judgement:
Civil Appeal No. 766 of 1957.
Appeal by special leave from the judgment and order dated January 31, 1966, of the, Punjab High Court in Civil Writ Petition No. 30 of 1956.
R. section Narula, for the appellants.
B. K. Khanna and P. D. Menon, for the respondents.
section L. Pandhi, for the interveners.
January 24.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave against the order of the Punjab High Court 735 summarily rejecting a petition filed by the appellants.
under article 226 of the Constitution.
The brief facts necessary for present purposes are there.
The appellants migrated in 1947 from what is now West Pakistan and settled in two villages, viz., Sheikhapind and Kotla.
They were given temporary allotment of agricultural land in the two villages under the East Punjab Evacuees ' (Administration of Property) Act, (No.XIV of 1947) then in force.
Thereafter a scheme was formulated in 1948 for quasi permanent allotment of agricultural land to owners of land in West Pakistan after the East Punjab Refugees (Registration of Claims) Act, (No.VIII of 1948) was enacted.
In July 1949, a notification was issued stating the condition under which allotment of agricultural land would be made to displaced person from West Pakistan.
This allotment was quasi permanent in the sense that it was to remain in force so long as the land was to remain vested in the Custodian of Evacuee Property.
In pursuance of this notification, land was allotted in the two villages to the appellants on quasi permanent basis in 1949 and the appellants have remained in possession thereof eversince.
Originally land was classified into two kinds, namely, (i) urban and (ii) agricultural land.
Later in 1949, however, a third Classification, namely sub urban was also introduced in practice with respect to agricultural land in the neighborhood of certain towns and a notification seems to have been issued with respect to that specifying the villages land in which was considered to be a sub urban (vide Chap.
V of Land Settlement Manual by Tarlok Singh).
But the two villages in which land was allotted to the appellants were not included in the notification with respect to sub urban land.
In August 1950 after the quasi permanent allotment in favour of the appellants had been 736 made, the Revenue Assistant (Rehabilitation) Jullundur proposed that these two villages should also be classified as sub urban, the consequence of which would have been to reduce the area of land given to the allottees therein.
The appellants objected before the Director General of Rehabilitation to the villages being graded as sub urban The Director General called for a report from the Revenue Assistant (Rehabilitation) and eventually passed an order on January 12, 1951 that it was not desirable at that stage to cause any disturbance to the allotments made in these two villages by declaring them sub urban and that the status quo should continue.
This however did not end the matter and in February, 1952 the Director of Rehabilitation passed an order in effect declaring these villages as sub urban with the result that the allotment made to the appellants would have to be reduced.
It also appears that some order was passed in April, 1952 on paper allotting the extra land which would be released from the allotment of the appellants to other persons who have appeared as interveners in this appeals.
But this order remained merely on paper and has not been carried out so far.
When the appellants came to know of the order of February 29, 1952, they filed a revision before the Custodian General for setting aside that order.
The revision came up before the Deputy Custodian General for hearing in January 1956.
By then however certain changes in the law and the Rules had been made.
Firstly, there was an amendment in r. 14 (8) of the Administration of Evacuee property (Central) Rules framed under the Administration of Evacuee property Act, (Central Act XXXI of 1950).
Further, the Displaced persons (Compensation and Rehabilitation) Act, Central Act XLIV of 1954, (hereinafter referred to as the Act) had been passed.
Under the amendment to r. 14 power was given for cancellation or variation of any 737 allotment of rural evacuee property on a quasi permanent basis, where the allotment was to be cancelled or varied in accordance with the general or special order of the Central Government.
It appears that in the meantime correspondence passed between the Punjab Government and the Central Government and an order under the amended r. 14 (6) (iii) (d) was obtained on October 11,1955.
Therefore, when the revision came up before the Deputy Custodian General he held that in view of r. 14 (6) (iii) (d) of the Rules it was open to the Central Government by special order to direct cancellation or variation of the allotment made in this case in favour of the appellants and that the Central Government had on the representation of the Punjab Government agreed to declare these two villages as sub urban by its order dated October 11, 1955; therefore he held that whatever was being done after October 11, 1955 was in pursuance of the order of the Central Government.
He therefore held that the impugned order of February 29, 1952, even if it was revisable, no longer held the field and action was to be taken in future under the order of the Central Government passed on October 11, 1955.
Therefore, the revisions had become infructuous and he dismissed them.
Then followed the writ petition by the appellants in the Punjab High Court, which was dismissed summarily.
As leave was refused by the High Court, the appellants applied for special leave to this Court, which was granted; and that is how the matter has come up before us.
The main contention on behalf of the appellants before us is that after the coming into force of the Act and the notification made there under on March 24, 1955 under section 12, the land allotted to the appellants in the two villages ceased to because property and became part of the compensation pool created thereunder and therefore the Central 738 Government had no power left to act under the Central Act XXXI of 1950 and the Rules framed thereunder.
In consequence the order passed, by the Central Government on October 11, 1955 on the basis of which the Deputy Custodian General rejected the revision petitions filed on behalf of the appellants was not within the competence of the Central Government and no action could be taken by virtue of that order declaring the two villages as sub urban.
Therefore it was not open to the authorities under the Central Act XXXI of 1950 to take any action under that order with the object of varying the allotment made in favour of the appellants by reducing the area allotted to them.
It is further urged that whether further action has to be taken after the notification dated March 24, 1955 can only be taken under the Act and that no such action has in fact been taken, We are of opinion that there is force in this contention of the appellants and it must prevail.
Section 12(1) of the Act provides that "if the Central Government is of opinion that it is necessary to acquire any evacuee property for a public purpose, being a purpose connected with the relief and rehabilitation of displaced persons, including payment of compensation to such persons, the Central Government may at any time acquire such evacuee property by publishing in the Official Gazette a notification to the effect that the Central Government has decided to a acquire such evacuee property in pursuance of this section".
Sub section (2) then provides that "on the publication of a notification under sub section (1), the right, title and interest of any evacuee in the evacuee property specified in the notification shall. . be extinguished and the evacuee property shall vest absolutely in the Central government free from all encumbrances".
Sub section (4) provides that all evacuee property acquired under this section shall form part of the 739 compensation pool.
Section 14 provides for the constitution of a compensation pool.
Section 16 gives powers to the Central Government for the management of the compensation pool, including the appointment of such officers as it may deem fit (referred to as managing officers) or constitution of such authority or corporation, as it may deem fit (referred to as managing corporations).
Section 17 provides for functions of managing officers and managing corporations.
Section 19, which is important, provides that "notwithstanding anything contained in any contract or any other law for the time being in force but subject to any rules that may be made under this Act, the managing officer or managing corporation may cancel any allotment or terminate any leases or amend the terms of any lease or allotment under which any evacuee property acquired under this Act is held of occupied by a person, whether such allotment or leases was granted before or after the commencement of this Act".
Rules have been framed under the Act specifying the circumstances under which a managing officer or a managing corporation may cancel an allotment or terminate a lease or vary the terms of any such lease or allotment (see r. 102).
It is not in dispute that the evacuee property in these two villages was notified under s.12 of the Act on March 24, 1955.
The consequence of that notification is that all rights.
title and interest of the evacuee in the property ceased with the result that the property no longer remained evacuee property.
Once therefore the property ceased to be evacuee property it can not be dealt with under the Central Act No. XXXI of 1950 or the Rules framed thereunder.
The property in these two villages became part of the compensation pool after the notification of March 24, 1955 and could be deal with under the provisions of the Act and any variation or cancellation of any lease or allotment thereafter could only be made under s.19 740 of the Act.
This is the position which emerges on a consideration section 12, 14, 16 and 19 of the Act after the notification under section 12(1) was made with respect to the evacuee property in these two villages on March 24, 1955.
This view has been taken by the Punjab High Court in Balmukand vs The Punjab State.
The same view has also been expressed by this Court in Major Gopal Singh vs Custodian, Evacuee Property, where it was held that from the date of the notification under section 12, the Custodian by reasons of the divesting of the property becomes functus officio with respect to it and cannot rectify any error made by him in the past in the matter of cancellation of allotment.
It follows therefore that when the notification of March 24, 1955 was made and the evacuee property in these two villages ceased to be evacuee property and became part of the compensation pool it could only be deal with under the Act and if any variation or cancellation of allotment was to be made it could only be done under the provisions of section 19 of the Act and there was no power left in the Central Government to act under r. 14(6)(iii)(d) of the Rules framed under the Central Act XXXI of 1950 with respect to this land after the notification of March 24, 1955.
The order of the Deputy Custodian General of January 1956 shows that further proceedings with respect to this land are contemplated under the order of October 11, 1955 passed by the Central Government under r. 14(6)(iii)(d).
As however that order was passed after March 24, 1955, when the power of the Central Government to act under the Central Act XXXI of 1950 had ceased on the evacuee property in these two villages becoming part of the compensation pool, that order must be set aside and no further proceedings can be taken under that order.
We order accordingly.
The appellants will get their costs.
741 We should however like to make it clear that we express no opinion on the controversy between the appellants and the interveners who are left to such remedies as may be available to them under the law.

dataset_name: IN-Abs

summary/full:
The appellants migrated to India in 1947 from West Pakistan.
To begin with, they were given temporary allotment of land in two villages.
In 1949, land was allotted to them on quasi permanent basis, and they have remained in possession of the same eversince.
Originally, land was classified into two kinds: urban and agricultural land.
Later on, a third classification was introduced, known as sub urban land.
The two villages in which land was allotted to the appellants were not included in the notification with respect to sub urban land.
In February, 1952, the Director of Rehabilitation passed and order declaring those villages as 734 sub urban land.
The result of the order was that the allotment made to the appellants was to be reduced.
The appellants went in revision to the Custodian General, and their revision petitions were dismissed on the ground that the view of Rule 14(6)(iii)(d) of the Rule it was open to the Central Government by a special order to direct cancellation or variation of the allotment made in favour of the appellants, and the Central Government has on the representation of the Punjab Government agreed to declare the two villages in question as sub urban by its order dated October 11, 1955.
The appellants filed a writ petition in the High Court but that was dismissed summarily.
The have come in appeal to this Court by special leave.
^ Held, that when the notification of March 24, 1955, was made under section 12 of the placed Persons (Compensation and Rehabilitation) Act, 1954, the evacuee property in those villages ceased to be evacuee property and became a part of the compensation pool.
That property could only be dealt with under the Act of 1954.
If any variation or cancellation of allotment was to he made that could be done only under the provisions of section 19 of Act of 1954.
There was no power left in the Central Government to act under Rule 14(6)(iii)(d) of the Rules framed under the with respect to that land after the notification of March 24, 1955.
Balmukand vs The State of Punjab, I.L.R. 1957 Punjab 712 and Major Gopal Singh vs Custodian of Evacuee Property, ; , followed.


judgement:
Civil Appeal No. 559 of 1960.
Appeal by special leave from the judgment and order dated May 1/14, 1957, of the Income Tax Appellate Tribunal of India (Delhi Bench) in I.T.A. No. 2070 of 1956 57.
K.N. Rajagopal Sastri and D. Gupta, for the appellant.
Radhey Lal Agarwal and P.C. Agarwal for the respondents.
867 1962.
January 29.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal against the order of the Income tax Appellate Tribunal, Delhi Bench, dated May 1/14, 1957, by which the tribunal, reversing the order of the Appellate Assistant Commissioner, held that a loss arising from the sale of certain shares by the respondent Company was a capital loss.
Subsequent to the order of the Tribunal impugned here, the Commissioner of Income tax, New Delhi, who is the appellant before us, had moved the Tribunal for a reference to the High Court on certain questions of law said to arise out of the order of the Appellate Tribunal.
That application was found to be barred by one day, and since, under the law, the Tribunal had no jurisdiction to extend the time, the application was dismissed.
Against the decision of the Tribunal, an application was filed in the High Court under section 66(3) of the Income tax Act; but the High Court dismissed the application, agreeing with the Tribunal that the application to the Tribunal for a reference was barred by time.
The Commissioner of Income tax then applied for special leave against the order passed by the Tribunal in the appeal before it, and the present appeal, with special leave, has been filed.
Before we examine the merits of the case, we shall deal with a preliminary objection raised on behalf of the respondent that the appeal is incomepetent, in view of the decision of this Court in Chandi Prasad Chokhani vs State of Bihar (1) where it was held that this Court would not entertain an appeal directly from an order of the Tribunal by passing the decision of the High Court, except in very exceptional circumstances.
The appellant relies upon the decision of this Court in Baldev Singh vs Commissioner of Income tax (2), and contends 868 that the exceptional circumstances existing in the latter case and adverted to in the former, govern the present case.
The facts relating to the filing of the application for reference together with the relevant dates are these: The Tribunal 's order was passed by two learned Members, who signed their respective orders on different dates.
The Accountant Member signed his order on May 1, 1957, and the Judicial Member, on May 14, 1957.
The notice of the order was sent to the Commissioner of Income tax, New Delhi, and reached his office by registered post on July 15, 1957.
It was received by one Motilal Pathak, a clerk in the office of the Commissioner.
Motilal 's affidavit shows that, he suddenly fell ill, and had to take casual leave for the day.
He returned to the office the next day, and dealt with the notice received from the Tribunal.
By a mischance, which is easy to appreciate, the date stamp of the receipt of the papers was affixed on the 16th, and bore that date instead of the real date, viz., the 15th, on which the papers had actually been received.
Relying upon the date stamp, everybody took it for granted that limitation would expire on the 60th day, counting time from July 16, 1957.
The application was filed on the last day of limitation on that supposition.
Actually, the application was barred by a day.
The Income tax Tribunal, therefore, dismissed the application on December 4, 1957.
The decision of the Tribunal was unsuccessfully challenged before the High Court.
It is evident that the decision of the Tribunal was quite correct, and the Tribunal had no option but to dismiss the application, since the law gives no jurisdiction to the Tribunal to extend limitation, as is done under section 5 of the Indian Limitation Act.
This Court then granted special leave against the order of the Tribunal passed in the appeal 869 before it, and the question is whether the appeal should be heard or the leave revoked, in view of the decision in Chokhani 's case (1).
In Chokhani 's case (1), the attempt was to bypass the decision of the High Court on a question referred to the High Court for decision and also another decision of the High Court that no other point of law arose from the order of the Tribunal.
It was held that this Court would not allow the High Court to be by passed, and that an appeal from the decision of the Tribunal in the circumstances was incompetent.
A similar view was again expressed in two other cases, viz., Indian Aluminium Co. Ltd. vs Commissioner of Income tax (2) and Kanhaiyalal Lohia vs The Commissioner of Income tax (3).
In all the three cases, reliance was placed by the appellants therein upon the decisions of this Court in Dhakeswari Cotton Mills, Ltd. vs Commissioner of Income tax (4) and Baldev Singh vs Commissioner of Income tax (5) It was pointed out in the judgments of this Court that the two cases relied upon were decided on the special circumstances existing there.
In the first, there was a question of breach of the principles of natural justice, which could not be raised otherwise than by an appeal with the special leave of this Court.
In the second case, it was pointed out that limitation was lost by the party through no fault of his, inasmuch as a letter was unduly delayed in post.
In our opinion, in the present case also, special circumstances which justified the grant of special leave in Baldev Singh 's case (5), exist.
There was a combination of circumstances which led to the filing of the application a day late, but in circumstances showing that the default was not due to any negligence on the part of the Commissioner of Income tax.
The receipt of the notice on July 15 is admitted; but the affixing of the date stamp on the 16th was due to the failure of the 870 clerk to deal with the notice on the 15th because he fell ill and had to leave the office.
It is common knowledge that date stamps are altered every day in the office, and this is done mostly by a very junior employee.
The affixing of the date stamp on the 16th and the notice consequently bearing that date went unnoticed, and relying upon the date stamp, the appeal was filed, though on the last day of limitation but within time.
In these circumstances, it is difficult to say that the Commissioner of Income tax was negligent and the negligence, if any, on the part of the clerk in affixing a wrong date stamp is excusable, if one considers his illness and his absence from the office on the 15th.
In our opinion, this case comes within the rule of Baldev Singh 's case (1) and an appeal direct to this Court from the Tribunal 's order is justified by the special circumstances.
By this appeal, no decision of the High Court can be said to be bypassed, because the decision of the High Court related to the correctness of the decision of the Tribunal on the question of limitation, which is not a question which is sought to be raised in an indirect way by the present appeal.
We, therefore, overrule the preliminary objection.
The assessee Company is the National Finance Ltd., New Delhi.
It is a public limited Company which was incorporated in 1943.
It deals in shares and securities and also as financiers.
The present case arises from a deal in 3,000 shares of the Madhusudan Mills Ltd., Bombay, by the assessee Company.
In the year of account, May 1, 1949, to April 30, 1950, corresponding to the assessment year, 1951 52, the assessee Company sold these shares suffering a loss of Rs. 5,48,712 8 0, which it claimed as one on the sale of its stock in trade.
The Income tax Officer and the Appellate Assistant Commissioner held it to be a capital loss.
The 871 Appellate Tribunal, Delhi Bench, reversed the decision, and held in favour of the assessee Company.
The only question in this appeal is whether the decision of the Tribunal is right.
The assessee Company belongs to a group of Companies controlled by one Lala Yodh Raj Bhalla and certain persons associated with him.
It is convenient to describe these persons as the 'Yodh Raj Bhalla group '.
These Companies are (1) Jaswant Sugar Mills Ltd., (2) Jaswant Straw Boards Ltd., (3) National Finance Ltd., (4) National Construction and Development Corporation Ltd., (5) Ganesh Finance Corporation Ltd., and (6) Raghunath Investment Trust Ltd. The interrelation of these.
Companies is very intimate, and they are practically owned by the 'Yodh Raj Bhalla group '.
To understand this, the following analysis of the shareholdings of these Companies must be sufficient: (1) Jaswant Sugar Mills Ltd. 2,00,000 shares (i) Jaswant Straw Board Ltd. 44,845 (ii) National Finance Ltd. 67,390 (iii)National Construction and Development Corporation Ltd. 47,800 _______ 1,60, 035 (i.e. over 80 per cent) (2) Jaswant Straw Board Ltd. 6,176 shares.
(i) National Finance Ltd. 4,783 (ii) National Construction and Development Corporation Ltd. 500 _____ __ 5,200 odd (or nearly 84 per cent) 872 (3) National Finance Ltd. (assessee Company) 50,000 shares.
Ganesh Finance Corporation Ltd. 48,000 (or over 96 per cent) (4) National Construction and Develop ment Corporation Ltd. 1,30,504 shares.
Ganesh Finance Corporation Ltd. 1,30,500 (almost all) (5) Ganesh Finance Corporation Ltd. 50,000 shares.
Raghunath Investment Trust Ltd. 49,795 (99.6 per cent of the capital) (6) Raghunath Investment Trust Ltd. 10,000 shares.
(i) Mr. Yodh Raj Bhalla 1,500 (ii) Mrs. Bhalla 1,000 (iii) Mr. N. C. Malhotra (brother in law) 1,000 (iv) Mr. Ram Prasad (father in law) 1,000 (v) Mr. Dina Nath (Secretary) 1,000 (vi) National Finance Ltd. 3,499 (vii) Mr. Piyare Lal Saha 1 9,000 (90 per cent).
The resulting position may be stated thus: Ganesh Fiance Corporation Ltd. practically owns the assessee Company and National Construction and Development Corporation Ltd., Raghunath Investment Trust Ltd. practically owns the Ganesh Finance Corporation Ltd., and 'Yodh Raj Bhalla group ' practically owns Raghunath Investment Trust Ltd. 873 Jaswant Sugar Mills Ltd. is practically owned by Jaswant Straw Board Ltd., National Finance Ltd., and National Construction and Development Corporation Ltd., and Jaswant Straw Board Ltd., is practically owned by National Finance Ltd., and National Construction and Development Corporation Ltd. Thus, the entire group is owned by a consortium, and there is no doubt about it.
The shares of Madhusudan Mills Ltd. were acquired in the following circumstances: In July 1948, Mr. Yodh Raj Bhalla, who was in a position by reason of his holdings in these six Companies to influence decisions of the Board of Directors, arranged to purchase 26,547 shares of the Mills from Messrs. Bhadani Brothers, Ltd., who were the managing agents of the Mills.
This block of shares represented about 80 per cent of the total issued capital of the Mills, The purchase was made at Rs. 400 per share, when the price in the market, was about Rs. 250 per share.
Out of the remaining shares which were on the market 200 shares were purchased at Rs. 252 8 0 per share, which was then the quoted price.
Now, these shares were purchased by Jaswant Sugar Mills Ltd., but the money for the purchase of the shares was obtained by borrowing it from some of the other concerns.
These Companies, as has been shown above, were completely under the control of 'Yodh Raj Bhalla group '.
The arrangement for the money was as follows: Rs. 14,75,000 borrowed from the assesee Company.
Rs. 5,00,000 from National Construction and Development Corporation Ltd. Rs. 55,00,000 from the assessee Company but advanced by Ganesh Finance Corporation Ltd. 874 The shares were registered as follows: 10,500 shares registered in the name of the assessee Company.
5,400 shares in the name of the National Construction and Development Corporation Ltd., and the balance in the names of the nominees of Jaswant Sugar Mills Ltd., which meant, largely, persons belonging to the 'Yodh Raj Bhalla group '.
On October 9, 1949, the assessee Company purchased 15,547 shares at Rs. 400 per share from Jaswant Sugar Mills Ltd., and the amount paid by the assessee Company was adjusted towards the purchase price and the balance was paid.
On the same day, the remaining 11,000 shares were sold by Jaswant Sugar Mills Ltd. to National Construction and Development Corporation Ltd., at Rs. 400 per share.
Thus, on that date Jaswant Sugar Mills Ltd. ceased to have any connection with the present matter.
It may be pointed out that on the date on which the two transactions took place, the priceruling in the market was about Rs. 217 8 0.
Before Jaswant Sugar Mills Ltd. parted with the shares, they.
had appointed a new Board of Directors of the Madhusudan Mills Ltd., and these new Directors also belonged to the same group.
The managing agency of Messrs. Bhadani Brothers Ltd. was terminated, and on the same day on which the shares were purchased from these managing agents, the assessee Company was appointed as the purchasing and selling agent of the Mills.
The assessee Company made enormous profit from the acquisition of these shares by way of dividend and commission as the purchasing and selling agent.
In October and November, 1948 they, however, sold 6,525 shares to Dalmia Cement and Marketing Company Ltd. at Rs. 400 per share.
These shares subsequently came back to the same group; but 875 that is not a matter with which we are immediately concerned.
On April 7, 1949, 4,500 shares were sold by the assessee Company to the National Investment Trust Ltd. at Rs. 181 per share resulting in a loss of Rs. 8,80,000, and on June 1, 1949, another block of 3,000 shares was sold to the National Investment Trust Ltd., at Rs. 180 per share, resulting in a loss of Rs. 5,86,312.
We are not concerned with the loss arising from the first sale which was considered in the assessment year, 1950 51, and in respect of which a reference is pending in the High Court of Punjab.
We are concerned with the loss in the second year relating to the assessment year, 1951 52.
In that year, the loss on the sale of the shares was sought to be set off against the profits made, and the loss practically cancelled the profits.
The shares which were sold by the assessee Company on the two occasioning were sold to one Amrit Bhushan (a relative of Mr. Yodh Raj Bhalla) who sold then the same day to Messrs. National Investment Trust Ltd., at the slender profits of 8 annas per share, which was brokerage.
Thus, at the beginning and at the end, though numerous transactions had taken place, the shares continued to be the property of the 'Yodh Raj Bhalla group '.
The question is whether the loss on the sale of the shares be set off against the profits in the year in which the sales and profits were respectively made.
The assessee Company was assessed for the assessment year, 1950 51, by the Income tax Officer, Meerut.
In that year, the loss of Rs. 8,78,062 8 0 arising from the sale of Rs. 4,520 shares of Madhusudan Mills Ltd. was set off against the profits of the assessee Company.
The case of the assessee Company for the assessment year, 1951 52, was considered by the Income tax Officer, Central Circle V, New Delhi, to whom the cases of the other Companies above named were also transferred.
By looking into the 876 affairs of these Companies, he came to learn, that the shares of the Madhusudan Mills Ltd. were purchased at a price, which was almost double the current market price, by the 'Yodh Raj Bhalla group, and were transferred at the same price to the assessee Company.
He found that this was done with a view to removing Messrs. Bhadani Brothers, Ltd. from their managing agency and to securing for the assessee Company the purchasing and selling agency of the Mills.
On the date of the purchase from Messrs. Bhadani Brothers, Ltd., Jaswant Sugar Mills Ltd. achieved this purpose in view of their controlling interest.
Bhadani Brothers, Ltd. ceased to be the managing agents from that date, and the purchasing and selling agency of the Madhusudan Mills, Ltd. was given to the assessee Company, though it had, on that day, done no more than give a loan to Jaswant Sugar Mills Ltd. In the assessment year, 1951 52, the loss of Rs. 5,86,312 8 0 on the sale of 3,000 shares was, therefore, disallowed holding it to be a capital loss.
The order of the Income tax Officer, Central Circle V, New Delhi was confirmed on appeal by the Appellate Assistant Commissioner.
On further appeal by the assessee Company, the Income tax Appellate Tribunal, Delhi, reversed the order of the Appellate Assistant Commissioner, and held that the loss was a trading loss.
Whether a particular loss is a trading loss or a loss on the capital side undoubtedly depends upon the facts of each case.
But it has been held, over and over again, that the question is not one of pure fact, and that a mixed question of fact and law is always involved.
The cases to which we shall make a reference presently, have laid down this proposition, and those cases have also indicated how the matter is to be viewed in the context of facts.
In Commissioner of Income tax vs Ramnarain Sons Ltd. (1), the Company was a dealer in shares 877 and also carried on the business of acquiring managing agencies of other Companies.
The Company the acquired the managing agency of a Textile Mill from Messrs. Sassoon J. David and Co. Ltd., and also agreed as part of the same transaction to buy 2,507 shares of the Mills.
1,507 shares were purchased at Rs. 2,321 8 0 per share, and the remaining 4,000 shares were purchased at Rs. 1,500 per share.
These shares were quoted on the market at Rs. 1,610.
Later,4,000 shares were sold at a loss of Rs. 1,78,000 This was shown in the books of the Company as a busines loss but was disallowed, as the shares were not held to be the stock in trade of the business of the Company as share dealers.
On a reference to the High Court of Bombay, a Divisional Bench upheld the view of the Tribunal.
Chagla,C. J., in delivering the judgment of the Court, observed that a managing agency being an asset of an enduring nature, the way to look at the matter was to enquire what was, the primary intention in acquiring the shares.
The learned Chief Justice then referred to a judgment of this Court reported in Kishan Prasad & Co. Ltd. vs Commissioner of Income tax (1), where it was observed: "It seems that the object of the assessee Company in buying shares was purely to obtain the managing agency of the third mill which no doubt would have been an asset of an enduring nature and would have brought them profits but there was from the inception no intention whatever on the part of the assessee Company to re sell the shares either at a profit or otherwise deal in them." The learned Chief Justice then considered the argument that a block of shares might have to be bought, if at all, at a higher price, and observed as follows: "A dealer in shares may succeed in getting a large number of shares at a price less than 878 the market price if the seller is in difficulties and wants to get rid of his shares and to get liquid assets.
But we have not heard of a dealer in shares purchasing a large number of shares at a higher value than the market value.
The other circumstance which is equally strong in this case is that the shares were purchased for the acquisition of the managing agency.
Therefore the real object of the assessee company was not to do business in these shares, not to make profit out of these shares, but to acquire a capital asset out of which it would earn managing agency commission and make profit." Messrs. Ramnarain and Sons.
Ltd. then appealed to this Court, and the decision of the Bombay High Court was upheld.
The Judgment of this Court is reported in Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax (1).
It was laid down by this Court that in considering whether a transaction was or was not an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee, having regard to the "legal requirements which are associated with the concept of trade or business".
Dealing with the price above the market price which was paid in that case, it was observed: "Even assuming that the appellants acquired the entire block of 2,507 shares from M/s. Sassoon J. David & Co. Ltd. the shares transferred to the names of the directors being held by them merely as nominees of the appellants the price per share was considerably in excess of the prevailing market rate.
The only reason for entering into the transaction, which could not otherwise be regarded as a prudent business transaction, was the acquisition of the 879 managing agency.
If the purpose of the acquisition of a large block of shares at a price which exceeded the current market price by a million rupees was the acquisition of the managing agency, the inference is inevitable that the intention in purchasing the shares was not to acquire them as part of the trade of the appellants in shares.
" The above two decisions are merely the application of a principle of long standing, which has been stated over and over again in the past.
In Oriental Investment Co. Ltd. vs Commissioner of Income tax (1), that principle was reiterated, and it was that the object for which a company was formed did not invest the deal with the characteristics of a trade in shares, but that other circumstances along with that fact must be considered to find out the real object of a particular venture.
Before we deal with the present case, one other case of this Court may be noticed.
In Rajputana Textiles vs Commissioner of Income tax (2), the converse conclusion was reached.
There, on the facts and circumstances of the case, it was held that a particular deal in shares was a commercial venture and had all the attributes of an adventure in the nature of trade.
In that case, the transaction was not a single or an undivided one with a slump payment, because for the managing agency, Rs. 12,50,000 were paid separately and for the shares, a sum of Rs. 83,98,000 was paid.
The two acquisitions being different, the profit on the sale of some of the shares was considered to be a gain on the revenue side.
There is no doubt, whatever, that the shares of the Madhusudan Mills Ltd. were acquired at a price considerably higher than the market price.
In fact, that the price paid was almost double.
Such a deal, from the business point of view, was not prudent, unless the purchaser stood to gain in some 880 other way.
It was contended before us that this was a speculative deal in the hope that the price of the shares would firm up when the textile industries would revive.
If this was the intention, then it might possibly be argued that the purchasers miscarried in their calculations, and suffered a loss in a business transaction.
But, was this the intention of the Directors of Jaswant Sugar Mills Ltd. ? Those who sold the shares were not only in possession of the shares but also of the managing agency of the Madhusudan Mills Ltd., and the intention of the Directors of Jaswant Sugar Mills Ltd. was to remove the sellers from their position as managing agents and to get the entire benefit of such or other agencies for themselves.
The assessee Company has urged that might have been the intention of they Jaswant Sugar Mills Ltd. but not of the assessee Company which had, on that day, merely given a loan to Jaswant Sugar Mills Ltd. Curiously enough, however, the immediate benefit of the deal was the acquisition of the selling and purchasing agency of the Mills, and that was obtained not in favour of Jaswant Sugar Mills Ltd. but of the assessee Company, even though on July 15, 1948 (the date of purchase) the assessee Company had obtained registration of 10,5000 shares by way of security in its own name.
Why the assessee Company was favoured in this way is not far to seek.
It mattered not whether Jaswant Sugar Mills Ltd. acquired that agency or the assessee Company; the benefit thereof went to the same group of persons.
The transaction of sale of the shares was also made within three months of their purchase, and the assessee Company not only bought the 10,500 shares which stood in its name but 15,547 shares, which gave the assessee Company a controlling voice in the affairs of the Mills.
The assessee Company continued to retain the selling and purchasing agency, which was very profitable.
Indeed, on its investment in the first year of Rs. 14 lakhs odd, it 881 made a profit of about Rs. 7 lakhs.
The question, therefore, would be whether the assessee company in purchasing the shares merely wished to deal in shares as stock in trade, or was acquiring a capital asset of an enduring nature.
This question is not one of fact, pure and simple, hut one of an inference in law from the proved circumstances of the case.
The Income tax Officer, in deciding this question against the assessee Company, pointed out numerous circumstances, which showed clearly that this was not a mere purchase of shares as shares by a speculator, who, buying a big block, sometimes pays slightly more than the market rate.
Bhadani Brothers Ltd., owned not only the shares but also the managing agency, and it is obvious that they would not part with the shares without charging for the managing agency.
The price of Rs. 400 per share was so out of proportion to the market price that it indicated, by itself, the acquisition of something more than the mere shares.
According to the Income tax officer, the real intention was to acquire lucrative agencies of the Mills, and this intention, whether it was held by Jaswant Sugar Mills Ltd. Or the assessed Company or both, was of the same body of persons.
The Appellate Assistant Commissioner endorsed the view of the Income tax officer; but the Tribunal made a distinction between one Company and another, and that distinction has been pressed upon us by the assessee Company.
Relying upon the well known case of Salomon vs Salomon & Co. Ltd.(1), it was argued before us that each company must be viewed as a separate entity, and that the intention of one company could not be attributed to another company, even though the proprietorship of the companies might be same.
As a proposition affecting companies, it cannot be gainsaid; but we are not concerned with a theoretical question as to the assesee Company being a separate legal entity, but with the 882 question whether a particular loss made by the assessee Company is a capital or a revenue loss.
The two Companies, i. e., jaswant Sugar Mills Ltd. and the assessee Company, were directed by the same set of persons, and the facts show that even though Jaswant Sugar Mills Ltd. temporarily acquire the shares, they conferred all the benefits of the acquisition upon the assessee Company from the very first day.
The assessee Company also ultimately came into possession of all the shares along with another Company, which was also directed by the same persons, and Jaswant Sugar Mills Ltd. went out of the picture within three months.
In these circumstances, it is easy to see that the interposition of Jaswant Sugar Mills Ltd. was merely a device to secure the benefit of the English case, to which we have referred.
It was never intended that Jaswant Sugar Mills Ltd. would hold the shares or the benefits arising from the acquisition of a block of shares, giving to the holder a decisive voice in the affairs of Madhusudan Mills Ltd. That controlling interest was acquired by the `Yodh Raj Bhalla group ' for the benefit of the assessee Company, and it was an acquisition of an interest of an enduring nature.
Reference was made, in this connection, to the transactions with the Dalmia Cement and Marketing Co. Ltd. in which the latter paid the same price namely, Rs. 400 per share.
Perhaps, the Dalmia Company was after the controlling interest in its own way, and it is significant to note that within a short time, those shares again found their way in the hands of the same group.
Similarly, the shares changed hands even within this group through the agency of Amrit Bhushan, no doubt a broker but also a relative of Mr. Yodh Raj Bhalla, who profited only to the extent of 8 annas per share, and bought and sold the shares from one Company to mother on the same day.
All this show that the affairs of there Companies were centrally arranged, and the 883 intention was to benefit the assessee Company by the acquisition of a large block of shares at a very much later prices than obtaining in the market, to acquire certain agencies of a profitable character.
In our opinion, this transaction must be regarded as one on the capital side.
Shares were never treated as part of the stock in trade.
They were not sold in the market, but were sold at a loss to another Company belonging to the same group, with the obvious intention of setting off the losses against the profits, thus cancelling the profits, and saving them from taxation.
In the result, the appeal is allowed, with costs on the respondent.
Appeal allowed.

summary/full:
The respondent was a company dealing in shares and securities and belonged to a group of companies all controlled by the same persons.
In the year of account, corresponding to the assessment year 1951 52, the respondent sold the shares relating to Madhusudan Mills Ltd., which it had acquired sometime earlier, suffering a loss for which it claimed a set off against the profits in that year.
The Income tax Officer found that the shares in question had been purchased by J, a company belonging to the group, at a price which was almost double the current market price, that it was so done with a view to removing the sellers from their managing agency and to securing for the respondent the purchasing and selling agency of the Mills, and that after the purchase J achieved the purpose in view of its controlling interest and the purchasing and selling agency of the Mills was given to the respondent, though the latter had done no more than give a loan to J.
It was also found that soon after the purchase the shares in question came into the possession of the respondent and that when the shares were sold it was not in the market but at a loss to another company belonging to the same group.
The Income tax Officer came to the conclusion that in getting the shares the respondent did not deal with them as stock in trade but was acquiring a capital asset of an enduring nature.
Accordingly, he disallowed the claim holding the loss to be a a capital loss.
The Appellate Tribunal, however, held in favour of the respondent on the view that a distinction must be made between the respondent company and J. The Commissioner of Income tax moved the Tribunal for a reference to the High Court, but it was dismissed on the ground that though it was barred only by one day and there was no negligence on the part of the Commissioner, the Tribunal had no power to extend time.
An application to the High Court was also dismissed.
The Commissioner of Income tax then applied for and got special leave to appeal against 866 the order passed by the Tribunal.
When the appeal came on for hearing in due course the respondent raised an objection that the appeal was not maintainable because no appeal was filed against the order of the High Court, and relied on the decision in Chandi Prasad Chokani vs State of Bihar, ; ^ Held, that the appeal was maintainable because there was no question of by passing the order of the High Court which only related to the correctness of the decision of the Tribunal on the question of limitation which was not the subject of the present appeal.
Held, further, that there were special circumstances which justified the grant of special leave.
Baldev Singh vs Commissioner of Income tax , applied.
Chandi Prasad Chokhani vs State of Bihar ; , distinghuished.
Held, also, that, on the facts, the object was to purchase a large block of shares at a much larger price than the market value to acquire certain agencies of a profitable character, that the purchase of the shares by J was merely a device but the controlling interest was acquired by the respondent, and that the transaction must be regarded as one on the capital side.
Ramanarain Sons (P.) Ltd. vs Commissioner of Income tax, ; and Oriental Investment Co. Ltd. vs Commissioner of Income tax, ; , applied.
Salomon vs Salomon & Co. Ltd. ; , distinguished.


judgement:
ION: Criminal Appeal No. 223 of 1959.
Appeal by special leave from the judgment and ordered dated April 14, 1959, of the former Bombay High Court (Rajkot Branch) at Rajkot in Criminal Appeal No. 84 of 1958.
Nur ud din Ahmed and K. L. Hathi for appellant.
H. R. Khanna and R. H. Dhebar, for respondent.
January 24.
The Judgment of the Court was delivered by KAPUR, J.
The appellant and two others were convicted by the Additional Sessions Judge, Gohilwad, under sections 302 and 201 of the Indian Penal Code for the murder of Kanji and they were sentenced to imprisonment for life under the former section and to seven years ' rigorous imprisonment under the latter.
The sentence were concurrent.
On appeal the High Court set aside the conviction 728 of Nanji Ravji but upheld the convictions and sentences of the appellant and Karamshi Bhawan.
The appellant has Come in appeal to this Court by Special leave.
The deceased Kanji was rather an unsavoury character in village Chiroda and it is alleged that he had a illicit connection with Shrimati Shantu the sister of Karamshi and also used to follow about Smt.
Baghu the sister of the appellant for a similar object.
It is stated that five days before the occurrence the appellant Karsan, Karamshi, Nanji and Gumansinh approver met and decided to murder the appellant.
With that object in view Gumansinh approver was to decoy the deceased to the Vadi of the appellant and there the murder was to be committed.
At about sunset on March 19, 1958, the deceased was decoyed to the place as previously arranged and there he was murdered by the appellant who gave him a few blows.
with a sharp cutting instrument called Dharia.
According to the statement of the approver the dead body was wrapped in the scarf of the deceased and was carried by the appellant from the place of the murder to the dry bed of the river and there it was burried in a pit.
Nothing was heard of the murder or of the deceased till on March 26, 1958, a brother of the deceased made a report to the police about his disappearance and that he suspected the three uncles of the appellant, subsequently the appellant and the other accused persons were taken into custody by the police.
One of them while in the custody of the police, was allowed to go to the village and he asked the help of Shamji and Manilal P.Ws.
He also made a confession to them and they reported the matter to the police.
On March 31, 1958, Gumansinh and Karamshi made confessions 729 which were recorded by a Magistrate.
Between March 26 and March 31, recoveries of various articles were made.
At the instance of the appellant, it is stated, the dead body and then the head of the deceased was recovered from a distant well.
At the instance of Nanji on March 28, 1958 a scarf was, discovered in the pit in which the dead body was according to the approver, buried.
On the scarf, there were some hairs which on analysis by the Chemical Examiner were found to be similar to the hairs of the appellant and of the deceased.
A day previous, i. e. March 27, 1958, at the instance of the appellant silver buttons which were stained with human blood were discovered from the field of the appellant at small stick like a button belonging to the deceased was also found at his instance.
The High Court rejected the confession of Karamshi on the ground that it was not voluntary.
It acquitted Nanji on the ground that there were no corroboration in regard to him of the approver 's statement, the place where the dead body was buried was not discovered at his instance, his production of stick and shirt and trousers from his house was of no consequence, and the oral evidence was contrary to the medical evidence and Karamshi 's confessional statement could not be used against Nanji.
In regard to the appellant the High Court accepted the testimony of the approver as being a reliable piece of evidence.
It attached no importance to the recovery of the cutting instrument, Dharia, nor to the discovery of the stick (Dhoka) at his instance.
But the High Court did rely upon the discovery of the dead body of the deceased, i.e. the trunk and the head, at the instance of the appellant and of the blood stained buttons also at his instance and attached importance to scarf recovered from the pit where the dead body was alleged to have been first buried and which had hairs both of the appellant as well as of the deceased.
730 It was argued for the appellant that the evidence of the approver, even though it had been accepted as true, was not corroborated in material particulars connecting the appellant with the offence.
On the other hand it was contradicted.
The approver had stated that the dead body was buried in a pit in the dry bed of the river but when that pit was dug up the dead body was not found there and only a piece of ulna bone and a heel of a human foot were found and all there recoveries had been made earlier and so could not be called corroborative in material particulars.
It was further submitted that there was no evidence to show as to when and how the body of the deceased was removed from the pit, dismembered and thrown into the well.
The recovery of the scarf, it was pointed out, was an innocuous circumstance because on the evidence produced it had not been shown to belong to the appellant but to his father and the evidence of the Chemical Examiner was not sufficient to prove that the hairs on the scarf were of the appellant or of the deceased because the Chemical Examiner was certainly no expert on this matter and his evidence was, not admissible under section 45 of the Evidence Act, and at the most, according to the Chemical Examiner 's report the hairs resembled those of the appellant.
And secondly according to the approver the dead body of the deceased was wrapped in his own pania (scarf).
It was further submitted that the statement in regard to the recovery of the trunk and the head will only show that the appellant knew where the trunk and the head were, which at the most would lead to an inference of an offence under 8. 201 and not of 8. 302.
What the law requires in the case of an accomplice 's evidence is that there should be such corroboration of the material Parts of the story connecting the accused with the crime as will satisfy reasonable minds that the approver can be regarded 731 as a truthful witness.
The corroboration need not be direct evidence of the commission of the offence by the accused.
If it is merely circumstantial evidence of his connection with the crime it will be sufficient and the nature of the corroboration will depend on and vary with the circumstances of each case.
Vemireddy Satyanarayan Reddy vs The State of Hyderabad.
The confessional statement made by the approver on March 31, 1958 gave the following facts connecting the appellant with the murder.
(1) The appellant gave dharia blow to the deceased.
The dharia had already been discovered and it has been disregarded from the evidence by the High Court as being of no importance.
The next thing stated by the approver was that the deceased 's body was tied in a pania (scarf).
He did not state that the scarf in which it was bound belonged to the appellant.
The next fact stated by him was that the appellant carried the body of the deceased and then it was buried in a pit and lastly he stated that the appellant had told him that the head of the deceased had been thrown into a well.
None of these recoveries in the circumstances of this case are corroborative of the statement of the approver to the extent of connecting the appellant with the offence committed.
On the other hand, they are somewhat contradictory of the statement because the pania (scarf) which was found in the pit has now been stated to belong to the appellant.
The dead body was not found in the pit, the head had already been discovered and the trunk had also been taken out of the well.
In these circumstances it was submitted that the approver 's statement cannot be said to have been corroborated in material particulars.
But there are other circumstances which have to be considered even if the evidence of the approver is held not to be very helpful to the prosecution.
Firstly, there is the pointing out of 732 the dead body by the appellant from the well; secondly, the discovery of the blood stained (stained with human blood) buttons at the instance of the appellant i thirdly the scarf which has been held to belong to the appellant and which was found from the pit pointed out by the co accused Nanji and fourthly by the presence of the hairs of the appellant and of the deceased on that scarf.
The mere fact that the dead body was pointed out by the appellant or was discovered as a result of a statement made by him would not necessarily lead to the conclusion of the offence of murder.
But there are other circumstances which have to be considered.
The discovery of the buttons with bloodstains at the instance of the appellant is a circumstance which may raise the presumption of the participation of the appellant in the murder, In Wasin Khan vs The State of Uttar Pradesh (1), it was held that the recent and unexplained possession of stolen property would be presumptive evidence against a prisoner on a charge of robbery as also of a charge of murder.
But it must depend upon the circumstance of each case.
The third piece of evidence to be considered is the recovery of the pania i.e. scarf.
No doubt there is no statement by the approver that the scarf in which the dead body was taken was that of the appellant.
But a scarf has been found which the High Court has held as belonging to the appellant and hairs were found on that scarf.
It was argued that the finding of the hairs was of no consequence and at least the Chemical Examiner was not he proper expert who could depose as to the similarity or other wise of the hairs.
The writers on medical jurisprudence, however, have stated that from the microscopic examination of the hairs it is possible to say whether they are of the same or of different colours or sizes and from the examination it may help in deciding where the hairs come from.
In 733 Taylor 's Medical Jurisprudence (1956 Edn.) Vol. 1, at page 122, sine cases are given showing that hairs were identified as belonging to particular persons.
Thus, we have besides the evidence of the approver three important facts which connect the appellant with the commission of the offence.
His pointing out the dead body, his pointing out the silver buttons of the deceased which were stained with human blood and the presence of his hairs on a pania (scarf) on which there were the hairs of the deceases also.
In our opinion this would be sufficient evidence in the circumstances of the present case to connect the appellant with the commission of the offence.
We, therefore, dismiss the appeal.
Appeal dismissed.

summary/full:
The appellant and two others were convicted for murder under sections 302 and 201 of the Indian Penal Code.
The High Court accepted the testimony of the approver as being a reliable piece of evidence.
It relied upon the discovery of the dead body of the deceased at the instance of the appellant and of blood stained buttons also at his instance and attached importance to the scarf recovered from the pit where the dead body was alleged to have been first buried and which had hairs both of the appellant as well as the deceased.
The appellant contended that the evidence of the approver, even though it had been accepted as true, was not corroborated in material particulars connecting the appellant with the offence.
None of the recoveries are corroborative of the statement of the approver to the extent of connecting the appellant with the offence committed; on the other hand they are somewhat contradictory of the statement.
The evidence of the Chemical Examiner was not sufficient to prove that hairs on the scraf were of the appellant or of the deceased because the Chemical Examiner was no expert on this matter and his evidence was not admissible under section 45 of the Evidence Act and, at the most, according to the Chemical Examiner the hairs resembled those of the appellant.
^ Held, that where the evidence of the approver is held not to be very helpful to the prosecution other circumstances 727 besides the evidence of the approver has to be considered.
The mere fact that the dead body was pointed out by the appellant or was discovered as a result of a statement made by him would not necessarily lead to the conclusion of the offence of murder.
In the present case beside the evidence of the approver, the appellant 's pointing out of the dead body, his pointing out the silver buttons of the deceased which were stained with human blood and the presence of his hairs on a pania (scraf) on which there were the hairs of the deceased also, are important facts which are sufficient evidence to connect the appellant with the commission of the offence.
Held, further, that writers of medical jurisprudence have stated that from microscopic examination of the hairs it is possible to say whether they are of the same or of different colours or sizes and from the examination it may help in deciding where the hairs come from.
Vemireddy Satyanarayan Reddy vs State of Hyderabad, ; and Wasim Khan vs State of Uttar Pradesh, [1956] S.C.R. 191, relied on.


judgement:
ION: Criminal Appeal No. 126 of 1960.
Appeal by special leave from the Judgment and order dated November 23, 1959, of the Punjab High Court in Criminal Revision No. 1445 of 1959.
V. D, Mahajan, for the appellant.
B. K. Khanna, D. Gupta and P. D. Menon, for the respondent.
January 25.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal by one Dault Ram who was prosecuted under section 182 of the Indian Penal Code and sentenced to imprisonment for three months.
His revision application in the High Court of Punjab at Chandigarh was dismissed in limini; but he obtained special leave from this court and has filed this appeal.
The appellant was working as a Patwari and on August 19, 1958, he wrote a letter to the Tehsildar of Pathankot that on the previous day he had been set upon by two persons Hans Raj and Kans Raj who beat him severely and robbed him of certain of his official papers and some money, which was with him, partly belonging to 814 him and partly to the Government.
At the end of the letter which he wrote to the Tehsildar, he stated that the letter was written for his information.
The Tehsildar, however, forwarded the letter to the Sub Divisional Officer who in his turn sent it on to the police.
The police enquired into the facts and reported that the allegations in letter were false.
Meanwhile, it appears that the appellant entered into some sort of compromise with Hans Raj and Kans Raj and wrote another letter saying that as they were his relatives and he had found the papers and money, the proceedings if any be dropped and the papers be consigned to the record room.
The matter however was pursued further and when the report of the police came that the allegations in the original letter were false, the Tehsildar asked the police that a "calendar" be drawn up.
The police however launched a prosecution against the appellant under section 182 of the Indian Penal Code, and after due trial, the appellant was found guilty of that offence and was sentenced to three months ' rigorous imprisonment.
His appeal and revision failed and we have been informed that the appellant has served out his entire sentence.
The only question in this case is whether a complaint in writing as required by section 195 had been presented by the public servant concerned.
The public servant who was moved by the appellant was undoubtedly the Tehsildar.
Whether the appellant wanted the Tehsildar to take action or not, the fact remains that he moved the Tehsildar on what is stated to be a false averment of facts.
He had charged Hans Raj and Kans Raj with offences under the Penal Code and he had moved his superior officer for action even though he might have stated in the letter that it was only for his information.
We are prepared to assume that he expected that 815 some action would be taken.
In fact his second letter that he had compromised the matter and the proceedings might be dropped clearly shows that he anticipated some action on the part of his superior officer.
The question is therefore whether under the provisions of section 195, it was not incumbent on the Tehsildar to present a complaint in writing against the appellant and not leave the court to be moved by the police by putting in a charge sheet.
The words of section 195 of the Criminal Procedure Code are explicit.
The section reads as follows: "(1) No Court shall take cognizance (a) of any offence punishable under sections 172 to 188 of the Indian Penal Code, except on the complaint in writing of the public servant concerned, or of some other public servant to whom he is subordinate; The words of the section, namely, that the complaint has to be in writing by the public servant concerned and that no court shall take cognizance except on such a complaint clearly show that in every instance the court must be moved by the appropriate public servant.
We have to decide therefore whether the Tehsildar can be said to be the public servant concerned and if he had not filed the complaint in writing, whether the police officers in filing the charge sheet had satisfied the requirements of section 195.
The words "no court shall take cognizance" have been interpreted on more than one occasion and they show that there is an absolute bar against the court taking seisin of the case except in the manner provided by the section.
Now the offence under section 182 of the Penal Code, if any, was undoubtedly complete when the appellant had moved the Tehsildar for action.
Section 182 does not require that action must always be 816 taken if the person who moves the public servant knows or believes that action would be taken.
In making his report to the Tehsildar therefore, if the appellant believed that some action would be taken (and he had no reason to doubt that it would not) the offence under that section was complete.
It was therefore incumbent, if the prosecution was to be launched, that the complaint in writing should be made by the Tehsildar as the public servant concerned in this case.
On the other hand what we find is that a complaint by the Tehsildar was not filed at all, but a charge sheet was put in by the Station House Officer.
The learned counsel for the State Government tries to support the action by submitting that section 195 had been complied with inasmuch as when the allegations had been disproved, the letter of the Superintendent of Police was forwarded to the Tehsildar and he asked for "a calendar".
This paper was flied along with the charge sheet and it is stated that this satisfies the requirements of section 195.
In our opinion, this is not a due compliance with the provisions of that section.
What the section comtemplates is that the complaint must be in writing by the public servant concerned and there is no such compliance in the present case.
The cognizance of the case was therefore wrongly assumed by the court without the complaint in writing of the public servant namely the Tehsildar in this case.
The trial was thus without jurisdiction ab inito and the conviction cannot be maintained.
The appeal is therefore allowed and the conviction of the appellant and the sentence passed on him are set aside.
Appeal allowed.

summary/full:
The appellant a Patwari wrote a letter to the Tehsildar under whom he was working that he had been robbed of certain official papers and money.
The police reported that on investigation, the allegations were found to be false.
The Tehsildar asked the police that a "calendar" be drawn up.
The police launched a prosecution under section 182 of the Indian Penal Code.
No complaint in writing as required by section 195 of the Code of Criminal Procedure was made by the Tehsildar 813 as the public servant concerned in the case, but a charge sheet was put in by the police attaching the letter of the Tehsildar asking them to draw up a "calendar" against the appellant.
^ Held, that in a prosecution to be launched under section 195 of the Code of Criminal Procedure, it is incumbent that a complaint in writing should be made by the public servant concerned for only on such complaint can the court take cognizance of the offence otherwise the trial is without jurisdiction ab initio.
Held, further, that section 182 does not require that an action must always be taken on the report made to the public servant, the offence is complete as soon as the report is made and the person who made the report believed that some action would be taken.


judgement:
N: Cr. A. No. 189 of 1961.
Appeal by special leave from the judgment and order dated July 10 and 11, 1961, of the Bombay High Court (Nagpur Bench) in Criminal Application No. 19 of 1961.
A. section Bobde, B. A. Masodkar, M. L. Vaidya, M. M. Kinkhede and Ganpat Rai, for the appellant.
M. C. Setalvad, Attorney General for India, B. Sen and R. H. Dhebar, for the respondents.
January 31.
The Judgment of the Court was delivered by 919 SINHA, C J.
This appeal is directed against the Judgment and order dated July 11, 1961 of a Division Bench of the Bombay High Court (Nagpur Bench), dismissing the appellant 's application, under article 226 of the Constitution, read with section 491 of the Code of Criminal Procedure, wherein he had prayed for a writ of Habeas Corpus against the State of Maharashtra and the District Magistrate of Nagpur, directing them to produce the petition in Court and to set him at liberty.
This application was heard by us on January 8 and 9, 1962, and after hearing Shri A. section Bobde for the appellant and the learned Attorney General for the State of Maharashtra, we directed that the appellant be released forthwith, and that the reasons for our judgment will follow later.
We now proceed to set out our reasons for the order passed on that day.
It appears that an Order of Detention, under section 3(1) (a)(ii) of the Preventive Detention Act (IV of 1950) hereinafter referred to as the Act) was made by the District Magistrate of Nagpur on April 10, 1961.
The order of Detention is in these terms: "No.
CC/X (2) of 1961 office of the District Magistrate, Nagpur, Dt.
10th April, 1961.
ORDER OF DETENTION UNDER SEC.
3(1)(a) (ii) OF THE .
Whereas I am satisfied that it is necessary to prevent Shri Harikisan Kishorilal Agarwal of Nagpur from acting in a manner prejudicial to the maintenance of public order and that therefore, it is necessary to detain him.
Now, therefore, in exercise of the powers conferred on me by Section 3(1)(a)(ii) of the 920 , I Dinkarrao Hanjantrao Deshmukh, I.A.S., District Magistrate, Nagpur hereby direct that the said Shri Harikisan Kishorilal Agarwal be so detained.
Given this 10th day of April 1961 under my signature and seal.
Seal of the Sd/D.H. Deshmukh D.M. Nagpur District Magistrate, Nagpur" He also directed that the appellant should be detained in the District Prison, Thana, and that for the purpose of the Bombay Condition of Detention order, 1951, be treated as a Class II Prisoner.
The grounds of detention were served on the same day.
The substance of the grounds is that since his release from previous detention in October, 1960, he had been instigating persons at Nagpur to defy and disobey reasonable directions and lawful orders issued by competent authorities, from time to time, prohibiting and regulating processions and assemblies at Nagpur; that by use of highly provocative words, expressions and slogans in meetings and processions in Nagpur, in which he took a prominent part, he had instigated persons on several occasions at Nagpur to indulge in acts of violence and mischief and to create disturbance in the city of Nagpur; and that he had been acting since October 1960, in a manner prejudicial to the maintenance of public order, in that city.
And then follow 'notable particular ' of his activities, running into five closely typed pages and contained in many paragraphs.
In his petition to the High Court, the petitioner raised a number of grounds of attack against the legality of the order of his detention, and most of those grounds have been reiterated in this Court.
We do not think it necessary to go into all the points raised, on behalf of the appellant, by the learned counsel.
In our opinion, it is enough to say that we are satisfied 921 that, in the circumstances of this case, the provisions of article 22(5) of the Constitution have not been fully complied with, and that, therefore, the appellant had not the full opportunity provided or contemplated by that Article of making his representation against the Order of Detention.
In this connection, it is necessary to state the following facts.
The appellant wrote a letter to the District Magistrate of Nagpur on April 19, 1961, to the effect that he had been served with an Order of Detention dated April 10, 1961, and that the Order and the grounds of detention being in English, he was unable to understand them, and therefore, asked for a Hindi version of the same so that he may be able to follow and understand the charges levelled against him and take necessary steps for his release from jail.
He raised some other questions also in that letter, but it is not necessary to refer to them here.
To that letter the District Magistrate replied by his letter dated April 23, 1961, the second paragraph of which, in the following terms, sets out his views of the matter: "The order of detention and the grounds of detention already communicated to you are given in English which is the official language in this district.
It is not possible to supply any translation of the same for is (sic) it legally necessary under the .
The order and the grounds of detention served on you were fully explained to you by the Police Officer in the presence of the D.S.P. Nagpur City." The High Court, dealing with this contention on behalf of the detenue, came to the conclusion that under the Constitution English still continued to be the official language of the State of Maharashtra, and that service of the Order in English upon the detenue was sufficient compliance with 922 the requirements of cl.
(5) of article 22 of the Constitution.
It also held that the failure of the District Magistrate to supply the grounds in Hindi did not have the effect of preventing him from making his representation to the authorities.
Furthermore, the High Court pointed out that the District Magistrate had stated in his letter that the grounds were explained to the appellant in Hindi by the Police Officer at the time the Order and the grounds were served upon him.
In the view of the High Court, therefore, the explanation or translation of the grounds by the Police Officer at the time he served those on the appellant should be deemed to be enough to enable him to make an effective representation against his detention.
Mr. Bobde, for the appellant, has vehemently argued that the requirements of the Constitution had not been complied with inasmuch as cl.
(5) of article 22 of the Constitution required that the grounds on which the Order of Detention had been based had to be communicated to the detained person.
His argument further was that "communication" of the grounds was not equivalent to serving the grounds in English upon a person who was not conversant with the English language, and that oral translation by the police officer, said to have been made to the detenue, was not sufficient compliance with the requirements of the constitutional provisions, which must be fully satisfied in order that the detenue may be in a position to make an effective representation against the Order of Detention.
He also contended that we do not know in what terms the police officer translated the lengthy document or whether his translation was correct.
On behalf of the State of Maharashtra, the learned Attorney General first attempted to show that the appellant knew English.
In this connection he has referred to the affidavit of the District Magistrate, the exact words of which are as follows: 923 "He (the detenue) had also asked me to supply the grounds in Hindi to enable him to understand the same.
I admit that I had replied to this letter and had declined to communicate the grounds in Hindi.
I deny that this has been done with a view to keep the petitioner in dark as to the grounds of his detention.
The petitioner as per my information, is an educated man and can understand English.
The question that the petitioner did not understand the grounds, therefore, does not arise.
I deny that the petitioner is entitled to receive the grounds in Hindi.
The grounds were supplied to the petitioner in the court language and also they were explained to him by the Police Inspector Shri W.B. Bobde who had served them on the petitioner. . " That statement of the District Magistrate is apparently based on the following statement, in the affidavit of Shri W.B. Bobde, the Police Inspector: "The Order of Detention as well as the grounds of detention were translated by me orally in Hindi and explained to Shri Harikisan Kishorilal Agrawal, in the presence of the District Superintendent of Police, Nagpur City.
" It has not been found by the High Court that the appellant knew enough English to understand the grounds of his detention.
The High Court has only stated that "he has studied upto 7th Hindi Standard, which is equivalent to 3rd English Standard".
The High Court negatived the contention raised on behalf of the appellant not on the ground that the appellant knew enough English, to understand the case against him, but on the ground, as already indicated, that the service upon him of the Order and grounds of detention in English was enough communication to him to enable him to 924 make his representation.
We must, therefore, proceed on the assumption that the appellant did not know enough English to understand the grounds, contained in many paragraphs, as indicated above, in order to be able effectively to make his representation against the Order of Detention.
The learned Attorney General has tried to answer this contention in several ways.
He has first contended that when the Constitution speaks of communicating the grounds of detention to the detenue, it means communication in the official language, which continues to be English; secondly the communication need not be in writing and the translation and explanation in Hindi offered by the Inspector of Police, while serving the Order of Detention and the grounds, would be enough compliance with the requirements, of the law and the Constitution; and thirdly, that it was not necessary in the circumstances of the case to supply the grounds in Hindi, in our opinion, this was not sufficient compliance in this case with the requirements of the Constitution, as laid down in cl.
(5) of article 22.
To a person, who is not conversant with the English language, service of the Order and the grounds of detention in English, with their oral translation or explanation by the police officer serving them does not fulfil the requirements of the law.
As has been explained by this Court in the case of The State of Bombay vs Atma Ram Sridhar Vidya, (1) cl.
(5) of article 22 requires that the grounds of his detention should be made available to the detenue as soon as may be, and that the earliest opportunity of making a representation against the Order should also be afforded to him.
In order that the detenue should have that opportunity, it is not sufficient that he has been physically delivered the means of knowledge with which to make his representation.
In order that the detenue should be in a position effectively to make his representation against the Order, he should have knowledge of the grounds of 925 detention, which are in the nature of the charge against him setting out the kinds of prejudicial acts which the authorities attribute to him.
Communication, in this context, must, therefore, mean imparting to the detenue sufficient knowledge of all the grounds on which the Order of Detention is based.
In this case the grounds are several, and are based on numerous speeches said to have been made by the appellant himself on different occasions and different dates.
Naturally, therefore, any oral translation or explanation given by the police officer serving those on the detenue would not amount to communication, in this context, must mean bringing home to the detenue effective knowledge of the facts and circumstances on which the Order of Detention is based.
We do not agree with the High Court in its conclusion that in every case communication of the grounds of detention in English, so long as it continues to be the official language of the State, is enough compliance with the requirements of the Constitution.
If the detained person is conversant with the English language, he will naturally be in a position to understand the gravamen of the charge against him and the facts and circumstances on which the order of detention is based.
But to a person who is not so conversant with the English language, in order to satisfy the requirements of the Constitution, the detenue must be given the grounds in a language which he can understand.
and in a script which he can read, if he is a literate person.
The Constitution has guaranteed freedom of movement throughout the territory of India and has laid down detailed rules as to arrest and detention.
It has also, by way of limitations upon the freedom of personal liberty, recognised the right of the State to legislate for preventive detention, subject to certain safeguards in favour of the detained 926 person, as laid down in cls.
(4) & (5) of article 22.
One of those safeguards is that the detained person has the right to be communicated the grounds on which the order of detention has been made against him, in order that he may be able to make his representation against the order of dentention.
In our opinion, in the circumstances of this case, it has not been shown that the appellant had the opportunity, which the law contemplates in his favour, making an effective representation against his detention.
On this ground alone we declare his detention illegal, and set aside the Order of the High Court and the Order of Detention passed against him.
Appeal allowed.

summary/full:
The detenue was served with the order of detention and the grounds in English.
He did not know English and asked for a translation of these in Hindi.
This request was refused on the grounds that the order and the grounds had been orally translated to him at the time they were served upon him and that English still being the official language communication of the order and grounds in English was in accordance with the law and the Constitution.
^ Held, that the provisions of article 22(5) of the Constitution were not complied with and the detention was illegal.
Article 22(5) required that the grounds should be communicated to the detenue as soon as may be and that he should be afforded the earliest opportunity of making a representation against the order.
Communication in this context meant bringing home to the detenue effective knowledge of the facts and grounds on which the order was based.
To a person who was not conversant with the English language, in order to satisfy the requirement of the Constitution, the detenue must be given the grounds in a language which he can understand and in a script which he can read, if he is a literate person.
Mere oral translation at the time of service was not enough.