judgement:
Civil Appeal No. 2082 of 1969.
Appeal by Special Leave from the Judgment and Order dated 14 2 1969 of the Punjab and Haryana High Court in L.P.A. No. 103/68.
R. section Narula, section K. Mehta, T. section Doabia, P. N. Puri and K. R. Nagaraja, for the Appellant.
Girish Chandra for Respondent No. 1.
Hardev Singh and R. section Sodhi for Respondents 2 5.
The Judgment of the Court was delivered by DESAI, J.
This appeal by special leave arises from the dismissal of the Civil Writ Petition filed by the present appellant by a learned single Judge of the Punjab & Haryana High Court as also dismissal in limine of the Letters Patent appeal preferred by him.
Appellant is a displaced person from West Pakistan.
On his migration to India he was allotted on quasi permanent basis land admeasuring 321/2 standard acres in village Daulatpur, Tehsil Pathankot, 402 District Gurdaspur.
First respondent Union of India acquired land admeasuring 1243 canals, 5 marlas which included 15 acres of land alloted to the appellant, for constructing a railway line.
According to the appellant he was paid cash compensation for the same.
First respondent further acquired in 1950 some land for construction National Highway from Jammu to Jullundur and the acquistion included a portion of the land allotted to the appellant and along with other allottees he was paid cash compensation for the same.
First respondent wanted an open plot of land for setting up a housing colony for rehabilitating some refugees from Mirpur (Kashmir) and in all it took possession of land comprising 7.88 acres of non evacuee land and 6.64 acres of evacuee land.
This acquisition included land admeasuring 1 standard acre and 151/2 units of land allotted to the appellant.
Possession of the land including the land of the appellant was admittedly taken over in July 1953.
Since then the appellant has been requesting the first respondent and other competent authorities for payment of compensation for the same.
In the mean time after the introduction of the , ( '1954 Act ' for short), allotment of land to appellant which was till then on quasi permanent basis was converted into permanent basis.
As the appellant was clamouring for compensation for the land taken from him, the Chief Settlement Commissioner, Punjab, made an order on 17th March 1961, Annexure 'C ', whereby a reference made from the Evacuee Property Department was accepted and the permanent settlement rights conferred on the appellant in respect of 1 standard acre and 151/2 units of land were cancelled on the ground that there already existed houses over that portion of the land and the land was described as ghair mumkin abadi and was not allottable on permanent settlement, as agricultural land against the verified claim of the appellant.
The appellant questioned the correctness of this order in Writ Petition No. 559/61 in the High Court which was dismissed in limine on 22nd March 1961 and which has led to a contention on behalf of the respondents that the subsequent writ petition from which the present appeal arises is barred by the principles analogous to res judicata.
After the dismissal of the aforementioned writ petition the appellant approached the Financial Commissioner (Rehabilitation Department), Chandigarh, as per his representation Annexure 'D ' dated 15th March 1963 requesting him to pay cash compensation for the land taken over by the first respondent which till such taking over was held by the appellant on quasi permanent allotment.
On receipt of this representation the appellant was directed as per Annexure 'E ' dated 25th April 1963 to appear before the Financial Commissioner (Taxation) on 16th March 1963 at Chandigarh.
The appellant accordingly appeared before the 403 Financial Commissioner (Taxation) and represented his case for cash compensation.
Subsequent thereto, Secretary to the Government of Punjab, Rehabilitation Department, wrote to his counterpart in the Central Government requesting the first respondent to concur with the decision of the Punjab Government for payment of cash compensation to the appellant adding that the land held by the appellant on quasi permanent basis was taken over for the purpose of the first respondent and that as the area involved was less than 2 acres, the decision to pay cash compensation in respect of such area arrived at in the meeting held between the officers of the Punjab Government and the Ministry of Rehabilitation on 27th August, 1957 would govern the case.
Presumably in response to this communication from the Punjab Government the then Home Minister wrote a demi official letter to the then Chief Minister of Punjab in which it was admitted that the land allotted to the appellant was in rural areas and a part of it was required later on for public purpose and that in view of the decision arrived at the meeting on 27th August, 1957 the appellant would be entitled to cash compensation and requested the Chief Minister to process the case accordingly.
Thus, even though both the Governments agreed in their inter departmental communications that the appellant would be entitled to cash compensation, nothing tangible came out with the result that the appellant preferred a petition under section 33 of the 1954 Act challenging the order dated 17th March 1961 of the then Settlement Commissioner cancelling the permanent settlement rights conferred upon the appellant.
This application was rejected by the Joint Secretary to the Government of India observing that the cancellation of the permanent settlement rights was in accordance with law and no interference was called for.
Thereafter the appellant filed the writ petition from which the present appeal arises.
After the writ petition was filed and rule nisi was issued, a return was filed as per the affidavit of one R. C. Aggarwal, Under Secretary to Government of Punjab, Rehabilitation Department, presumably on behalf of all the respondents which undoubtedly amongst others, include the Union of India, the first respondent, and the State of Punjab, the second respondent.
It must be specifically mentioned that the Union of India did not file any separate return and accepted the return filed by and on behalf of the State of Punjab and other officers of the Punjab Government.
There are certain averments in this return which must be noticed.
Appellant is a displaced person and he was allotted 32 1/2 standard acres of land on quasi permanent basis is in fact admitted.
It is equally admitted that the land which was taken over for setting up a colony for rehabilitation of some families from Kashmir included one 404 standard acre and 15 1/2 units of land which was till then held by the appellant and that the land was taken over in July 1953.
It was contended that when land is allotted on quasi permanent basis, the allotment can be cancelled and the land can be resumed and that when such a resumption takes place the allottee is only entitled to compensation in the form of land and not in cash.
It was also contended that the cancellation of the permanent settlement rights was just and legal because the conferment was the result of a fraud between the appellant and some officers of the Punjab Government and proceeded on the erroneous assumption that the land was used as agricultural land though in fact it can be appropriately described as ghair mumkin abadi.
The manner in which the preliminary objection was raised at the hearing of the writ petition that in view of the dismissal of the earlier petition bearing on the same subject the present petition is barred by the principles of res judicata was not in terms taken up in the return filed on behalf of the respondents.
The High Court, however, appears to have permitted the respondents to raise that contention.
The learned single Judge held that the effect of dismissal of the earlier petition filed by the present appellant was that the order dated 17th March, 1961 by which permanent settlement rights conferred on the appellant were cancelled became final and if the present petition is allowed the only thing the court would have to do would be to cancel the order dated 17th March, 1961 which has become final against the appellant and, therefore, the petition is barred by the principles analogous to res judicata.
Mr. Girish Chandra for the first respondent and Mr. Hardev Singh for the remaining respondents urged that the appeal must fail for the same reason for which the earlier petition of the appellant was dismissed inasmuch as the cause of action for both the petitions being the same, the subsequent petition would be barred by the principles analogous to res judicata.
In the earlier petition the appellant questioned the correctness of the decision dated 17th March 1961 by which permanent settlement rights conferred on the appellant for the land held by him on quasi permanent basis, including the land admeasuring 1 standard acre and 15 1/2 units taken over by the first respondent in Joly 1953, and the appellant in the earlier petition did not claim any cash compensation for the land taken over by the first respondent.
In the present petition the appellant seeks a direction for quashing the order of the Joint Secretary, Rehabilitation Department, Government of India dated 29th September, 1964 rejecting the representation made to the Central Government presumably under section 33 of the 1954 Act question 405 ing the correctness of the order dated 17th March 1961.
Under section 33 the Central Government has power to call for the record of any proceeding under the Act and to pass such order in relation thereto as in its opinion the circumstances of the case require and as is not inconsistent with any of the provisions contained in the Act or the rules made thereunder.
Broadly stated the power of revision is conferred on the Central Government under section 33.
Appellant invoked this revisional jurisdiction under section 33 against the order dated 17th March 1961 which he challenged in the first petition.
After the dismissal of the first petition he preferred revision application under section 33 and when this revision petition was dismissed he preferred the second petition.
The High Court was of the view that the order dated 17th March 1961 merged into the order dated 29th September 1964 passed by the Central Government while dismissing the revision application of the appellant and, therefore, if now the petition is allowed it would have the effect of setting aside the order dated 17th March 1961 which in view of the dismissal of the earlier petition of the appellant had become final.
The High Court is clearly in error in reaching this conclusion.
The earlier petition was dismissed by a non speaking, one word, order 'dismissed '.
The High Court may as well dismiss the petition in limine on the ground of delay or laches or on the ground of alternative remedy.
The second petition after pursuing the alternative remedy would not be barred by the principles analogous to res judicata.
More often a petition under Article 226 is dismissed on the ground that before invoking the extraordinary jurisdiction of the High Court, if the petitioner has an alternative remedy under a statute under which the right is claimed by the petitioner, the Court expects the petitioner to exhaust the remedy and in such a situation the petition is dismissed in limine.
If after preferring an appeal or revision under the statute under which the right is claimed by the petitioner a petition under Article 226 is filed irrespective of the fact that the revision or appeal was dismissed and the original order which was challenged in the first petition had merged into the appellate or revisional order, nonetheless the second petition in the circumstances would not be barred by the principles analogous to res judicata because the cause of action is entirely different and the merger of the order cannot stand in the way of the petitioner invoking the jurisdiction of the High Court under Article 226.
In the leading case of Daryao & Ors.
vs State of U.P. & Ors.(1) this Court in terms said that if the petition filed in the High Court under 406 Article 226 is dismissed not on the merits but because of the laches of the party applying for the writ or because it is held that the party had an alternative remedy available to it then the dismissal of the writ petition would not constitute a bar to the subsequent petition under article 32 except in cases where the facts found by the High Court may themselves be relevant even under article 32.
If a writ petition is dismissed in limine and an order is pronounced in that behalf whether or not the dismissal would constitute a bar would depend upon the nature of the order.
If the order is on the merits it would be a bar; if the order says that the dismissal was for the reason that the petitioner was guilty of laches or that he had an alternative remedy it would not be a bar except in cases indicated in the judgment.
Then comes an observation which may better be quoted: "It the petition is dismissed in limine without passing a speaking order then such dismissal cannot be treated as creating a bar of res judicata.
It is true that, prima facie, dismissal in limine even without passing a speaking order in that behalf may strongly suggest that the Court took the view that there was no substance in the petition at all, but in the absence of a speaking order it would not be easy to decide what factors weighed in the mind of the Court and that makes it difficult and unsafe to hold that such a summary dismissal is a dismissal on merits and as such constitutes a bar of res judicata against a similar petition filed under article 32".
In Virudhunagar Steel Rolling Mills Ltd. vs The Government of Madras,(1) rejecting the contention that if the petition under article 226 is dismissed without issuing a notice to the other side though by a speaking order such a dismissal would not bar the subsequent petition for same cause of action or for the same relief, it was observed that this Court in Daryao 's case(2) did not mean to lay down that if the petition is dismised in limine without notice to the opposite side it would not bar a subsequent petition.
This Court only ruled that if the petition is dismissed in limine but with a speaking order which order itself indicates that the petition was dismissed on merits, the absence of notice to other side by itself would not be sufficient to negative the plea of res judicata in a subsequent petition in respect of the same cause of action.
However, while negativing the contention on the facts of the case this Court reaffirmed that if the petition is dismissed in limine without passing a speaking order than such a dismissal cannot be treated as creating a bar of res judicata.
Similarly in Tilokchand Motichand & Ors.
vs H. B. 407 Munshi & Anr.
,(1) a majority of the Judges affirmed the ratio in Daryao 's case (supra) that if a petition under article 226 is dismissed not on merits but because an alternative remedy was available to the petitioner or that the petition was dismissed in limine without a speaking order such dismissal is not a bar to the subsequent petition under article 32.
It must follow as a necessary corollary that a subsequent petition under article 226 would not be barred by the principles analogous to res judicata.
Re affirming the view taken on this point in Daryao 's case, in P. D. Sharma vs State Bank of India(2) the preliminary objection about bar of res judicata was negatived.
It is, therefore, incontrovertible that where a petition under article 226 is dismissed in limine without a speaking order such a dismissal would not constitute a bar of res judicuta to a subsequent petition on the same cause of action, more so, when on the facts in this case it appears that the petition was dismissed presumably because the petitioner had an alternative remedy by way of a revision petition under section 33 of the 1954 Act which remedy he availed of and after failure to get the relief he moved the High Court again for the relief.
It would be incorrect in such a situation to dismiss the petition on the ground that the order made by the revisional authority dismissing the revision petition had the effect of merging the original order against which the revision was preferred with the order made by the revisional authority and, therefore, the challenge on the first cause of action to the order made by the revisional authority would of necessity be a challenge to the original order also and the petition would be barred by the principles analogous to res judicata as the rest order had become final.
The High Court was clearly in error in dismissing the petition on this short ground.
There is yet another fallacy in the approach of the High Court while dismissing the petition as being barred by the principles analogous to res judicata because the second relief claimed by the appellant in the second petition was never claimed in the first petition and is an independent and separate relief which the High Court was invited to grant if the appellant was otherwise entitled to it.
The appellant, by prayer (b) of the petition, sought a direction that the respondents be ordered to pay cash compensation to the appellant for the area of land which had been taken over by the respondents.
It is nobody 's case that such a prayer was ever made in the first petition.
In the first petition the grievance of the appellant was that the order dated 17th March, 1961 made by the Chief Settlement Commissioner cancelling the permanent settlement rights conferred on the appellant in respect of his land was illegal and invalid.
There was no claim for 408 compensation.
A claim for compensation was being separately pursued by the appellant and he did not invoke the jurisdiction of the High Court praying for a direction to pay him compensation.
In the second petition from which this appeal arises there is a specific prayer for compensation and Mr. Narula, learned counsel for the appellant, stated that the appellant is not interested in the first prayer questioning the validity of the order made by the Joint Secretary to Government of India dated 29th September 1964 affirming the order dated 17th March, 1961 which was the subject matter of the first petition.
Now, if claim for compensation was not raised in the first petition and if it is specifically raised in the second petition on the allegation that as the land of the appellant has been taken over by the Government for its own use, if compensation is not paid it would be deprivation of property without compensation and would be denial of fundamental right to hold property, it is unthinkable that the present petition for this particular relief can ever be dismissed in the facts of this case on the ground that it is barred by the principles analogous to res judicata.
For this additional reason the order of the High Court is unsustainable.
And now to the facts of the case.
The appellant is admittedly a displaced person to whom 32 1/2 standard acres of land was allotted and the allotment admittedly was on quasi permanent basis.
It is again an admitted position that in July 1953 the first respondent, Union of India, took possession of 1 standard acre and 15 1/2 units of land from the land allotted to the appellant on quasi permanent basis for its use, viz., for setting up a colony.
Appellant contends that he must be paid compensation in cash for the land taken over from him.
Respondents on the other hand contend that an allotment of land on quasi permanent basis could be resumed by the first respondent when the land was required for its own use and on such resumption the appellant would only be entitled to allotment of an equivalent area of land but in no case the appellant would be entitled to compensation in cash.
This necessitates examination as to what is the interest of the appellant in the land allotted to him on quasi permanent basis and when and in what circumstances and for what purpose it can be resumed or allotment cancelled and if so resumed, to what relief the appellant is entitled to.
There has been a flood of enactments on the taking over and administration of evacuee property as also compensation payable to displaced persons.
This Court in Amar Singh vs Custodian, Evacuee 409 Property, Punjab,(1) exhaustively and stage by stage examined the measures taken by the Central and State Governments first for rehabilitating displaced persons, taking over of properties left by those who migrated to Pakistan, its distribution and allotment to displaced persons who came over to India on partition, and ultimately extinguishment of the evacuee interest in such properties.
To recapitulate them here would be merely adding to the length of this judgment.
We would, therefore, only take note of the conclusion reached in Amar Singh 's case (supra) with regard to the interest of the displaced persons to whom agricultural land was allotted on quasi permanent basis up to July 22, 1952.
Says the Court at page 823: "(1) The allottee is entitled to right of use and occupation of property until such time as the property remains vested in the Custodian; (2) The benefit of such right will enure to his heirs and successors; (3) His enjoyment of the property is on the basis of paying land revenue thereupon and cesses for the time being.
Additional rent may be fixed thereupon by the Custodian.
If and when he does so, the allottee is bound to pay the same; (4) He is entitled to quiet and undisturbed enjoyment of the property during that period; (5) He is entitled to make improvements on the land with the assent of the Custodian and is entitled to compensation in the manner provided in the Punjab Tenancy Act; (6) He is entitled to exchange the whole or any part of the land for other evacuee land with the consent of the Custodian; (7) He is entitled to lease the land for a period not exceeding three years without the permission of the Custodian and for longer period with his consent.
But he is not entitled to transfer his rights by way of sale, gift, will, mortgage or other private contract; (8) His rights in the allotment are subject to the fairly extensive powers of cancellation under the Act and rules as then in force prior to July 22, 1952, on 410 varied administrative considerations and actions such as the following: . . . ." Undoubtedly this Court held that these quasi permanent rights in land would not be property within the meaning of Article 31 of the Constitution and, therefore, if deprivation of property is complained of a petition under article 32 would not lie.
However, after concluding in this manner this Court summed up the position with regard to the interest of quasi permanent holder in his holding as under : "In holding that quasi permanent allotment does not carry with it a fundamental right to property under the Constitution we are not to be supposed as denying or weakening the scope of the rights of the allottee.
These rights as recognised in the statutory rules are important and constitute the essential basis of a satisfactory rehabilitation and settlement of displaced land holders.
Until such time as these land holders obtain sanads to the lands, these rights are entitled to the zealous protection of the constituted authorities according to administrative rules and instructions binding on them, and of the courts by appropriate proceedings where there is usurpation of jurisdiction or abuse of exercise of statutory powers".
After re affirming the position of the quasi permanent allottees as herein quoted, this Court in State of Punjab vs Suraj Prakash Kapur, etc.,(1) held that after July 22, 1952, the Custodian ceases to have any authority to cancel or modify quasi permanent allotment.
This enunciation of the interest of the quasi permanent allottees in the land allotted to them should dispel any doubt about their entrenched interest in the land.
Nor could it be said that those allottees were at the mercy of the Custodian and can be dispossessed at his whim or caprice.
These were heritable rights and the holders were entitled in due course to permanent settlement by issuance of sanads.
But even before this situation was reached a fundamental change occurred in the position of the Custodian vis a vis the quasi permanent allottees about the right of the former to cancel allotment and resume land.
In exercise of the powers conferred by section 56 of the , the Central Government enacted what are styled as Administration of Evacuee Property (Central) Rules, 1950 Rule 14 recites the power of the Custodian to vary or cancel the lease or allotment under certain circumstances mentioned therein.
Initially sub rule (6) was added to this rule and later on it was modified where 411 by the power to cancel any allotment or resume evacuee property allotted on quasi permanent basis was circumscribed and was available in the circumstances mentioned in amended sub rule (6).
The amendment effective from 22nd July 1952 had undoubtedly the effect of modifying and thereby restricting the power of resumption or cancellation vested in the Custodian in respect of quasi permanent allottees and the power was confined within very narrow limits.
Therefore, subsequent to July 22, 1952, the Custodian of Evacuee Property would have the power to cancel an allotment only upon a ground which falls within the exceptions enumerated in sub rule (6) (vide Joginder Singh & Ors.
vs Deputy Custodian General of Evacuee Property).
(1) We need not examine the circumstances in which resumption or cancellation can be ordered under the amended sub rule (6) of rule 14 because it is not the case of the respondents that the land was resumed in exercise of the power conferred by rule 14 and in one or other of the circumstances mentioned in sub rule (6) thereof.
Suffice it to say that after July 22, 1952, the Custodian had no authority to cancel quasi permanent allotment and resume land except in the circumstances and contingencies mentioned in sub rule (6) of rule 14 and that having not been done, it cannot be contended on behalf of the respondents that the land in this case allotted on quasi permanent basis to appellant was resumed by the Custodian.
Two fact situations material and necessary for raising this contention are absent in this case.
There is no material placed on record, including the counter affidavit, which would show that the Custodian resumed the land of the appellant in exercise of the power conferred by rule 14 and in one of the circumstances mentioned in sub rule (6).
And secondly, no such order of Custodian is forth coming even after time was given to produce the file.
Mr. Hardev Singh, however, contended that even though sub rule (6) of rule 14 as amended up to July 22, 1952 would not enable the Custodian to resume land or cancel allotment granted on quasi permanent basis except in the circumstances mentioned in sub rule (6), yet the State Government had the requisite power under a rule made by the Punjab State Government on 29th August, 1951.
It was contended that in exercise of the powers delegated by the Central Government under sub section
(1) of section 55 of the , to make rules under clause (i) of sub section (2) of section 56, the Punjab Government made the rule, the relevant portion of which reads as under : 412 "The Custodian shall be competent to cancel or terminate any lease or allotment or vary the terms of any lease, allotment or agreement and evict the lessee allottee in any one of the following circumstances; . . (h) that it is necessary or expedient to cancel or vary the terms of a lease/allotment for the implementation of resettlement schemes and/or rules framed by the State Government or for such distribution amongst displaced persons as appears to the Custodian to be equitable and proper".
Mr. Hardev Singh contended that presumably the Custodian at the State level cancelled the allotment in respect of the land taken over for resettlement and rehabilitation of refugees from Kashmir and that this cancellation and resumption must be for implementation of resettlement scheme or under the rules framed for such resettlement schemes by the State Government and, therefore, the resumption was one under the and it was not a case of either acquisition or taking over of the land of the petitioner.
There is no material placed before us to support this submission.
In the counter affidavit on behalf of the respondents not one word has been stated that the Custodian at State level cancelled the allotment and resumed the land.
The stand taken in the return filed in the High Court is that evacuee area measuring 7.88 acres was taken over by the Government for construction and development of a colony for rehabilitation of 300 Kashmiri displaced persons and that such land included an area of 1 standard acre and 15 1/2 units of the land allotted to the petitioner.
It was further stated that this land of the appellant stood acquired under section 12 of the Displaced Persons (Compensation & Rehabilitation) Act, 1954.
There is not the slightest suggestion that the Custodian in exercise of the power under the aforementioned rule cancelled the allotment in favour of the appellant and resumed the land.
If such is not the case, the power claimed under the rule cannot help the respondents.
Assuming that there was power to cancel allotment and resume land under the State Rules, it must be shown that the State Government had framed a resettlement scheme and for the purpose of the scheme the allotment was cancelled and land was resumed.
The fact pleaded is to the contrary that the Union of India took possession of the land for setting up a colony.
This also becomes clear from the letter written by the Secretary to Government of Punjab, Rehabilitation Department, Annexure 'F ' wherein it was in terms stated that 413 the land in question was not acquired by the State Government but stood acquired by the Central Government in terms of the general notification issued in 1955 and, therefore, the Government should concur in payment of compensation out of the funds allotted for setting up of the colony.
From the contents of the letter which have remained uncontroverted the situation that emerges is that the land was acquired by the Central Government for its own use.
The Central Government could exercise powers under the Central Rules.
It had not asked the State Government to acquire the land.
Therefore, the power conferred on the State Custodian under the State Rules would not help the respondents as contended by Mr. Hardev Singh.
It was next contended that on the introduction of the 1954 Act and the issuance of Notification under section 12, all evacuee property was acquired by the Central Government and under sub section
(4) of section 12 such acquired evacuee property formed part of the compensation pool.
It was further said that if acquisition was under section 12 of the 1954 Act, the allottee of land on quasi permanent basis would be entitled to compensation as provided by rule 49 of Displaced Persons (Compensation & Rehabilitation) Rules, 1955, and in that event he would be entitled to compensation by allotment of agricultural land but not cash compensation.
To understand the full import of the submission it is necessary to state that when there was migration of large number of persons both the ways from India to Pakistan and vice versa, initially such property left by migrants from India to Pakistan was taken over for the purpose of administration under the provisions of the .
This Act broadly provided for appointment of Custodian General of Evacuee Property and other authorities subordinate to him.
The authorities set up under the Act were empowered to declare certain properties to be evacuee property and any property so declared as evacuee property would, under section 8, vest in the Custodian for the State.
The Custodian was empowered to administer the property and the powers and duties of the Custodian were enumerated in section 10.
In exercise of this power the Custodian allotted lands on quasi permanent basis to displaced persons.
But this was an unsatisfactory situation because the interest of the evacuee in the evacuee property remained intact and till such evacuee interest was extinguished, the evacuee property could not be settled on permanent basis.
In order to obviate this difficulty the Displaced Persons (Compensation & Rehabilitation) Act, 1954, was enacted by Parliament.
Section 12 provided for issuance of a notification as hereinabove mentioned and sub section
(2) of section 12 amongst others provided that the right, title and interest of any evacuee in the evacuee property specified in 414 the notification shall, on and from the beginning of the date on which the notification is so published, be extinguished and the evacuee property shall vest absolutely in the Central Government free from all encumbrances.
Evacuee properties acquired in this manner would form part of the compensation pool.
If the scheme of the 1954 Act is as hereinbefore mentioned, we fail to see how the property which was admittedly allotted to the appellant on quasi permanent basis and which was taken over by the Central Government in July 1953, i.e. much before the introduction of the 1954 Act, became property of the compensation pool.
Assuming that even though it was taken over by the Central Government in July 1953, the evacuee interest therein having not been extinguished till the issue of a notification under section 12 of the 1954 Act and, therefore, on the issue of a notification the property became part of the compensation pool, the consequences provided in 1954 Act must ensue, viz., that so long as the property remained vested in the Central Government it shall continue in possession of the person to whom it was allotted on the same conditions on which he held the property immediately before the date of acquisition.
In this connection reference to section 10 of the 1954 Act would be advantageous.
The relevant portion reads as under : "10.
Where any immovable property has been leased or allotted to a displaced person by the Custodian under the conditions published : (a) by the notification of the Government of Punjab in the Department of Rehabilitation No. 4891 S or 4892 S, dated the 8th July 1949; or (b) by the notification of the Government of Patiala and East Punjab States Union in the Department of Rehabilitation No. 8R or 9R, dated the 23rd July, 1949, and published in the Official Gazette of that State, dated the 7th August 1949, and such property is acquired under the provisions of this Act and forms part of the compensation pool, the displaced person shall, so long as the property remains vested in the Central Government, continue in possession of such property on the same conditions on which he held the property immediately before the date of the acquisition, and the Central Government may, for the purpose of payment of compensation to such displaced person, transfer to him such property on such terms and conditions as may be prescribed.
" 415 Now, indisputably the appellant was allotted the property on quasi permanent basis under the conditions published by the notification of the Government of Punjab in the Department of Rehabilitation, dated 8th July 1949.
If he had continued to hold the property on the clate on which the notification under section 12 of the 1954 Act was issued, by the operation of section 10 he would be entitled to hold the property till the property remained vested in the Central Government and would be entitled to payment of compensation by transfer to him of such property on terms and conditions that may be prescribed.
Therefore, if 1954 Act is not attracted because the property in question was already taken over by the Central Government in July 1953 much before the 1954 Act came into force neither section 12 nor Rule 49 would be attracted.
If on the other hand the evacuee interest in the property came to be extinguished on the issue of a notification under section 12 of the 1954 Act, its consequences would be as provided in section 10 and the appellant would be entitled to hold the property till it continues to vest in the Central Government under section 12.
In either event he would be entitled to compensation.
Mr. Hardev Singh, however, urged that assuming that the appellant is entitled to compensation for taking over of his land the land having formed part of the compensation pool on the issue of a notification under section 12 and the allotment in this case being one not under the notification of the Government of Punjab dated 8th July 1949 but a fresh allotment under section 10, the compensation would only be payable in the form of land under rule 49.
There is a two fold fallacy in this submission.
Indisputably the land was allotted to the appellant under the conditions published by the notification of the Government of Punjabs dated 8th July 1949 and section 10 does not purport to make a fresh allotment.
It merely takes note of the earlier allotment and assures that if the displaced person has continued to be in possession of the land allotted, on the issue of a notification under section 12 and the land becoming part of the compensation pool, such allottee would be entitled to continue in possession of such property on the same conditions on which he held the property immediately before the date of acquisition by issue of notification under section 12 till the property continues to vest in the Central Government and further he would be entitled to the transfer of such property to him presumably on permanent settlement basis as and by way of compensation.
Section 10 does not permit a construction as canvassed for by Mr. Hardev Singh that a fresh allotment could be made under section 10 416 Further, rule 49 which provides that compensation shall be in the from of land will have to be read with r. 69 which reads as under: "69.
Saving Nothing in this Chapter shall apply to agricultural land allotted in the States of Punjab and Patiala and East Punjab States Union under section 10 of the Act.
" It will immediately appear that where allotment was made under the conditions published by the notification of the Government of Punjab dated 8th July 1949, the whole of Chapter VIII of the 1955 Rules which includes Rules 49 to 69 would not apply.
In this case appellant was allotted agricultural land and the allotment was under the notification hereinbefore mentioned which has been set out in rule 10(a) and in that situation provisions contained in Chapter VIII of the Rules would not be attracted.
Therefore, rule 49 cannot be called in aid by the respondents.
The last contention, however, is that if the appellant is a displaced person and he was being allotted land against a verified claim in respect of agricultural land held by him in Pakistan, ordinarily compensation for land taken over must be in the form of land and not in form of cash.
Ordinarily it should be so.
But in this connection the experience gained by the Government in disposing of the claims cannot be overlooked.
There were allottees of small plots of land.
Once allotment is made and thereafter the land is taken over by the Government a fresh allotment cannot be in a compact area and if a small plot of land is allotted at a distant place the allottee would be put to a serious disadvantage.
Realising this position, at a meeting between the officers of the Punjab Government and the Ministry of Rehabilitation of the Central Government held on 27th August 1957, a decision was taken which was notified by the Press Note Annexure 'A ' of the very date.
It provides that there are large number of displaced land allottees whose whole or part of the land were acquired by the Government for various public purposes and their claim for cash compensation is pending.
Such of the allottees who have acquired permanent rights and others who are quasi permanent allottees and small pieces of their land are acquired by the Government, should send their applications to the Deputy Secretary to the Government of Punjab, Rehabilitation Department, Jullundur, giving various details therein.
The decision further provided that quasi permanent land allottes whose land exceeding two standard acres have been acquired should apply for alternative allotment to the Land Claims Officer, and those whose land admeasuring less than two standard acres is acquired should apply for payment of compensation in cash.
The decision was the decision of the Central 417 Government and the Punjab State Government that displaced persons to whom lands were allotted on quasi permanent basis, part of which was taken over for public purposes by the Government and where the land acquired was less than two standard acres in area, payment of compensation would be in cash and applications were accordingly invited.
This decision was affirmed in the letter of the Secretary to Government of Punjab, Rehabilitation Department, addressed to his counterpart in the Central Government wherein after referring to the meeting dated 27th August, 1957 and the decision arrived at it, he requested the Central Government that the appellant would be entitled to cash compensation because the land taken over from him was less than two standard acres and was covered by the decision arrived at, at the meeting and that the Central Govermnent should concur in payment of compensation out of the funds allotted for setting up the colony for which the land was acquired.
In the face of this position it is difficult to entertain the contention that compensation in cash was never payable for agricultural land taken over from a quasi permanent allottee.
It was said that such a decision which runs counter to the statute cannot be given effect to by the Court.
Once Chapter VIII of 1955 Rules and especially rule 49 which provides for payment of compensation in the form of land is out of the way, we see nothing in the statute which would debar a quasi permanent allottee asking for compensation in cash and the Government paying the same.
In fact the appellant has averred in his petition and in his affidavit that on former occasion he was paid compensation in cash and the denial is on the ground of want information which can frankly be styled as a vague one.
Now it is indisputable that the appellant was a quasi permanent allottee and that his land admeasuring 1 standard acre and 151/2 units had been taken over by the Central Government in July 1953.
In view of the decision recorded in the Press Note referred to above he would be entitled to compensation in cash which has not been paid to him.
The appellant would be entitled to compensation in cash for the interest that he had in the land because land was taken away from him.
What is the quantum of compensation will have to be worked out according to law and the modalities of determining the compensation.
This appeal accordingly succeeds and is allowed.
The respondents are directed to pay the compensation in cash to the appellant for the land admeasuring 1 standard acre and 151/2 units taken over in July 418 1953.
As there is a delay of nearly 25 years, the respondents should pay the compensation as directed herein within a period of six months from today.
Respondents should also pay the costs of the appellant and bear their own costs.
P.B.R. Appeal allowed.

summary/full:
A part of the land allotted to the appellant on quasi permanent basis as a displaced person from West Pakistan was acquired by the Government.
When the question of payment of compensation in respect of the land acquired was pending, the was passed which enabled holders of quasi permanency rights to obtain permanent settlement pursuant to which permanent settlement in respect of acquired land was made in favour of the appellant.
Alleging that the land allotted to the appellant was not allottable on a permanent basis, the Chief Settlement Commissioner, by his order dated 17th March, 1961, cancelled the allotment.
The appellant 's petition questioning the correctness of this decision was dismissed by the High Court in limine.
Thereupon the appellant preferred a petition under s.33 of the Act to the Joint Secretary to the Government of India, Rehabilitation Department, challenging the order of the Chief Settlement Commissioner.
By his order dated 29th September, 1964 the Joint Secretary rejected the petition pointing out that the cancellation of the appellant 's permanent settlement rights in the land was in accordance with law and that no interference was called for.
The appellant filed a writ petition in the High Court.
In rejecting the appellant 's writ petition impugning the order dated 29th September, 1964 the High Court was of the view that it was barred by principles analogous to res judicata because if that petition were allowed, it would in effect, amount to cancellation of the order dated the 17th March, 1961 which became final as against the appellant on dismissal of his first petition.
Allowing the appeal, ^ HELD: 1(a) Where a petition under article 226 is dismissed in limine without a speaking order, such a dismissal would not constitute a bar of res judicata to a subsequent petition on the same cause of action.
When a petition is dismissed on the ground that the petitioner has an alternative remedy by way of appeal or revision under a statute and on failure to get relief after pursuing the remedy by way of appeal or revision, he moved the High Court, it would be incorrect to dismiss the petition on the ground that the order made by the revisional authority had the effect of merging the original order with the order of the revisional authority, and that the challenge on the fresh cause of action to the order of the revisional authority would of necesity be a challenge to the original order also and that therefore the petition would be barred by principles analogous to res judicata as the first order had become final.
[407C E] 400 Daryao & Ors.
vs State of U.P. & Ors.
; ; Virudhunagar Steel Rolling Mills Ltd. vs The Govt of Madras, ; ; Tilokchand Motichand & Ors.
vs H. B. Munshi & Anr., ; referred to.
In the instant case in the first writ petition the appellant questioned the correctness of the order of the Chief Settlement Commissioner dated 17th March, 1961 without claiming therein any compensation for the land acquired.
That having been dismissed in limine he invoked the revisional jurisdiction under section 33 of the Act.
When that petition was dismissed by the revisional authority he preferred the second writ petition.
What he prayed in the second petition was a direction quashing the order dated 29th September, 1964 of the Joint Secretary to the Government of India.
The High Court was, therefore, in error in rejecting the second petition on the sole ground that the order of 17th March, 1961 merged into the order of 29th September, 1964 and in substance the challenge was to the order dated 17th March, 1961 which had become final.
[408 A B] (b) Secondly, if the claim for compensation was not raised in the first petition but was specifically raised in the second, it would not be dismissed on the ground that it was barred by principles analogous to res judicata.
[408 D] 2(a) It has been well established by a long line of decisions of this Court that after July 22, 1952 the Custodian had no authority to cancel or modify quasi permanent allotment, that the allottes of these rights could not be dispossessed at the whim or caprice of the Custodian, that the quasi permanent rights were heritable and that the holders were entitled to permanent settlement by issuance of sanad.
Added to this was the fact that r. 14(6) of the Administration of Evacuee Property (Central) Rules, 1950 as amended from July 22, 1952 restricted the power of the Custodian to resume or cancel quasi permanent rights of the allottees except in the circumstances mentioned in the subrule and no material is placed on record to show that the Custodian had exercised his power under r. 14(6) of the Rules.
[411 D E] P. D. Sharma vs State Bank of India, ; ; Amar Singh vs Custodian, Evacuee Property, Punjab, [1957] SCR 801; State of Punjab vs Suraj Prakash Kapur, etc., ; Joginder Singh & Ors.
vs Deputy Custodian General of Evacuee Property, ; at 740; referred to.
(b) Nor again is there any material to show that the Custodian had the power to cancel the allotment under the State Rules.
It was not shown that the State Government had framed any re settlement scheme and that the allotment was cancelled for that purpose.
[412 H] 3 (a) Under the Evacuee Property Act, 1950 property which was declared us evacuee property vested in the Custodian and was allotted to displaced persons on a quasi permanent basis.
To obviate difficulties caused by continued unextinguished title of the evacuee, the 1954 Act was passed, under section 12(2) of which the right, title and interest of any evacuee in the evacuee property specified in the notification issued under the section stood extinguished and the evacuee property would vest absolutely in the Central Government.
Evacuee property acquired in this manner formed part of the compensation pool.
Therefore, the appellant 's property which was acquired in 1953, much before the coming into force of the 1954 Act, could not have become part of the compensation pool.
[413 G H] 401 (b) Even assuming that though the property was taken over by the Central Government in 1953 evacuee interest in it had not been extinguished till a notification under section 12 of the 1954 Act had been issued and that on the issue of the notification it became part of the compensation pool, the consequence envisaged by section 10 of the 1954 Act must ensue.
It is that so long as the property remained vested in the Central Government it shall continue in possession of the person to whom it was allotted on the same conditions on which he held the property immediately before the date of acquisition.
[914 C D] In the present case if the property had been taken over by the Central Government much before the 1954 Act came into force neither section 12 of the 1954 Act nor r. 49 would be attracted.
If on the other hand the evacuee interest in the property came to be extinguished on the issue of a notification under section 12, section 10 would be attracted and the appellant would be entitled to hold the property till it continued to vest in the Central Government under section 12.
In other words in either event he would be entitled to compensation.
[415 C D] (c) Nor again is it correct to say that it was a fresh allotment under section 10 of the 1954 Act.
The land was allotted in 1949 and section 10 does not purport to make a fresh allotment.
[415 A] 4(a) The whole of chapter VIII of the 1955 Rules (which includes rr.
49 to 69) would not apply because the land allotted was agricultural land and the allotment was made under the notification of the Government of Punjab dated 8th July, 1949.
[416 C] (b) Once chapter VIII of the 1955 Rules and especially r. 49 which provides for payment of compensation in the form of land is out of the way, there is nothing in the Act which would debar a quasi permanent allottee asking for compensation in cash and the Govenment paying it.
Moreover on the former occasion the appellant was paid compensation in cash for a part of the land acquired from him.
[417 D E]


judgement:
Civil Appeal Nos.
1575 and 1965 of 1971.
From the Judgment and Order dated 12 1 1968 of the Calcutta High Court in Civil Rule No. 2523 and 2527 of 1960.
V. section Desai, section P. Nayar and Miss A. Subhashini for the Appellant.
section T. Desai, J. Ramamurthi and D. N. Gupta for the Respondents and Vice Versa.
The Judgment of the Court was delivered by UNTWALIA, J.
These two appeals one by the Union of India and the other by M/s Jardine Henderson Ltd. are by certificate granted by the Calcutta High Court.
Since the facts in both the cases are very much similar involving the interpretation of the various clauses of section 3(1) of The , hereinafter referred to as the Validation Act, the two appeals have been heard together and are being disposed of by this judgment.
There were two brothers named Basanta Kumar Daw, respondent No. 2 in Civil Appeal No. 1575 of 1971 and Haridhan Daw, respondent No. 2 in Civil Appeal No. 1965 of 1971.
The facts of Civil Appeal No. 1575 of 1971 are these: For realization of arrears of income tax dues the Certificate Officer of 24 Parganas forwarded to the Collector a Certificate in accordance with Section 46(2) of the Indian Income tax Act, 1922 specifying the amount of arrears due from respondent No. 2.
Thereupon a Certificate case was started against him (Basanta Kumar Daw) under the Bengal Public Demands Recovery Act, 1913, hereinafter called the Bengal Act, by the Certificate Officer acting as a Collector.
Notice under section 7 was served on the Certificate debtor on 31 10 1949.
Basanta Kumar Daw entered appearance and filed an objection under section 9 of the Bengal Act.
This objection was rejected by the Certificate Officer by his Order dated March 8, 1951.
On April 2, 1951 the Certificate debtor made an application for review of the said order dated 8 3 1951 stating therein, inter alia that the appeal preferred by him before the Income tax Appellate Tribunal had been allowed in part and some payments also had 559 been made since then; the Certificate case, therefore, could not proceed for the recovery of the sum of Rs. 36,874.10 annas, the original amount mentioned in the Certificate.
The Certificate Officer declined to review his previous order and rejected the review petition.
But he made certain enquiries from the Income tax Officer whether the amount of the Certificate had to be reduced.
The Income tax Officer informed him that the Tribunal had reduced the demand on appeal on 13 9 1950 and after adjustment of the previous payments made by the Certificate debtor the revised demand stood at Rs. 19,001.3 annas only.
Thereupon the Certificate Officer amended the Certificate on the basis of the information received from the Income tax Officer and reduced the demand.
On July 18, 1956 he directed the issue of sale notice under Rule 46(2) framed under the Bengal Act in respect of the half share of Basanta Kumar Daw (the other half belonging to his brother Haridhan Daw) in premises nos.
201 to 205/1, Old China Bazar Street, Calcutta.
Now a few facts of the other appeal being Civil Appeal No. 1965 of 1971 may be stated.
The Income tax officer sent a requisition to the Certificate officer of 24 Parganas for the recovery of a sum of Rs. 59,541.15 annas against Haridhan Daw, respondent No. 2 in this appeal.
A Certificate case was started.
A notice under section 7 of the Bengal Act was served on the Certificate debtor on January 30, 1951.
He also filed a petition of objection under section 9.
But the Certificate Officer by his order dated January 13, 1954 rejected the objection filed by the Certificate debtor under the Bengal Act.
A review application was also rejected in this case on January 27, 1954.
On March 2, 1954, the Income tax Officer informed the Certificate Officer that the original demand of Rs. 59,541.15 annas had been enhanced to Rs. 59,604.7 annas under section 35 of the Income tax Act and requested him to realize the enhanced amount.
The order under section 35 was passed on March 2, 1953.
The Certificate Officer thereupon informed the Income tax Officer that the Bengal Act did not provide for enhancing the demand of the existing Certificate and asked him to file a separate Certificate for the additional amount.
He, however, continued the Certificate proceedings for the recovery of the original amount.
M/s. Jardine Henderson Ltd., respondent in Civil Appeal No. 1575 of 1971 and appellant in Civil Appeal No. 1965 of 1971 purchased the whole of the premises in question on September 20, 1954 for a total sum of Rs. 3,00,100/ purchasing one half of the undivided share from each of the two brothers.
560 In both the cases the Company received a notice on August 6, 1956 fixing a date for settling the terms of the sale proclamations in respect of the respective one half share of each of the two Certificate debtors.
Immediately thereafter the respondent company made an application in each of the two cases that it had purchased the property being unaware of the pendency of any Certificate case against any of its vendors for realization of income tax dues and that the Company was the owner of the property and it was not liable to be sold as that of the Certificate debtor.
The Certificate Officer rejected the objection holding that the purchase having been made after service of notice under section 7 of the Bengal Act on the Certificate debtor, was void as against any claim enforceable in execution of the Certificate and hence the Company had no right to object to the sale.
The Company went up in appeal before the Commissioner and succeeded in both the cases.
Two revisions were filed before the Board of Revenue which were allowed.
The respondent company then moved the High Court under Article 227 of the Constitution.
The petition giving rise to Civil Appeal No. 1575 was allowed and hence the Union of India has come up in appeal.
The other petition giving rise to Civil Appeal No. 1965 of 1971 was dismissed by the same Bench and the Company has, therefore, come up in appeal.
The Validation Act was not there when the orders were passed either by the Commissioner or the Board of Revenue.
But in the High Court as also here the main controversy between the parties was the effect of the Validation Act on the two Certificate proceedings.
Mr. V. section Desai, appearing for the Union of India, in the first instance submitted that the order reducing the amount of the Certificate in Civil Appeal No. 1575 was an order under section 10 of the Bengal Act.
Hence the notice served under section 7 on the Certificate debtor continued to have its effect in spite of the reduction of the amount and no fresh notice under section 7 was necessary to be served.
In agreement with the High Court we have no difficulty in rejecting this argument.
We may first read some of the relevant provisions of the Bengal Act.
Section 7 reads as follows: "When a certificate has been filed in the office of a Certificate officer under section 4 or section 6, he shall cause to be served upon the certificate debtor, in the prescribed manner, a notice in the prescribed form and a copy of the certificate.
" 561 The effect of service of notice of certificate is provided in section 8 which provides : "From and after the service of notice of any certificate under section 7 upon a certificate debtor (a) any private transfer or delivery of any of his immovable property situated in the district in which the certificate is filed, or of any interest in any such property, shall be void against any claim enforceable in execution of the certificate.
" Under Section 9 the Certificate debtor may file a petition of objection denying his liability in whole or in part.
Under section 10 it is provided: "The Certificate officer in whose office the original certificate is filed shall hear the petition, take evidence (if necessary), and determine whether the certificate debtor is liable for the whole or any part of the amount for which the certificate was signed; and may set aside, modify or vary the certificate accordingly :" On reading the provisions aforesaid it is clear that if the Certificate is modified or varied by the Certificate Officer under section 10 while disposing of the petition of objection filed by the certificate debtor under section 9, then the Certificate case proceeds further without a fresh notice under section 7.
But in the instant case the amount was not reduced on the objection of the Certificate debtor but it was reduced on receipt of the information from the Income tax Officer.
In the Bengal Act itself there is no express provision enabling a person other than the Certificate debtor claiming an interest in the property to be sold to file any objection.
He, of course, under section 22 can take recourse to the said provision by filing an application to set aside the sale of immovable property on deposit of the amounts provided therein.
But the rules in Schedule II under section 38 have the effect as if enacted in the body of the Act.
In Schedule II is to be found rule 39 which is very much like rule 58 of Order 21 of the Code of Civil Procedure, 1908.
The Company preferred a claim objecting to the sale of property on the ground that it was not liable to sale as it had purchased the property from the two Certificate debtors.
It was, therefore, not quite accurate to say that the Company had no locus standi to prefer the claim.
It was open to it to show under rule 40 that at the date of the service of notice under section 7 it had some interest in the property in dispute.
If the notice served at the beginning 562 of the two Certificate cases under section 7 on the two Certificate debtors was not a valid notice in the sense that in one case on the reduction of the amount of the Certificate it became necessary to give a fresh notice and in the other without a fresh demand notice under the Income tax Act for the enhanced amount, the Certificate case could not proceed, then the Company had validly purchased the property and its purchase was not void.
The property purchased by it could not then be sold for realization of the income tax dues against the two brothers.
If, however, no fresh notice was necessary to be served in either of the two cases then it is plain that the Company 's purchase was void as against the claim enforceable in execution of the Certificate.
The answer in both the cases has got to be given with reference to the Validation Act and no other point of any consequence was argued or could be pressed with any success in either of the two appeals.
In Income tax Officer, Kolar Circle, and another vs Seghu Buchiah Setty(1) best Judgment assessments had been made for the assessment years 1953 54 and 1954 55.
A notice of demand for each of the two years was served upon the assessee under section 29 of the Income tax Act, 1922.
The assessee preferred appeals.
In the meantime for non payment tax he was treated as a defaulter and a Certificate was forwarded to the Collector under section 46(2).
Thereafter the tax payable by the assessee was substantially reduced in appeal.
The Income tax Officer informed the assessee of the reduced tax liability and called upon him to pay the reduced amount.
No fresh notice of demand was issued under section 29.
Pending further appeals to the Appellate Tribunal the assessee wanted the Certificate proceedings to be stayed and on his request being rejected he moved the High Court under Article 226 of the Constitution.
The High Court held that the department was not entitled to treat the respondent as a defaulter in the absence of a fresh notice of demand and quashed the recovery proceedings.
On appeal to this Court the majority view expressed was that the amount of tax assessed being reduced as a result of the orders of the Appellate Assistant Commissioner, a fresh demand notice had to be served on the respondent before he could be treated as a defaulter.
The recovery proceedings initiated against him on the basis of the original demand notice were therefore rightly quashed by the High Court.
The Statement of Objects and Reasons which led to the introduction and passing of the Validation Act would show that it was to get over the difficulties in the collection of income tax and other direct taxes created by the Supreme Court decision in Seghu Buchiah Setty 's case 563 (supra) that the Validation Act was passed with retrospective effect.
The interpretation of this Act falls for our consideration for the first time in this Court.
This is an Act "to provide for the continuation and validation of proceedings in relation to Government dues and for matters connected therewith." In the Schedule appended to the Act are enumerated various tax statutes including the Income tax Act.
"Taxing Authority" has been defined in clause (d) of section 2 and clause (e) defines "Tax Recovery Officer" to mean an officer to whom a certificate for the recovery of arrears of Government dues may be issued under this Act.
Section 3 without the proviso may be read as a whole: "Continuation and validation of certain proceedings. (1) Where any notice of demand in respect of any Government dues is served upon an assessee by a Taxing Authority under any scheduled Act, and any appeal or other proceeding is filed or taken in respect such Government dues, then, (a) where such Government dues are enhanced in such appeal or proceeding, the Taxing Authority shall serve upon the assessee another notice of demand only in respect of the amount by which such Government dues are enhanced and any proceedings in relation to such Government dues as are covered by the notice or notices of demand served upon him before the disposal of such appeal or proceeding may, without the service of any fresh notice of demand, be continued from the stage at which such proceedings stood immediately before such disposal; (b) where such Government dues are reduced in such appeal or proceeding (i) it shall not be necessary for the Taxing Authority to serve upon the assessee a fresh notice of demand; (ii) the Taxing Authority shall give intimation of the act of such reduction to the assessee, and where a certificate has been issued to the Tax Recovery Officer for the recovery of such amount, also to that officer; 564 (iii)any proceedings initiated on the basis of the notice or notices of demand served upon the assessee before the disposal of such appeal or proceeding may be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal; (c) no proceedings in relation to such Government dues (including the imposition of penalty or charging of interest) shall be invalid by reason only that no fresh notice of demand was served upon the assessee after the disposal of such appeal or proceeding or that such Government dues have been enhanced or reduced in such appeal or proceeding :" The Act was made retrospective by an express provision in section 5.
Clause (a) deals with the case of an enhancement of Government dues and provides that the proceedings initiated may be continued from the stage at which such proceedings stood immediately before the disposal of the appeal or proceedings in which the enhancement was made.
Another notice of demand is required to be served in respect of the amount by which the dues are enhanced.
On a plain reading of clause (a) of section 3 it is clear that the intention of the legislature is not to allow the nullification of the proceedings which were initiated for recovery of the original demand.
On the basis of another notice of demand for the enhanced amount, two courses are open to the department (1) to initiate another proceeding for the recovery of the amount by which the dues are enhanced treating it as a separate demand or (2) to cancel the first proceedings and start a fresh one for the recovery of the entire amount including the enhanced one.
In the latter case the first proceedings started for the recovery of the original amount will lose its force and the fresh proceeding will have to proceed de novo.
But in the former the first proceedings are not affected at all.
In Civil Appeal No. 1965 of 1971 this is exactly the view taken by the High Court and in our opinion rightly.
Mr. section T. Desai appearing for the Company submitted that where the amount was enhanced in appeal or revision there was no express provision in the Income tax Act for service of a fresh or another notice of demand for the additional amount.
But if the amount was enhanced under the power of rectification under section 35 then sub section (4) thereof requires: 565 "Where any such rectification has the effect of enhancing the assessment or reducing a refund the Income tax Officer shall serve on the assessee a notice of demand in the prescribed form specifying the sum payable, and such notice of demand shall be deemed to be issued under section 29, and the provisions of this Act shall apply accordingly.
" The effect of this sub section, according to the counsel, has not been done away with by clause (a) of section 3 of the Validation Act.
We reject this argument as being unsound and for two reasons.
Firstly, on a correct interpretation of sub section (4) of section 35 it would be noticed that though the expression used is "the sum payable" but in the context it would mean only the "extra enhanced sum payable" and not the whole of the enhanced amount.
The expression "sum payable" had to be used in sub section (4) because that sub section was also providing for a contingency where by the rectification order the amount of refund was reduced.
In such a case the expression "the sum payable" would obviously mean the difference between the amount refunded and the reduced amount which was liable to be refunded.
The second reason is that even if it were to be held that in the case of enhancement the expression "the sum payable" in sub section (4) means the whole of the enhanced amount by a rule of harmonious construction it has got to be held that in view of section 3(1) (a) of the Validation Act even in the case of a rectification a notice of demand is to be served now only in respect of the amount by which the Government dues are enhanced.
Now coming to the case of reduction dealt with in clause (b) of sub section (1) of section 3 of the Validation Act it would be seen that sub clause (i) clearly provides that it is not necessary for the Taxing Authority to serve upon the assessee a fresh notice of demand.
The only thing which he is required to do is that he has to give intimation of the fact of such deduction to the assessee and to the Tax Recovery Officer.
The purpose of giving intimation to the assessee is to bring it to his pointed knowledge that the demand against him has been reduced, although by other methods also such as by service of a copy of the Appellate Order or the revisional order being served on him he may be made aware of that.
The intimation to the Tax Recovery Officer is essential as without that intimation from the Taxing Authority he cannot reduce the amount of the Certificate debt in the proceedings already commenced.
The High Court has taken the view that the provision contained in sub clause (ii) of clause (b) of section 3(1) of the Validation Act is mandatory and in absence of a formal intima 566 tion to the assessee and to the Tax Recovery Officer as required by the said provision the proceedings initially started could not be continued under sub clause (iii).
In our opinion the view of the High Court is not sustainable in law.
On the facts of this case the assessee himself in his review application had clearly mentioned that the demand against him stood reduced in appeal.
He also claimed that he had made certain payments.
Although the Tax Recovery Officer rejected his review petition, as, probably, he had no power of review, he took the precautionary measure of making inquiry from the Taxing Authority.
Thereupon the Taxing Authority gave him the information and the amount of the Certificate debt was substantially reduced.
We, therefore, hold that on the facts of this case the requirement of sub clause (ii) stood fulfilled and nothing further had to be done in the matter by the Taxing Authority.
That being so the proceedings initiated on the basis of the notice of demand served upon the assessee before the reduction of the amount in appeal could be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal as provided for in sub clause (iii).
Clause (c) of section 3(1) of the Validation Act is also important and it clearly and expressly provides that no proceedings in relation to Government dues shall be invalid merely because no fresh notice of demand was served upon the assessee after the dues were enhanced or reduced in any appeal or proceeding.
It is, therefore, plain that in neither of the two cases did the Certificate proceeding become invalid, in one case by reduction of the demand and in the other by an enhancement.
In both the cases notices under section 7 of the Bengal Act had been served upon the Certificate debtors before the property in question was transferred by them to the Company.
The transfer was, therefore, void against the Certificate claims in both the cases under section 8(a) of the Bengal Act.
Mr. section T. Desai called our attention to the decision of the Allahabad High Court in Ram Swarup Gupta vs Behari Lal Baldeo Prasad and others.(1).
That case is, however, clearly distinguishable as in that the property was sold in Certificate proceedings started for the realization of the original amount even after the amount had been reduced in appeal.
It is obvious that that sale was illegal and invalid as rightly held by the High Court because after reduction the demand had to be reduced on intimation by the Taxing Authority and the property could not be sold for the original amount.
567 For the reasons stated above, Civil Appeal No. 1575 of 1971 is allowed with costs payable by the respondent company, the Judgment and Order of the High Court are set aside and it is directed that the Certificate case shall proceed to disposal in accordance with law as expeditiously as possible.
Civil Appeal No. 1965 of 1971 is dismissed but we make no order as to costs in this appeal.
V. D. K. C.A. No. 1965/71 dismissed.

dataset_name: IN-Abs

summary/full:
In Income Tax Officer, Kolar Circle and Anr.
vs Seghu Buchiah Setty. , this Court held that the recovery proceedings initiated against the assessee respondent on the basis of the original demand notice were had as it was of the view that the amount of tax assessed when reduced as a result of the appellate orders a fresh demand notice had to be served on the respondent before he could be treated as a defaulter.
To get over the difficulties in the collection of income tax and other direct taxes created by the decision in Seghu Chetty 's case, the was passed with retrospective effect by an express provision in section 5.
The property belonging to two brothers, the certificate debtors in C.A. 1575(NT) 71 and C.A. 1965 (NT) of 1963 respectively were purchased by M/s Jurdine Henderson (Ltd.) on September 20, 1954, i.e. after service of notices under section 7 of the Bengal Public Demands Recovery Act, 1913.
The objections raised by the certificate debtors were rejected and the property came to be sold.
In both cases the Company received a notice on August 6, 1956 fixing a date for settling the terms of the sale proclamation in respect of the respective one half share of each of the two Certificate debtors.
Immediately thereafter the respondent company made an application in each of the two cases that it had purchased the property being unaware of the pendency of any Certificate case against any of its vendors for realization of incometax dues and that the Company was the owner of the property and it was not liable to be sold as that of the Certificate debtor.
The Certificate Officer rejected the objection holding that the purchase having been made after service of notice under section 7 of the Bengal Act on the Certificate debtor, was void as against any claim enforceable in execution of the Certificate and hence the Company had no right to object to the sale.
The Company went up in appeal before the Commissioner and succeeded in both the cases.
Two revisions were filed before the Board of Revenue which were allowed.
The respondent company then moved the High Court under Article 227 of the Constitution.
The petition giving rise to Civil Appeal No. 1575 was allowed.
The other petition giving rise to C.A. 1965 of 1971 was dismissed by the same Bench.
556 Two questions, namely (a) the locus standi of the purchaser Company to prefer a claim objecting to the sale of the property and (b) the effect of section 3(1)(a) and (b) of the Validation Act, 1964 read with Section 35(4) of the Income Tax Act, 1962 arose for decision in these appeals.
Allowing C.A. 1575/71 and dismissing C.A. 1965/71 (both by certificates) the Court.
^ HELD: 1.
The Company as a purchaser of the property of the certificate debtors had locus standi to prefer the claim.
The company preferred a claim objecting to the sale of property on the ground that it was not liable to be sold as it had purchased the property from the two certificate debtors.
In the Bengal Public Demands Recovery Act, 1913, there is no express provision enabling a person other than the Certificate debtor claiming an interest in the property to be sold to file any objection.
He, of course, under section 22 can take recourse to the said provision by filing an application to set aside the sale of immovable property on deposit of the amounts provided therein.
But the rules in Schedule II under section 38 have the effect as if enacted in the body of the Act.
In Schedule II is to be found rule 39 which is very much like rule 58 of Order 21 of the Code of Civil Procedure, 1908.
[561 F G] (a) It was open to it to show under rule 40 that at the date of the service of notice under section 7 it had some interest in the property in dispute.
If the notice served at the beginning of the two Certificate cases under section 7 on the two Certificate debtors was not a valid notice in the sense that in one case on the reduction of the amount of the Certificate it became necessary to give a fresh notice and in the other without a fresh demand notice under the Income tax Act for the enhanced amount, the Certificate case could not proceed, then the Company had validly purchased the property and its purchase was not void.
The property purchased by it could not then be sold for realization of the income tax dues against the two brothers.
If, however, no fresh notice was necessary to be served in either of the two cases then it is plain that the Company 's purchase was void as against the claim enforceable in execution of the Certificate.
[561 H, 562 A C] (b) It is clear from sections 7, 8, 9 and 10 of the Bengal Public Demands Recovery Act, 1913, that if the Certificate is modified or varied by the certificate officer under Section 10, while disposing of the petition of objection filed by the Certificate debtor under section 9, then the Certificate case proceeds further without a fresh notice under section 7.[561 D E] In the instant case, the amount was not reduced on the objection of the Certificate debtor but it was reduced on receipt of the information from the Income Tax Officer.
[561 E] 2.
The transfer was void against the Certificate claims in both cases under section 8(a) of the Bengal Public Demands Recovery Act, 1913.
In both the cases notices under section 7 of the Bengal Act had been served upon the Certificate debtor before the property in question was transferred by them to the company.
In neither of the two cases did the certificate proceeding became invalid, in one case by reduction of the demand and in the other by an enhancement, since clause (c) of section 3(1) of the Validation Act clearly and expressly provides that no proceedings in relation to Government dues 557 shall be invalid merely because no fresh notice was served upon the assessee, after the dues were enhanced or reduced in any appeal or proceeding.
[566 E F] Ram Swarup Gupta vs Behari Lal Baldeo Prasad and Ors., ; Distinguished.
(a) On a plain reading of clause (a) of section 3 of the Validation Act, it is clear that the intention of the Legislature is not to allow the nullification of the proceedings which were initiated for recovery of the original demand.
On the basis of another notice of demand for the enhanced amount two courses are open to the department (i) to initiate another proceedings for the recovery of the amount by which the dues are enhanced treating it as a separate demand or (2) to cancel the first proceedings and start a fresh one for the recovery of the entire amount including the enhanced one.
In the latter case, the first proceedings started for the recovery of the original amount will lose its force and the fresh proceedings will have to proceed de novo.
But in the former, the proceedings are not affected at all.
[564 E G] 3.
(b) The argument that the effect of sub section (4) of section 35 of the Income Tax Act has not been done away with by clause (a) of section 3 of the Validation Act, 1964 is not correct.
Firstly on a correct interpretation of sub section (4) of section 35 it would be noticed that though the expression used is "the sum payable" but in the context it would mean only the "extra enhanced sum payable" and not the whole of the enhanced amount.
The expression "sum payable" had to be used in sub section (4) because that sub section was also providing for a contingency where by the rectification order the amount of refund was reduced.
In such a case the expression "the sum payable" would obviously mean the difference between the amount refunded and the reduced amount which was liable to be refunded.
Secondly, even if it were to be held that in the case of enhancement the expression "the sum payable" in sub section (4) means the whole of the enhanced amount by a rule of harmonious construction it has got to be held that in view of section 3(1)(a) of the Validation Act even in the case of a rectification a notice of demand is to be served now only in respect of the amount by which the Government dues are enhanced.
[565 B E] 4.
Sub clause (i) of clause (b) of sub section (1) of section 3 of the Validation Act clearly provides that it is not necessary for the Taxing Authority to serve upon the assessee a fresh notice of demand.
The only thing which he is required to do that he has to give intimation of the fact of such deduction to the assessee and to the Tax Recovery officer.
The purpose of giving intimation to the assessee is to bring it to his pointed knowledge that the demand against him has been reduced, although by other methods also such as by service of a copy of the Appellate Order or the revisional order being served on him he may be made aware of that.
The intimation to the Tax Recovery Officer is essential as without that intimation from the Taxing Authority he cannot reduce the amount of the Certificate debt in the proceedings already commenced.
[565 E H] (a) The view of the High Court that the provision contained in subclause (ii) of clause (b) of section 3(1) of the Validation Act is mandatory and in absence of a formal intimation to the assessee and to the Tax Recovery Officer as required by the said provision the proceedings initially started could not be continued under sub clause (iii), is not sustainable in law.
[565 H, 566 A] 558 (b) On the facts of the case in C.A. 1575(NT)/71, the requirement of sub clause (ii) stood fulfilled and nothing further had to be done in the matter by the Taxing Authority.
That being so the proceedings initiated on the basis of the notice of demand served upon the assessee before the reduction of the amount in appeal could be continued in relation to the amount so reduced from the stage at which such proceedings stood immediately before such disposal as provided for in sub clause (iii).
[566 C D]


judgement:
: Criminal Appeal No. 43 of 1975.
From the Judgment and Order dated 9 1 1973 of the Bombay High Court in Criminal Application No. 681/72.
V. section Desai, P. H. Parekh, C. B. Singh, M. Mudgol, B. L. Verma and J.C. Rajani, for the Appellants.
637 M. N. Shroff for the Respondents.
The Judgment of the Court was delivered by FAZAL ALI, J.
This is an appeal under section 19 of the Contempt of Courts Act (hereinafter called the Act) against an order of the High Court of Bombay convicting the appellants for a Civil Contempt and sentencing them to one month 's simple imprisonment.
The facts of the case have been fully detailed by the High Court and it is not necessary for us to repeat the same all over again.
It appears that Respondent No. 1 had given a loan of Rs. 50,000/ to the appellants on certain conditions.
Somehow or other, the loan could not be paid by the appellants as a result of which Respondent No. 1 filed a complaint under section 420 I.P.C. against the appellants.
While the complaint was pending before the Court of the Magistrate, the parties entered into a compromise on 22 7 1971 under which the appellants undertook to pay the loan of Rs. 50,000/ with simple interest @ 12% per annum on or before 21 7 1972.
An application was filed before the Court for allowing the parties to compound the case and acquit the accused.
The Court after hearing the parties, passed the following order: "The accused given an undertaking to the court that he shall repay the sum of Rs. 50,000/ to the complainant on or before 21 7 1972 with interest as mentioned on the reverse.
In view of the undertaking, I permit the compromise and acquit the accused".
It is obvious, therefore, that the Court permitted the parties to compound the case only because of the undertaking given by the appellants.
Thereafter, it appears, that the undertaking was violated and the amount of loan was not paid to the Respondent No. 1 at all.
The respondent, therefore, moved the High Court for taking action for contempt of Court against the appellants as a result of which the present proceedings were taken against them.
The High Court came to the conclusion that the appellants had committed a wilful disobedience of the undertaking given to the Court and were, therefore, guilty of civil contempt as defined in section 2(b) of the Act.
Hence, this appeal before us.
Mr. V. section Desai appearing in support of the appeal has raised two short points before us.
He has submitted that there is no doubt that the appellants had violated the undertaking but in the circumstances it cannot be said that the appellants had committed a wilful disobedience of the orders of the Court.
So far as this point is concerned, we fully agree with the High Court.
In the circumstances, the appellants undoubtedly committed wilful disobedience of the order of the court 638 by committing a serious breach of the undertaking given to the Court on the basis of which alone, the appellants had been acquitted.
For these reasons, the first contention put forward by Mr. Desai, is overruled.
It is, then, contended that under section 12(3), normally the sentence that should be given to an offender who is found guilty of civil contempt, is fine and not imprisonment, which should be given only where the Court is satisfied that ends of justice require the imposition of such a sentence.
In our opinion, this contention of learned counsel for the appellants is well founded and must prevail.
Sub section 3 of section 12 reads thus : "Notwithstanding anything contained in this section, where a person is found guilty of a civil contempt, the Court, if it considers that a fine will not meet the ends of justice and that a sentence of imprisonment is necessary shall, instead of sentencing him to simple imprisonment, direct that he be detained in a civil prison for such period not exceeding six months as it may think fit".
A close and careful interpretation of the extracted section leaves no room for doubt that the Legislature intended that a sentence of fine alone should be imposed in normal circumstances.
The statute, however, confers special power on the Court to pass a sentence of imprisonment if it think that ends of justice so require.
Thus before a Court passes the extreme sentence of imprisonment, it must give special reasons after a proper application of its mind that a sentence of imprisonment alone is called for in a particular situation Thus, the sentence of imprisonment is an exception while sentence of fine is the rule.
Having regard to the peculiar facts and circumstances of this case, we do not find any special reason why the appellants should be sent to jail by sentencing them to imprisonment.
Furthermore, respondent No. 1 before us despite service, has not appeared to support the sentence given by the High Court.
Having regard to these circumstances, therefore, we are satisfied that the present case, squarely falls in the first part of section 12(3) and a sentence of fine alone should have been given by the High Court.
We, therefore, allow this appeal to this extent that the sentence of imprisonment passed by the High Court is set aside and instead the appellants are sentenced to pay a fine of Rs. 1000/ each.
In case of default, 15 days simple imprisonment.
Four weeks time to pay the fine.
P.B.R. Appeal allowed in part.

summary/full:
Respondent No. 1 filed a complaint under section 420 IPC against the appellants alleging that a loan taken by them from him had not been repaid.
While the complaint was pending before a Magistrate the parties entered into a compromise under which the appellants undertook to repay the loan before a stipulated date.
The Magistrate accordingly allowed the parties to compound the case.
When the appellants failed to repay the loan in accordance with the undertaking given before the Magistrate the respondent moved the High Court for taking action against the appellants for contempt of court.
On the view that the appellants had committed a willful disobedience of the undertaking the High Court held that they were guilty of civil contempt and sentenced them to one month 's simple imprisonment.
Allowing the appeal in part, ^ HELD: 1.
The appellants had committed willful disobedience of the court of the Magistrate by committing serious breach of the undertaking given to it on the basis of which alone they had been acquitted.
The High Court was, therefore, right in holding that the appellants were guilty of civil contempt under section 2(b) of the Contempt of Courts Act.
[638 A] 2.
Having regard to the circumstances of the case the present case falls within the first part of section 12(3) of the Act and a sentence of fine alone should have been awarded by the High Court.
By enacting the section the legislature intended that a sentence of fine alone should be imposed in normal circumstances.
Special power is, however, conferred on the court to pass a sentence of imprisonment if it thought that ends of justice so required.
Therefore, before a court passed a sentence of imprisonment it must give special reasons for passing such a sentence.
[638 G] In the present case there are no special reasons why the appellants should be sent to jail