relevant notifications to have the imported goods cleared from the Pondicherry port without the payment of the customs duty leviable under Indian law in the area from and after November 1, 1954.
We have already referred to the two notifications by the External Affairs Ministry, the details of which we shall now proceed to state.
By virtue of the jurisdiction obtained by the Union Government under the agreement between the two Governments dated October 21, 1954, S.R.O. 3314 was issued in exercise of the powers conferred by the , and came into force on November 1, 1954, when the agreement became effective.
Its principal function was to provide for the continuance of the law which previously prevailed in Pondicherry except in so far as it was varied by other notifications issued by the Union Government extending Indian Laws to that territory.
Paragraph 5 of section R.O. 3314 provided: "5.
All laws in force in the French Establishments or any part thereof immediately before the commencement of this order and not repealed by paragraph 6 of the French Establishments (Application of Laws) Order, 1954, shall continue to be in force until repealed or amended by a competent autho rity.
" The other provisions of this order are designed with the same objective, viz., the continuance of laws until other provisions are made by a competent Legislature or authority.
The provisions contained in S.R.O. 3315 are of more immediate consequence for the purpose of this petition.
Paragraph 3(1) of this order provided; 416 "The enactments specified in column 3 of the schedule as in force before the commencement of this order are hereby applied to, and shall be in force in the French Establishments subject to: (a). . . . . . . . . (b). . . . . . . . . (c) The subsequent provisions of the order.
" Paragraph 6 which was in the nature of a saving clause ran: "Unless therefore specially provided in the schedule, all laws in force in the French Establishments immediately before the commencement of this order, which corresponds to the enactments specified in the schedule shall cease to have effect save as respects things done or omitted to be done before such commencement." Among the laws extended to Pondicherry under S.R.O. 3315 were, as already noticed, the , the , the Imports and Exports Trade (Control) Act, 1947, the Foreign Exchange Regulation Act, 1947, and the Indian Tariff Act, 1934.
In the absence of the saving contained in the last words of paragraph 6 of S.R.O. 3315 "as respects things done or omitted to be done before such commencement", the previous French law or the authorizations or permits obtained thereunder, would have become repealed or exhausted and the import to be legal would have to be in conformity with the laws applied to the territory by virtue of paragraph 3 with the result that the orders of the Customs Authorities in the present case could not be open to challenge.
The questions therefore are whether this saving protects the petitioners from: (a) the liability to the penalty, and (b) from payment of customs duty.
We shall deal first with the levy of the penalty.
This matter is wholly concluded in favour of the petitioner by the judgment of this Court in Universal Imports Agency vs The Chief Controller of Imports and Exports (1).
There, as here, a contract had been entered into with a foreign supplier for the despatch of goods (1) ; 417 to the port of Pondicherry in the months preceding the transfer.
The goods however arrived after November 1, 1954, and the customs authorities acting under the provisions of the , treated the import as unauthorized, and adjudged the goods to confiscation and also inflicted a fine.
Petitions were then filed under article 32 for quashing these orders of confiscation and fine and for directing the return of the goods.
It may be mentioned that the present petitioner was an intervener in the petitions then before this Court.
This Court held that the words "things done" in paragraph 6 of S.R.O. 3315 were comprehensive so as to include a contract effected before November 1, 1954, though its legal effect and consequence projected into the post transfer period and the goods were imported only after November 1, 1954.
The petitioners then before the Court having authority under the French law which prevailed before November 1, 1954, to import the goods and having placed the orders and effected the imports in pursuance of that law, this Court held that the imported goods could not, notwithstanding that they were actually brought into the territory after November 1, 1954, be confiscated on the ground that they were imported without a licence required under the Imports and Exports (Control) Act and the Sea Cus toms Act.
Mr. Sen learned Counsel for the respondent urged some points of distinction between the facts in the Universal Imports Agency 's case( ') and the case now before us, but having examined them we find there is no substance in the argument.
Learned Counsel submitted that in the present case the import was effected not by opening Letters of Credit but by payment by bankers ' draft and secondly, that the foreign exchange required for payment to the U. K. supplier was met in the present case by open market purchases and not by the purchase of foreign exchange from French Banking Establishments.
In our opinion, these are wholly immaterial.
Learned Counsel had to admit that there was no legal requirement to have a (1) ; 418 Letter of Credit and also that it was not in contravention of French law which prevailed before November 1, 1954, to obtain foreign exchange requirements by what are termed "open market purchases".
In fact, in the case of the Universal Imports Agency( ') the orders impugned were passed and were sought to 'be supported before this Court on the ground that the foreign exchange requirements were met by "open market purchases" and that in consequence the importation was not authorized by the French law, and this contention was expressly negatived.
We therefore hold that the petitioners are entitled to relief so far as the petition relates to the quashing of the order imposing the penalty and for a direction to refund the same.
We now proceed to examine whether the claim of the petitioners that they are entitled to import the goods without payment of duty is justified by the saving contained in the last words of paragraph 6 of S.R.O. 3315.
Mr. Chatterjee learned Counsel for the petitioners had to admit that this matter was not the subject of decision in Univeral Imports Agency '8 case (1).
Nor is it a matter for surprise that it was not, because the petitioners then before this Court had never objected to the payment of the duty, and indeed the request they made to the Customs Authorities and which was rejected, which led to the petition, was that the authorisation which they had under the French law should be re validated by the Indian Customs Authorities so as to permit the importation on payment of normal duty as if the same were licensed under the Import and Export (Control) Order; and that on payment of the duty they were entitled to a customs clearance under sections 87 and 89 of the .
This being the nature of the controversy raised in this Court, the petitioners relied on article 17 of the Articles of Agreement between the two Governments, to which we shall advert later, in support of their submission that while the Indian authorities were entitled to levy such customs duties as were fixed under law for the several articles imported, the import (1) ; 419 itself should be treated as authorised by the previous law whose operation was continued by the last words of cl. 6 of S.R.O. 3315 of 1954.
Further, as we shall presently show, there are passages in the judgment of Subba Rao, J., who spoke for the majority, that on an importation effected after November 1, 1954, customs duty would have to be paid according to the rates fixed under the relevant Indian legislation.
The submission of Mr. Chatterji however was that this relief which he claimed followed logically from the reasoning of Subba Rao, J., and in particular he relied on the following passage: ". .
A purchase by import involved a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods into the importing country and the purchase and resultant import formed parts of a same transaction.
If so, in the present case the bringing of the goods into India and the relevant contracts entered into by the petitioners, with the foreign dealers formed parts of the same transaction.
The imports, therefore, were the effect or the legal consequence of the 'things done ', i. e., the contracts entered into by the petitioners with the foreign dealers before merger.
" The argument of the learned counsel based on this passage was on the following lines: This Court has held that it is the agreement concluded with the foreign seller under which goods are contracted to be imported, which constituted the "thing done".
The legal consequence of that "thing done" was the act of importation, because that was the object and purpose of the contract, so far as the buyer was concerned.
This Court has held that the previous authorization by the French law, as it were, projected into the post transfer period so as to justify the importer claiming that the importation was authorized and this is the ratio of the decision.
But this does not, learned counsel urged, exhaust the entirety of the rights of the importer.
The previous French law authorized the import into a territory which was "a free port".
When therefore the importation was made by virtue 420 of the authorization contained in the previous law, its effect should extend not merely to justify the claim to have the import treated as one authorized under the relevant Indian law, but logically also as entitling the party to effect the importation without payment of customs duty.
We find ourselves unable to accept this argument.
The expression "free port" in the case of Pondicherry merely meant freedom from restriction as to importation in the shape of licence, etc., and not a complete absence of duties leviable on importation.
But that apart, if the submission of the learned counsel amounted to saying that the point about the exemption of the petitioner from payment of customs duty is also covered by the decision of this Court in Universal Imports Agency 's case (1), we consider it wholly unjustified.
As we have already shown, the liability to pay customs duty was admitted by the petitioner and the reasoning by which he sought relief in this Court proceeded on the basis that such duties were exigible.
Besides, the entire reasoning of Subba Rao, J., was directed to show that the authorization under the French law to effect the import should be held to protect the petitioners then before the Court from being treated as having imported goods without a licence under the Import and Export (Control) Act, and that is why in the penultimate paragraph of the order the conclusion reached is thus set down: "We would therefore hold that paragraph 6 of the order saves the transaction entered into by the petitioners and that the respondents had no rights to confiscate their goods on the ground that they were imported without licence.
" It is in this context that the observations extracted earlier on which Mr. Chatterji relies have to be understood.
Besides, there are passages in the judgment which expressly refer to the fact that goods imported after November 1, 1954, would be liable to be charged duty under the relevant Indian fiscal statute.
In making this observation we have in mind the reference by the learned Judge to the Notification (1) ; 421 of the Central Government dated November 1, 1954, and to the terms of article 17 of the Articles of Agreement dated October 21, 1954, between the two Governments (to both of which we shall advert later).
The decision of this Court is not, therefore, an authority to support the petitioner on the point regarding the right to import without payment of duty and we have to deal with the matter on the footing that it is res integra.
Nor can the plea based on the logic of the ratio of the decision in the Universal Imports Agency 's case (1) assist Mr. Chatterji to any material extent, because the content of the saving as respects "things done", must ultimately be determined not by any interpretation of these two words in vacuo, but in the context of the entire scheme of the two section R. Os.
read in the light of other material which could assist in arriving at their scope.
Thus, for instance, if S.R.O. 3315 contained a specific proviso excepting from the saving as regards ' things done" the obligation, say, to pay duties of customs, it could hardly be contended that as the imports under pre transfer contracts should be deemed to be authorised even if the goods arrive subsequent thereto, they should be exempt from the payment of duty.
No doubt there is no such express provision but such a situation can also arise by necessary intendment.
The right to exemption from payment of duty claimed by the petitioners would therefore have to depend on the proper interpretation of the relevant notifications, because as already seen as the and the Tariff Act, etc., having been extended to Pondicherry territory, etc., from and after November 1, 1954, prima facie duty would be payable on the import.
We have already pointed out the inter relation between S.R.O. 3314 and 3315 which were issued on the same date and by virtue of the same provisions and power.
Paragraph 6 of S.R.O. 3314 which provided for the continuance of the previous existing laws ran: (1) ; 54 422 "All taxes, duties, cesses or fees which, immediately before the commencement of this order were being lawfully levied in the French Establishments or any part thereof shall, in so far as such levy has not been discontinued by any of the laws extended to the French Establishments by the French Establishments (Application of Laws) Order, 1954, continue to be levied and applied for the same purpose until other provisions are made by a competent Legislature or authority".
This would be some indication that taxes, duties, cesses and fees imposed by reason of the extension to that territory, of Indian laws under the French Establishments (Application of Laws) Order, 1954, (S.R.O. 3315) would be operative from and after November 1, 1954.
On November 1, 1954, the Government of India appointed a Controller of Imports and Exports for the French Establishments and paragraph 4 of that notification also contained the following: " As regards orders placed outside the Establishments and finalised through the grant of licence by the competent French Authorities in accordance with the Laws and Regulations in force prior to 1st November, 1954, licence holders are advised to apply to the Controller of Imports and Exports for validation of licences held by them.
No fees will be charged for these applications".
This notification, though it has no statutory force, was obviously part and parcel of S.R.O. 3314 and 3315, in so far as these related to the administration of the Import and Export (Control) Act, the and the Tariff Act and would therefore throw considerable light on what was intended by the framers of S.R.O. 3315.
The effect of this notification was that the authorization granted by or the permission acquired from the French authorities was made to serve the same purpose as the grant of a licence to import under the Import and Export (Control) Act and nothing more.
If its effect was in terms confined to this, there could be no contention that goods imported in pursuance of the authorization should be exempted from customs duty.
423 Besides this, we might also draw attention to paragraph 17 of the Articles of Agreement dated October 21, 1954, under the terms of which the transfer of Pondicherry to the Union Government was effected.
No doubt, that was an agreement between two Governments whose terms and covenants are not justiciable in municipal courts but as the two S.R.0s.
themselves proceed on the basis of this agreement and have been issued by virtue of the authority acquired by the Union Government under the Agreement, a reference to the terms thereof would be pertinent for understanding the scope or intent of the provisions in these two orders S.R.O. 3314 and 3315.
Paragraph 17 of the Agreement dated October 21, 1954 which has been referred to also by Subba Rao, J., in the Universal lmports Agency 's case (1) in support of the position that the authorization under the French law to effect importation of goods into Pondicherry was tanta mount to and had the same effect as the obtaining of a licence under the Import and Export (Control) Act, 1947 expressly made provision for the Government of India applying to the Establishment the relevant Indian laws relating to the imposition of customs and other duties in respect of goods which entered the port after November 1, 1954.
It reads: " All orders placed outside the Establishments and finalised through the grant of a Licence by competent authorities in accordance with the laws and regulations in force, prior to the date of the de facto transfer, shall be fulfilled and the necessary foreign currency granted, as far as the goods are imported within the period of validity of the relevant Licence.
The goods shall, however, be liable to customs duty and other taxes normally leviable at Indian ports. . . . .
As we have already pointed out, this is exactly what is sought to be achieved by the conjoint operation of paragraph 6 of S.R.O. 3314 and the extension of fiscal laws to Pondicherry effected by paragraph 3 of S.R.O. 3315.
It is precisely this that is also brought out by paragraph 4 of the notification dated November 1, 1954, extracted earlier.
In the circumstances (1) ; 424 it looks somewhat curious that the petitioners now before us, who as interveners in the petitions by the Universal Imports Agency, etc., supported the invoking of para.
6 of S.R.O. 3314, or article 17 of the Articles of Agreement and para.
4 of the notification dated November 1, 1954, as an aid to the construction of the words "things done" in para.
6 of S.R.O. 3315 the Government resisting their use as an aid, should now take up the position that these materials are irrelevant for determining the scope of those crucial words.
In our opinion the petitioners are not entitled to have their goods imported into Pondicherry after November 1, 1954, without payment of duty notwithstanding that the contracts, by reason of which the goods were imported, were entered into or the shipment took place before that date.
The result is that the petition is allowed and the orders of the Government, of the Central Board of Revenue and the Collector of Customs are quashed only in so far as they impose a penalty on the petitioner for importing goods without a licence under the Import and Export (Control) Act, 1947, and the Import Control Order.
The respondents were entitled to demand and to enforce the payment of customs duty and the relief prayed in the petition in so far as it relates to the quashing of the order in that respect and the refund of the duty collected, fails and is rejected.
In the circumstances there would be no order as to costs.
DAS GUPTA, J. We agree that in view of this Court 's decision in M/s. Universal Imports Agency vs The Chief Controller of Imports and Exports (1) the petitioners are entitled to relief as against the order imposing penalty for importation of goods into Pondicherry, even though the actual importation took place, after November 1, 1954, as the contract in pursuance of which the importation took place had been concluded prior to that date.
We are not able to agree however that the position is different as regards the (1) [1061] 1 S.C.R. 305.
425 petitioners ' prayer for relief against the levy of customs duty on this very importation.
With great respect to our learned brethren, who have taken the contrary view, we are of opinion that as long as the Universal Imports Agency case (1) is not held to have been wrongly decided, we are bound by the authority of that decision to hold that the petitioners are entitled to relief against the levy of customs duty as well.
In all the three petitions which were before the Court in the Universal Imports Agency Case, the petitioners had entered into firm contracts of purchase by import with foreign sellers, before the date of merger of Pondicherry with India; in all the cases, the goods reached the destination, the port of Pondicherry, after the date of merger.
By that date (which was November 1, 1954) however the entire administration of Pondicherry had become vested in the Government of India, but Pondicherry still remained a foreign territory.
Under section 4 of the , an order had been made on October 30, 1954, being notification S.R.O. 3315, in consequence of which the Import and Export (Control) Act, 1947, and the , along with several other Indian statutes became laws in force in Pondicherry.
6 of this order was in these words: "Unless otherwise specifically provided in the Schedule, all laws in force in the French Establishments immediately before the commencement of this order which corresponds to the enactments specified in the Schedule shall cease to have effect, save as respects things done or omitted to be done before such commencement.
" When the goods arrived at the Port of Pondicherry they were confiscated, on the ground that they had been imported without licence.
But an option was given to pay a penalty in lieu of confiscation.
The petitioners paid the penalty and then came to this Court for relief In making the order of confiscation and giving an option to the petitioners to pay penalty in lieu of confiscation the Collector of Customs proceeded on the (1) ; 426 basis of section 3(2) of the Imports and Exports Trade (Control) Act read with section 67(8) of the .
The ground on which relief was sought from this Court was that to this act of importation, the Indian statutes mentioned in notification S.R.O. 3315 did not apply because this was "a thing done" before the commencement of the order.
If this contention succeeded, there was no escape from the conclusion that the order of confiscation had no legal basis, for the laws in force in the French Establishments regarding the importation of goods into Pondicherry did not require such licence.
The controversy before the Court therefore was whether the import was or was not "a thing done" within the meaning of the saving provisions of para.
6 of the order.
On the one hand, it was urged that only the conclusion of the contract was "a thing done" before the commencement of the order and the importation the bringing of the goods across the customs barrier at Pondicherry port which was the mere consequence of the contract could not, without undue strain on the language, be said to be a thing done before the commencement of the order.
Against this it was urged on behalf of the petitioners that the words "things done" included not only the things actually done and completed, but also their consequence.
The majority decision of this Court accepted the petitioners ' contention and also held that an import was the legal consequence of the contract that had been entered into by the petitioners with the foreign dealers and so where the contract was concluded before the date of commencement of the order, the import by bringing the goods into Pondicherry Port was also a "thing done" before the commencement of the order.
It is helpful in this connection to reread what was said by our brother Subba Rao, J., speaking for the majority.
After setting out the relevant facts he proceeded to say: "On the said facts a short question arises whether paragraph 6 of the Order protects the petitioners.
While learned counsel for the petitioners contends that "things done" take in not only things done but also their legal consequences, learned 427 counsel for the State contends that, as the goods were not brought into India before the merger, it was not a thing done before the merger, and therefore, would be governed by the enactments specified in the Schedule.
It is not necessary to consider in this case whether the concept of import not only( takes in the factual bringing, of goods into India, but also the entire process of Import commencing from the date of the application for permission to import and ending with the crossing of the customs barrier in India.
The words "things done" in para.
6 must be reasonably interpreted and, if so interpreted they can mean not only things done but also the legal consequences flowing therefrom.
If the interpretation suggested by the learned counsel for the respondents be accepted, the saving clause would become unnecessary.
If what it saves, is only the executed contracts, i.e., the contracts where under the goods have been imported and received by the buyer before the merger, no further protection is necessary as ordinarily no question of enforcement of the contracts under the preexisting law would arise.
" After pointing out that the phraseology used had been copied from various previous statutes and referring to several English decisions as regards the interpretation of the words "things done" the conclusion of the majority was stated in these words: "We therefore hold that the words "things done" in paragraph 6 of the, Order are comprehensive enough to take in a transaction effected before the merger, though some of its legal effects and consequences projected into the post merger period.
" The question whether imports were the conse quences of the contract that had been entered into before the date of merger was next examined even though this position does not appear to have been seriously disputed, and the conclusion was stated thus: ". .
It may be stated that a purchase by import involves a series of integrated activities commencing from the contract of purchase with a foreign firm and ending with the bringing of the goods 428 into the importing country and that the purchase and resultant import form parts of the same transaction.
If so, in the present case the bringing of the goods into India and the relevant contracts entered into by the petitioners with the foreign dealers form parts of the same transaction.
The imports, therefore, were the effect or the legal con sequences of the "things done", i.e., the contracts entered into by the petitioners with the foreign dealers.
" Applying the principles of law thus enunciated the majority held that para.
6 of the order saved the transactions entered into by the petitioners and that the respondent had no right to confiscate their goods on the ground that they were imported without licence.
Accordingly it gave the petitioners the relief they sought for.
In the present case also the question is whether the act of importation can get the benefit of the saving provisions in para.
6 of the order.
We cannot see how that benefit can be denied in respect of customs duty, unless we refuse to apply the principles laid down in the Universal Imports Agency case; and we cannot see how we can refuse to apply these principles.
It is true that in that case the Court had not to deal with the question of customs duty.
The questions for decision were however pure questions of law: (i) whether the imports were the effect or the legal consequence of the "things done", i.e., the contracts entered into by the Indian buyers with foreign dealers and (ii) whether "things done" mean not only things done but also the legal consequences flowing therefrom.
Whether these questions of law fell to be decided in a case, where the benefit of the saving clause is sought against an order of confiscation or as in the present case it is sought against an order for payment of customs duty is wholly irrelevant for the decisions of these questions of law.
We wish to make it clear that we have no opinion to express as regards the decisions of these questions of law by the majority in the Universal Imports Agency case.
What we cannot ignore is that the law laid down by the majority on 429 those questions in that case is law and should be followed by this Court as it has to be followed by other courts, the only difference being that this Court can overrule those decisions.
But so long as that is not done the law as laid down there is good law, which we in deciding the present case must obey.
Applying c. that law we are of opinion that we are bound to hold that the provisions in the for levy of customs duty on imports of the goods which were imported by the petitioners in the present case do not apply to these imports unless there is something in the order itself which deprives the act of importation from the benefit of the saving clause in respect of the customs duty.
No such thing can be seen in the order.
Of the 6 paras of which it consists the first merely gives its name and says that it will come into force on the 1st day of November, 1954.
The second para.
defines the French Establishments.
The third para.
which is the operative para.
says that the enactments specified in col. 3 of the Schedule as in force before the commencement of this order are hereby applied to, and shall be in force in French Establishments subject to (a) amendments, (b) modifications, if any, specified in column 4 of the Schedule and (c) the subsequent provisions of the order.
4 contains a rule of construction, viz., reference in any enactment, notification, rule, order or regulation.
applied to the French Establishments by this order, to India or to States or State generally shall be construed as including a reference to the French Establishments; and some other similar provisions.
5 empowers the court, tribunal or authority required or empowered to enforce any specified enactment, in the French Establishments, to construe the enactment with such alte rations, not affecting the substance as may be necessary or proper.
6 which has already been set out contains the saving clause.
It is worth noting that the provisions for the application of the enactments to the French Establishments is in terms made subject to subsequent provisions of the order and thus clearly to the provisions of para.
There is thus 55 430 nothing in the order itself, which makes the saving provision in para.
6 inapplicable to the levy of customs duties.
Nor has our attention been drawn to any later law which would have the effect of depriving the petitioners from the benefit of those saving clauses.
On behalf of the State reference was made to para.
17 of the Articles of Indo French Agreement.
After stating that all orders placed outside the Establishments and finalised through the grant of a licence by competent authorities shall be fulfilled and the necessary foreign currency granted, so far as the goods are imported within the period of the validity of the relevant licence, goes on to say, the goods shall however be liable to customs duty and other taxes normally leviable at Indian ports.
It is argued that this expression of intention by the Government of India as mentioned in this Agreement to realise customs duty on goods imported after the merger should be taken into consideration in applying the saving provisions of the order in notification section R. O. 3315.
We are unable to persuade ourselves that there is any justification in reading into the order section R. O. 3315 anything to the contrary that might have been expressed in the Indo French Agreement.
It is true that the provisions of this para.
of the Indo French Agreement were referred to in the majority judgment in the Universal Imports Agency case and it was said that the conclusion already reached were reinforced by what appeared in para.
It is one thing however for a court to consider that conclusions reached on legal principles is in keeping with the intention expressed in a document between high contracting parties, it is quite another thing to say that the conclusion reached on legal principles should be departed from because it seems to be at variance with what has been said in such a document.
In view of what was agreed to in para.
17 of the Indo French Agreement there would have been no difficulty for the Government of India to make provision when providing for the saving of the operation of certain laws to be applied to the French Establishments in respect of "things done" 431 before the commencement of the order to exempt the levy of customs duty from such saving.
That was not done.
There is nothing in law that we are aware of which would compel the Government of India because of the above Agreement in para.
17 to extend the provisions of levy of customs duty in the in respect of things done before the com mencement of the order.
Though the Government of India could have well made the exception when inserting the saving clause in the order section R. O. 3315 in respect of levy of customs duty they did not do so.
It will be improper in our opinion to hold that even though the Government of India did not expect it we should do so to give effect to what is considered to be the Government of India 's intention as expressed in the Indo French Agreement.
Reference has also been made to another order made by the Government of India, i.e., section R. O. 3314 which saved the operation of the preexisting French law except in so far as it had been affected by section R. O. 3315.
Paragraph 5 of this order provides that all laws in force in the French Establishments immediately before the commencement of the order and not repealed by paragraph 6 of the French Establishments (Application of Laws Order) 1954 that is the order in section R. O. 3315 shall continue to be in force until repealed or amended by competent authority.
6 of the same order (section R. O. 3314) provides that all taxes, duties, cesses or fees which immediately before the commencement of the order were being lawfully levied in the French Establishments in so far as such levy has not been discontinued by any of the laws extended to the French Establishment by the French Establishments (Application of Laws Order) 1954 continued to be levied.
Thus if any customs duty had been pay.
able under the French law which was in force prior to November 1, 1954, that would have continued to be payable in respect of "things done" which are saved from the operation of the Indian laws in the matter by para.
6 of section R. O. 3315.
We are unable to see how either of these provisions in S.R.O. 3314 or anything else therein can deprive 432 the petitioners from the benefit of the saving clause in para.
6 of the French Establishments (Application of Laws Order) 1954, in respect of the levy of customs duty.
What is it that is saved by this saving provision in para.
6? It is the things done before the commencement of the order.
If the thing done did not include the bringing of the goods across the customs barrier, it would not have been saved.
It was held in the Universal Imports Agency case that bringing the goods across the customs barrier was a "thing done" before the commencement of the order when the contract in pursuance of which this was done, was concluded before the date of commencement of the order.
Under the saving clause in para.
6, this "thing done" i.e., the bringing the goods across the customs barrier is saved from a body of Indian laws and is intended to be controlled by a corresponding body of the previously prevailing French laws.
It is not possible without reading into para.
6, some words like"provided that in respect of levy of customs duty under the , the corresponding French law will cease to have effect, if the actual import takes place after the commencement of the order" to hold that the levy of customs duty will be governed by the Indian law, in respect even of an import which was a "thing done" before the commencement of the order.
We are of opinion that on the law as laid down in the Universal Imports Agency case the importation of goods in the present case in pursuance of a contract which was concluded before the date of the commencement of the order (S.R.O. 3315) was governed by the French laws and not by the Indian laws, no less as regards the question of levy of customs duty than as regards the question of import licences.
Under the French law no duty was payable on these imports.
Consequently these petitioners were not liable to pay duty on these imports.
In our opinion, the petitioners are entitled to the relief they have prayed for, both against the levy of 433 customs duty and against the order imposing penalty for importation without licence.
We would accordingly allow the petition.
By COURT.
In accordance with the opinion of the majority, the petition is allowed in part and the orders of the Government in so far as they impose a penalty on the petitioners for importing goods without a licence, are set aside; except to this extent, the petition shall stand dismissed.

summary/full:
The petitioners entered into agreements with certain British firms for the import of cycles and cycle parts to Pondi cherry, which was then a French Establishment, in the manner provided by French law.
The goods arrived at Pondicherry after the French Establishments had merged into India on the basis of the Agreement dated October 21, 1954, between the Union of India and France, which was to be operative from November 1, 1954.
By virtue of the said Agreement two Orders, dated October 30, 1954, were issued by the Ministry of External Affairs under the Foreign jurisdiction Act, 1947, being S.R.O. 3314, the French Establishments (Administration) Order, 1954, and S.R.O. 3315, the French Establishments (Application of Laws) Order, 1954.
The first saved the operation of the preexisting French Law except in so far as it was repealed by the second, which extended to French Settlements certain Indian Statutes specified in the Schedule and amongst these were the , the Tariff Act, 1934, the Import and Export (Control) Act, 1947, and the Foreign Exchange Regulation Act, 1947.
These Orders came into force on November 1, 1954.
On the same day the Government of India, by a Notification, appointed a Controller of Imports and Exports for the French Settlements.
Paragraph 4 Of this notification called upon the licence holders under the French Law to apply to the Controller for validation of the licences held by them.
Paragraph 17 Of the Agreement, while saving import of goods validly ordered prior to the de facto transfer, made such goods liable to customs duty.
As the goods arrived at Pondicherry on December 4, 1954, the Customs Authorities took the view that the import was in contravention of the Indian Statutes and ordered the petitioners to pay a penalty under section i67(8) of the , as also customs duty.
The Central Board of Revenue on appeal upheld the order and the Central Government in revision, while affirming that decision, reduced the penalty.
Paragraph 6 of S.R.O. 3315 provided as follows, 411 " Unless therefore specially provided in the schedule all laws in force in the French Establishments immediately before the commencement of this order which correspond to the enactments specified in the schedule shall cease to have effect, save as respects things done or omitted to be done before such commencement".
The question for determination was whether the petitioners were liable to pay the penalty under section i67(8) of the , and also the Customs Duty.
Held, (per curiam), that in view of, the decision of this Court in Universal Imports Agency vs The Chief Controller of Imports and Exports, the petitioners were not liable to pay the penalty under section i67(8) of the .
Universal Imports Agency vs The Chief Controller of Imports and Exports, ; , followed.
Per Gajendragadkar, Wanchoo and Ayyangar, JJ.
That decision of this Court, however, did not apply to or absolve the petitioners from the liability to pay the customs duty.
In order to determine the exact scope of the words "things done" occurring in para.
6 of S.R.O. 3315, the two orders, S.R.O. 3314 and S.R.O. 3315 must be read along with para.
17 of the Agreement and para.
4 Of the Notification of November 1, 1954, appointing the Controller and so determined there could be no doubt that the saving clause afforded no protection to the petitioners so far as their liability to pay the customs duty was concerned.
Per Sarkar and Das Gupta, JJ.
The words "things done" occurring in para.
6 of S.R.O. 3315 as construed by this Court in Universal Imports Agency vs The Chief Controller of Imports and Exports, cover the petitioners ' liability to pay not only the penalty but also the customs duty and so long as that decision stands, it has to be followed.
Universal Imports Agency vs The Chief Controller of Imports and Exports, ; , discussed.
There is nothing in the Order S.R.O. 3315 itself which renders the saving provision in para.
6 inapplicable to the levy of customs duty nor does any later law deprive the petitioners of its protection.
There can be no justification for reading into the Order S.R.O. 3315 anything to the contrary contained in para.
17 of the Articles of the Indo French Agreement.


judgement:
Appeal No. 43 of 1958.
Appeal by special leave from the judgment and order dated April 11, 1956, of the former PEPSU High Court in Civil Misc.
Case No. 173 of 1955.
Naunit Lal, for the appellants.
section M. Sikhri, Advocate General, Punjab, Gopal Singh and D. Gupta, for the respondents.
504 1961.
April 27.
The Judgment of the Court was delivered by DAB GUPTA, J.
The 51 appellants all of whom belong to village Simla, Tehsil, Narwana, filed in the Pepsu High Court at Patiala a petition under article 226 and article 227 of the Constitution for relief against an order made by the Divisional Canal Commissioner, Narwana, for payment of certain water rates and Tawan.
It appears that on the night of September 1, 1951, there was a cut on the left bank of Sirsa Branch Canal.
Certain persons were prosecuted on a charge for having damaged the Canal but they were acquitted.
Thereafter, the Divisional Canal Officer, Narwana, on the recommendation of the Sub Divisional Officer, Canal, Narwana made an order levying special charges against these appellants.
On appeal the Divisional Canal Officer, Narwana, ordered in partial modification of the order made by the Sub Divisional Officer, the levy of six times the crop rates on cultivated area and six times the charges on uncultivated area and single bulk rate on water store of village Simla.
This levy was made on the basis of his conclusion that the villagers of Simla were responsible for the cut and joined hands for the common good.
The High Court dismissed the application by a short order stating that the points involved in this petition were fully covered by the decision of a Division Bench of the same High Court in Mukandi Ram vs The Executive Engineer (LPA/FAO No. 58 of 1954) and that the counsel for the petitioners had therefore nothing to say in support of the petition and did not press it.
Against this order of dismissal the present petition has been filed by special leave obtained from this Court.
Before mentioning the points raised by Mr. Naunit Lal in support of the appeal it would be convenient to refer to the provisions of law that require consideration.
Section 31 of the , which admittedly applies to the Sirsa Branch Canal provides for the levy of water rates for 505 supply of canal water taken in the absence of contract at the rates and subject to the condition prescribed by the rules to be made by the State Government in respect thereof.
No rules have however been made as regards the rates to be charged for such unauthorised supply of canal water in respect of the Sirsa Branch Canal which was in the State of Patiala.
Rules had however been made by the 'Punjab Government in respect of the Sirhind Canal and branches thereof as also the Western Jumna Canal and branches thereof as early as April 1873 and August 1878 respectively.
These rules had been amended from time to time.
At the time the Sub Divisional Officer made his recommendation and the Divisional Canal Officer made his order these rules had not been extended to the Pepsu.
It was when the appeal was pending before the Commissioner that the Pepsu Sirhind Canal and Western Jumna Canal Rules (Enforcement and Validation) Act No. IV of 1954 was passed by the Pepsu State Legislature.
Section 3 of this Act applied with retrospective effect from August 1, 1948, the Sirhind Canal Rules and the Western Jumna Canal Rules to the Pepsu State.
Section 4 provided that as from August 1, 1948, anything done or any action taken in accordance with the Pepsu Sirhind Canal Rules or the Western Jumna Canal Rules shall not be called in question in any proceedings before any court or other authority merely on the ground that the Sirhind Canal Rules or the Western Jumna Canal Rules were not in force in the Pepsu State on the date on which such thing was done or such action was taken.
It may be mentioned that this Act replaced the Pepsu Sirhind Canal and Western Jumna Canal Rules (Enforcement and Validation) Ordinance, 1954, which had been made shortly before this.
In Mukandi Ram vs The Executive Engineer (1), on the basis of which without further discussion the petition in this case was dismissed the Pepsu High Court held on facts practically identical with the facts of this case that the levy of special rates by the Canal Commissioner was justified under Rule 32 and in any case (1) LPA/FAO No. 58 of 1954.
506 under Rule 33 of the Sirhind Canal Rules read with section 31 of the Act.
The main contention raised by Mr. Naunit Lal before us in support of the present appeal is that section 3 and section 4 of the Pepsu Sirhind Canal and Western Jumna Canal Rules (Enforcement and Validation) Act No. IV of 1954 are unconstitutional being in contravention of article 20(1) of the Constitution.
Other points that he wanted to urge were (i) that the provisions of Rules 32 and 33 do not apply to the facts of the present case and (ii) that the notice served before the levy was made was not sufficient.
As however it appeared clear to us that neither of these points was taken before the High Court we have not given him permission to raise these points before us, in the circumstances of this case.
Another point that Rules 32 and 33 are beyond the scope of the rule making provisions of the Act was mentioned by the learned counsel but was later abandoned.
The only point for our consideration therefore is whether section 3 and section 4 of the Pepsu Sirhind Canal and Western Jumna Canal Rules (Enforcement and Validation) Act, 1954, infringes the provisions of article 20(1) of the Constitution.
article 20(1) provides that no person shall be convicted of any offence except for violation of a law in force at the time of the commission of the act charged as an offence, nor be subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
It is argued on behalf of the appellants that the application by these sections of rules allowing the imposition of special rates which have been imposed under the provisions of Rules 32 and 33 of the Pepsu Sirhind Canal Rules, which could not have been imposed at the time the water was used is bad, as thereby the appellants have been subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
This argument is based on the assumption that the use of water by the appellants was an "offence" and 507 that the imposition of an enhanced water charge under Rules 32 and 33 read with section 31 of the Canal Act for such use was "a penalty" for such an "offence".
This assumption is clearly wrong.
"Offence" s as was pointed out by this Court in Maqbool Hussain 's case (1) where article 20(2) of the Constitution came up for consideration has not been defined in the Constitution.
So under article 367 which provides that the , shall apply for the interpretation of the Constitution the word "offence" in the several clauses of article 20 must be understood to convey the meaning given to it in section 3(37) of the .
That section defines an "offence" to mean an act or omission made punishable by any law for the time being in force.
Punishment is the mode by which the State enforces its laws forbidding the doing of something, or omission to do something.
Punishment may take different forms.
It may be a mere reprimand; it may be a fine; it may be whipping; it may be imprisonment simple or rigorous; it may even extend to death.
But whatever the form, punishment is always co related to a law of the State forbidding the doing or the omission to do something.
Unless such a law exists, there is no question of any act or omission being made " punish able".
Have we in the present case any law forbidding the unauthorised user of the water which section 31 of the Canal Act provides will be charged at rates that may be prescribed by rules? Quite clearly, there is none.
In providing for a charge to be made for use of water at rates that may be prescribed by rules the legislature is not prohibiting the use of water.
The word "unauthorised use" in the section does not import any idea of prohibition.
The intention of the law clearly is to obtain payment for water used; and the fact that the rates prescribed may be high cannot alter this position.
We are therefore of opinion that the use of the water by the petitioners was not an "offence" and the order for levy of special rates for user thereof was not (1) ; 508 the imposition of a penalty for an offence.
When the Sub Divisional Canal Officer or the Canal Commissioner was dealing with the matter they had to decide whether these petitioners had used water in an unauthorised manner and if so at what rates they should be charged for such use.
In doing this, they were not trying anybody for any offence; and the fact that special rates were imposed did not deprive these rates of their essential character of a charge for water used and did not convert them into any penalty for the commission of an offence.
There is therefore no scope here for the application of the provisions of article 20(1) of the Constitution.
The appeal is accordingly dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
Certain persons were prosecuted but acquitted of a charge of having damaged a canal.
Thereafter the canal officers levied special canal charges on the appellants on the basis of the conclusion that the villagers were responsible for a cut in the canal.
The High Court is missed the appellants petition under articles 226 and 227 of the Constitution on the ground that the case was covered by the case of Mukundi Ram vs The Executive Engineer, decided by the High Court (LPA/FAO NO. 58 of 1954), On appeal by special leave the appellants contended that sections 3, and 4 Of the Pepsu Sirhind Canal and Western jamuna Canal Rules (Enforcement and validation) Act (No. IV of 1954) are unconstitutional being in contravention of article 20(1) of the Constitution inasmuch as they have been subjected to a penalty greater than that which might have been inflicted under the law in force at the time of the commission of the offence.
Held, that the use of water by the appellants was not an "offence" and the levy of special rates under Rules 32 and 33 of the Sirhind Canal Rules read with section 31 of the Northern India Canal and Drainage Act, i873, for such use was not the imposition of a "penalty" for an offence as contemplated under article 20(1) of the Constitution.
Maqbool Hussain 's case; , , referred to.


judgement:
Appeal No. 1 of 1958.
Appeal from the judgment and order dated April 18, 1956, of the former Judicial Commissioner, Ajmer, in Civil Writ Petition No. 1 of 1956.
G. C. Kasliwal, Advocate General for the State of Rajasthan, section K. Kapur and D. Gupta, for the appellant.
section section Deedwania and K. P. Gupta, for respondent No. 1.
B. P. Maheshwari, for respondent No. 9. 1961.
April 27.
The judgment of the Court was delivered by 435 WANCHOO, J.
This is an appeal on a certificate granted by the Judicial Commissioner, Ajmer.
The brief facts necessary for present purposes are these.
,, There is a Bank in Ajmer known as the Commercial Co operative Bank Limited, Ajmer (hereinafter referred to as the Bank), which is registered under the Cooperative Societies Act, No. 11 of 1912 (hereinafter referred to as the Act).
Dharam Chand, respondent No. 1 (hereinafter referred to as the respondent), along with certain other respondents were members of the managing committee of the Bank.
One Nandlal Sharma was the paid manager of the Bank.
This man disappeared in 1953 and thereafter defalcation to the extent of about Rs. 6,34,000 was detected.
Consequently, the managing committee passed a resolution suspending the business of the Bank subject to the approval of the Registrar.
The then Registrar Shri Nagar approved the resolution and appointed an Inspector of Co operative Societies to hold an immediate inquiry.
He also appointed a firm of Chartered Accountants as investigating auditors.
On investigation by the auditors embezzlement to the extent of about Rs. 6,34,000 was found.
Thereupon the successor Registrar, Shri Chitnis, gave notice to the respondent and other members of the managing committee on February 26, 1955, asking them to show cause why the committee should not be suspended under r. 30(3) of the Rules framed under the Act.
A reply to the notice was given by the respondent and others in which they denied allegations of mismanagement, etc.
The then Registrar Shri Chitnis however appointed an administrator of the Bank after removing the managing committee.
In the meantime, an application was made under r. 18 of the Rules by seven shareholders of the Bank to the Registrar on April 4, 1956.
Rule 18 authorises the Registrar to decide any dispute brought before him under that rule either himself or through the appointment of one or more arbitrators.
Any dispute concerning the business of a Co operative Society between members or past members of the Society or persons claiming through them, or between a member or past member or person 436 so claiming and the Committee or any officer can be referred under r. 18.
Such reference can be made by the Committee or by the Society by resolution in general meeting or by any party to the dispute, or if the dispute concerns a sum due from a member of the committee to the Society by any member of the Society.
In consequence of this application the then Registrar appointed Shri Hem Chand Sogani, an advocate, as an arbitrator.
The application was in the nature of a misfeasance proceeding against the members of the managing committee and the prayer was for an award against thirteen persons (including the respondent) directing them to pay certain amounts including the entire loss amounting to about Rs. 6,34,000, which was said to have been occasioned on account of glaring breach of law and the rules and the bye laws of the Bank and betrayal of confidence by the members of the managing committee.
The appointment of the arbitrator was challenged by the president of the managing committee before the Deputy Commissioner through a revision petition but the challenge failed.
As however Shri Sogani was in ill health, he expressed his inability to act as arbitrator.
Consequently, on December 13, 1955, the then Registrar set aside the order appointing Shri Sogani as arbitrator and informed the parties that he would decide the dispute himself.
This order was also challenged in revision before the Deputy Commissioner; but the attempt failed.
Thereafter the present petition was filed by the respondent before the Judicial Commissioner, Ajmer, and a large number of grounds were urged in support of it, and it was prayed that the Registrar be prohibited from proceeding to deal with the application under r. 18 and the proceedings arising therefrom be quashed.
The petition was decided by the Judicial Commissioner on April 18, 1956.
He negatived all the contentions raised on behalf of the respondent except one; and it is with that contention only that we are concerned in the present appeal.
That contention is that the Registrar is in the position of a party and had expressed his opinion unequivocally against the respondent and other members of the committee in the notice 437 which he gave on February 26, 1955, and therefore his constituting himself as a tribunal to decide the dispute under r. 18 was against the principles of natural justice, inasmuch as a party constituted himself the judge.
This contention found favour with the learned Judicial Commissioner and he held that although the Registrar had no pecuniary or proprietary interest in the dispute yet in view of the circumstances of the case there was a strong likelihood of bias and therefore the Registrar 's acting as the tribunal would be against the principles of natural justice.
He further held that if the Registrar had not suffered from the disability inherent in the situation, he would have been the most proper person to decide the dispute.
The petition was therefore allowed and a writ of prohibition was issued to the Registrar directing him not to proceed with the dispute before him.
This was followed by an application to the Judicial Commissioner for a certificate of fitness in order to file an appeal to this court, which was granted; and that is how the matter has come up before us.
The official bias of the Registrar is sought to be based on two circumstances: the first is the notice issued by the then Registrar on February 26, 1955, asking the members of the managing committee (including the respondent) to show cause why they should not be suspended, and the second is that the Registrar is the head of the Co operative Department and as such has certain legal powers over all Co operative Societies (including the Bank) in his administrative capacity and therefore he would not be an impartial person to decide this dispute, particularly in view of the provisions of section 17 of the Act.
We are of opinion that there is no force in either of the contentions.
Turning to the notice of February 26, 1955, we are of opinion that there can be no inference of bias against the Registrar as such because he gave that notice and afterwards ordered the removal of the managing committee.
That notice was based on the report of the investigating auditors and was concerned with the collective responsibility of the 56 438 managing committee in the discharge of their duties.
The proceedings under that notice have nothing in ,common with the proceedings in the present dispute which, as we have already said, are in the nature of misfeasance proceedings against certain members of the managing committee and in which their individual responsibility as members of the managing committee to make good the loss caused by the embezzlement falls to be considered.
So far as the proceedings under the notice are concerned, the only question was whether on the facts found by the investigating auditors the managing committee should as a whole be allowed to act as such and all that the Registrar in that connection did was to decide on the facts found by the investigating auditors that the managing committee should no longer be allowed to manage the affairs of the Bank.
That is a very different matter from the dispute in the present pro ceedings, namely, whether the particular members of the managing committee against whom the application under r. 18 has been made are responsible for making good the loss caused to the Bank by the embezzlement, the fact of which is not in dispute.
In the present proceedings therefore the Registrar will have to decide the individual responsibility of the various members of the managing committee (including the respondent) in the matter of making good the loss caused to the Bank.
We are therefore of opinion that the fact that the Registrar gave that notice for the purpose of the removal of the managing committee is no reason to hold that he would be biased in the investigation of individual responsibility of various members of the managing committee in this matter.
We cannot therefore agree with the Judicial Commissioner that there can be any official bias in the Registrar on this ground in connection with the present dispute and that such bias disentitles him to act as a judge or arbitrator under r. 18.
The next contention is that the Registrar being the administrative head of the Department is in control of all the Co operative Societies in Ajmer, including the Bank.
It is said that because of that administrative control which the Registrar exercises through his 439 subordinates in the Department, he is interested to see that the blame is put on the managing committee and that his Department is freed from all blame.
In, particular our attention has been drawn to section 17 which enjoins that the Registrar shall audit or cause to be audited by some person authorised by him the accounts of every registered society once at least in every year.
It is said that under this provision the Registrar has been appointing Chartered Accountants to audit the accounts of the Bank and that nothing wrong was discovered in the annual audits till the paid manager Nandlal absconded and the defalcations came to light.
We fail to appreciate how this general supervision of the Registrar over all Co operative Societies can be said to amount to a bias in him so as to disentitle him to act as a judge or arbitrator under r. 18.
It is not the respondent 's case that the Registrar is in any way responsible for the day to day working of the Bank.
All that he is concerned with is to see that the accounts of the Bank are audited yearly, and if necessary, to make inspections of the Bank, if so authorised by the Act and the Rules.
That, however, does not mean that the Registrar is bound to shield the auditors or his subordinates who might have made the inspection of the Bank and would so conduct the proceedings as to put the blame on the members of the managing committee.
Even if some blame attaches to the auditors appointed by the Registrar or to his subordinates who might have inspected the Bank, their fault would be that they failed to detect the embezzlement till the paid manager absconded.
That, however, does not mean that the Registrar was at any time a party to the fraud which resulted in the embezzlement.
Even the Judicial Commissioner recognises that the Registrar has no personal interest in the matter and that he would but for the bias found by the Judicial Commissioner have been a most proper person to decide the dispute.
Therefore even if we bear in mind the fact that the Registrar is the administrative head of the Department, we see nothing inherent in the situation which shows any official bias whatsoever in him so far as adjudication of this dispute is concerned.
440 We have no reason to suppose that if any of his subordinates or the auditors appointed by him are in any way found to be connected with the fraud he would not put the responsibility where it should lie.
We are therefore of opinion that the Judicial Commissioner was wrong in the view that there was anything inherent in the situation which made the Registrar a biased person who could not act as a judge or an arbitrator in this case.
It seems to us, therefore, that the learned Judicial Commissioner was in error in thinking that the Registrar was biased.
For the reasons earlier mentioned, we do not think that any such blemish attached to the Registrar.
That being so, no question of his inability to act as a judge under the rule of natural justice that no man shall be judge in his own cause, arises.
The judgment of the learned Judicial Commissioner has to be set aside on this ground alone.
We do not wish however to be understood as having made any pronouncement that if it had been proved that the Registrar was suffering from any bias, then the present would have been a fit case for the issue of a writ of prohibition as asked by the respondent.
Before the writ could be issued a further question would have to be decided whether in view of the statute, that is, r. 18 of the Rules framed under section 43 of the Act, there was any scope for applying the rule of natural justice on which the contesting respondent relied.
A question of this kind was mentioned in Gullapalli Nageswar Rao and Others V. State of Andhra Pradesh and Others (1).
In the view that we have taken it is unnecessary to go into that question and we do not do so.
The result is that the appeal is allowed and the judgment of the Judicial Commissioner is set aside.
The petition will stand dismissed.
Respondent No. 1 will pay the costs throughout.
We trust that there will be no further reason to delay the termination of the proceedings under the rules by the Registrar.
Appeal allowed.
(1) ; , 587.

summary/full:
An investigation of the affairs of a Co operative Bank registered under the , on the disappearance of the manager of the bank in 1953, showed that a very large amount of money had been defalcated.
On February 26, 1955, the Registrar of Co operative.
Societies gave notice to the members of the managing committee of the bank asking them to show cause why the committee should not be suspended, under r. 30(3) Of the Rules framed under the Act.
In reply the members denied allegations of mismanagement etc., but the Registrar, however, appointed an administrator of the bank after removing the managing committee.
In the meantime, some of the shareholders of the bank made an application before the Registrar under r. 18 of the Co operative Societies Rules, in the nature of a misfeasance proceeding against the members of the managing committee, praying for an award directing them to pay the amount found defalcated, on the ground that it had been occasioned by a glaring breach of the law and the rules 434 and the bye laws of the bank and betrayal of confidence by the members of the committee.
The Registrar originally appointed an arbitrator for this purpose, but, on the inability of the arbitrator to act due to his illness, the Registrar informed the parties that he would decide the dispute himself.
The legality of the procedure adopted by the Registrar was challenged in a petition filed before the judicial Commissioner, on the ground that he was in the position of a party and had expressed his opinion unequivocally against the members of the committee in the notice he gave on February 26, 1955, and therefore his con stituting himself as a tribunal to decide the dispute under r. 18 was against the principles of natural justice, inasmuch as a party constituted himself the judge.
The judicial Commissioner took the view that although the Registrar had no pecuniary or properties interest in the dispute yet in view of the circumstances of the case there was a strong likelihood of bias and therefore his acting as the tribunal would be against the principles of natural justice.
Held, that the notice dated February 26, 1955, was concerned with the collective responsibility of the members of the managing committee in the.discharge of their duties, while the application made under r. 18 of the Co operative Societies Rules was in the nature of misfeasance proceedings in which their individual responsibility as members to make good the loss caused by the embezzlement fell to be considered, and consequently there could be no inference of bias against the Registrar simply because he gave notice to show cause against the removal of the managing committee, as the two matters were quite different.
Held, further, that the fact that Registrar had general supervision over all co operative societies could not be said to amount to a bias in him so as to disentitle him to act as a judge or arbitrator under r. 18.


judgement:
Appeal No. 301 of 1960.
Appeal from the judgment and decree dated September 24, 1958, of the Allahabad High Court (Lucknow Bench) at Lucknow in First Execution of Decree Appeal No. 8 of 1953.
C. B. Agarwala, Shankar Prasad and C. P. Lal, for the appellant.
Iqbal Ahmed, N. C. Chatterjee, D. N. Mukherjee and B. N. Ghosh, for the respondent.
April 27.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the Allahabad High Court.
The brief facts necessary for present purposes are these.
The appellant 's father Rana Umanath Bakshsingh was the Talukdar of Khajurgaon.
On July 13, 1914, Rana Umanath Bakshsingh executed a simple mortgage in favour of the Allahabad Bank Limited (hereinafter called the respondent).
The mortgage was for a sum of Rs. 6,00,000 and the property mortgaged consisted of sixty seven villages.
In May 1924, the respondent filed a suit for the recovery of the balance of the unpaid mortgage money by the sale of the mortgaged property.
In January 1925 a preliminary decree for the recovery of rupees four lacs and odd was passed, which was made final in July 1926 and directed the sale of the mortgaged property, namely, the proprietary rights of Rana Umanath Bakshsingh in the sixty seven villages.
Then followed execution applications with which we are not concerned.
In 1934, the U. P. 443 Agriculturists ' Relief Act was passed and thereupon an application was made by the judgment debtor for the amendment of the decree under that Act.
On October 19, 1936, the decree was amended under the provisions of that Act and thereafter the pending execution proceedings were dropped as installments had been fixed.
Eventually, the respondent applied for execution on May 25, 1940.
Objection was taken to this application on the ground that it was barred by time; but this matter was decided against the judgment debtor and thereafter the execution has been proceeding uptil now on this application.
On July 1, 1952, the U. P. Zamindari Abolition and Land Reforms Act, 1950 (1 of 1951), hereinafter called the Act, came into force.
As a consequence of this enactment, the zamindari rights of the judgment debtor were abolished and it was no longer possible to sell these rights in the sixty seven villages.
Consequently, on September 29, 1952, the respondent made an application that as the zamindari rights could not be sold, only such rights of the judgment debtor as remained in him after the coming into force of the Act might be sold, namely, the rights in trees and wells in abadi and buildings situate in various villages under sale.
It was also prayed that the judgment debtor 's proprietary rights in grove land and sir and khudkashat land had been continued under section 18 of the Act and these constituted substituted security in place of the proprietary rights mortgaged with the respondent and they should also be sold Finally it was prayed that compensation money payable to the judgment debtor on the acquisition of the proprietary rights by the State might be treated as substituted security.
The appellant objected to these applications on various grounds.
The execution court held that the buildings, trees and wells situated in the abadi were liable to be sold in execution of the decree.
It further held that the respondent was entitled to compensation amount granted by the State to the appellant in lieu of zamindari rights as substituted security.
Finally, it held that the bhumidari rights acquired by the 444 appellants under section 18 of the Act could also be sold in execution of the decree.
The appellant then took the matter in appeal to the High Court, and the two points urged before the High Court were (i) that the bhumidari rights created by section 18 (i) of the Act could not be sold in execution of the decree, and (ii) that the application dated September 20, 1952, was a fresh application for execution and as it was filed over 12 years after the date of the amended decree it was barred by time.
The High Court repelled both these contentions, and held that execution could proceed against the bhumidari rights created in favour of the appellant under section 18 of the Act and further that the application dated September 20, 1952, was within time as it was not a fresh application and the decree holder was only seeking to execute the decree in respect of the property for the sale of which he had already applied within time allowed by law.
The High Court therefore dismissed the appeal.
The appellant then obtained a certificate to appeal to this Court; and that is how the matter has come up before us.
The main point urged on behalf of the appellant is that the decision of the High Court that bhumidari rights created under section 18 of the Act can also be sold in execution of the decree, is not correct.
Under the mortgage deed, the property mortgaged consisted of the property forming part of the Talukdari of Khajurgaon detailed at the foot of the mortgage, namely, the sixty seven villages.
Thus the mortgage consisted of the proprietary interests only of the mortgagor in the sixty seven villages, and as it was a simple mortgage, possession of no part of the property was given to the mortgagee.
it is therefore contended by Mr. Aggarwala on behalf of the appellant that as the proprietary right in the sixty seven villages vested in the State under the Act, the respondent who was only entitled to get the proprietary rights sold under the mortgage can now fall back only on compensation payable to the appellant under the Act, and reliance in particular is placed on section 6 (h) of the Act in this connection.
On the other hand, the contention on 445 behalf of the respondent is that bhumidari rights arising under section 18 of the Act are liable to be sold as they represented the proprietary rights which were mortgaged and in any case they can be sold as substituted security in place of the property mortgaged.
We have therefore to look into the scheme of the Act in order to decide between the rival contentions.
It is not in dispute that the Taluka of Khajurgaon was an estate within the meaning of the Act.
It may be mentioned that the judgment debtor had certain sir and khudkashat lands and zamindar 's grove in the sixty seven villages comprised within the Talukdari estate.
Section 4 of the Act provides for vesting of an estate in the State on the making of a notification thereunder and the Taluka of Khajurgaon has vested in the State by virtue of such a notification made under section 4.
Section 6 prescribes the consequences of the vesting arising under section 4 and we may refer to section 6(a) (i) as that will show in what the interests of the judgment debtor ceased and became vested in the State: "(a) all rights, title and interest of all the intermediaries (i) in every estate in such area including land (cultivable or barren), grove land, forests whether within or outside village boundaries, trees (other than trees in village abadi, holding or grove), fisheries, tanks, ponds, water channels, ferries, pathways, abadi sites hats, bazars or melas (other than hats, bazars, melas held upon land to which clauses (a) to (c) of sub section (1) of section 18 apply), and .
. . . . . . . .
shall cease and be vested in the State of Uttar Pradesh free from all encumbrances.
" Clause (h) of section 6 is also material and is in these terms: "(h) no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in section 73 of the , be enforceable against his interest in the estate.
" 57 446 All lands therefore whether cultivable or barren or grove lands vested in the State on the notification under section 4 having been made save as otherwise provided in this Act.
Therefore, proprietary rights in Sir and khudkashat land and grove land would vest in the State on the coming into force of the notification under section 4 unless there was some provision otherwise in the Act.
The contention of the respondent therefore that sir and khudkashat land and grove land continued to be the property of the appellant and would therefore remain liable to be sold in execution proceedings would fail in view of the notification under section 4, unless of course there is a provision otherwise in the Act.
The only provisions otherwise on which the respondent relies are sections 9 and 18 of the Act.
So far as section 9 is concerned, it is certainly a provision otherwise and it provides as follows: "All wells or trees in abadi, and all buildings situate within the limits of an estate, belonging to or held by an intermediary or tenant or other person, whether residing in the village or not, shall continue to belong to or be held by such intermediary, tenant or person, as the case may be, and the site of the wells or the buildings with the area appurtenant thereto shall be deemed to be settled with him by the State Government on such terms and conditions as may be prescribed.
" This provision clearly creates an exception to the property which vests in the State on the making of a notification under section 4.
The exception is in favour of all wells and trees in abadi and all buildings and it is significant to note that these things will continue to belong to the intermediary, though the further provision shows that the site of the wells, and buildings with the area appurtenant thereto would vest in the Government and would be deemed to be settled with the intermediary on such conditions and terms as may be prescribed.
The effect therefore of section 9 is that wells, trees in abadi and buildings apart from the land under them continue to belong to the intermediary (and the appellant is undoubtedly an intermediary within the meaning of the Act); but even here the 447 land on which the buildings and the wells stand vest in the State and it is deemed settled with the intermediary on terms and conditions to be prescribed.
So far therefore as wells and trees in abadi and all buildings are concerned, these continue to belong to the appellant and if they are covered by the mortgage they would be liable to sale.
As we have already pointed out, there was no dispute before the High Court with respect to wells, and trees in abadi and buildings and it was conceded there that these were liable to be sold, the only dispute being with respect to bhumidari rights created under section 18.
Let us now turn to section 18 and see whether it is also a provision otherwise like section 9.
The relevant part of section 18 for our purposes is in these terms: "(1) Subject to the provisions of sections 10, 15, 16 and 17, all lands (a) in possession of or held or deemed to be held by an intermediary as sir, khudkashat or an intermediary 's grove, on the date immediately preceding the date of vesting shall be deemed to be settled by the State Government with such intermediary, lessee, or tenant, grantee or grove holder, as the case may be, who shall subject to the provisions of this Act be entitled to take or retain possession as a bhumidar thereof.
" It is well to contrast the language of this section with the language of section 9.
Section 9 lays down that trees and wells in abadi and buildings shall continue to belong to the intermediary and that shows that it was a provision otherwise excepting these three items from vesting in the State by virtue of the notification under section 4 and its consequence under section 6; but there is no provision in section 18 of the Act to the effect that sir and khudkashat land and intermediary 's grove shall continue to belong to the intermediary.
Therefore, sir and khudkashat land and grove land would vest in the State by virtue of section 6 (a) (i) for there is no provision otherwise in section 18 in that behalf.
In this connection we may refer for comparison to section 23 of the 448 Rajasthan Land Reforms and Resumption of Jagirs Act, No. VI of 1952 (hereinafter called the Rajasthan Act) which provides that "notwithstanding anything contained in the last preceding section (i.e. section 22, which refers to consequences of resumption), all khudkashat lands of a Jagirdar etc.
shall continue to belong to or be held by such jagirdar or other person".
If the intention of the Act Was not to vest sir and khudkashat land and grove land in the State we would have found an exception similar to that found in the Rajasthan Act.
Section 9 itself shows in what manner the legislature was making an exception when it did not intend that a particular property should vest in the State.
If the intention were that sir and khudkashat land and grove land should not vest in the State, section 18 would have been worded in the same way as section 9.
Further the way in which section 18 is worded, (namely that khudkashat and sir land and an intermediary 's grove shall be deemed to be settled with the intermediary and he would have bhumidari rights therein) shows that these three kinds of property vested in the State under section 6(a)(1) and were then resettled with the intermediary on a new tenure and not in the same right, which he had in them before the vesting.
The legislature was therefore creating a new right under section 18 and the old proprietary right in sir and khudkashat land and any intermediary 's grove land had already vested under section 6 in the State.
Therefore, it cannot be said that section 18 is an exception to the consequences provided in section 6 and therefore sir and khudkashat land and grove land continue to be the property of the judgment debtor in this case in the same manner as they were his property at the time of the mortgage and would therefore be available in execution of the decree as the proprietary rights mortgaged.
We are of opinion that the proprietary rights in sir and khudkashat land and in grove land have vested in the State and what is conferred on the intermediary by section 18 is a new right altogether which he never had and which could not therefore have been mortgaged in 1914.
Our attention in this connection was drawn to the 449 compensation sections in the Act, and it was urged that what was given to the intermediary under section 18 was really his old right because no compensation was to be paid to him with respect to what was left to him under section 18.
The first section to be considered in this connection is section 39 which deals with gross assets of a mahal.
In these gross assets the amount computed at the rates applicable to the ex proprietary tenants of similar land for land in the personal cultivation of or held as intermediary 's grove, Khudkashat or sir by all the intermediaries in the estate was to be included subject to certain exceptions which are immaterial for our purposes.
The very fact that in the gross assets the rents of these lands in which the bhumidari rights were created under section 18 were taken into consideration shows that these lands also vested in the State; if that were not so there was no necessity for including these assets in the gross assets for the purposes of compensation.
Here again we may refer to a similar provision in the Rajasthan Act for purposes of comparison.
The second Schedule to that Act provides how gross income is to be calculated and in calculating the gross income the income from khudkashat land has not been taken into account because it was excepted from the consequence of resumption under section 23 of that Act.
It is true that under section 44 of the Act when calculating net assets, the income from sir and khudkashat land and grove land has been excluded on the ground that bhumidari rights have been conferred therein under section 18 of the Act.
That is however for the purposes of calculating what should, be paid to the intermediary as compensation and in that connection it was necessary to take into account the fact that the legislature was creating a new right in the intermediary with respect to certain lands and therefore it was not necessary to give money as compensation.
That would not however make any difference in our view as to the legal effect of the notification under section 4 and under the notification sir and khudkashat land and grove land would vest in the State and would not be an exception to the consequences of vesting in section 6 and therefore the proprietary right in sir 450 and khudkashat land and grove land which were mortgaged would be extinguished and the bhumidari right which is created by section 18 would be a new right altogether and would not therefore be considered to be included under the mortgage in this case.
This brings us to a consideration of section 6(h) of the Act.
That lays down that "no claim or liability enforceable or incurred before the date of vesting by or against such intermediary for any money, which is charged on or is secured by a mortgage of such estate or part thereof shall, except as provided in section 73 of the , be enforceable against his interest in the estate".
This provision has in our opinion a, two fold effect.
In the first place, it makes it impossible for the mortgagee to follow the proprietary right after it vests in the State.
Secondly, it provides that the only way in which the mortgagee can recover his none advanced on the security of the property which vested in the State by virtue of the notification under section 4 and the consequences thereof under section 6 is to follow the procedure under section 73 of the .
Section 73(2) provides that "where the mortgaged property or any part thereof or any interest therein is acquired under the Land Acquisition Act, 1894 (1 of 1894), or any other enactment for the time being in force providing for the compulsory acquisition of immovable property, the mortgagee shall be entitled to claim payment of the mortgage money, in whole or in part, out of the amount due to the mortgagor as compensation".
There is no doubt that the property mortgaged has been compulsorily acquired in this case by the State under the Act.
Therefore, section 6 (h) read with section 73 directs that the mortgagee shall proceed in the manner provided in section 73, namely, follow the compensation money, and there is no other way possible for him in view of section 6(h) with respect to the property which has been acquired under the Act.
We have held that sir and khudkashat land and grove land have been acquired under the Act and have vested in the State; therefore the mortgagee is relegated to enforce his rights against the mortgagor in the manner provided in section 73 of the 451 and in no other way.
What we say here does not affect that property which is not acquired by the State, for example, property excepted under section 9 of the Act; but where the property has vested in the State by virtue of a notification under section 4 and its consequences under section 6, the only course open to the mortgagee is to follow the compensation money under section 6(h).
The bhumidari rights created under section 18 are not compensation; they are special rights conferred on the intermediary by virtue of his cultivatory possession of the lands comprised therein.
The respondent therefore cannot enforce his rights under the mortgage by sale of the bhumidari rights created in favour of the appellant under section 18 so far as his sir and khudkashat land and grove land are concerned; it can only follow the compensation money as provided in section 6(h).
The argument that bhumidari rights can 'be followed as substituted security must therefore equally fail.
Our attention in this connection was drawn to section 8(2) of the U. P. Zamindars Debt Reduction Act, No. XV of 1953.
That Act provides for scaling down of debts of zamindars whose estates have been acquired under the Act.
It also provides that the debts due shall be realisable from the compensation and rehabilitation grant, and in particular section 8(2) provides that "notwithstanding anything in any law the reduced amount found in the case of a mortgagor or judgment debtor as the case may be, under section 3 or 4 as respects mortgaged estates shall not be legally recoverable otherwise than out of the compensation and rehabilitation grant payable to such mortgagor or judgment debtor in respect of such estates".
We have not been able to understand how the provisions of the U. P. Zamindars Debt Reduction Act can affect the con struction of section 6(h) of the Act read with other provisions of the Act.
It is not necessary for us therefore to construe section 8(2) of the U. P. Zamindars Debt Reduction Act, for we are clear on the provisions of section 6 (h) and the other provisions of the Act that bhumidari rights created in favour of the appellant cannot be sold in execution of the decree held against him by the respondent under the mortgage of 1914.
452 This brings us to the question of limitation.
Mr. Aggarwala conceded that if the appellant succeeds on the first point it would not be necessary for us to consider the question of limitation.
Therefore, as the appellant succeeds on the first point we need not consider whether the application for execution by sale of bhumidari rights created under section 18 is barred by limitation.
We therefore allow the appeal and direct that the execution of the decree by the respondent will not be levied against the bhumidari rights created in favour of the appellant under section 18 of the Act.
The appellant will get his costs of this court and of the High Court.
Costs of the execution court will be at the discretion of that Court.
Appeal allowed.

summary/full:
The appellant 's father, a Talukdar of the Estate of Khajur gaon, executed a simple mortgage of his proprietary interest in the estate consisting of sixty seven villages to the Allahabad Bank Ltd. While execution proceedings were pending, the U. P. Zamindari Abolition and Land Reforms Act, 1950, came into force from July 1952.
As a result, the Zamindari rights of the appellant judgment debtor were abolished and it was no longer possible to sell these rights in the 67 villages.
The respondent Bank made an application before the executing court that as the Zamindari rights could not be sold, only such rights of the judgment debtor as remained in him after coming into force of the Act might be sold along with certain other rights.
Objections were taken and finally the matter came up by appeal to the High Court and it, inter alia, upheld the view of the executing court that the execution could proceed against the Bhumidari rights created in favour of the appellant under section 18 of the Act.
The question was whether the Bhumidari rights created under section 18 of the Act could also be sold in execution of the decree in view of the fact that the proprietary rights bad vested in the State.
Held, that the intention of the U. P. Zamindari Abolition and Land Reforms Act was to vest the proprietary rights in the Sir and Khudkast land and grove land in the Estate by virtue of section 6(a)(i) and resettle it on the intermediary not as compensation but by virtue of his cultivatory possession of lands comprised therein and on a new tenure and confer upon the intermediary a new and special right of Bhumidari, which he Dever had before, by section 18 of the Act.
The proprietary rights in Sir, Khudkast land and grove land which were mortgaged were extinguished, and the Bhumidari right which was altogether a new right could not be con sidered to be included under the mortgage.
442 The mortgagee could only enforce his rights against the mortgagor in the manner as provided by section 6(h) of the Act read with section 73 of the Transfer of Property Act and follow the compensation money; and so far as the Sir, Khudkast land and grove land were concerned, he could not enforce his rights under the mortgage by the sale of the Bhumidari rights created in favour of the mortgagor against them as a substituted security.
In the instant case the Bhumidari rights created in favour of the appellant could not be sold in execution of the decree held against him by the respondent under the mortgage Of 1914.