judgement:
Appeal No. 464 of 1964.
Appeal by special leave from the Award dated the September 29, 1962 of the Third Industrial Tribunal in Case No. VIII 197 of 1960.
A. V. Viswanatha Sastri, Anand Prakash and D. N. Gupta, for the appellant.
N. C. Chatterjee, D. L. Sen Gupta and Janardan Sharma, for the respondent.
140 The Judgment of the Court was delivered by Hidayatullah, J.
The Dunlop Rubber Co. Ltd. was granted on January 21, 1963 special leave to appeal against the award of the Third Industrial Tribunal, West Bengal dated September 29, 1962.
By that award the Tribunal set aside the dismissal from service of twelve workmen of the Company and ordered their reinstatement with continuity of service but awarded only 25 per cent of the back wages etc.
during the period they were out of employment treating the period as leave.
This dispute was referred by the Government of West Bengal on July 20, 1960 under section 10 of the .
The workmen were dismissed after a domestic enquiry commenced on February 4, 1960 which was carried on exparte because these workmen did not choose to be present.
The Tribunal held that the enquiry was not proper and some of the witnesses were re examined before the Tribunal whose verdict was against the Company and hence this appeal.
Eleven of these workmen belonged to what is known as the Dual Auto Mill and the twelfth was working on what is described as the Baby Mill.
These workmen and several others stopped work from January 21, 1960 and they were placed under suspension on 25/27th January.
Ten other workmen were also dismissed but they were taken back on the intercession of the Government of Bengal.
The incident arose in the following circumstances : In the processing of rubber which is used in the manufacture of rubber goods by the Company, a number of departments have to work in sequence.
The Banbury Section prepares a mixture of rubber and chemicals and it is passed on to the Dual Auto Mill which, after further processing, turns out blocks of rubber called "batches".
Each batch is of about 1250 lbs.
There were at the material time two Dual Auto Mills and they were working in three shifts and as each auto mill required the attendance of two workmen, twelve such workmen were employed to look after the two mills.
Each shift was of 8 hours with half an hour 's rest for meals and an extra 20 minutes for emergencies.
It was expected to produce and was, in fact, producing 17 batches till January 12, 1960.
There was another mill called the Baby Mill but what it was used for is not quite clear on the record of the case.
One of the dismissed workmen (section R. Sen Gupta Check No. 252 was working on the Baby Mill and he was a protected worker.
The workmen in this Company are grouped under three Unions : the most numerous is Union No. 4145 which goes under the name of Dunlop Workers ' Union.
This Union was registered 141 but it was not recognised by the Company.
Another Union which bears No. 729 and goes under the, name of Dunlop Rubber Factory Labour Union was recognised by the Company.
We need not refer to the third Union which does not figure in these proceedings.
It appears that Union No. 4145, which came into existence in 1957, managed to capture all the elective seats open to the workmen by defeating the candidates set up by Union No. 729.
There was great rivalry between the two Unions and the dismissed workmen belonged to Union No. 4145.
It appears that Union No. 4145 had raised a demand for revision of wages etc.
which was being resisted by the Company.
The Baby Mill, the Banbury Mill and the Dual Auto Mills were manned by the workmen belonging to Union No. 4145, except one Raghunandan Das, Check No. 100, who belonged to Union No. 729 and was teamed with Chandramma Chaube one of the dismissed workmen.
Raghunandan Das was absent on leave from January 12 to January 19, 1960.
From January 12, there was a fall in the output of the Dual Auto Mills at all the three shifts.
The number of batches fell from 17 to 15 and later still further.
On January 15, 1960 warnings were issued to these workmen that they were going slow and that "go slow" action was misconduct under cl.
10(XVI) of the Company 's Standing Orders for operators and under cl.
18(C) of the Labour Union Agreement for operators.
They were told that if they did not immediately return to their normal output the Company would be forced to take disciplinary action against them.
All the workmen were served with such letters.
On January 19, Raghunandan Das joined his duties and was teamed again with Chandramma Chaube.
It seems that Raghu nandan Das found that Chandramma Chaube was not giving the full output and was taking more than the required time over the mixing operations.
Chandramma Chaube 's case, on the other hand, was that Raghunandan Das was not allowing sufficient technical time for the mixtures and he (Chandramma Chaube) was objecting to it.
It may be pointed out that the workmen were.
paid extra if they turned out more than the expected quota of batches and Raghunandan Das was anxious to earn more, if possible.
Be that as it may, it seems that these two workmen quarreled on January 21 and Raghunandan Das abused Chandramma Chaube and also Union No. 4145.
Immediately the members of 4145 Union threatened to stop work unless Raghunandan Das was removed from the Dual Auto Mill and transferred to another Department.
The officers of the Company promised an enquiry 142 but asked the workmen to go back to work.
The workmen belonging to the 4145 Union refused to do this.
As a result the Dual Auto Mills either remained closed or worked much below their capacity.
The workmen were again and again requested and ultimately on 25/27th January they were called to the office so that they could be served with charge sheets.
They declined to accepted the charge sheets and were there and then placed under suspension.
The suspended workmen included these twelve workmen and ten others as already stated.
One Mr. P. K. Maitra commenced enquiry into the charges in the presence of Mr. R. M. Bhandari, an observer.
At the commencement of the enquiry each of the workmen asked for a representative of Union No. 4145 who was "conversant with the art of cross examination" to be present.
Under the Standing Orders of this Company representation could only be by a member of a recognised Union but as Union No. 729 was anathema to the members of Union No. 4145 they would not avail of the services of any member of that Union.
They elected to remain absent except section R. Sen Gupta who, though their leader, appeared at the enquiry against himself and made a statement clearing himself but took no further part in the enquiry.
As a result of the enquiry, which was ex parte, Mr. Maitra held that these workmen were going slow and that they were guilty of the charge brought against them.
He recommended the punishment of dismissal.
The Company accordingly ordered their dismissal seeking at the same time the permission of the Tribunal under section 33 of the and tendering one month 's wages to each workman.
Later, the Government of West Bengal took interest in the matter and at the intercession of the Government the Company agreed to take back 10 of the workmen leaving it to Union No. 4145 to select the persons who should be taken back.
All the workmen of the Banbury Mill were taken back and the 1 1 workmen of the Dual Auto Mill and Sen Gupta of the Baby Mill remained dismissed.
The Tribunal in reaching the conclusion that the dismissal was improper and that the workmen should be reinstated held that the Company had not really charged the workmen with "go slow" action but had found them guilty of that charge.
It held that the Company was showing favours to Union No. 729 and was trying to put down the Union of the dismissed workmen.
The Tribunal, however, held that the stoppage of work by the workmen amounted to strike as there were proceedings pending before the Tribunal, but since the strike was peaceful and non 143 vident it was only technically illegal.
The Tribunal blamed the Company for contributing to the strike by its refusal to shift Raghunandan Das from his place of work.
In view of these findings the Tribunal held that the punishment of dismissal was not justified and the order now impugned was accordingly passed.
The Tribunal was wrong in almost all its conclusions.
It was wrong in holding that the workmen were not charged with "go slow" action and therefore could not be dismissed on the finding that they were guilty of "go slow".
Under the Standing Orders of the Company "go slow" is a major misconduct.
Clauses (VIII) and (XVI) of Standing Order 10 deal with insubordination or disobedience or failure whether alone or in combination with others, to carry out any lawful and reasonable or proper order of a Superior (cl. VIII) and engaging or inciting others to engage in irregular or unjustified or illegal strikes; malingering or slowing down of work (cl. XVI).
The charge sheet stated as follows : "You are hereby asked to show cause why disciplinary action should not be taken against you for the following misconduct under Operators Standing orders Clauses 10(VIII) and (XVI).
The two clauses of Standing Order 10, as pointed out above, deal with insubordination and inter alia with going slow.
It was contended before us that the words "go slow" did not figure in this charge as they did in the charges against workmen in the Banbury AM.
It is to be remembered that on January 15, 1960 these workmen had been expressly warned that they were going slow and that "go slow" action was misconduct under cl.
10(XVI) of the Company 's Standing Orders for Operators.
No doubt Mr. Lobo, who drew up the charge, had not mentioned go slow in these charges as he had done in the charges framed against the workmen of the Banbury Mill, but it is nevertheless clear that these charges refer to go slow and indeed the workmen in their replies to the charge denied that they were going slow.
It may be pointed out that Mr. Lobo had stated before the Enquiry Officer that the charge was "go slow".
The log books also showed that from January 12, 1960 against the Dual Auto Mills the remark was "slow work".
It is clearly established by the records produced that instead of 17 batches 15 batches or less were turned out at each shift.
This proves that there was a deliberate "go 144 slow" no sooner Raghunandan Das left on leave and the Dual Auto Mills came into the exclusive hands of Union No. 4145.
This Union thought that the opportunity was too good to be wasted to force their demand for increase of wages by the tactics of "go slow".
The explanation of the workmen that the mixture received from the Banbury Mill was too cold and had to be reheated before it could be processed in the Dual Auto Mills was false.
They attributed the cooling of the mixture to the working of a new machine called the festooner from the 12th of January.
It is clear that this machine was tried for three months before it was put into operation and had worked for three months prior to January 12, 1960 and so such complaint had been made by the workmen.
It is possible that the Banbury Mill operators, who were also suspended and dismissed, were cooling the mixture unduly by means of their blower to delay operation.
But whether the Banbury Mill cooled it and the Dual Auto Mills were required to reheat it or the Dual Auto Mills delayed the operations, it is clear that the motivating force behind it was the action of Union No. 4145 to force the hands of the Company in support of their demands.
It is sufficient to say that after the new workmen had got trained in the working of the Dual Auto Mills the production again reached the same number of batches and after the figure was even better though the festooner continued in operation.
We are satisfied that the workmen were going slow from January 12, 1960, that the charge of "go slow" was incorporated in the charge sheet read with the warning letter and that it was fully substantiated.
This amounted to misconduct under Standing Order No. 10 and was not a minor offence as contended before us by their learned counsel.
The minor offences deal with conduct of a very different kind.
The Tribunal was also wrong in thinking that there was a denial of natural justice because the workmen were refused the assistance of a representative of their own Union.
Under the Standing Orders it is clearly provided that at such enquiries only a re presentative of a Union which is registered under the Indian Trade Union Act and recognised by the Company can assist.
Technically, therefore, the demand of the workmen that they should be represented by their own Union could not be accepted.
It has been ruled by this Court in Kalindi & Ors.
vs Tata Locomotive & Engineering Co. Ltd.(1) and Brook Bond India (P) Ltd. vs Subba Raman(2) that there is no right to representation as such unless the Company by its Standing Orders recognises such a right.
(1)[1960] 3 S.C.R. 407.
(2) 145 Refusal to allow representation by any Union unless the Standing Orders confer that right does not vitiate the proceedings.
It is true that only the rival Union was recognised and there was hostility between the two Unions.
The quarrel itself which sparked off the strike was also between two representatives of the rival Unions.
In such circumstances it is idle to expect that these workmen would have chosen to be represented by a member of the rival Union and the Company might well have considered their demand to be represented by any other workman of their choice.
The workmen, however, insisted that the representation should be in the capacity of a representative of their own unrecognised Union.
In other words, they were desiring recognition of their Union in an indirect way.
The dispute, therefore, was carried on by these workmen with the twin object of achieving their demand for increased wages and also for the recognition of their Union.
The implication of their demand that they should be represented by a member of their own Union was not lost upon the Company and the refusal to allow representation on these terms cannot be characterised as a denial of natural justice or amounting to unfair play.
If the Company had been asked that the workmen wished to be represented by a workman of their own choice without the additional qualification about Union No. 4145 it is possible that the Company might have acceded to the request.
We think, the Company might have asked the workmen to delete all reference to Union No. 4145 and allowed them to have a representative of their own choice in the special circumstances of this dispute.
But we cannot say that the action of the Enquiry Officer was for that reason illegal or amounted to a denial of natural justice.
In this connection, we have repeatedly emphasised that in holding domestic enquiries, reasonable opportunity should be given to the delinquent employees to meet the charge framed against them and it is desirable that at such an enquiry the employ should be given liberty to represent their case by persons of their choice, if there is no standing order against such a course being adopted and if there is nothing otherwise objectionable in the said request.
But as we have just indicated, in the circumstances of this case, we have no doubt that the failure of the Enquiry Officer to accede to the request made by the employees does not introduce any serious defect in the enquiry itself, and so, we have no hesitation in holding that the result of the said enquiry cannot be successfully challenged in the present proceedings.
146 It follows that the two main reasons for interfering with the order of dismissal do not really exist.
The charge was under cls.
(VIII) and (XVI) of Standing Order No. 10.
It said so and its meaning was quite clear to the workmen who, according to plan, were definitely going slow from January 12, 1960 when the Dual Auto Mills passed into the control of workmen belonging to Union No. 4145.
The demand of the workmen, couched as it was, could not be granted by the Enquiry Officer, because the Standing Orders did not permit representation by a member of any but a recognised Union.
The additional reasons given by the Tribunal that later the demands of this Union were accepted in respect of wages can hardly justify the action of these workmen in going on an illegal strike and in declining to resume work unless what they demanded was done.
There was thus justification for the order passed by the Company.
It is on record that the Dual Auto Mills perform a key operation and no rubber goods can be produced without the batches being available.
By their action these workmen slowed down production of every category and by their refusal to work when asked to g0 back to work cause enormous loss to the Company.
The motive underlying the action is more deep seated than a mere quarrel between Chandramma Chaube and Raghunandan Das or the abuses which Raghunandan Das is alleged to have showered on Chandramma Chaube and his Union.
It is contended that there was discrimination between the Banbury Mill and the Dual Auto Mills because workmen of the Banbury Mill were reinstated but not the workmen of the Dual Auto Mills.
The discrimination, if any, was made by Union No. 4145 which nominated those who should be taken back in service.
There must be some reason why the Banbury Mill workmen were treated differently and if we are to hazard a guess, it seems that those workmen were not sending out a cold mixture as alleged but that the Dual Auto Mill workmen were taking more time on their own operation.
The production was slowed down not by the Banbury Mill operators but by the Dual Auto Mill operators.
In other words, the Banbury Mill workmen, though they joined in the strike, did not probably join in the "go slow", but the Dual Auto Mill workmen not only started "go slow" but also led the strike affecting a large number of workmen.
In any event the workmen chosen for reinstatement '.
were chosen by their own Union and it cannot be said that the Company made any discrimination.
We are satisfied that in this case the Tribunal was not justified in interfering.
It has acted as a court of appeal in scrutinizing the evidence and in reaching conclusions of its own.
We are also 147 satisfied that the conclusions reached by it were not justified on the evidence in the case.
In these circumstances, we think that the order passed by the Tribunal should be vacated and the order passed by the Company ought to be accepted.
It is a pity that these workmen, who, on their own admission were better paid than in any other Organisation should lose their job in an attempt to get an indirect recognition of their Union.
But it cannot be helped because the Company must have a free hand in the internal management of its own affairs.
No outside agency should impose its will unless the action of the Company is lacking in bona fides or is manifestly perverse or unfair.
There is nothing to indicate this.
At the same time we must say that existence of Union No. 4145 which has a larger membership than Union No. 729 which is the only recognised Union, has in a great measure contributed to this dispute.
We have often noticed that Companies favour one Union out of several and thus create rivalry which disturbs industrial peace.
It often turns out that this has adverse effect on Company itself.
Since Union No. 729 was formed in 1950 and Union No. 4145 in 1957 we cannot say that the non recognition of Union No. 4145 was deliberate.
But as that Union seems to be the stronger of the two Unions the Company should seriously consider whether Union No. 4145 should not also be recognised.
The appeal must succeed.
It will be allowed but we make no order about costs.
Appeal allowed.

summary/full:
The appellant company dismissed some workmen after a domestic enquiry holding them guilty on a charge of 'go slow ' action.
The respondents raised an industrial dispute.
The Industrial Tribunal found that the dismissal of the respondents could not be sustained as there was no specific mention of 'go slow ' in the charge.
Further it found that there was denial of natural justice at the enquiry as the workmen were not allowed to be represented by a person of their choice.
The Tribunal set aside the dismissal of the respondents and ordered their reinstatement.
The company appealed to the Supreme Court by special leave.
HELD : (i) The charge specified cls.
10(vii) and (xvi) of the Operators Standing Orders.
These clauses deal with insubordination and, inter alia, with 'go slow '.
The workmen had been expressly warned by notice that they were "going slow" and in their reply to the charge they denied that they were going slow.
The Tribunal was thus wrong in holding that the workmen were not charged with 'go slow ' action and could not be found guilty of that charge.
[143 B C, G H] (ii) 'Mere was no denial of natural justice because the workmen asked to be represented by a member of a union which was not recognised The Standing Orders clearly provided that only a representative of a union which is registered under the Trade Union Act and recognised by the company can assist. 'Mere was no right to representation as such unless the company by its Standing Order recognised such a right.
[144 F G, H] Kalindi & Ors.
vs Tata Locomotives & Engineering Co. Ltd.[1960]3 S.C.R. 407 and Brook Bond India (P) Ltd. vs Subba Raman , relied on.


judgement:
Appeal No. 813 of 1962.
Appeal from the judgment and decree dated July 13, 1960, of the Punjab High Court in L.P. Appeal No. 58 of 1958.
N.C. Chatterjee, V. section Sawhney, section section Khanduja and Ganpat Rai, for the appellant.
Naunit Lal, for the respondent No. 1(a).
The Judgment of the Court was delivered by Ayyangar, J.
The tenability of the appellant 's claim to possession of certain properties belonging to the Dera of Sanyasi Sadhus in Mauza Kharak Tahsil Hansi, District Hissar in Punjab is the subject matter of this appeal which is before us on a certificate of fitness granted by the High Court of Punjab.
The appellant claimed the properties as the successor of the last Mahant of the Dera Kishan Puri who died on February 15, 1951.
The fortunes of the litigation started by the appellant have greatly fluctuated.
His suit was decreed by the learned trial Judge, was dismissed by the first appellate Court, was again decreed by a learned Single Judge of the Punjab High Court on second appeal but this judgment has again been reversed on Letters Patent appeal and the suit directed to be dismissed.
On a certificate of fitness granted by the High Court the matter is now before us.
The last Mahant of this Dera Kishan Puri died on February 15, 1951.
Immediately on his death disputes seem to have arisen as regards the succession to the Dera.
Neki Puri the original respondent in this appeal (now deceased) claiming to be a Chela of the deceased Mahant appears to have entered into possession of the properties belonging to the Dera basing his title thereto on an appointment made to the office by the Bhekh and the people of the village.
The appellant nevertheless claiming to be in possession of the property as the successor of the deceased Kishan Puri by virtue of a title as the Gurbhai of the deceased, brought a suit for a declaration regarding his title and for an injunction restraining Neki Puri from interfering with his possession Neki Puri, as 235 stated earlier, claimed that he was in possession of the properties and asserted a title to such possession by being a Chela who had been appointed by the Bhekh.
An issue was raised in the suit as to whether it was the plaintiff or the defendant who was in possession of the properties and on a finding recorded that Neki Puri was in possession, the suit for a mere declaration and injunction was held to be not maintainable and was, therefore, dismissed.
Incidentally, however, evidence was recorded on an issue as to whether Neki Puri was a Chela of Kishan Puri the last Mahant and a finding was recorded on this question adverse to the claim of Neki Puri.
An appeal against this judgment was dismissed and 'hat decree has now become final.
The suit for declaration and injunction having been dismissed, Bralima Nand Puri the appellant brought the suit out of which ,his appeal arises, in the Civil Court at Hissar for a decree for possession of the properties movable and immovable belongingto the Dera.
The suit being on the basis of the plaintiff 's title, his was formulated thus : "5.
According to custom regarding succession of the Dera and the Riwaj i Am of Deras the plaintiff being Gurbhai was entitled to Gaddi, as he is the eldest Chela of Shanker Puri and the people of the village and the Bhekh appointed him as Mahant after performing all the ceremonies on the 17th day of the death of Shri Kishan Puri and made him occupy the Gaddi of dera of Kharak." An alternative basis for the title was also put forward in paragraph 8 in these terms : "8.
If for any reason it is held that after the death of Shri Kishan Puri, the plaintiff was not appointed as Mahant of the Dera, even then according to the custom regarding succession of the Dera and Riwaj i Am, the plaintiff is entitled to become Mahant of the Dera as he is the Gurbhai of Kishan Puri deceased.
It was held in the previous case that according to the Riwaj, in the absence of a Chela his (deceased Mahant 's) Gurbhai becomes Mahant of a Dera." in the Written Statement that was filed by Neki Puri two defences were raised : (1) that Neki Puri was a Chela and he had been appointed to succeed Kishan Puri by the Bhekh and other villagers.
In other words, he put forward a preferential title based on Chelaship followed by an appointment by the Bhekh and others.
,2) Alternatively, while admitting that Brahma Nand Puri was 236 a Gurbhai of the deceased Mahant, he denied that he had been appointed by the Bhekh and also urged that there was no custom by which a Gurbhai who had not been appointed by the Bhekh was entitled to succeed as Mahant merely by reason of his being a Gurbhai.
On these pleadings 4 principal questions (omitting certain others which are not relevant in the present context) arose for trial : (1) Was Neki Puri a Chela of the deceased Kishan Puri ?, (2) Was Neki Puri appointed by the Bhekh ? It was admitted by Brahma Nand Puri that a Chela had a right superior to a Gurbhai and therefore if these two issues were found in favour of Neki Puri the plaintiff 's suit had admittedly to fail.
, (3) Was the plaintiff appointed by the Bhekh ? No serious attempt was made to establish that the plaintiff had been appointed by the Bhekh and hence the 4th question that arose was whether there was a custom by which a Gurbhai could succeed to the Mahantship of this institution without an appointment by the Bhekh as pleaded in paragraph 8 of the plaint extracted earlier.
On these four matters the learned trial Judge recorded the following findings : (1) that Neki Puri had not been proved to be the Chela of the last Mahant.
, (2) No definite finding was recorded on the second point but the trial Judge was of the opinion that there was no proof that the Bhekh could appoint as Mahant a person who was not either a Chela or a Gurbhai or that they actually did so in the present case.
, (3) A definite finding was recorded that the plaintiff was not appointed by the Bhekh., (4) Without recording a finding on the custom set up by the plaintiff in para 8 of the plaint the learned trial Judge held that under the law in the Punjab in the absence of a Chela, a Gurbhai was entitled to succeed to the Gaddi apart from any question of appointment by the Bhekh and on this reasoning decreed the plaintiff 's suit.
The defendant went up in appeal to the Additional Sessions Judge.
The appellate Court reversed the finding of the trial Judge on the issue as to whether Neki Puri was a Chela of the deceased Mahant and held that he was.
A definite finding was also recorded on the basis of the evidence led by the defence that Neki Puri had been appointed to succeed the deceased Mahant by the Bhekh and the villagers.
As admittedly a Chela had a superior title to a Gurbhai in the matter of succession the learned District Judge allowed the appeal of the defendant Neki Puri and directed the dismissal of the suit.
The plaintiff took the matter to the High Court by way of second appeal.
The learned Single Judge who heard the appeal in his turn reversed the finding of the first appellate Court on the issue 237 regarding Neki Puri being a Chela of the deceased Kishan Puri.
He considered that the finding on this matter by the Additional Sessions Judge was vitiated by serious errors of law and misappreciation of facts.
Having thus put aside the claim of Neki Puri to succeed by holding that he was not a Chela, the learned Judge upheld the plaintiff 's claim on the ground that a Gurbhai was entitled to succeed to the Gaddi even if he had not been appointed by the Bhekh.
He, therefore, decreed the suit of the plaintiff.
, Neki Puri then in his turn took the matter before a Division Bench 'by a Letters Patent appeal.
The learned Judges concurred with the learned Single Judge on the issue as to whether Neki Puri was a Chela or not.
They agreed with him that the first appellate Court had committed serious errors in its reasoning in finding that Neki Puri had established the claim to be the Chela of Kishan Puri and affirmed the finding of the learned trial Judge in that regard.
Dealing next with the title of the plaintiff to the Gaddi, the learned Judges held that the custom set up in paragraph 8 of the plaint that Gurbhai could succeed without an appointment by the Bhekh had not been made out on the evidence and on this reasoning they allowed the appeal and directed the dismissal of the suit.
It is the correctness of this decision that is challenged before us by the appellant.
Two points were urged before us by Mr. Chatterjee learned Counsel for the appellant.
The first was that under the law applicable to Deras in the Punjab that is to say apart from any special custom, a Gurbhai was entitled to succeed to the Dera even without an appointment by the Bhekh or fraternity, (2) that even if that was not the law and a custom was required to sustain that plea, such a custom had been established by the evidence adduced by the appellant in the present case.
Pausing here, we might mention that Mr. Chatterjee referred us to the circumstance that during the pendency of the appeal in this Court Neki Puri had died and that certain others who, he stated, had even less claims to a Mahantship were in possession of the property and that seeing that the appellant was admittedly a Gurbhai it would be most inappropriate that his rights should be overlooked and a stranger permitted to squat on the property.
We consider this submission is devoid of force.
The plaintiff 's suit being one for ejectment he has to succeed or fail on the title that he establishes and if he cannot succeed on the strength of his title his suit must fail notwithstanding that the defendant in possession has no title to the property, assuming learned Counsel is right in 238 that submission.
As pointed out in Mukherjea 's Hindu Law of Religious and Charitable Trust, Second Edn., page 317 : "The party who lays claim to the office of the Mohunt on the strength of any such usage must establish it affirmatively by proper legal evidence.
The fact that the defendant is a trespasser would not entitle the plaintiff to succeed even though he be a disciple of the last Mohunt, unless he succeeds in proving the particular usage under which succession takes place in the particular institution.
" We, therefore, dismiss this aspect of the case from consideration.
Taking the first point urged by Mr. Chatterjee, we do not consider that learned Counsel is justified in his submission that under the law as obtains in the Punjab a Gurbhai is entitled to succeed without reference to an appointment by the Bhekh or the fraternity.
In Rattigan 's Digest of Customary Law the position as regards religious institutions in the Punjab is thus stated : "There is no general law applicable to religious institutions in this Province, and each institution must bedeemed to be regulated by its own custom and practice.
There are, however, certain broad propositions which judicial decisions have shown to have received very general recognition, and these propositions are embodied in the following paragraphs : 84.
The members of such institutions are governed exclusively by the customs and usages of the particular institution to which they belong.
The office of Mahant is usually elective and not hereditary.
But a Mahant may nominate a successor subject to confirmation by his fraternity.
" From paragraph 85 it would follow that the office of Mahant being usually elective and not hereditary, anyone who lays claims to the office on the basis of a hereditary title resting on Chelaship simplicitor or Gurbhaiship simplicitor must establish it.
(See also Jiwan Das vs Hira Das)1 Though, no doubt, the usage of one institution is no guide to that of another, it may be mentioned that in regard to the succession of the Mahantship of a Thakurdwara belonging to the Ram Kabir Sect of Hindu Bairagis in district Jullundur in the Punjab this Court held in Sital Das vs Sant Ram 2 (1) A.I. R. 1.
(2) A.I.R. 1954 S.C. 606.
239 that the usage required an appointment by the fraternity before a person could become a Mahant.
On the basis, therefore, of the passage in Rattigan 's Digest, which we have extracted, it appears to us that the first of the submissions made by Mr. Chatterjee cannot be upheld.
In fact, the tenor of para 5 of the plaint we have extracted earlier itself shows a consciousness on the part of the plaintiff himself that he considered that an appointment by the Bhekh was necessary to clothe him with the title to the Gaddi besides his status as a Gurbhai.
No doubt the plaintiff was a Gurbhai but he had not established that he had been appointed by the Bhekh or fraternity.
In the absence of such appointment under the law and apart from any special custom pertaining to this institution the appellant could claim no title to the Gaddi, by his being a Gurbhai.
This takes us to the second point urged by Mr. Chatterjee that on the evidence the plaintiff had made out the special custom pertaining to this institution that no appointment by the Bhekh was necessary before a Chela or Gurbhai could succeed to the Gaddi.
We have been taken through the entire evidence in the case.
In the first place, there are no documents or anything in writing in support of the custom and the matter depends entirely on the testimony of witnesses produced before the Court.
P.W. 4 who claimed to be a Bhekh of this Dera stated in chief examination : "According to the custom of our Bhekh if a Mahant died without leaving a Chela his Gurbhai became the successor.
If however there is Chela he is the successor.
" In cross examination be stated "The custom of succession stated by me above is written nowhere : it is followed by us." and then he continued : "In village Bata there is a Sanyasi Dera.
There also Prabhu Puri Chela was not found to be a good man and Sunder Puri Gurbhai of the last Mahant was installed.
In Guna there is a Sanyasi Dera.
Lachhman Gir Sanyasi died without leaving a Chela.
His Gurbbai Phag Gir succeeded him to the Gaddi.
" It would be seen that there was nothing specific in his evidence about the absence of an appointment by the Bhekh in those instances which is the special custom which the plaintiff sought to prove by this evidence.
P.W. II is another witness to whose 240 evidence reference was made.
He stated in his chief exami nation : " According to the custom of the Bhekh if a Mahant leaves no Chela, his Gurbhai succeeds to the Gaddi.
" In cross examination he stated : "The custom of succession which I have deposed to above is at par with the General Hindu Customary Law .
There might be many instances.
But I cannot recall to my mind any such instance now.
" P.W. 13 belongs to a different Dera but he claimed that the Dera at Kharak was similar to his institution and stated in his chief examination : "Amongst us if a Sadhu does not leave a Chela, the Gaddi goes to his Gurbhai.
There is an instance in the Gurdwara of Kosli near my Dera of a Gurbhai succeeding a Mahant in the absence of a Chela.
There is another such instance ofDera at Nangri in Rajasthan.
" The evidence ofP.W. 16 was similar: "My Guru succeeded to the Gaddi as Gurbhai of the last Mahant.
" Evidence of P.Ws. 17 and 18 was identical with that of the witnesses who preceded them : "According to custom of the Bhekh if a Mahant dies without leaving a Chela his Gurbhai succeeds.
" It would be seen from this evidence : (1) that it is lacking in particulars as regards the instances, and (2) there is nothing stated as to whether even in the instances referred to, there was no recognition, appointment or confirmation by the Bhekh which according to Rattigan is part of the customary law of the Punjab as the source of title for the Mahantship.
We are, therefore, not prepared to hold that the appellant has established the custom which he put forward in paragraph 8 of his plaint in derogation of the ordinary law viz., that without an appointment by the Bhekh or fraternity a Chela or, in his absence, a Gurbhai succeeds to the headship of a Dera.
The plaintiff 's suit was, therefore, in our opinion, properly dismissed.
Mr. Naunit Lal, learned counsel for the respondent urged that the learned Single Judge was in error in reversing the finding of the first appellate Court that Neki Puri had proved that he was a Chela of Kishan Puri the deceased Mahant.
It might be noticed 241 that the Division Bench had concurred in the views expressed by the learned Single Judge as regards the defects in the judgment of the first appellate Court on its findings on this issue.
Learned Counsel submitted that the learned Single Judge fell into serious errors in interfering with a finding of fact.
Though we are satisfied that certain portions of the judgment of the learned Single Judge had suffered from errors, we do not purpose to examine this question as the same is wholly unnecessary for the disposal of this appeal.
It is only in the event of our accepting the submissions of Mr. Chatterjee that the correctness of the reversal of the finding on the Chelaship of Neki Puri would have become material.
In the view that we have expressed as regards the appellant 's title to the Gaddi we do not consider it necessary or proper to discuss what, in fact, is merely an academic question.
The result is, the appeal fails and is dismissed with costs.

dataset_name: IN-Abs

summary/full:
Upon the death of the last Mahant of a Dera of Sanyasi Sadhus in Punjab, the respondent, claiming to be the Chela of the deceased and therefore having a preferential title, entered into possession of certain properties basing his title thereto on an appointment made to the office by the Bhekh and the people of the village.
The appellant also claimed the same properties as the successor of the deceased Mahant and brought a suit for a decree for possession of the properties belonging to the Dera, he claimed title on the basis that as Gurbhal of the last Mahant, he was entitled to the Gadi and that he, and not the respondent, had been appointed to it by the people of the village and the Bhekh; he further claimed in the alternative, that even if it was found that he was not so appointed, according to the custom regarding succession of the Dera and Rewaj i am of Deras, he was in any event entitled to become Mahant as he was the Gurbhai of the deceased Mahant.
The trial court found that the respondent was not the Chela of the deceased Mahant and that there was no evidence that be was appointed Mahant, on the other hand the appellant was also held not to have been appointed.
However, without recording a finding on the custom set up by the appellant, the trial court held that under the law in Punjab, in the absence of a Chela, a Gurbhai was entitled to succeed to the Gadi apart from any question of appointment by the Bhekh, and on this reasoning, decreed the appellant 's suit.
The respondent 's first appeal to the Additional Sessions Judge was allowed but a Single Bench of the High Court reversed that decision.
Thereafter, in the respondent 's Letters Patent Appeal, although the Division Bench concurred with the single Bench on the other issues, the appeal was allowed on the ground that the custom set up in the plaint that a Gurbhai could succeed without an appointment of the Bhekh had not been made out.
HELD : (i) There is no general law applicable to religious institutions in the Punjab and each institution must be deemed to be regulated by its own custom and practice.
Therefore, the appellant could not succeed as Mahant without reference to an appointment by the Bhekh or the fraternity unless he could establish a custom which entitled him to succeed by virtue of being a Gurbhai.
[238 D E; 239 C] Rattigans ' Digest of Customary law: Jiwan Das vs Hira Das, A.I.R. 1937 Lah.
311 and Sital Das vs Sant Ram, A.I.R. 1954 S.C. 606, referred to.
On the basis of the evidence before the trial court the appellant had not established the custom put forward by him.
[240 G] Sup./65 16 234 (ii)The appellant 's suit being one of ejectment he had to succeed or fail on the title that he established; if he could not succeed on the strength of his title, his suit must fail notwithstanding that the defendant in possession had no title to the property.
[236 HI Mukherjea 's Hindu Law of Religious and Charitable Trust, 2nd Edition,p.
317, referred.


judgement:
Appeals Nos. 131, 131 A and 131 B of 1952.
Appeals from the Judgment and Decree dated the 2nd day of February, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Vishwanath Sastri JJ.) in Cases Referred Nos. 76 and 78 of 1946 and 32 and 56 of 1947.
259 C.K. Daphtary, Solicitor General for India (G. N. Joshi, with him) for the appellant.
B. Somayya (Alladi Kuppuswami, with him) for the respondent.
October 14.
The Judgment of the Court was delivered by GHULAM HASAN J.
These three appeals arise from the judgment and order of the Madras High Court dated 2nd February, 1950, delivered on a reference by the Income tax Appellate Tribunal (hereinafter referred to as 'The Tribunal '), whereby the High Court answered the first referred question in, the negative, and as regards the second question, Satyanarayana Rao J. answered it in the affirmative, while Viswanatha Sastri J. answered it in the negative, as a result of which the judgment of Satyanarayana Rao J. ultimately prevailed.
They relate to the assessment for 1942 1943 and are filed by the Commissioner of Income tax, while Appeal No. 132 of 1952 which relates to 1943 1944 is filed by the assessee, and, is dealt with separately.
The two question which were referred in respect of the first group of appeals are as follows: (1) Whether there is any material for the Tribunal 's finding that the appellants (respondents in this case) were being assessed on cash basis in the prior years? (2) Whether on the facts and in the circumstances of the case the Appellate Tribunal 's finding that the sum of Rs. 2,26,850 could not be assessed for the assessment year 1942 43 is correct in law? The assessee is a registered firm (hereinafter referred to as 'the firm ') consisting of K.R.M.T.T. Thiagaraja Chetty and his two sons.
The firm is the managing agent of Shri Meenakshi Mills, Ltd., (hereinafter referred to as the Com pany) owning a, spinning mill at Madura.
The firm also con ducted insurance business and the business of ginning cotton in a ginning factory at another place.
Under the terms of L/B(D)2SCI 3(a) 260 the agreement the managing agents were entitled to a remu neration of Rs. 1,000 per mensem and a commission of I per cent.
on all purchases, I per cent.
on all sales and 10 per cent.
commission on the net profits of the mills before allowing for ,depreciation.
The firm had plenary powers of management of the affairs of the company subject to general supervision of the directors.
It was to have charge and custody on behalf of the company of all the property, books of accounts, papers and documents and effects belonging to the company.
It was required to keep at the expense of the company proper and complete books of account of all purchases and sales and of all payments made and moneys received on behalf of the company.
It had to defray all the expenses of maintaining a suitable office and a staff of assistants and clerks sufficient to transact the business of the firm as managing agents of the company.
Clause 16 is most important and lays down that the firm be at liberty to retain, reimburse, and pay themselves out of the funds of the company, all charges and expenses, legal or otherwise and all the costs and expenses of providing and maintaining offices for the company and the salaries of clerks, servants, agents or workmen and all moneys expended by them on behalf of the company and all sums due to the firm for commission or otherwise.
The company made considerable profit in the assessment year 1942 1943 and the firm became entitled to commission to the tune of Rs. 2,26,850 5 0.
The firm did not show this sum in the return on the ground that it was not actually re ceived in the year of account, viz., by the 31st March, 1942.
It relied upon a resolution of the Board of Directors of the company, dated the 30th March, 1942, by which they had decided to keep the aforesaid amount in suspense without paying it on the ground that an amount of two lakhs odd was due to the company from the firm.
It appears that the firm owed a debt to the company for a long time past which was outstanding.
The firm wrote on the 30th March, 1942, to the company requesting that the debt be written off.
The Firm also wrote that on account of the extraordinary increase in the 261 volume of business.
it found it difficult to bestow adequate attention on all the aspects of the mill business and proposed that the direct responsibility for sales and purchases may be transferred to some other agency, leaving the general supervision over the entire management in the firm 's hands.
The firm agreed to forego its commission on purchases and sales and agreed to take half of the commission on the net profits.
The directors by their resolution, passed on the same date, refused to write off the amount without consulting the general body of shareholders and pending the settlement of the dispute resolved, to keep the amount in suspense.
The Income tax Officer held that the firm followed the mercantile method of accounting and not the cash basis and that the income having accrued become assessable whether received or not.
The actual amount payable to the firm in, accordance with the terms and conditions of the agreement for the year 1942 1943 was not disputed.
The Appellate Assistant Commissioner confirmed the assessment and dismissed the appeal of the assessee.
The Commissioner upheld the view that the income was determined on the mercantile basis and that the income had accrued or arisen to the assessee within the meaning of section 4(1) (b)(i) of the Income tax Act.
and the mere fact that the amount was put in the suspense account did not alter the fact that the income had accrued to the firm Upon the matter being carried further in appeal by the assessee, the Tribunal held that the income had not accrued to the firm and that the amount should be excluded from taxation as not having been received during the accounting year.
The two questions aforementioned were then referred, at the instance of the Commissioner by the Tribunal to the High Court.
As already stated, the opinion on the first question was unanimous, both the learned Judges Satyanarayana Rao J. and Viswanatha Sastri J. holding against the assessee that there was no material for the Tribunal 's finding that the firm was being assessed on cash basis in previous years, the latter observing that finding in respect of 1942 1943 and 1943 1944 262 were mutually inconsistent, for in respect of the latter assessment year the Tribunal had held that the sum of Rs. 2,20,702 was assessable to income tax, though the amount merely stood as a credit to the firm in the books of the company and has not been drawn by the firm.
It is contended by Mr. Somayya on behalf of the firm that the finding of the Commissioner that the firm was not paid in cash in the prior years was set aside by the Tribunal and being a finding of fact ought not to have been interfered with by the High Court.
The firm had raised this question before the Tribunal at the time of the reference and had contended that no question of law arose from its order, as it was concluded by finding of fact.
The Tribunal, however repelled this contention observing that the question was one of ,law, as it related to the existence of any material for the finding.
The High Court upon such question being referred applied its mind to the precise question and came to the conclusion that there was No. material for the finding that the firm was being assessed on cash basis in the prior year.
The case of Commissinoer of Income tax, Bihar and Orissa vs Maharaiadhiraja of Darbhanga(1) does not support the contention of Mr. Somayya.
There the Income tax Officer had computed the profits of the business for a particular year by taking into account both actual receipts of interest in that year and sums treated by the assessee in that year as receipts of interest by their transference to the interest register from what might be regarded as a suspense account.
The Privy Council held that there was nothing illegel or contrary to principle in the computation arrived by the Income tax Officer.
The High Court under section 66(1) had to decide the question of law raised by the first question and decided it against the assessee.
Nor can it be said that in answering the question, the High Court acted illegally or contrary to principle.
Admittedly, the firm kept no separate books of accounts other than the (1) 60 I.A, 146.
263 books of accounts of the company in which there was a ledger containing entries relating to the remuneration and commis sion paid in cash to the firm.
The sum of Rs. 2,26,850 5 0 was debited as a revenue expenditure of the company as having been paid to the firm in the books of accounts of the company kept by the firm and was also allowed as a deduction in computing the profits and gains of the company for the purposes of income tax for 1941 1942.
The fact that certain moneys were drawn in cash by the firm from time to time does not necessarily lead to the inference that the firm kept its accounts on a cash basis.
Anyone familiar with commercial transactions knows that even in accounts kept on a mercantile basis there can be entries of cash credits and debits.
We see no flaw in the conclusion reached by the High Court on the first question.
The next question that falls to be determined is whether the sum of Rs. 2,26,850 5 0 was part of the profit and gains which had accrued to the firm during the accounting year 1941 1942.
The undisputed facts are that the amount in question was the commission earned by the firm as managing agents of the company.
In the books of the company main tained by the firm the aforesaid sum was debited as an item of revenue expenditure and the profits were computed after deducting that sum.
The amount was simultaneously credited to the managing agents ' commission account.
Under these circumstances, it is idle to contend that the aforesaid sum had not accrued.
There can be no doubt under the circum stances that the aforesaid sum was income which had accrued to the firm.
The only question is whether the aforesaid sum ceased to be, income by reason of the fact that on the 30th March the sum was carried to the suspense account by a reso lution of the directors as a result of the request made by the firm that the outstanding debt due from it may be written off.
It is true that the, sum was not drawn by the firm but that can hardly affect the question of its liability to tax, once it is established that the income had accrued or arisen to the firm 264 The mere fact that the company was withholding payment on account of a pending dispute cannot be held to mean that the amount did not accrue to the firm.
The resolution of the directors itself shows beyond doubt that the amount in question was treated as belonging to the firm though its payment was deferred on account of a pending dispute.
As Viswanatha Sastri J. tersely put it "The sum had irrevocably entered the debit side of the company 's account as a disbursement of managing agency commission to the firm and had been appropriated to the, firm 's dues and the same sum could not again be entered in a suspense account at a later date.
The sum, therefore, belonged to the firm and had to be included in the computation of the profits and gains that had accrued to it unless the firm had regularly kept its accounts on a cash basis, Which is not the case here" '.
A reference to the ledger folios in the books of the company shows that apart from the managing agents ' monthly remuneration of Rs. 1,00.0 which has duly entered in.
their account the amount in question also finds a place in the ledger as outstanding charges against the company and as credits in favour of the firm, The ' journal entries in the company 's books are the same.
Section 10 of the Act makes "profits and gains of busi ness, profession or vocation" ' carried on by an assessee liable to tax.
Section 12 makes "income from other sources in respect of income, profits and gains of every kind" liable to tax.
By section 13 income, profits and gains shall be computed for the purposes of both those sections in accordance with the method of accounting regularly employed by the assessee, but there is a proviso that, if no method of accounting has been regularly employed, or if the method employed is such that, in the opinion of the Income tax Officer, the income, profits and gains cannot properly be deduced therefrom, then the c Computation shall be made upon such basis and in such manner as the Income tex Officer may determine.
265 The Income tax Officer in computing the income of the assessee would have followed the mercantile system or the cash basis whichever was employed by the assessee.
There is some evidence, though not conclusive, on the record that the assessee followed the mercantile system of accountancy.
This appears from the assessment orders field in the case, but apart from this, ' the Income tax Officer had full authority under the proviso to compute the profits upon such basis and in such manner as he thought fit.
The case of St. Lucia Usines and Estates Company, Ltd. vs Colonial Treasurer of St. Lucia(1) was relied upon strongly before us as it was in the High Court in support of the contention that the sum not having been paid to or realized by the firm no income can be said to have accrued to the firm.
In that case the assessee company sold all its property in St. Lucia in 1920 and ceased to reside or carry on business there.
In 1921 interest upon the unpaid part of the purchase price, was payable to it, but was not paid.
The company was liable to pay income tax for the year 1921 under the Income tax Ordinance, 1910, of St. Lucia, only if the interest above mentioned was 'income arising and, accruing ' to it in 1921.
It was held that though the interest was a debt accruing in 1921, it was not 'income arising or accruing ' in 1921, and that the company was not liable.
The decision was based upon the meaning of the word 'income ' as used in the Ordinance which was said to connote the idea of something "coming in".
Lord Wrenbury who delivered the judgment of the Privy Council construed the words "income arising or accruing" as money arising or accruing by way of income and not "debts arising or accruing".
The learned Law Lord observed "A debt has accrued to him (taxpayer) but income has not".
It is clear that the case related to the meaning of the word "Income" as used in the Ordinance and can be no authority on the question of the assessment of profits and gains under the Indian Income tax Act.
The next case relied upon is Dewar vs Commissioners of Inland Revenue(2).
In that case one of the executors be (1) (2) 266 came entitled to a legacy which carried interest for such time as it remained unpaid.
The testator 's estate was sufficient at all material times to enable interest to be paid on the legacy but the legatee acting on the advice of his accountant did not demand the legacy or interest thereon.
It was held that as the legatee had not received interest, there was no income in respect of which he could be charged to sur tax.
The decision turned upon the language of Schedule D, clause 1, sub clause (b) of the English Income Tax Act of 1918, as distinguished from clause I (a).
Clause I (a) deals with annual profits or gains arising or accruing from any kind of property whatever. but clause (b) imposes a tax in respect of "all interest of money, annuities and other annual profits." Lord Hanworth.
M. R. drew the distinction between the two clauses and observed that the case was one of interest of money and fell under clause (b) and not under clause (a).
Under that clause the tax was limited.to any interest of money whether the same is received and payable half yearly or any shorter or more distant period.
The learned Master of the Rolls observed: "If the interest on the legacy in this case has not arisen to the respondent, if he had not become the dominus of this sum, if it does not lie to his order in the hands of his agent, can it be said that it has arisen to him? I think the answer definitely upon the facts must be: No. it has not." Lord Maugham L. J. put the question thus: "I think in the present case two circumstances may be accurately stated in regard to the sum of pound 40,000 which it is said can be brought into charge.
The first is that the sum of pound 40,000 was not during the year of assessment a debt due by the executors to Mr. Dewar, and secondly, that the sum in question may never be paid or received at all." The case of Commissioner of Taxes vs The Melbourne Trust, Limited(1) turned on the construction of the charging (1) 267 section in the Income Tax Act 1903 of Victoria, whereby a company was liable to pay tax upon the profits earned, in or derived in or from Victoria.
In this case the surplus realized by the assessees over the purchase price for the assets sold after making all just deductions was taxed as profit but it was held that they were entitled to hold in suspense part of the surplus realised to meet possible losses on other assets and that under the circumstances the profit was earned for the purposes of the Act only when distributed to the share holders.
Having considered all these cases, we are of opinion that neither of them has any bearing upon the facts and circumstances of the present case.
Lastly it was urged that the commission could not be said to have accrued, as the profit of the business could be computed only after the 31st March, and therefore the com mission could not be subjected to tax when it is no more than a mere right to receive.
This argument involves the fallacy that profits do not accrue unless and until they are actually computed.
The computation of the profits whenever it may take place cannot possibly be allowed to suspend their accrual.
In the case of income where there is a condition that the commission will not be payable until the expiry of a definite period or the making up of the account, it might be said with some justification, though we do not decide it, that the income has not accrued, but there is no such condition in the present case.
Clauses 7 & 8 of the agreement which relate to the payment of the commission and the calculation of the profits mean no more than this that the commission will be quantified only after certain deductions had been made and not that the commission will not accrue until the profits have been ascertained.
The quantification of the commission is not a condition precedent to its accrual.
If the profits of the company are said to have accrued on the 31st of March, upon a parity of reasoning, it must be conceded that the commission also accrued on the same date.
The date has as much to do with the accrual of the commission as it has to do with the accrual of the profits.
It was faintly suggested that the managing.
agency was not a business but this is immaterial for income tax purposes because section 13 will apply to cases both under sections 10 268 and 12, so we refrain from deciding the point.
We may, how ever, point out in passing that in two cases Tata Hydro Electric Agencies, Ltd. vs Commissioner of Income tax Bombay(1) and Commissioner of Income tax.
Bombay Presidency vs Tata Sons Ltd.(2) it was assumed that the managing agency is business but the point was directly decided in Inderchand Hari Ram vs Commissioner of Income tax, U.P. and C.P.(3) that it is so.
For the foregoing reasons, we accept the view taken by Viswanatha Sastri J. and allow the appeals.
The respondent shall pay the costs of the Commissioner both in this court and before the High Court.
Appeals allowed.

summary/full:
Where, under the terms of a managing agency agreement the assessee firm who were the managing agents of a company were entitled to a certain percentage of the profits as their commission and in the books of the company maintained by the firm a sum of Rs. 2,26,850 odd was shown as commission due to the firm on the profits for the year 1941 42 and the said sum was also debited as an item of business expenditure and credited to the managing agents ' commission account, but the aforesaid sum was subsequently carried to a suspense account by a resolution of the company as a result of a request made by the firm that a debt due by the firm to the company may be written off : Held, that, as the assessee kept the accounts on the mercantile system the commission accrued to the assessee when the commission was credited to it in the accounts, and the subsequent carrying over of the amount of the commission to a suspense account pending the settlement of the dispute between the company and the assessee could not affect assessee 's liability to be taxed on this income.
Held further, that the fact that the profits of the business could be computed only after the 31st of March, 1942, was Immaterial as quantification of the commission is not a condition precedent to its accrual.


judgement:
Appeal No. 934 of 1964.
Appeal from the judgment and order dated January 13, 1964, of the Punjab High Court (Circuit Bench) at Delhi in Civil Writ No. 258 D of 1957.
Hardayal Hardy, B. Dutta, M. section K. Sastri and J. B. Dadachanji, for the appellants.
C. K. Daphtary, Attorney General R. K. P. Shankardass and R. H. Dhebar, for the respondents.
The Judgment of the Court was delivered by Gajendragadkar, C.J.
The two appellants, the Hamdard Dawakhana (Wakf), Delhi, and its Mutawalli Haji Hakim Hameed, represent the Hamdard Dawakhana institution which was initially established in or about 1906 as a dawakhana and was subsequently declared and founded as a Wakf.
Since its inception, the institution has been running dispensaries and clinics for the treatment of patients and has been manufacturing and supplying medicines and medicinal products according to Ayurvedic and Unani Systems of medicines.
Appellant No. 1 also manufactures medicated syrups which contain some fruit juices for medicinal use and they are prepared according to a certain formula devised by it.
"Sharbat Rooh Afza" which is a medicated syrup manufactured by appellant No. 1 is made of the following ingredients "Kasni seeds, Khus, Pumpkin Juice, Water melon Juice, Chharila, Ripe grapes, Spinach, Nilofar, Sandal, 194 Gul Gaozaban, Coriandar, Carrot, Mint, Kulfa, Keora, Rose, Citrus flower, Orange Juice, Pine apple Juice, Water, Sugar".
The formula determining the ratio and proportion in which each one of the ingredients has to be used, has been evolved by appellant No. 1 as a result of various experiments spread over a long period.
The manufacture of this Sharbat began in 1920.
It is intended to be used for common ailments during hot season, particularly for ailments like loss of appetite, sun stroke, nausea, sleeplessness, etc.
This Sharbat Rooh Afza is not a foodstuff, and cannot be regarded as an essential commodity under section 2 of the (No. 10 of 1955) (hereinafter called 'the Act ').
In substance, this is the case as set out by the appellants in their petition.
Purporting to act under section 3 of the Act the Central Govern ment made an Order called the Fruit Products Order, 1955 (hereinafter called 'the Fruit Order ') under Notification No. S.R.O. 1052 dated May 3, 1955.
Under clause 3 of the Order, respondent No. 4, the Central Fruit Products Advisory Committee, has been constituted.
It appears that on the 22nd September, 1956, the Central Government purporting to act under section 3 of the Act, made certain amendments in the Fruit Order.
The result of one of the amendments thus made was to direct that the minimum percentage of fruit juice in the final product of a fruit syrup as indicated in Part 11 of the Second Schedule to the Fruit Order should be raised from 10% to 25%.
The change so made was notified to the appellants by respondent No. 2, the Marketing Development Officer, Fruit Products, Central Zone, Delhi, on January 29, 1957.
As a result of this intimation, certain correspondence followed between the appellants and respondent No. 2.
The appellants had urged in the course of this correspondence that Sharbat Rooh Afza did not fall within the scope of the Act and the Fruit Order.
On March 25, 1957, respondent No. 3, the Agricultural Marketing Adviser to the Government of India, New Delhi, invited a representative of the appellants for discussions, and as a result of the said discussion, Mr. Sood, the Marketing Development Officer, Delhi, inspected the factory of the appellants and watched the process of manufacture of Sharbat Rooh Afza on April 29, 1957.
Thereafter, on May 10, 1957, the appellants received a communication from Mr. Sood ordering the appellants to stop further manufacture and sale of Sharbat Rooh Afza forthwith on 195 the ground that it did not contain the minimum percentage of fruit juice prescribed by the relevant clause of the Fruit Order.
This communication mentioned the fact that the appellants had been specifically asked to prepare fruit syrups strictly in accordance with the specifications prescribed, but in utter disregard of the said instructions, the appellants had wilfully continued to contravene the provisions of the Fruit Order.
That is why by virtue of the powers conferred on him by clause 13(f) of the Fruit Order, the present order was served on the appellants.
It is this order which was challenged by the appellants by their writ petition filed before the Punjab High Court on the 18th May, 1957 (No. 258 D of 1957).
By their writ petition, the appellants prayed that the impugned order as well as the several orders passed preceding it, should be quashed and a writ of mandamus should be issued against the respondents restraining them from seeking to enforce the material provisions of the Fruit Order in respect of the appellants ' product 'Sharbat Rooh Afza '.
The appellants urged that the said Sharbat is not a foodstuff, but a medicinal product and as such, its produc tion cannot be regulated under the provisions of section 3 of the Act.
According to them, the said Sharbat was not an essential commodity, nor was it a 'fruit product ' as defined by clause 2(d) of the fruit Order.
They also urged that the impugned order was invalid, because it contravened the fundamental rights of the appellants under article 19(1)(f)&(g) of the Constitution; the Sharbat in question was in fact a medicinal product and as such, the impugned order was inconsistent with clause 16 (1) (c) of the Fruit Order.
It is on these grounds that the appellants sought relief by way of an appropriate writ or order quashing the impugned order issued against them on May 10, 1957.
To this petition, the appellants impleaded the Union of India as respondent No. 1.
This petition was resisted by the respondents on several grounds.
It was alleged that the Sharbat in question fell within the scope of the Act and the Fruit Order.
The respondents referred to the fact that the Hamdard Dawakhana had duly applied and was granted a licence in 1955 as a manufacturer engaged in the business of manufacturing fruit products for sale.
The Dawakhana is holding this licence since 1955.
The bottles in which the Sharbat in question is sold by the appellants do not bear labels containing the words "for medicinal use only".
It appears that the Dawakhana obtained a licence for the year 1952 under the Fruit Products Order 1948 for the manufacture of the Sharbat in question.
On analysis, it was found that the said Sharbat did not 196 contain fruit juice, though it was sold as fruit juice.
The label ,on the bottle of the Sharbat depicts pictures of fruits.
Under the said Order of 1948 the synthetic syrups containing no fruit juice were required to be clearly marked as 'synthetic ' and to abstain from using labels with pictures of fruits.
In 1954 when it was found that the Dawakhana did not get the licence renewed, the appellants were asked either to get their licence renewed or to get exemption by complying with the necessary conditions.
When the appellants did not comply with these directions, some of the bottles of the Sharbat were detained in the market.
That led to a writ petition filed by the appellants in 1.954 (No. 11 D/1954) in the Punjab High Court.
When the petition, however, came for final hearing, it was not pressed, and so, was dismissed on June 5, 1954.
The Dawakhana then filed a suit for injunction, but the said suit became infructuous with the expiry of the Fruit Products Order, 1948 on January 25, 1955.
The present Fruit Order came into force on May 3, 1955; and the Dawakhana filed another suit for injunction, but pending the suit, the appellants applied for and obtained a licence under the Fruit Order and in consequence, the suit was withdrawn on October 18, 1955.
Even after obtaining the licence, the requirements of the relevant provisions of the Fruit Order as to the minimum percentage of fruit juice were not complied with by the appellants; and that led to the impugned order.
That is the background of the present writ petition.
In the present writ petition, the respondents urged that the Sharbat in question is not sold for medicinal purposes; it is manufactured by the appellants as a fruit product and sold as such.
No exemption was claimed by the appellants under clause 16 of the Fruit Order.
The Sharbat in question is foodstuff within the meaning of section 2 of the Act and it falls within the purview of the Fruit Order.
The impugned order is not unconstitutional, because the restriction imposed by it is consistent with the relevant provisions of the Act and the Fruit Order, and the said provisions are perfectly valid, because they impose a reasonable restriction in the interest of general public.
This writ petition came on for final disposal before the Punjab High Court on January 13, 1964.
The High Court has rejected the pleas raised by the appellants and dismissed their writ petition.
The High Court has held that there was no substance in the appellants ' grievance that the Fruit Order was invalid.
In support of this conclusion, the High Court has relied upon a decision of this 197 Court in M/s. Amrit Banaspati Co., Ltd. vs The State of Uttar Pradesh(1).
The High Court negatived the appellants ' argument that the Sharbat in question was either prepared or sold as a medicinal product.
In this connection the High Court has commented ' on the fact that the label borne by the bottles containing the Sharbat did not show that it was for medicinal use only as required by cl. 16 (1) (c) of the Fruit Order According to the High Court, clause 1 1 of the Fruit Order covered the case of the Sharbat prepared by the appellants, and so, the impugned order was justified.
The High Court also found that there was no substance in the, grievance made by the appellants that as a result of this impugned order, their registered trade mark label had been affected.
The High Court then examined the question as to whether the provisions of the Fruit Order could be said to be invalid, and it held that the said provisions were perfectly valid inasmuch as the restrictions imposed by them were reasonable and in the interests of ' the general public.
It is on these grounds that the High Court dismissed the appellants ' petition.
Thereafter, the appellants applied for and obtained a certificate from the High Court to come to this Court in appeal.
This certificate was granted on July 22, 1964 After the appeal.
was admitted in due course, the appellants moved this Court on October 26, 1964 for stay; in fact, during all the seven years that the writ petition was pending before the High Court, the appellants had obtained stay and they wanted the stay to continue pending the final ' disposal of this appeal.
When we found that the writ petition had taken an unusually long time in the Punjab High Court, we directed that the stay should continue in favour of the appellants, but that the appeal should be heard on November 9, 1964.
That is how the hearing of this appeal has been specially expedited.
Before we deal with the points which have been raised before us by Mr. Pathak, we would refer very briefly to the scheme and the relevant provisions of the Act and the Fruit Order.
The Act was passed in 1955 for the purpose of controlling the production, supply and distribution of, and trade and commerce in, certain commodities in the interests of the general public.
The commodities which were intended to be brought within the purview of the Act were essential commodities as defined by section 2(a) of the Act.
Amongst them are included foodstuffs, including edible oil seeds and oils covered by section 2 (a) (v), and any other class of ' commodity which the Central Government may, by notified order, (1) Criminal Appeal No. 141 of 1959 decided on 30 11 1960.
198 declare to be an essential commodity for the purposes of this Act, being a commodity with respect to which Parliament has power to make laws by virtue of entry 33 in List III of the Seventh Schedule to the Constitution; this is included in the definition by section 2 (a) (xi).
Section 3 (1 ) provides that if the Central Government is of opinion that it is necessary or expedient so to do for maintaining or increasing supplies of any essential commodity or for securing their equitable distribution and availability at fair prices, it may, by order, provide for regulating or prohibiting the production, supply and distribution thereof and trade and commerce therein.
Sub section (2) by clauses (a) to (h) provides for different categories of orders which may be passed by the Central Government without prejudice to the generality of the powers conferred on it by sub section (1).
It would thus be clear that the Act confers power on the Central Government to regulate the production, supply and distribution of essential commodities.
This power is conferred in a very general and wide sense by section 3 ( 1 ).
There can be little doubt that the power to regulate the production of an essential commodity will include the power to regulate the production of essential commodities which may operate either qualitatively or quantitatively.
In other words, in regard to essential commodities, the Central Government is given the power to direct how certain essential commodities should be produced and in what quantity.
This power, of course, can be exercised only if the condition precedent prescribed by section 3(1) is satisfied, and that is that the Central Government should be of opinion that it is necessary or expedient to regulate the production of any essential commodity for one of the purposes mentioned by it.
This position cannot be, and is not, disputed before us.
In fact in M/s. Amrit Banaspati Co. Ltd.(1) this Court whilst dealing with the provisions of the Vegetable Oil Products Control Order, 1947, issued under section 3 (1 ) of the Act, has definitely ruled that a qualitative regulation in respect of the production of an essential commodity is permissible under section 3(1) of the Act.
That takes us to the Fruit Products Order which was issued by the Central Government on May 3, 1955, in exercise of the powers conferred on it by section 3 of the Act.
Clause 2 of the Fruit Order defines 'fruit product '.
2(d) (1) takes in synthetic beverages, syrups and sharbats; cl. 2 (d) (v) takes in squashes crushes, cordials, barley water, barreled juice and ready to serve beverages or any other beverages containing fruit juices or fruit pulp.
Clause 2 (d) (xiv) takes in any other unspecified items relating to fruits or vegetables.
Clause 2(j) defines "sharbat" as 199 meaning any non alcoholic sweetened beverage or syrup containing non fruit juice or flavoured with non fruit flavours, such as rose, khus, kewra, etc; and cl.
2(k) defines "synthetic beverage" as meaning any non alcoholic beverage or syrups, other than aerated waters, containing no fruit juice but having an artificial flavour or colour resembling as fruit.
Clause 7 of the Fruit Order prescribes that every manufacturer shall manufacture fruit products in conformity with the sanitary requirements and the appropriate standard of quality and composition specified in the Second Schedule to this Order; it adds that every other fruit and vegetable product not so specified shall be manufactured in accordance with the standard of quality and composition laid down in this behalf by the Licensing Officer.
That takes us to clause II; it is necessary to read this clause fully : (1)Any beverage which does not contain at least 25 per centum of fruit juice in its composition shall not be described as a fruit syrup, fruit juice, squash or cordial or crush and shall be described as a synthetic syrup.
(2) Every synthetic syrup shall be clearly and conspicuously marked on the label as a 'SYNTHETIC ' product, and no container containing such product shall have a label, whether attached thereto or printed on the wrapper of such container or, otherwise, which may lead the consumer into believing that it is a fruit product, Neither the word 'FRUIT ' shall be used in describing such a product, nor shall it be sold under the cover of a label, which carries the picture of any fruit.
Aerated water containing no fruit juice or pulp shall not have a label which leads the consumer into believing that it is a fruit product.
Part II of the Second Schedule to the Fruit Order prescribes the specifications for fruit juice and other beverages.
In regard to fruit syrup, it provides, inter alia, that the minimum percentage of fruit juice in the final product must be 25%.
The respondents ' contention is that since the Sharbat in question produced by the appellants does not comply with this specification, it contravenes the mandatory provision of cl.
11(1).
Part IV of the Second Schedule prescribes the specifications for synthetic syrups and sharbats.
Under this Part, there is no requirement as to any minimum of fruit juice in the said syrups and sharbats.
200 Clause 16 of the Fruit Order provides for cases to which this Order does not apply, Clause 16 (1) (c) provides that nothing in this Order shall be deemed to apply to any syrups which are sold in bottles bearing a label containing the words "For medicinal use only" which does not exhibit any picture of fruits.
It is common ground that the appellants do not sell the Sharbat in question in bottles bearing a label containing the words "For medicinal use only" and so, cl. 1 6 (1) (c) does not apply and the appellants can claim no exemption on that account.
Mr. Pathak no doubt attempted to argue that the Sharbat in question is not an essential commodity and as such, it does not fall within the purview of the Act or within the purview of the Fruit Order.
It appears that this plea was not urged by the appellants before the Punjab High Court.
It was argued by them before the High Court that the Sharbat in question was a medicinal product; and that point had been considered and rejected by the High Court; and so, it has assumed that the Sharbat in question is an essential commodity within the meaning of section 2 of the Act; that question cannot now be allowed to be argued for the first time before this Court.
Mr. Pathak wanted to suggest that the Sharbat in question is not a fruit product and as such, is outside the purview of the Fruit Order.
We are not impressed by this argument.
We have already referred to cl. 2 (d) (v) of the Fruit Order which refers to several beverages, and the residuary part of this clause takes in any other beverages containing fruit juices or fruit pulp.
The suggestion that this clause should be read ejusdem generis with the previous categories of beverages cannot obviously be accepted because an examination of the said beverages will disclose the fact that there is no genus by reference to which the rule of ejusdem generis can be properly invoked.
Besides, the context of the clause clearly suggests that it is intended to take in all beverages other than those earlier specified, provided they contain fruit juices or fruit pulp.
Therefore, we feel no difficulty in holding that the Sharbat in question falls within the purview of cl. 2 (d) (v) of the Fruit Order and as such, its production can be controlled by its relevant provisions Then it is urged by Mr. Pathak that the Fruit Order itself is invalid, because it does not purport to say that before it was issued, the Central Government had formed the opinion that it was necessary or expedient to issue the Order for maintaining or increasing supplies of the commodity in question.
Mr Pathak 201 contends, and rightly, that the condition prescribed by the first part of section 3(1) of the Act is a condition precedent and it is only when and after the said condition is satisfied that the power to issue a regulatory order can be exercised by the Central Government.
This contention again cannot be allowed to be raised for the first time in appeal, because if it had been raised before the High Court, the respondents would have had a chance to meet it.
It is true, as Mr. Pathak contends, that in the absence of any specific averment made by the Fruit Order that the Central Government had formed the necessary opinion, no presumption can be drawn that such opinion had been formed at the relevant time; but it would have been open to the respondents to prove that such an opinion had been formed at the relevant time; and it cannot be suggested that the failure to mention that fact expressly in the Fruit Order itself would preclude the respondents from proving the said fact independently.
That is why we think Mr. Pathak cannot be permitted to urge this contention at this stage.
Mr. Pathak, has, however, strenuously argued before us that the Fruit Order is invalid, because its relevant provisions indicate that it is an Order which could have been appropriately issued under the (No. 37 of 1954).
In support of this argument, Mr. Pathak has relied on the fact that Act 37 of 1954 is relatable to the legislative power conferred by Entry 18 in List III of the Seventh Schedule to the Constitution which refers to adulteration of foodstuffs and other goods; and so, the material provisions of the Fruit Order which really prevent the adulteration of fruit products could be legitimately enacted under this Act.
On the other hand, the is relateable to Entry 33 in List III and the Fruit Order issued under it would, therefore, be inappropriate, having regard to the object which this Order is intended to achieve.
He argues that the two powers are distinct and separate, and the Fruit Order with which we are concerned, cannot be said properly to have been issued under the Act.
It is true that the does deal with the problem of preventing adulteration of food; but it is not easy to accept Mr. Pathak 's assumption that the regulatory Order of the kind with which we are concerned which imposes regulations Of a qualitative character in the production of essential goods, could have been issued under this Act.
But quite apart from this consideration if section 3(1) of the Act authorises the Central Government to regulate the qualitative and quantitative production of essential commodities, it is idle to contend that the regulations p /65 14 202 imposed by the Fruit Order in respect of fruit products are outside the purview of section 3 (1).
The pith and substance of the relevant provisions of the Fruit Order clearly is to regulate the qualitative production of fruit products covered by it.
This object is illustrated by the specification with which we are concerned.
Part II of the Second Schedule to the Fruit Order 1which has imposed the obligation on the manufacturers of fruit 'Syrups to include at least 25% of fruit juice in the final product of the fruit syrup produced by them, shows that by virtue of its powers under section 3 (1) of the Act, the Central Government thought it necessary to require that a particular quality of fruit syrup should be put on the market as fruit syrup and no other.
This object plainly falls within the purview of section 3(1), and so, the contention that the Fruit Order is invalid inasmuch as it purports to tackle the problem of adulteration of fruit product, cannot be accepted.
Then Mr. Pathak suggested that there was some inconsistency between the definition of 'synthetic beverage ' prescribed by cl. 2 (k) and the provisions of cl. 11 (2) of the Fruit Order.
We have already read cl. 11.
The effect of cl. 11 (1) is that if any beverage does not contain at least 25 per cent of fruit juice, it shall not be described, inter alia, as 'fruit syrup ', but shall be ,described as a 'synthetic syrup ', and sub cl.
(2) of cl. 11 therefore provides that if any syrup which has to be described as a 'synthetic syrup ' by virtue of the provisions of sub cl.
(1) is put on the market, it would be necessary to describe it as a 'Synthetic ' product clearly and conspicuously.
It is with the object of bringing it to the notice of the customers at large that the synthetic product does not contain the minimum fruit juice prescribed by the Fruit Order that sub cl.
(2) imposes an obligation that whoever puts the synthetic product in the market shall mark it with a label "Synthetic" and no attempt would be made to describe the product as though it was a fruit product.
That is why a specific provision is made by sub cl.
(2) that neither the word "Fruit" shall be used in describing such a product, nor will it bear a label which carries the picture of any fruit.
From this provision aerated waters are exempted, because it was thought that no customer would ever mistake aerated water for fruit juice.
Now, if we bear in mind this scheme of clause 11, it is difficult to see where the inconsistency lies between cl. 11 and the definition of a 'synthetic beverage ' as prescribed by cl. 2(k).
The definition of synthetic beverage indicates that it is a beverage which contains no fruit juice, and clause 11 which contains a positive provision that beverages 203 containing less than 25 per cent fruit juice should be shown as a 'synthetic ' product.
The definition of 'synthetic beverage ' cannot be said to conflict with the requirement that the products falling under cl.
11(2) should be sold as 'synthetic ' products.
Besides, clause 1 1 contains a positive provision and the validity of the mandatory requirements of cl. 11 cannot be said to be impaired by any alleged inconsistency between the said provision and the definition of 'synthetic beverage ' prescribed by cl. 2 (k) of the Fruit Order.
The last contention which Mr. Pathak urged before us is that the impugned order is invalid, because it affects the appellants ' trade mark right.
It is not easy to appreciate this argument.
We have already held that the Act and the Fruit Order issued by the Central Government by virtue of its powers conferred by section 3(1) of the Act are valid.
If that be so, the impugned order which is fully justified by the provisions of the Act and the Fruit Order cannot be challenged as being invalid.
The conclusion that the Act and the Fruit Order issued under it are constitutionally valid proceeds on the basis that the restrictions imposed by them are reasonable and in the interests of general public.
What the impugned order purports to do is to require the appellants to comply with the reasonable restrictions imposed by the Fruit Order.
The fact that incidentally compliance with Fruit Order may tend to affect their trade mark right cannot, in our opinion, render the impugned order invalid.
In this connection, it is necessary to bear in mind that appellant No. I would not be justified in con tending that the registered trade mark which is usually intended to distinguish one manufactured article from another can be used by it even though it is likely to mislead the customers, or its use would mean a breach of some other law.
Besides, it is significant that the impugned order does not really compel the appellants to change their trade mark.
If the appellants desire that the Sharbat in question should be put on the market without complying with the requirements of clause 1 1 ( 1 ), all that they to do is to comply with cl. 1 1 (2) of the Fruit Order.
In the process of complying with cl. 1 1 (2), if their trade mark right is likely to be affected, that would not render the impugned order invalid, because the restriction which is sought to be enforced against them is found to be reasonable and in the interests of the general public.
Besides, we would like to add that if the appellants wanted to urge this point seriously, they should have placed before the Court more material in respect of their alleged trade mark right.
The appellants had alleged in their writ petition that they are putting the 204 Sharbat on the market as a medicinal product.
In that case, they may claim exemption by complying with cl. 16 (i) (c) of the Fruit Order.
We are, therefore satisfied that the Punjab High Court was right in holding that no case had been made out by the appellants for quashing the impugned order.
Before we part with this appeal, we would like to refer to one unfortunate aspect of the present proceedings.
We have already indicated that the present writ petition was filed by the appellants in the Punjab High Court on May 18, 1957, and it was finally decided on January 13, 1964.
It is very much to be regretted that the final disposal of this writ petition should have taken such an unusually long period.
The appellants have been agitating this matter since 1957 and as a result of the long duration of the present writ petition in the High Court, they have had the benefit of the stay order all this time, though ultimately it was found that there was no substance in the petition.
It is hardly necessary to add that writ petitions in which orders of stay and injunction are passed, should be decided as expeditiously as possible.
That is why when it came to the notice of this Court that this writ petition has taken an unusually long period in the High Court, we directed that it should be set down for hearing within a fortnight after it was brought to us on a notice of motion for stay.
The result is, the appeal fails and is dismissed with costs.
Appea1 dismissed.

summary/full:
The appellants manufacture a medicated syrup "Sharbat Rooh Afza" according to a formula and containing some fruit juices.
Acting under section 3 of the , the Central Government made the Fruit Products order in 1955; as a result of an amendment in September 1956 of the relevant provisions of this Order, the requirement of the minimum percentage of fruit juices in a fruit syrup covered in of the Second Schedule of the Fruit Order was raised from 10% to 25%.
This requirement was duly notified to the Appellants.
Thereafter as a result of an inspection of their factory by the Marketing development Officer, the appellants received an order from him requiring them to stop further manufacture and sale of 'Sharbat Rooh Afza ' forthwith on the ground that it did not contain the minimum percentage of fruit juices prescribed by the relevant provisions of the Fruit Order.
The appellants challenged this order in a Writ Petition on the ground, inter alia, that the Fruit Order did not apply to 'Sharbat Rooh Afza ' and also that the impugned order and the Fruit Order were invalid.
The High Court, however, rejected these grounds, upheld the validity of the Fruit Order and dis missed the petition.
It was contended on behalf of the appellants that the 'Sharbat ' was a medicinal product and not a 'fruit product ' as defined by cl. 2(d) of the Fruit Order; that the Fruit Order was invalid because it could have appropriately been issued only under the , and not the ; and that the impugned order was invalid because it affected the appellant 's Trade mark rigts.
HELD : (i) The Sharbat was a fruit product within the meaning of cl. 2(d) (v) of the Fruit order as the residuary part of that clause took in any beverages containing fruit juices or fruit pulp; as such, its production could be controlled by the relevant provisions of the order.
The High Court was right in rejecting the appellant 's contention that the Sharbat was a medicinal product in view of the fact that the appellants had not claimed exemption from the application of the Fruit Order by complying with Cl. 16(1)(c) thereof.
[200 E G; 201 H; 203 A] (ii)As section 3(1) of the authorised the Central Government to regulate the qualitative and quantitative production of essential commodities, and as the pith and substance of the relevant provisions of the Fruit Order was clearly to regulate the qualitative production of the Fruit Products covered by it, the contention that the regulations imposed by the order were outside the purview of section 3(1), could 193 not be accepted.
The order was not therefore invalid on the ground that it purported to tackle the problem of adulteration and should therefore have been issued under the .
[201 D 202 C] (iii)The Fruit Order and the Act under which it was issued were constitutionally valid as the restrictions imposed by them were reasonable and in the interest of the general public.
What the impugned order purported to do was to require the appellants to comply with reasonable restric tions imposed by the Fruit Order and the fact that, incidentally, compliance with the Fruit Order might tend to affect the trade mark rights, could not render the impugned order invalid.
[203 D E] (iv)The definition of 'synthetic beverage ' in cl. 2(k) of the Fruit Order which indicates that it is a beverage which contains no fruit juice cannot be said to conflict with the requirements of cl.
11(2) that beverages containing less than 25% fruit juices should be sold as 'synthetic ' pro ducts.
Furthermore, cl. 11 contains a positive provision and the validity of the mandatory requirements of cl. 11 could not be impaired by the alleged inconsistency between that provision and the definition of 'synthetic ' beverage prescribed by cl. 2(k).
[203 A B] Amrit Banaspati Co. Ltd. vs The Stale of U.P. Cr.
A. No. 141 of 1959 dated 30 11 60, referred to.