judgement:
vil Appeal No. 508 of 1957.
Appeal by special leave from the judgment and decree dated June 3, 1955, of the Calcutta High Court in Appeal from Appellate Decree No. 1090 of 1949.
N. C. Chatterjee and D. N. Mukherjee, for the appellant.
B. C. Panda and P. K. Chaterjee, for the respondent, 882 1961.
February 21.
The Judgment of Kapur and Shah, JJ. was delivered by Shah, J. Hidayatullah, J. delivered a separate judgment.
SHAH, J To secure repayment of Rs. 2,500/ Anath Nath Mittra hereinafter referred to as Mittra mortgaged four parcels of land to Haridas Mondalhereinafer referred to as Mondal by deed dated April 25, 1930.
Mondal filed suit, No. 18 of 1937 on June 11, 1937, for enforcement of the mortgage in the Court of the 2nd Subordinate Judge, Midnapore, and obtained a preliminary mortgage decree for Rs. 5,000/and interest and costs.
This decree was made absolute and in execution of the decree, the mortgaged property was sold for Rs. 4,160/ and an amount of Rs. 2,176,66 out of the decretal amount remained due and payable under the mortgage decree.
Out of the four parcels of land sold, three were purchased by Mondal and the remaining was purchased by Mittra 's wife.
Mondal then applied for a personal decree under 0. 34, r. 6 of the Civil Procedure Code and obtained on September 7, 1940, a decree for payment of Rs. 2,338,15,0 against Mittra.
Mondal then applied for executing the personal decree by Misc.
Execution Cage No. 1 1 of 1941.
In the meanwhile, the Bengal Legislature enacted the Bengal Money lenders Act, 1940, which enabled the courts in certain circumstances to reopen decrees already passed.
Availing himself of this Act, Mittra filed a suit under section 36 of the Bengal Money lenders Act for an order reopening the personal decree.
By order dated August 16, 1941, the Subordinate Judge, Midnapore, decreed the suit and directed that a new decree for Rs. 1,431 15 0 be drawn up and that the amount due under the personal decree be paid in three annual instalments.
Against this decree, an appeal was preferred to the District Court, Midnapore.
The District Judge dismissed the appeal and allowed the cross objections filed by Mondal.
In Second Appeal No. 1442 of 1942, the High Court of Judicature at Calcutta set aside the decree of the District Judge and restored the decree of the Subordinate Judge, 2nd Court, Midnapore.
Mittra did not pay the amount as directed under the 883 new decree and Mondal applied for executing the decree.
Mittra then filed another suit under section 36 of the Bengal Money lenders Act in the 2nd Court of the Subordinate Judge, Midnapore, for reopening the, decrees preliminary and final passed in the mortgage suit.
The Subordinate Judge dismissed this suit as it was, in his view, barred as res judicata.
In appeal to the District Court, the decree was confirmed.
But the High Court in Second Appeal ordered that the preliminary and final decrees be reopened and the case be remanded to the trial court for passing a fresh preliminary decree.
Against the said decree of the High Court, this appeal is filed with special leave.
Section 30 of the Bengal Money lenders Act, 1940, provides in so far as it is material that notwithstanding anything contained in any law for the time being in force, or in any agreement, no borrower shall be liable to pay after the commencement of the Act a sum in respect of principal and interest which,, together with any amount already paid or included in any decree in respect of a loan exceeds twice the principal of the original loan and that the borrower shall not be liable to pay interest at rate per annum in cases of secured loans exceeding 8 per cent.
simple.
By section 36, the liability on loans secured or otherwise which contravenes the provisions of section 30 is liable to be reopened.
It is provided by sub.s.
(1) of s.36 in so far as it is material that notwithstanding anything contained in any law for the time being in force, if in any suit brought by a borrower for relief under this section whether heard ex parte or otherwise, the court has reason to believe that the exercise of one or more of the powers under the section will give relief to the borrower it shall exercise all or any of the powers specified therein as may be considered appropriate.
The court is invested with the power of reopening transactions including taking of accounts between the parties, of releasing the borrower of all liability in excess of the limits specified in cls.
(1) and (2) of section 30 and offsetting aside either wholly or in part or of revising or altering any security given or agreement made in respect of any loan.
Exercise of these powers 884 is subject to the provisos which are not material for the purposes of this appeal.
By sub section
(2), the court reopening a decree is prohibited from doing anything which affects the rights acquired bona fide by any person other than the decree holder in consequence of the execution of the reopened decree; but is enjoined to order the restoration to the judgment debtor of such property, if any, of the judgment debtor acquired by the decree holder in consequence of the execution of the reopened decree as may be in the possession of the decree holder on the date on which the decree was reopened and also to order the judgment debtor to pay to the decree holder in such number of instalments as it may think fit, the whole amount of the new decree passed under cl.
The court is further enjoined to direct that in default of payment of any instalments, the decree holder shall be put into possession of the property which has been restored to the judgment debtor and that the amount for which the decree holder purchased such property in execution of the reopened decree shall be set off against so much of the amount of the new decree as remained unsatisfied.
Sub section (6) provides that notwithstanding any.
thing contained in any law for the time being in force, the court which, in a suit to which the Act applies, passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by sub sections
(1) and (2) in any proceeding in execution of such decree.
Section 36, sub section
(1), contemplates the institution of a suit by a borrower for relief under that section and the court is thereby invested with the power of reopening decrees already passed.
Mittra in the year 1941 filed the suit under section 36 of the Act for reopening the personal decree passed under 0. 34, r. 6 of the Civil Procedure Code.
In Schedule " A " to the plaint, he set out the principal amount due under the mortgage.
the interest at the rate of 8% due thereon from the date of the mortgage till the date of the suit, costs of the suit, and after giving credit for the price realised by sale of the properties, he submitted that Mondal was entitled to 885 recover only Rs. 66 13 2 and that Mondal should be declared entitled to that amount in twenty annual instalments.
By a suit under section 36, Mittra undoubtedly was entitled to reopen the preliminary decree, decree absolute for sale and also the personal decree; ' but in the first suit, he gave up his right to reopen the preliminary decree and the decree absolute for sale, and was content to obtain an order that the personal decree alone be reopened.
In the execution under the mortgage decree one parcel of land was purchased by Mittra 's wife and it is presumably on account of this circumstance that Mittra was unwilling to have the preliminary decree reopened.
The District Judge, Midnapore, who heard the appeal against the order passed by the 2nd Court of the Subordinate Judge in the first suit under section 36 of the Act observed: " It is admitted before me by the learned pleader for the appellant that the reopening of the entire transaction will not be to the benefit of the appellant and the latter, therefore, does not want this to be done.
The only relief he claims is that the new decree passed by the learned Subordinate Judge for Rs. 1,431 15 0 shall be reduced to Rs. 66 13 2 as mentioned in his application under section 36 of the Act.
" In the first suit under section 36 filed by Mittra, the claim to reopen the preliminary decree and the decree absolute was deliberately abandoned and he obtained relief expressly on the footing that he did not, desire that those decrees should be reopened.
Is it thereafter open to Mittra to file another suit for obtaining relief under section 36 by reopening the preliminary decree and the decree absolute ? In our judgment, section 36 contemPlates filing of one suit and not successive suits for reopening transactions including decrees and obtaining relief under the Act.
If in a suit filed for that purpose, a borrower does not obtain relief which he has asked for or abandons his right to relief, in our judgment it will not thereafter be open to him to institute a second suit for relief which could have been but was not claimed in the earlier suit.
The plea that in the previous suit it was not open to Mittra to make a claim for reopening the 886 preliminary decree and the decree absolute is without substance.
By sub section
(6) of section 36, the right to grant relief in proceedings in execution of a decree already passed but which is not satisfied is vested in.
the court passing the decree and the first suit under section 36 was filed in the court which had originally passed the mortgage decree.
The claim to reopen the decrees preliminary and final was abandoned not because the court was incompetent to grant relief but because Mittra did not at that stage desire to reopen those decrees.
We are unable to agree with the High Court that to a suit under section 36 of the Act, the rule contained in 0. 2, r. 2 of the Code of Civil Procedure does not apply.
We are also of the view that the right to claim relief which could have been but has not been asked for in the previous suit must be regarded as res judicata.
In that view of the case, this appeal will be allowed and Mittra 's suit No. 105 of 1947 dismissed with costs throughout.
HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Shah, J.; but I regret my inability to agree that the judgment under appeal be reversed.
The appellant, a money lender, had advanced a sum of Rs. 2,500/ to the respondent on a simple mortgage of four properties.
He filed a suit which was decreed on November 13, 1937, when a preliminary decree for Rs. 5,000/ plus costs was passed against the respondent.
This decree was made final on February 25, 1938.
On May 17, 1939, the four properties were sold for Rs. 4,160/ , and the balance then remaining due was Rs. 2,176/ .
Three of the properties were purchased by the appellant (decree holder), and the fourth, by the wife of the mortgagor.
On September 7, 1940, a personal decree for Rs. 2,338 15 3 was passed against the respondent.
In 1941, execution of that decree was taken out.
In the meantime, the Bengal Money lenders Act had come into force on August 1, 1940.
The respondent there.
upon made an application under section 36 of the Bengal Money lenders Act for reopening the decree.
The 887 respondent did not say which decree he wanted reopened; but with his application he gave a statement of account of the entire amount as reduced under the Bengal Money lenders Act and by the amount realised A by sale of the four properties, and asked that a decree for the balance, Rs. 66 13 2, should be passed against him.
The application was partly allowed, and afresh decree for Rs. 1,431 15 0 was passed.
If the earlier decrees had been reopened, the amount due would have been Rs. 5,591 15 0, but the Subordinate Judge said : " As Rs. 4,160/ was paid, I find no necessity of cancelling the sale and ordering restitution, but for the balance of Rs. 1,431 15 0, a new decree be drawn up." The respondent appealed, and the appellant cross objected.
The District Judge dismissed the appeal, allowed the cross objection, and dismissed the application.
On appeal to the High Court by the present respondent, R. C. Mitter, J. allowed the appeal.
He held that the personal decree was liable to be reopened, and restored the decree for Rs. 1,431 15 0 passed by the Subordinate Judge.
The respondent who was directed to pay the amount by instalments under the orders of Mitter, J. made default in payment, and a money execution case was ,started against him.
He, thereupon, brought a suit under section 36 of the Bengal Money lenders Act for reopening the preliminary, final and personal decrees.
This suit was dismissed as barred by constructive res judicata and the principle of 0. 2, r. 2 of the Code of Civil Procedure, by the Subordinate Judge, and the appeal to the District Judge also failed.
On further appeal to the High Court, K. C. Das Gupta, J. (as he then was) and Guha, J. allowed the appeal.
The learned Judges held that 0. 2, r. 2 of the Code of Civil Procedure did not apply to the suit, because it refers to a previous suit and not to an application filed in execution for relief They also pointed out that under the Bengal Money lenders Act the duty was laid upon the Court to reopen any decree, if it was likely to give relief to the borrower, and that the relief did not 888 depend upon the desire or claim of the borrower.
They further pointed out that even Mitter, J. was of the opinion that the relief to be given was incumbent ,,,upon the Court and independent of the wishes of the borrower.
In the appeal before us filed with special leave, Mr. N. C. Chatterjee contended that the suit was barred by res judicata, waiver and estoppel, and that the Divisional Bench of the High Court was in error in ordering the reopening of the three decrees, when the respondent himself had not asked on the earlier occasion that they be reopened.
The scheme of the Bengal Money lenders Act is as follows: The Act, though passed to control moneylenders and to regulate and control money lending, gave relief to borrowers in many ways.
One such way was to put the limit of what is popularly known as Damdupat on interest, and another was to limit the rate of interest to 8 per cent.
simple in the case of secured loans.
By section 36, transactions which contravened these provisions were required to be reopened.
This reopen ing was not limited to transactions, but decrees also were required to be reopened, unless fully satisfied by the first day of January, 1939.
The section gave vast powers to Courts reopening decrees.
Sub section (2) of section 36 provided: " (2) If in exercise of the powers conferred by sub section (1) the Court reopens a decree, the Court (a) shall, after affording the parties an opportunity of being heard, pass a new decree in accordance with the provisions of this Act, and may award to the decree holder such costs in respect of the re.
opened decree as it thinks fit, (b) shall not do anything which affects any right acquired bona fide by any person, other than the decree holder, in consequence of the execution of the reopened decree, (c) shall order the restoration to the judgment debtor of such property, if any, of the judgmentdebtor acquired by the decree holder in consequence of the execution of the reopened decree as may be in 889 the possession of the decree holder on the date on which the decree was reopened, (d) shall order the judgment debtor to pay to the decree holder, in such number of instalments as it A may think fit, the whole amount of the new decree passed under clause (a), and (e) shall direct that, in default of the payment of any instalment ordered under clause (d), the decree holder shall be put into possession of the property referred to in clause (c) and that the amount for which the decree holder purchased such property in execution of the reopened decree shall be set off against so much of the amount of the new decree as remains unsatisfied.
" The stages at which decrees could be reopened were laid down by sub sections
(1) and (6) of section 36.
Sub section (1) provided : " Notwithstanding anything contained in any law for the time being in force, if in any suit to which this Act applies, or in any suit brought by a borrower for relief under this section whether heard ex parte or otherwise, the Court has reason to believe that the exercise of one or more of the powers under this section will give relief to the borrower, it shall exercise all or any of the following powers as it may consider appropriate. " Sub section (6) provided: " Notwithstanding anything contained in any law for the time being in force, (a) the Court which, in a suit to which this Act applies passed a decree which was not fully satisfied by the first day of January, 1939, may exercise the powers conferred by sub sections (1) and (2) (i) in any proceedings in execution of such decree, or (ii) on an application for review of such decree made within one year of the date of commencement of this Act, and the provisions of rules 2 and 5 of Order XLVII of the First Schedule to the Code of Civil Procedure, 1908, shall not apply to any such application; 890 (b) any Court before which an appeal is pending in respect of a decree referred to in clause (a) may either itself exercise the like powers as may be exercised under sub sections (1) and (2), or refer the case to the Court which passed the decree directing such Court to exercise such powers, and such Court shall after exercise thereof return the record with the additional evidence, if any, taken by it and its findings and the reasons therefore to the Appellate Court and thereupon the provisions of rule 26 of Order XLI of the First Schedule to the Code of Civil Procedure, 1908, shall apply.
" The words "suit to which this Act applies" were defined to mean: " 2 (22). any suit or proceeding instituted or filed on or after the 1st day of January, 1939, or pending on that date and includes a proceeding in execution (a).
for the recovery of a loan advanced before or after the commencement of this Act; (b) for the enforcement of any agreement entered into before or after the commencement of this Act, whether by way of settlement of account or other:wise, or of any security so taken, in respect of any loan advanced whether before or after the commencement of this Act; or (c) for the redemption of any security given before or after the commencement of this Act in respect of any loan advanced whether before or after the commencement of this Act.
" By section 2(21), " suit " included an appeal.
The definition was still further widened for purposes of section 36 vide sub section
(3) but nothing turns on it.
The effect of these provisions may be summed up: The reopening of transactions and decrees could be achieved: (a)in any suit to which the Act applied; (b) in a suit brought by the borrower for relief under section 36; (c) in any proceeding in execution of decrees;,: (d) by an application for review of a decree made within one year of the date of commencement of the Act; and 891 (e) by appellate Courts at all the above stages.
Once the Court was moved, the action of the Court was dictated by the Act, and the Court was compelled by the Act to give full relief.
The Court in this case, was required by law to reopen all the decrees passed against the respondent.
Indeed, R. C. Mitter, J. quite correctly pointed out: " In this case the judgment debtor was entitled to have all the decrees, namely, the preliminary, final and the personal decrees reopened.
He should not have been refused relief simply because he had asked for the reopening of the personal decree only if there had been a contravention of the provisions of section 30 of the Bengal Money lenders Act.
" The learned Judge, however, declined to remand the case for the application of the Act or even to apply it himself, because he felt that what was asked for by the respondent should at,least have been granted, and he granted only that relief.
The law, however, gave no such option.
It was mandatory, and laid a duty upon the Court.
The respondent then filed a suit, and asked for all the reliefs which the Court had to award, and there can be no doubt that unless the suit be incompetent, the Act must be applied even now, because the volition of the borrower is entirely out of place in the application of the Act.
The respondent no doubt, when he applied on the previous occasion, asked that the Act be applied only so far as benefited him; but his wishes were irrelevant, and the Act had to be applied, as it stood.
Every one who has dealt with this case has felt this to be the true position in law.
Thus, the question is whether the respondent was precluded from bringing the suit.
The suit could be barred under section 11 or 0. 2, r. 2 of the Code of Civil Procedure, or by the application of the principle of constructive res judicata, or because of waiver, estoppel or the equitable principle of approbation and reprobation.
The opening words of Sub section
(1) and again of sub=s.
(6) of section 36 are: " Notwithstanding anything contained in any law for the time being in force 892 and they are apt to put out of consideration both section 11 and O. 2, r. 2 of the Code of Civil Procedure.
Waiver and the equitable doctrine of approbation and reprobation can apply only if a right were give up.
They can have no application where the question is not so much of a right of a party as of the duty of a Court under the Act.
The Court was moved, and had to do its duty.
If it can be moved a second time by another proceeding, neither those principles nor the principle of constructive res judicata can apply.
The remedies which are enjoined by the Act are not exclusive of one another, either expressly or by necessary intendment.
As the law stands, the Court could take action to enforce it at almost any stage of the proceedings between the parties commenced by the creditor, and, in addition, in proceedings or a suit commenced by the borrower.
The intention of the law is clear and manifest that borrowers must be protected.
Indeed, in Jadunath Roy vs Kshitish Chandra Achariya Choudhury (1), the Judicial Committee held that the preliminary, the final and the personal decrees in a suit to enforce a simple mortgage were all connected and were, in effect, one decree only, and there could be no question of reopening one decree and not the others.
And in Joy Chand Lal Babu vs Kamalaksha Choudhury (2), a consent decree in a mortgage suit,,, which combined the preliminary, the final and the personal decrees into one decree, was held to, be properly reopened.
The decrees passed against the respondent were required by law to be reopened, and no provision of the Code of Civil Procedure or of equity could bar the suit.
The first was excluded expressly, and equity was hardly applicable in view of the law on the subject.
Indeed, by the suit even the.decree, of Mitter, J. could be reopened, if it did not comply.
with the law.
In my opinion, the order of the Divisional Bench of the Calcutta High Court, with respect, is correct and to hold otherwise is to decline to give effect to the protection, which the Act has sedulously erected in (1) (1949) L.R. 76 I.A. 179, (2) (1949) L.R. 76 I.A. 131. 893 favour of borrowers and against rapacious moneylenders.
I find myself in such complete agreement with the judgment impugned, that I do not find it necessary to cover the same ground.
I would, therefore, dismiss the appeal with 'Costs.
BY COURT.
In view of the majority judgment of the Court, this appeal will be allowed and Mittra 's Suit No. 105 of 1947 dismissed with costs throughout.

summary/full:
The appellant obtained a preliminary and then a final mort gage decree against the respondent and thereafter a personal decree for the debt remaining due to him 'after sale of the property mortgaged.
The appellant applied for execution of the personal decree and thereupon the respondent sued for relief under section 36 of the Bengal Money lenders Act, 1940, by reopening the personal decree.
In the suit relief for reopening the preliminary decree and final decree was not claimed.
The personal decree was reopened in that suit and an instalment decree for a smaller amount passed instead, which was ultimately upheld by the High Court.
The respondent failed to pay the instalments and the appellant applied for executing the decree.
The respondent then filed another suit under section 36 of the Act for reopening the preliminary and final decrees.
The Subordinate judge dismissed the suit holding that it wag barred as res judicata and the District judge on appeal affirmed that decision.
But the 881 High Court in second appeal reversed those decisions and directed the preliminary and the final decrees be reopened and remanded the case to the trial court for passing a fresh preliminary decree.
Hence this appeal with special leave.
Held (per Kapur and Shah, JJ.), that section 36 of the Bengal Money lenders Act, 1940, contemplated the filing of one and not successive suits for the reopening of transactions including decrees and obtaining relief under the Act.
If in such a suit, the borrower failed to seek the entire relief he was entitled to and abandoned his right to a part of the relief, he would be precluded from seeking that relief in another suit.
The principle underlying r. 2 of 0. 2 of the Code of Civil Procedure as also the principle of res judicata applied to a suit under section 36 of the Act.
Per Hidayatullah, J. When the respondent moved the executing court under section 36 of the Act he had not filed a suit but only an application.
It was the duty of the court thereunder to give him full relief although he might not have asked for it.
If the court failed in its duty and he filed a suit no question of waiver or constructive res judicata could at all arise.
This was made clear by the non obstante words of sub sections
(1) and (6) Of section 36 and the question that arose under the section was not s? much of the right of a party as of the duty of the court to give entire relief under the Act.
The remedies enjoined by the Act were not exclusive of one another, either expressly or by necessary intendment, and were intended to give the widest possible relief to the borrowers.
jadhunath Roy vs Kshitish Chandra Achariya Choudhury (1949) L.R. 76 I.A. I79 and joy Chand Lal Babu vs Kamalaksha Choudhury, (1949) L.R. 76 I.A. 131, referred to.
Since the Act required that the decrees passed against the respondent had to be reopened, no provision of the Code of Civil Procedure or of equity could bar the suit, the former being expressly excluded and the latter made inapplicable by the substantive provisions of the Act.


judgement:
11 7 of 1958.
Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
R.K. Garg, M. K. Ramamurthi section C. Agarwala and D. P. Singh, for the petitioners.
The respondent did not appear.
306 1961 August 29.
The Judgment of the Court was delivered by S.K. DAs, J.
This is a writ petition oil behalf of the Bihar State Mukhtars ' Association, Patna and the Vice President and the General Secretary thereof.
The petition has been heard exparte as there, has been no appearance on behalf of the Chief Justice and Judges of the Patna High Court who were cited as respondents to the petition.
The petitioners contend that certain rules of the Patna High Court made as far back as 1922 under s.11 of the (Act XVIII of ' 1879), hereinafter referred to as the Act, in respect of the functions.
, powers and duties of Mukhtars practising in the subordinate courts are now invalid and void, because they contravene the fundamental right of the petitioners guaranteed under article 19(1)(g) of the Constitution of India and are not saved by cl.
(6) thereof.
The petitioners have, in particular, challenged the validity of r. 2 made by the said High Court under section 11 of the Act and incorporated in Chapter III, Part VII of the General Rules and Circular Orders of the High Court of Judicature at Patna (Civil), 1922.
The petitioners pray that an appropriate writ, direction or order be issued by this Court declaring that r. 2 aforesaid is unconstitutional and there fore, void and inoperative.
We shall presently read the rule ; but before we do so a few facts which are not in dispute may be stated.
The petitioners state that the Bihar State Mukhtars ' Association was formed some 30 years back with the object of generally protecting the interests of the Mukhtars in the State of Bihar practising in the courts subordinate to the High Court of Patna within the meaning of section 3 of the Act.
At its various annual conferences the said Association passed resolutions to move the high Court for the removal of the restriction imposed by r. 2 aforesaid on the right of Mukhtars practising in 307 subordinate civil courts.
The High Court did not remove the restriction.
On July 27, 1958 at an emergent Executive Committee meeting of the Association it was.
resolved to move ' the Supreme Court under article 32 of the Constitution.
The present writ petition has been filed in pursuance of that resolution.
The enrolment of Mukhtars is made under certain provisions of the Act to which a reference must now be made Under s.3 of the Act "a subordinate Court" means all courts subordinate to the High Court including courts of Small Causes established under Act IX of 1850 or Act XI of 1865.
"Legal practitioner" means an advocate, vakil or attorney of any High Court, a pleader, Mukhtar or revenue agent.
Section 6 of the Act empowers the High Court to make from time to time rules consistent with the Act in respect of certain matters including inter alia the qualifications, admission and certificates of proper persons to be Mukhtars of the subordinate courts.
It appears that by a rule made under section 6 of the Act, the High Court of Patna laid down that any person who shall produce a certificate from a committee constituted by the High Court that he has passed an examination in the subjects prescribed from time to time by the High Court for the mukhtarship examination may be admitted.
as a Mukhtar to practise in courts subordinate to the High Court.
Rule 10 laid down the subjects in which the examination was to be held.
This examination was known as the Mukhtarship examination.
It was abolished some time in the year 1947 48.
Under section 7 of the Act the High Court made certain rules for the grant of certificates to Mukhtars who had passed the necessary examination for admission as prescribed by the rules referred to above.
Section 7 also provided for annual renewal of such certificates.
The argument of learned advocate for the petitioners is rested.
mainly on the pro.
visions of section 9 and they must be quoted in full, 308 "Every mukhtar holding a certificate issued under section 7 may apply to be enrolled in any Civil or Criminal Court mentioned therein and situate within the same limits ; and, subject to such rules as the High Court may from time to time make in this behalf, the presiding Judge shall enroll him accordingly; and thereupon he may practise as a mukhtar in any such Civil Court and any Court subordinate thereto, and may (subject to the provisions of the Code of Criminal Procedure) appear, plead and act in any such Criminal Court and any Court subordinate thereto.
" Section 10 says in effect that except as provided by the Act or any other enactment t for the time being in force, no person shall practise as a Mukhtar in any Court unless he holds a certificate issued under s.7 and has been enrolled in such court or in some court to which it is subordinate.
Then come,% section 1 1 under which the impugned rule was made.
This section is in these terms.
"Notwithstanding anything contained in the Code of civil Procedure, the High Court may, from time time, make rules declaring what shall be deemed to be the functions, powers and duties of Mukhtars practising in the subordinate courts and, in the case of a High Court not established by Royal Charter, in such Court.
" The High Court of Patna made a number of rules defining the functions, powers and duties of Mukhtars practising in the subordinate courts.
One of these rules is r. 2 which is 'in these terms.
"Rule 2: A Mukhtar shall not be allowed to address any Civil Court except for the purpose of stating the nature , and.
effect of his application or to offer any legal argument or to examine any witness without the leave of the Court specially given.
" 309 The argument of learned Advocate for the petitioners is 'this.
He has submitted that s.9 of the Act gives every Mukhtar holding a certificate issued under s.7 the right to apply to be enrolled in any Civil or Criminal Court subordinate to the High Court and on enrollment in accordance with the rules , he has the right to practise as a Mukhtar in any Civil Court and in 'Courts subordinate thereto and ' has further the right to appear, plead and act in any Criminal Court.
This right of practice learned Advocate for the petitioners has contended, cannot be curtailed and section 11 which empowers the High Court to Make rules declaring what shall be deemed to be the functions, powers and duties of the Mukhtars practising in the subordinate courts does not empower the High Court to make a rule which curtails the right given by s.9.
His argument further is that the impugned rule curtails the right of a Mukhtar to, practise in the Civil Courts inasmuch as it says, that a Mukhtar shall not be allowed to address any Civil Court except for the purpose of stating the nature and effect of his application or to offer any legal argument or to examine any witness without the leave of the court specially given.
He has contended firstly, that the rule is in excess; of the rulemaking power under section 11 and secondly, is An unreasonable restriction on the right guaranteed under article 19(1)(g) of the Constitution.
The simple question for decision really is this: is the impugned rule in excess of the powers given to the High Court under section 11 of the Act ? If the rule is intra vires the Act, then clearly enough there has been no violation of any, fundamental right of the petitioners.
The right of the petitioners to practise in the subordinate court a was create d by the act.
In the arguments before us there was no challenge to the constitutional validity of section 11 of the Act as permitting.
an unreasonable restriction of a guaranteed right, if on a proper construction that section enabled the High Court to regulate the right 310 of practice of Mukhtars.
The complaint before us was that the impugned r. 2 was not justified by section 11 of the Act.
Therefore, the only question which we need consider is whether the impugned rule is in excess of the authority given by section 11 of the Act.
It seems to us that the impugned rule is clearly within that authority.
The learned Advocate for the petitioners has.
sought to make a distinction between the right to practise as given by section 9 and the functions, powers and duties as mentioned in section 1 1.
Relying on the majority decision in Aswini ' Kumar Ghosh and another vs Arabinda Bose & another(1) he has submitted that the right to practise means the right to appear and plead as well as to act on, behalf of suitors in the subordinate courts; the power of the High Court to make rules under s.1 1 of the Act as respects the functions, powers and duties of Mukhtars practising in the subordinate courts merely means that the High Court may give effect to the right given under section 9 by making rules, but it cannot curtail that right ; when therefore the High Court made the impugned rule restricting the right of Mukhtars to plead in civil courts, it did something in excess of the power given by section 11.
We are unable to accept this line of argument as correct.
Sections 9 and 1 1 of the Act must be read together and it would be wrong to treat the right to practise given by section 9 as.
dissociated from the functions, powers and duties of Mukhtars referred to in section 1 1.
The learned Advocate for the petitioners is reading the two sections as though one section gives an absolute right and the other section merely empowers the making of rules to effectuate that right.
That, we do not think, is a proper reading of the two sections.
It is worthy of note that under section 9 itself a distinction is made between the right of a Mukhtar to practise in civil courts and his right to appear, plead and act in any criminal.
court.
In express terms section 9 gives every (1) ; 311 Mukhtar the right to appear, plead and act in any criminal court ; it does not, however, give such an unlimited right in a civil court.
On the contrary, it merely says that on enrolment a Mukhtar may practise in any civil court, but under section 11 the High Court may make rules declaring what shall be deemed to be the functions, powers and duties of Mukhtars practising in the subordinate courts.
It is clear to us that in declaring what shall be the functions and powers of mukhtars practising in the subordinate courts, the High Court can so delimit them as to regulate the right of practice.
It will be wrong to treat the functions and powers as dissociated from the right to practise.
The right to practise 'Must depend on the functions and powers.
It is also worthy of note that the expression used in section 11 of the Act is much wider than the expression used in section 15 of the Indian Bar Council Act, 1926, (Act XXXVIII of 1926), which gives the Bar Council the power to make rules to provide for and regulate the rights and duties of Advocates of the High Court.
We do not think that the majority decision in Aswini Kumar Ghosh vs Arabinda Bose (1) is of any assistance to the petitioners.
That decision depended on the interpretation of section 2 of the Supreme Court Advocates (Practice in High Courts) Act, 1951.
That section provided that "notwithstanding anything contained in the Bar Councils Act or any other law regulating the conditions subject to which a person not entered in the roll of Advocates of a High Court may be permitted to practise in that High Court, every Advocate of the Supreme Court shall be entitled as of right to practise in any High Court whether or not he is an Advocate of ' that High Court".
It was held by the majority that a rule made by a High Court which denied to an Advocate of the Supreme Court the right to exercise an essential part of his function, by insisting oil a, dual agency on the Original Side was much more than a rule (1) 312 of practice and constituted a serious invasion of his statutory right to practise and the power of making such a rule, unless expressly reserved, was repugnant to the right conferred by section 2 aforesaid The point to be noticed is that the majority held that unless the power was expressly reserved by the statute, a rule could not be made repugnant to the right conferred by section 2 of the.
Supreme Court Advocates (Practice in High Courts) Act, 1951.
If it be held that sections 9 and 1 1 of the Act must be read together and functions and powers mentioned in s.11 are not dissociated from the right to practise mentioned in a. 9, then it is clear enough that section 1 1 expressly reserves the power of the High Court to make rules declaring what shall be the functions, powers and duties of Mukhtars practising in the subordinate courts.
If this be the correct interpretation of sections 9 and 11 of the Act, then the principle laid down by the majority in Aswini Kumar Ghosh vs Arabinda Pose(,) is if no assistance to the petitioners in the present case.
For the reasons given above, we hold that r.2 of the rules made by the High Court under section 11 of the Act is not in excess of the rule making power and the petitioners cannot complain of any violation of their fundamental right to practise the profession to which they have been enrolled under the provisions of the Act.
The petition fails and is accordingly dismissed.
As there has been no appearance on behalf of the respondents, there will be no order for costs.
Petition dismissed.

dataset_name: IN-Abs

summary/full:
Section 9 of the , entitles a duly enrolled Mukhtar to "Practise" in any Civil Court, and section 11 thereof empowers the High Court to make rules declaring .what shall be deemed to be the ,functions, powers and duties" of Mukhtars practising in the subordinate Courts.
Rule 2 framed under section 1 1 lays down that a Mukhtar shall not be allowed to address any Civil Court except for the purpose of "stating the nature.
and effect of his application or to offer any legal argument or to examine any witness" without the leave of the Court.
The petitioners contended that r. 2 was in excess of the rule making power under section 1 1 and was an unreasonable restriction on their rights under article 19 (1) (g) of the Constitution.
Held, that sections 9 and 1 1 of the Act must be read together and the right to "practise" given under section 9 cannot be dissociated from the "functions, powers and duties of Mukhtars" as contemplated under section 11.
In declaring what shall be the functions, powers and duties of a Mukhtar the High Court may by its rules so delimit them as to regulate their right of practice in the Civil Courts, and such delimitation is no violation of their fundamental right to practise the profession as allowed under the Act.
Aswini Kumar Ghosh vs Arabinda Bose, , explained and distinguished.


judgement:
minal Appeal No. 240 of 1960.
Appeal by special leave from the judgment and order dated November 25, 1958, of the Punjab High Court in Criminal Appeal No. 114 of 1954.
Jai Gopal Sethi, C. L. Sareen and R. L. Kohli, for the appellant.
N. section Bindra, R. H. Dhebar and D. Gupta, for respondent.
August 30.
The Judgement of the Court was delivered by SARKAR, J.
The appellant Payare Lal was the Tehsildar of Patiala.
He and Bishan Chand, a Patwar. clerk of the Tehsil Office, were prosecuted for offences under s.5(2) of the Prevention of 330 Corruption Act, 1947.
The Criminal Law Amendment Act, 1952 (Act XLVI of 1952), to which it will be convenient hereafter to refer as the Act, required the trial to be held by a special Judge appointed under it and in accordance with certain provisions of the Code of Criminal Procedure mentioned in section 8 of the Act.
The Principal question in this appeal turns on the construction of sub section
(1) of this .section which we will later set out.
The trial commenced before section Narinder Singh the special Judge, Patiala.
He heard the evidence but before he could deliver a judgment he was transferred and was succeeded by section Jagjit Singh.
section Jagjit Singh did not recall the witnesses and hear the evidence over again, but proceeded without any objection from either side, with the trial from the stage at which his predecessor had left it and having heard the arguments of the advocates for the parties, delivered his judgment convicting both the accused of the offences with which they had been charged and passed certain sentences on them.
The accused appealed against their conviction to the High Court of Punjab.
The appeals came to be heard by Mehar Singh J., who,, though no point had been taken by the accused, himself felt considerable difficulty as to whether section Jagjit Singh had the power to decide the case on the evidence recorded by his predecessor and referred the matter to a larger bench taking the view that if the course followed was defective, the defect would be one of jurisdiction of the Court and could not be cured by the consent of parties.
The case was thereupon heard by a bench of that High, Court constituted by Gurnam Singh and Mehar Singh JJ.
who took different views.
Gurnam Singh J. held that section 350 of the Code applied to the trial before a special Judge in view of section 8(1) of the Act and under the terms of section 350, which we will later set out, section Jagjit Singh was entitled to proceed on the evidence recorded by his predecessor 331 section Narinder Singh, while Mehar Singh J., was of the opinion that section 8(1) of the Act did not make section 350 of that Code applicable to such a trial.
He also held that what section Jagjit Singh had done was not a matter of mere irregularity curable under section 537 of the Code.
The matter was then referred to Passey J., who agreed with Gurnam Singh J. On the question of section 537 of the Code, Gurnam Singh and Passey JJ.
expressed no opinion in the view that they had taken of section 8(1) of the Act.
The appeals were thereafter heard on the merits by Tek Chand J. who upheld the conviction of the appellant but reduced the sentence passed on him.
He,, however, acquitted the other accused Bishan Chand giving him the benefit of doubt.
The appellant has now come up to this Court in further appeal with special leave.
There is no appeal by the State against the acquittal of Bishan Chand.
There is no covntroversy that the general principle of law is that a judge or magistrate can decide a case only on evidence taken by him.
Section 350 of the Code is a statutory departure from this principle.
That section so far as material was at the date section Jagjit Singh decided the case in these terms : section 350.
Whenever any Magistrate, after having heard and recorded the whole or any part of the evidence in an inquiry or a trial, ceases to exercise jurisdiction therein, and is succeeded by another Magistrate who has and who exercises such jurisdictions, the Magistrate so succeeding may act on the evidence so recorded by his predecessor, or partly recorded by his predecessor and partly recorded by himself or be may resumption the witnesses and recommence the inquiry or trial It is only if this provision was available to section Jagjit Singh that the course taken by him can be supported.
332 As we have said earlier, section 8 of the Act makes certain provisions of the Code applicable to the proceedings before a special Judge The question is whether section 350 of the Code.
was one of such provisions.
The answer to this question will depend on the construction of sub ss.(1) and (3) of section 8 of the Act the material portions of which we now set out.
section 8 (1) A special judge may take cognizance of offences without the accused being committed to him.
for trial, and in trying the accused persons, shall follow the procedure prescribed by the Code of Criminal Procedure, 1898 . for the trial of warrant ' cases by magistrates.
(3) Save as provided in sub section (1) . . the provisions of the Code of Criminal Procedure, 1898, shall, so far as they are not inconsistent with this Act, apply to the proceedings before a special Judge ; and for the purposes of the said provisions, the Court of the special judge shall be deemed to be a Court of session trying cases without a jury or without the aid of assessors. . . .
In substance these sub sections provide that a special Judge shall follow the procedure prescribed by the Code for the trial of warrant cases by magistrates and save to this extent.
, the provision ,, of the Code applicable to a Court of session, shall govern him as if he were such a Court subject to certain qualifications which are not relevant for the present case.
There is no controversy that section 350 of the Code is applicable only to magistrates and not a Court of session and cannot therefore be applied to a special Judge under sub section
(3) as it makes only those provisions of the Code applicable to him which would apply to a Court of session.
The only controversy is whether that section is applicable to a special Judge under sub s.(1) of section 8 of the Act.
If it is so applicable, it must be applied 333 though under sub section
(3) it is not applicable, for this sub section, is to have effect " 'Save as provided in subsection (1)".
The real question is, what is meant by the words "the procedure prescribed by the Code . . . for the trial of warrant cases by magistrates" In section 8(1) of the Act ? Does section 350 of the Code prescribe one of the rules of such procedure ? It is necessary however to point out that by an amendment made in the Act after judgment had been delivered in this case by section Jagjit Singh, it has been expressly provided that section 350 of the Code applies to the proceedings before a special Judge.
On the amended Act, therefore, the question that has arisen in this case, would no longer arise.
For reasons to be hereafter stated, this amendment clearly does not govern the proceedings before section Jagjit Singh and this case has to be decided without reference to the amendment.
Is was once held by the Madras High Court in In re, Vaidyanatha Iyer (1) that section 350 of the Code prescribed a rule of procedure for the trial of warrant cases as mentioned in section 8 (1) of the Act.
This seems to be the only reported decision taking that view.
All other decisions which have been brought to our notice take the contrary view.
Even in Madras, in In re Fernandez (2), a Full Bench of the High Court has now hold that section 350 of the Code was not applicable to a special Judge and has overruled In re Vaidyanatha Iyer (1).
That appears to be the position on the authorities.
It is true that section 350 of the Code is a provision applying to all magistrates and therefore, also to a magistrate trying a warrant case.
That however does not in our opinion decide the question.
We think it 'relevant to observe that it is a right of an accused person that his case should be decided by a judge who has heard the whole of it and we agree with the view expressed in Fernandez 's case(2) (1) ; A.I.R. (1954) Mad.
(2) 334 that very clear words would be necessary to take away such an important and well 'established right.
We find no such clear words here.
We turn now to the word used.
When sub section
(1) of section 8 of the Act talks of a procedure prescribed by the Code for the trial of warrant cases by magistrates it is reasonable to think that it has the provisions and the language of the Code in view.
When we look at the Code, we find that ch.
XXI is headed "of the.
Trial of Warrant Cases by Magi strates".
This chapter consists of sections 251 to 259.
Section 251 is in these terms : section 251 In the trial of warrant cases by Magistrates, the Magistrate shall, (a) in any case instituted on a police report, follow the procedure specified in section 251A; and (b) in any other case, follow the procedure specified in the other provisions of this Chapter.
The Code, therefore, expressly refers to sections 251 259 as containing the procedure specified for the trial of warrant cases by magistrates; this then,, is the procedure it prescribes for the trial of such cases.
It would be legitimate, therefore, to think that the Act in using the words "procedure prescribed by the Code. for the trial of warrant cases by magistrates" also meant only these sections of the Code and did not contemplate section 350 of the Code as a procedure so prescribed, though that section is applicable to the proceedings before a magistrate trying a warrant case.
It does not seem to us that the words "the procedure prescribed by the Code. . for the trial of warrant cases by magistrates" meant a procedure which may be followed by magistrates in all cases.
Further more section 350 occurs in a chapter of the Code which deals with general provisions relating to inquiries and trials and is not a provision which has been specifically prescribed by the Code for application to the 335 trial of warrant cases by magistrates, as are sections 251 to 259.
Again, section 350 of the Code cannot, without doing violence to the language used in it, be applied to the proceedings before a special Judge Clearly it cannot be, applied where its terms make such application impossible.
Now the section can be applied only when one magistrate succeeds another.
It lays down what the succeeding magistrate can do.
Now suppose one special Judge succeeds another.
How can he exercise the powers conferred by the section ? The section applies only when the predecessor is a magistrate.
The predecessor in the case assumed is however a special Judge.
Such a Judge is not a magistrate for the purpose of the Act, nor does the Act require that he is to be deemed to be such.
Section 8 (1) of the Act which only requires a special Judge to follow the procedure for the trial of a warrant case, cannot justify the creation of a fiction making the predecessor special Judge, a magistrate.
It is of some interest to note here that the amendment to the Act which expressly makes section 350 of the Code applicable to proceedings before a special Judge also provides that for the purposes of so applying the section, "a special Judge shall be deemed to be a magistrate".
Clearly, the legislature thought that unless such a fiction was created, the application of the section to the proceedings before a special Judge would create difficulties or anomalies.
Therefore also, the Act could not in our view, have intended that section 350 of the Code would be available to a special Judge as a rule, of procedure prescribed for the trial of warrant cases.
For all these reasons, we would prefer the opinion expressed by Mehar Singh J.
We think that under the Act, as it stood before its amendment as aforesaid, section 350 of the Code was not available when one special Judge succeeded another. 'we hold that section Jagjit Singh had no authority 336 under the law to proceed with the trial of the case from the stage at which section Narinder Singh left it.
The conviction by section Jagjit Singh of the appellant cannot be supported as he had not heard the evidence in the case himself The proceedings before him were clearly incompetent.
It is then said that this defect was a mere irregularity and the conviction of the appellant can, if sustainable on the evidence, be upheld under EA.
537 of the Code.
In regard to this section, it was said by the Privy Council in Pulukuri Kotayyam vs King Emperor (1), "When a trial is conducted in a manner different from that prescribed by the Code (as in N. A. Subramania Iyer 's case, 1901 L.R. 28 I.A. 257), the trial is bad, and no question of curing an irregularity arises but if the trial is conducted substantially in the manner prescribed by the Code, but some irregularity occurs in the course of such conduct, the irregularity can be cured under section 537, and none the less so because the irregularity involves, as must nearly always be the case, a breach of one or more of the very comprehensive, provisions of the Code".
It seems to us that the case falls within the first category mentioned by the Privy Council.
This is not a case of irregularity but want of competency.
Apart from section 350 which, as we have said, is not applicable to the present case, the, Code, does not conceive of such a trial.
The trial offends the cardinal principle of law earlier stated, the acceptance of which by the Code is clearly manifest from the fact that the Code embodies an exception to that principle in section 350.
Therefore, we think that section .537 of the Code has no application.
It cannot be called in aid to make what was incompetent, competent.
There has been no proper trial of the case and there should be one.
(1) (1947) L.R. 74 I.A. 65, 75.
337 'Then it is said or,.
behalf of the appellant that we should not send the case back for a fresh trial but decide it ourselves on the evidence on the record.
Coming from the appellant, it is a somewhat surprising contention.
According to him, a point which we have accepted, there has realy been no proper trial of the case.
It would follow from this that there has to be one.
In the absence of such a trial we cannot even look at the evidence on the record.
Lastly, we have to say a few words on the amendment of the Act expressly making section 350 of the Code applicable to the proceedings, before a special Judge.
The amendment came long after the decision of the case by section Jagjit Singh and had not expressly been made retrospective.
It was said on behalf of the respondent, the prosecutor, that the amendment being 'in a procedural provision was necessarily retrospective, and, therefore, no exception can now be taken to the action taken by section Jagjit Singh.
Assuming that the rule contained in section 350 of the Code is only a rule of procedure, all that would follow would be that it would be presumed to apply to all actions pending as well as future : Kimbray vs Draper (1).
Such a retrospective operation does not assist the respondent 's contention.
Nor do we think it an argument against sending the case back for retrial that the special Judge now hearing the case would be entitled to proceed on the evidence recorded by section Narinder Singh in view of the amendment.
Whether he would be entitled to do so or not would depend on whether the amended Act would apply to proceedings commenced before the amendment.
It has to be noted that the impugned part of the proceedings was concluded before the amendment.
On this question, we do not propose to express any opinion.
In any event, under section 350 as it now stands a succeeding magistrate (1) 338 liar, power to resummon and examine a witness further.
We cannot speculate what the special Judge who tries the case afresh will think fit to do if section 350 of the Code is now applicable to the proceedings before him.
For all these considerations, we think it fit to send the case back for retrial.
We therefore, allow the appeal and set aside the conviction of the appellant and the sentence passed on him.
The case will now go back for retrial According to law.

summary/full:
The appellant and another were prosecuted ' for offences under section 5(2) of the Prevention of Corruption Act, 1947.
The trial commenced before the special judge who heard the evidence but before he could deliver judgment was transferred and was succeeded by another special judge.
The latter did not recall the witnesses and did not hear the evidence over again, but proceeded with the trial without any objection from either side from the stage at which his predecessor had left.
He convicted both the accused.
On appeal, the Punjab High Court held that section 350 Criminal procedure Code applied to the trial before a special judge in view of section 8(1) of the Criminal Law Amendment Act, 1952, and the succeeding special judge was entitled to proceed on the evidence recorded by his predecessor.
The controversy is whether section 330 of the Code of Criminal Procedure is applicable to a special judge under sub s.(1) ,of section 8 of the Criminal Law Amendment Act, 1952, though it is not applicable under sub section
(3) of the Act.
Therefore the question is what is meant by the words "The procedure prescribed by the court. for the trial of warrant cases by magistrate" in sub s.(1) of section 8 of the Act, and whether section 350 of the Code prescribe one of the rules of such procedure.
The Act was since amended and therein it is expressly provided that s.350 of the Code applies to the proceedings before a special judge.
The amendment does not govern the present proceeding as the impugned part of the proceedings was concluded before the amendment.
Held, that the Criminal Law Amendment Act, 1952, did not intend that section 350 of the Criminal Procedure Code would be available as a rule of procedure prescribed for the trials of warrant cases, to a special judge as the special Judge was not a magistrate for the purpose of the Act not did the Act require before the amendment that he was to be deemed to be such.
329 The Act in using the words "procedure prescribed by the Code. for the trial of warrant cases by magistrate" meant only the sections 251 to 259 of the Criminal Procedure Code as expressly referred in the code as containing the procedure St specified for the trials of warrant cases by magistrate and did not contemplate section 350 of the Code as a procedure so prescribed.
Held, further, that where in a case there is want of competency and not a mere irregularity, section 537 of the Code of Criminal Procedure has no application.
It cannot be called in aid to make what was incompetent, competent.
Held, also, that it is the right of an accused person that his case should be decided by a judge who has heard the whole of it and that very clear words would be necessary to take away such an important and well established right.
In the present case the succeeding special judge had no authority under the law to proceed with the trial of the case from the stage at which hi , predecessor in office left it, and the conviction of the appellant cannot be supported as he had not heard the evidence in the case himself.
The proceeding before the succeeding special judge were clearly incompetent.
There has been no proper trial of the case and there should be one.
In re Vaidyanatha Iyer, (1954) 1 M. I,.
cable.
Pulukuri Kotayya vs King Emperor, (1947) L. R. 74 I A. 65 and Kimbray vs Dapper, , referred to In re Fernandez.
(1958) 11 M. L. J. 294, approved,.


judgement:
No. 1 1 of 1952.
Appeal from the Judgment and Order dated January 18, 1950, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Case Referred No. 25 of 1947.
O.T.G. Nambiar (Samarendra Nath Mukherjee, with him I for the appellant.
M. C. Setalvad, Attorney General for India, and C. K Daphtary, Solicitor General for India (G. N. Joshi and P.A. Mehta, with them) for the respondent.
December 22.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal from the judgment and order of the High Court of Judicature at Madras upon a reference made by the Income tax Appellate Tribunal under section 66(1) of the Indian Incometax Act, 1922.
The appellant company, the assessee, is incorporated in the United Kingdom under the English Companies Act and has it registered office in London.
It owns a spinning and weaving mill at Pondicherry in French India where it manufactures yarn and cloth.
Messrs. Best and Co. Ltd., Madras, have been appointed 525 the agents of the assessee under an agreement dated, the 11th July, 1939, and have been invested with full powers in connection with the business of the assessee in the matter of purchasing stock, signing bills and other negotiable instruments and receipts and settling, compounding or compromising any claim by or against the assessee.
The yarn and cotton manufactured in Pondicherry were sold mostly in British India and partly outside British India.
In the accounting year 1941 and 1942 all the contracts in respect of the sales in British India were entered into in British India and the deliveries were made and payments received in British India.
In regard to the sales outside British India also, payments in respect of such sales were received in Madras through the said agents.
The total sales of the goods in the assessment year 1942 43 were Rs. 69,69,145 and for the assessment year 1943 44 were Rs. 93,48,822.
The value of the sales in British India amounted to Rs. 57,07,431 for the assessment year 1942 43 and to Rs. 67,98,356 for the assessment year 1943 44.
The value of the total sales outside British India amounted to Rs. 12,61,714 for the year 1942 43 and Rs. 25,50,472 for the year 1943 44.
Out of the said amounts received in respect of the foreign sales the amounts received in British India were Rs. 9,62,434 for 1942 43 and Rs. 75,230 for 1943 44 and the amounts received outside British India were Rs. 2,99,280 for 1942 43 and Rs. 24,75,242 for 1943 44.
On these facts the Income tax Officer found that the assessee was resident in British India within the meaning of section 4 A (c) (b) of the Act by reason of its income arising in British India in the year of account exceeding its income arising without British India and on that basis he assessed the company for the two assessment years 1942 43 and 1943 44 as resident in British India on the profits and gains which had accrued to the company both within and without British India under section 4 (1) (b) (i) and (ii) of the Act.
The order of the Income tax Officer was confirmed by the Appellate Assistant Commissioner and, the order 526 of the Appellate Assistant Commissioner was confirmed by the Appellate Tribunal on the 15th May, 1946.
The assessee applied to the Appellate Tribunal under section 66 (1) of the Act for reference to the High Court of certain questions of law arising out of its order.
The, Commissioner of Income tax in his reply suggested the following two questions for reference (1)Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that section 42 (1) and (3) of the Income tax Act has no application to income accruing or arising to the assessee company in British India or to income received by it in British India during the previous year?" " (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the entire income of the assessee company during the accounting year ended 31st December, 1941, was assessable under section 4(1) of the Incometax Act, and that no portion of such in come was entitled to be exempted under section 42(3) of the Act ? The Appellate Tribunal however referred the following questions to the High Court: " (1) Whether on the facts and in the circumstances of the case, section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising to the assessee company in British India and to the income attributable to the sale proceeds received by it in British India during the previous year?" " (2) Whether on the facts and in the circumstances of this case the entire profits and gains arising to the assessee company in British India should be taken into account for the purpose of applying the test laid down under section 4 A (c) (b) or only that part of the profits which should be determined after the application of sectioin 42(3) of the Act as reasonably be attributable to that part of the operations carried on in British India ?" and " (3) Whether on the facts and in the circumstances ' of the case, the provisions.
of the Indian Income tax 527 Act contained in section 4 (1) with the subsections and section 4 A (c) (b) are not ultra vires in so far as they seek to assess foreign income of the company registered outside British India ?" The third question was concluded by the decision of their Lordships of the Privy Council in the case of Wallace Bros. & Co. Ltd. (1) and was therefore not argued before the High Court and the High Court answered it by stating that the provisions of section 4 (1) and section 4 A (c) (b) of the Act were not ultra vires the Indian Legislature.
The question No. (1) was further amended by agreement between the learned counsel for the revenue authority and the assessee and it was reframed as under: " (1) Whether on the facts and in the circumstances of the case section 42 (1) and (3) of the Act alone and not section 4 of the Act have application to the income accruing or arising by reason of sales in British India of manufactured goods where the manufacturing process took place outside British India?" The question (2) was retained in the form in which it had been referred by the Appellate Tribunal.
Both these questions were answered against the assessee by the High Court.
The assessee obtained the necessary certificate from the High Court for leave to appeal to this court and hence this appeal.
It may be observed that in reply to the. notice under sections 22(2) and 38 of the Act for the assessment year 1942 43 the agents of the assessee had on the 1st June, 1943, submitted a return under protest and had claimed that the income shown in the return should be apportioned under section 42(3) of the Act as between the operations carried on in British India and operations carried on outside British India.
They had further declared that the company was non resident in British India during the previous year for which the return was made.
In the statement enclosed therewith the total world income for the year ended 31st December, 1941, had been shown at Rs. 10,23,907.
Profit at 10 per cent.
on British Indian sales which (1) (1948) 76 I.A. 86.
528 aggregated to Rs. 57,07,431 was shown at Rs. 5,70,743 and after deduction of the proportionate expenses relating to sales in British India and sundry charges was put down at the net figure of Rs. 4,58,026 which was shown as the British Indian income.
It was thus contended that the income arising in British India in the year of account did not exceed its income arising without British India and that therefore the assessee was non resident in British India.
This calculation of profits at the rate of 10 per cent.
on British Indian sales did not make any allocation between manufacturing profits and merchanting profits and all the profits arising out of British Indian sales were shown in one lump sum.
The Income tax Officer took it as settled law that the profits arose in the country in which the sales took place and as the bulk of the sales had taken place in British India the bulk of the profits accrued or arose in British India.
He held that the provisions of section 42(3) would apply only where the profits arose outside British India but which by virtue of section 42(1) were deemed to accrue or arise in British India, and that it did not apply where the profits actually arose in British India by the sale of goods in British India.
He therefore held that the entire profits on "Sales made in British India actually arose in British India and were liable to tax under section 4 (1) (c).
On a calculation of the figures he came to the conclusion that the income of the assessee arising in British India in the accounting year exceeded its income arising without British India and that the assessee was resident in British India under section 4 A(c).
The assessee was also held ordinarily resident in British India under section 4 B(c) and he assessed the company accordingly on that basis.
The Appellate Assistant Commissioner also proceeded on that basis and confirmed the order of the Income tax Officer.
He was however further of the opinion that the entire profits were received where the sale pro ceeds were received and the assessee was therefore.
liable to tax under section 4(1)(a) also.
This conclusion was arrived at by him relying upon two decisions of their Lordships of the Privy Council: (1) 529 Pondicherry Railway Company V. Commissioner of Income tax, Madras(1) and Commissioner of Income tax, Madras vs Diwan Bahadur Mathias(2), in the first of which at page 369 Lord Macmillan observed as follows : Their Lordships accordingly are of the opinion that the income derived by the Pondicherry Railway Company from the payment made to them by the South Indian Railway Company is on the facts stated received in British India within the meaning of the Act by the Agent of the Pondicherry Railway Company there on their behalf " It is unnecessary to go on to consider whether the business is carried on in British India, which is the form which question (c) takes, for it is enough if the profits of a business carried on by the assessee are received in British India and the place where the business is carried on is not material.
" The Appellate Tribunal adverted to the fact that the whole income of the company, so far as 1942 43 is concerned was received in British India and so far as 1943 44 is concerned a major part of it in this way was received in British India, but did not base its decision on this aspect of the case.
It held that the scope of section 42(3) was circumscribed by confinement to those cases where profits were deemed to accrue or arise under section 42 alone and there was no warrant for extending the principle of apportionment to other cases where the profits and gains were made taxable under other sections of the Act.
It also held that section 42 dealt with " deemed " income whereas section 4 A (c) dealt with income that arose in British India.
Therefore, it could not be said that for the purpose of section 4 A (c) a proportionate "deemed " income should be taken as income that arose in British India.
When the application for reference was made to the Appellate Tribunal the Commissioner of Income tax in the question (1) which he suggested included within its ambit this aspect of the income having been received by the assessee in British India during the previous year.
But when the Appellate Tribunal refrained the question (1) it merely (1) (2) [1939] 7 I.T.R 48.
530 confined it to income accruing and arising to the assessee in British India and to the income attributable to the sale proceeds received by it in British India during the previous year.
The question (1) as finally framed by the High Court adverted to the income accruing or arising by reason of sales in British India on manufactured goods where manufacturing process took place outside British India and the aspect of the income having been received by the assessee in British India was absolutely ignored.
When the questions were originally referred to the High Court the position in law as then understood was that profits arose in the country in which the sales took place.
This position was however negatived, particularly in the case of manufacturing businesses, in a decision of this court.
in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1).
After hearing at considerable length the arguments urged before us on behalf of the assessee as well as the Income tax authorities we feel that in view of that decision the questions framed by the Tribunal and the High Court do not bring out the real point in controversy between the parties and it is agreed that the following two questions truly represent I and bring out the matter on which the parties are at issue.
We therefore resettle the questions originally framed and reframe them as below: (1) Whether in view of the finding of fact in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42(1) have any relevancy ? (2) Can the income received in India be said to arise in India within the meaning of section 4 A(c)(b) of the Act ? If not, should only those profits determined under section 42(3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4 A (c) (b) ? (1) ; ; 18 I.T.R. 472.
531 The case is remanded to the High Court with the direction that it should give its opinion on, these two questions and submit the case to this court within three months.
section N. Mukherjee, for the appellant.
Porus A. Mehta, for the respondent.
December 8.
BHAGWATI J.
By our judgment dated the 22nd December, 1952, we reframed the questions as below: (1) Whether in view of the finding of fact, in this case that the entire profits were received in India and the company is liable to tax under section 4 (1) (a) of the Act, the provisions of section 42 (1) have any relevancy; (2) Can the income received in India be said to arise in India within the meaning of section 4A (c) (b) of the Act ? If not, should only those profits determined under section 42 (3) as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b), and remanded the case to the High Court with the direction that it should give its opinion on these two questions.
The High Court has accordingly considered these two questions which were referred to it for opinion and has answered the question No. I in the negative and against the assessee and question No. 2 in the manner following, i.e., the income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various profit producing operations of the business of the company in the light of the principle contained in the judgments in Ahmedbhai Umarbhai 's case(1) and in Anglo French Textile Company vs Income tax Commissioner(2) relating to the same assessee.
When the matter came up for further arguments before us on this opinion of the High Court,Shri section N. Mukherjee, the learned counsel for the appellant (1) (1950] 18 I.T.R. 472, (2) A.I.R, 70 532 did not contest the correctness of the answer to question No. I in view of the decision of this court in Turner Morrison & Co., Ltd. vs Commissioner of Incometax, West Bengal(1).
It may be noted that even before the High Court the learned counsel appearing for both the parties agreed that the matter was concluded by this decision against the assessee and question No. I was answered accordingly by the High Court.
In regard to the question No. 2 however Shri Porus A. Mehta, learned counsel for the respondent, contended before us that the matter was not concluded by the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1) and that the High Court was wrong in the answer which it gave to this question.
He contended that the decision in the case of Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay("), turned on the statutory provisions of the Excess Profits Tax Act read with section 42 (3) of the Indian Income tax Act which was expressly incorporated therein by virtue of section 21 of the Act and not on any general principles of apportion.
ment of income, profits or gains enunciated therein.
He took us in extensover the portions of the majority judgments and tried to demonstrate that the decision there was based purely on the applicability of section 42 (3) of the Indian Income tax Act, but for the applicability of which, according to his submission, there was no room for the apportionment of the income, profits or gains of the business, in the manner contended by the appellant.
We do not accept this contention of the respondent.
Section 4A(c) (b) is concerned with the income arising in the taxable territories in a particular year exceeding the income arising without the taxable territories in that year and the very words of the section are capable of being construed as also contemplating a state of affairs where there may have to be a division or apportionment between the income arising in the taxable territories and the income arising without the taxable territories (1) (2) ; 533 in the particular year.
The whole of the argument urged before us on behalf of the respondent was aimed at establishing that the scheme of the Indian Income tax Act was not to tax the source of income but the income, profits or gains from whatever source derived which were received or were deemed to be received in the taxable territories or which accrued or arose or were deemed to accrue or arise in the taxable territories during the particular year and that it was immaterial whether the income, profits or gains were derived from business operations carried on in the taxable territories or without the taxable territories.
This argument was possible when the decisions which held that income, profits or gains arose or accrued at the places where the sales took place were good law, because then there was no question of apportionment of income, profits or gains arising from the business operations carried on in the taxable territories 'and income, profits or gains arising from the business operations carried on without the taxable territories.
The moment however it was held, as it was done in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), that though profits may not be realised until a manufactured article was sold profits were not wholly made by the act of sale and did not necessarily accrue at the place of sale and to the extent profits were attributable to the manufacturing operations profits accrued at the place where business operations were carried on, these decisions went by the board.
The question whether a particular part of the income, profits or gains arose or accrued within the taxable territories or without the taxable territories would have to be decided having regard to the general principles as to where the income, profits or gains could be said to arise or accrue.
Section 42 of the Indian Income tax Act has no relevance to the determination of this question because it is mainly concerned with income Which is deemed to have arisen, or accrued and not with income which actually arises or.
accrues within the taxable Territories.
Section 42 (3) also is a part of the ' scheme which is enacted in section 42 and cannot help (1) (1950)S.C.R. 335.
534 in the determination of the question before us As a matter of fact the use of the words "under section 42(3)" used in the question No. 2 as reframed by us was not appropriate and the only question which should have been sent to the High Court was "If not, should only those profits determined as attributable to the operations carried out in India be taken into account for applying the test laid down in section 4A (c) (b).
" If, therefore, section 42(3) has nothing to do with the determination of the income arising in the taxable territories as distinguished from the income arising without the taxable territories as understood in section 4A(c) (b) of the Act what we have got to consider is whether there is anything in the Act which prevents the application of the general principle of apportionment of income, profits or gains between those which are derived from business operations carried on within the taxable territories and those which are derived from business operations carried on without the taxable territories.
The contention which was advanced by Shri Porus A. Mehta on behalf of the respondents in this behalf, viz., that the word ,arise " was the only word used in section 4A (c) (b) and the word "accrue" did not find any place therein, that there was a distinction between the conception of arising and the conception of accrual and that the apportionment of the income was appropriate only in cases where the income arose and was inappropriate in cases where the income accrued, was sufficiently repelled in the judgment in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai &.Co., Bombay(1), where it was observed: " Whether the words 'derive ' and 'Produce ' are or are not synonymous with the words 'accrue ' or arise it can be said without hesitation that the words 'accrue ' or " arise ' though not defined in the Act are certainly synonymous and are used in the sense of 'bridging, in as a natural result '.
Strictly speaking, the word 'accrue ' is not synonymous with 'arise ', the former connoting idea of growth or accumulation and the (1) ; at p. 364.
535 latter of the growth or accumulation with a tangible shape so as to be receivable.
There is a distinction in the dictionary meaning of these words, but throughout the Act they seem to denote the same idea or ideas very similar and the difference only lies in this that one is more appropriate when applied to a particular case.
In the case of a composite business, i.e., in the case of a person who is carrying on a number of businesses, it is always difficult to decide as to the place of the accrual of profits and their apportionment inter se.
For instance, where a person carries on manufacture, sale, export and import, it is not possible to say that the place where the profits accrue to him is the place of sale.
The profits received relate firstly to his business as a manufacturer, secondly to his trading operations, and thirdly to his business of import and export.
Profit or loss has to be apportioned between these businesses in a businesslike manner and according to well established principles of accountancy.
In such cases it will be doing no violence to the meaning of the words accrue ' or 'arise ' if the profits attributable to the manufacturing business are said to arise or accrue at the place where the manufacture is being done and the profits which arise by reason of the sale are said to arise at the place where the sales are made and the profits in respect of the import and export business are said to arise at the place where the business is conducted.
This apportionment of profits between a number of businesses which are carried on by the same person at different places determines a so the place of the accrual of profits.
" The phraseology of section 42(3) of the Act 'also repels the contention in so far as the profits and gains of the business which are referred to therein and which are capable of apportionment as therein mentioned are deemed to accrue or arise in the taxable territories thus using the words "accrue" and "arise" as synonymous with each other.
The above passage is also sufficient in our opinion to establish that the apportionment of income, or gains between those arising from business opinion 536 carried on in the taxable territories and those arising from business operations carried on without the taxable territories is based not on the applicability of section 42(3) of the Act but on general principles of apportionment of income, profits or gains.
That was really the ratio of the judgment of the majority in Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co., Bombay(1), and any attempt to distinguish that 'ease from the present one by having resort to the statutory provisions of the Excess Profits Tax Act is really futile.
We are accordingly of the opinion that the answer given by the High Court to the question No. 2 also was correct.
The appeal before us will accordingly be allowed and the answers to the questions Nos. 1 and 2 refrained by us will be as under: Question No. 1 In the negative; and Question No. 2 The income received in British India cannot be said to wholly arise in India within the meaning of section 4A (c) (b) of the Act and that there should be allocation of the income between the various business operations of the assessee company demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
In so far as the appellant has failed in one part of the case and succeeded in another part we think that the proper order for cost should be that each party bears and pays his own costs of this appeal including ,the costs of the remand before the High Court.
Appeal allowed.

summary/full:
The assessee, a company incorporated in the United Kingdom and having its registered office in London, manufactured yarn and cloth in their,mill at Pondicherry.
The assessee had appointed another company in Madras as their agents.
The manufactured goods were sold mostly in British India and partly outside British India.
All the contracts in respect of the sales in British India: were entered into in British India and deliveries were made and payments were received in British India.
In regard to sales outside British India also, payments were received in Madras 69 524 through the agents and it was found as a fact that, the entire profits were received in India: Held, (i) that in view of the finding of fact that the entire profits were received in India and the assessee was liable to tax under section 4 (1) (a), the provisions of section 42 (1) had no relevancy ; (ii)that the income received in British India could not be said to wholly arise in British India within the meaning of section 4A (c) (b) and that there should be allocation of the income between the various business operations of the assessee demarcating the income arising in the taxable territories in the particular year from the income arising without the taxable territories in that year for the purposes of section 4A (c) (b) of the Act.
Commissioner of Income tax, Bombay vs Ahmedbhai Umarbhai & Co. ([1950] S.C.R. 335), Pondicherry Railway Company vs Commissioner of Income tax, Madras [1931] (58 I.A. 239), Turner Morrison and Co. vs Commissioner of Income tax [1951] (19 I.T.R. 451 ; , referred to.