judgement:
etition (Civil) No. 508 of 1988.
(Under Article 32 of the Constitution of India).
(With WP(C) Nos. 534/88, CA.
5513/85, 5679/85, 5686/85, 183/86, 192, 235 36/86, 363,/86, 447/86, 510 15/86, 529/86, 646/86, 647/86, 1199/86, 1200/86, 1250/86, WP.
(C) Nos.
143, 269, 434/86, T.P. (C) Nos. 76, 77, 78 79/86, 88/86, 139 49/86, 154/86, 155/86, CA.
Nos. 81 83/86, T.C. (C) No. 81/86, I.A. Nos. 1 & 2/92 in CA.
No. 5513,185) WITH (CA.
No. 174/86 Manipal Finance Crop.
vs U.O.L, and Anr.
With CA.
193/86, 624/86, 509/86, W.P. (C) No. 1506/87, CA.
69699/86, 949 50/86, 541/86, W.P. (C) No. 602/89) D.N. Dwivedi, Additional Solicitor General, G. Viswanatha Iyer, K.N. Bhat, Anil B. Diwan, E.M.S. Anam, P.H. Parekh, C.N. Sree Kumar, R. Mohan, section Balakrishnan, M.K.D, Namboodiri, M.S. Ganesh, S.S. Khanduja, Y.P. Dhingra, B.K. Satija, Kuldeep, section Paribar.
H.S. Parihar, Ms. A Sub hashini, C.V. Subba Rao, K,R. Nambiar, M.P. Shorawala, D.K, Garg, S.K. Nandy,Randhir Jain, Ms.
Malini Poduval,M.A.Krishna Moorthy, K.J,John, Ms. section Vaidyalingam, A.K. Sanghi, P.N. Puri, Ms. Abha Jain, Ms. Madhu Moolchandani and A.G. Ratnaparkhi for the Appearing Parties.
The Judgment of the Court was delivered by MOHAN, J.
All these civil appeals arise by certificate granted by the 836 High Court of Delhi against the decision reported in Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769.
All these civil appeals and writ petitions challenge the constitutional validity of Chapter 111 C read with section 58B (5A) of the , introduced by the Banking Laws (Amendment) Act, 1983 (Act 1 of 1984).
Hence, they are dealt with under a common judgment.
In order to appreciate the challenge the necessary legal background may be set out.
In the year 1949, the Banking Regulation Act of 1949 was enacted.
That contained regulatory, provisions in regard to banking under the surveillance of the Reserve Bank of India as to what would constitute "banking" as defined under Section 5(b) of the 1949 Act.
In the year 1959, the Banking Companies (Amendment) Act, 1959 was passed.
Sections 17 and 18 were substituted which required banking companies to create reserve fund and maintain cash reserve.
In the year 1963, Banking Laws (Miscellaneous Provisions) Act, 1963 inserted Chapter III B in the .
This Chapter conferred extensive powers on the Reserve Bank of India to issue suitable instructions, to regulate and monitor diverse activities of non banking companies.
The powers to control and regulate these non banking institutions are set out in Sections 45 I to 45 L.
While exercising these powers, the Reserve Bank of India was issuing various directions to these non banking financial institutions.
One such important direction was issued on 1st of January, 1967 to the effect that the non banking financial companies were not to hold deposits in excess of 25 per cent of its paid up capital and the reserves as also to non banking, non financial companies.
They were also required to take steps to keep the deposits within the limits.
This direction was challenged unsuccessfully before the Madras high Court as seen from the case reported in Mayavaram Financial Corporation vs Reserve Bank of India.
In, 1968, by Banking Laws (Amendment) Act, 1968, Sections 10A to 10D were introduced.
Section 10A provided that the Board of Directors shall include persons with professional or special knowledge.
Section 10A(5) empowered the Reserve Bank of India to vary the composition of the Board.
837 When a report of the Study Group of non banking financial intermediaries was submitted in the year 1971 that was studied.
Thereafter in 1973 the Reserve Bank of India issued Miscellaneous Non Banking Companies (Reserve Bank) Directions, 1973 placing certain restrictions on companies carrying on prize chit and chit business from receiving deposits from the public.
In 1974, Section 58A of the Companies Act was inserted by the Companies (Amendment) Act of 1974, which came into force from 1st of February, 1975.
The object was to regulate deposits received by non banking non financial companies.
The financial companies were already covered by Reserve Bank of India directions under the .
Therefore, they were exempted under Section 58A (7) from the purview of that Section.
Since the non banking non financial companies came within the purview of Section 58A, the earlier directions issued by the to non banking nonfinancial companies in the year 1966 Were withdrawn.
By an amendment of 1977, Section 58A was further enlarged and the Central Government was empowered to grant extensions.
In June 1974, another Study Group was constituted which is popularly known as James Raj Committee.
In July 1975, the above Study Group gave its report.
In accordance with the recommendations of the Study Group elaborate rules were issued by the Central Government under Section 58A, called Banking Companies (Acceptance of Deposits) Rules, 1975 with a view of regulate the various activities of the companies to accept deposits from public.
The validity of the section and the deposit rules were questioned.
This Court in DCM Ltd. vs U. O.L, ; upheld the same.
In 1977, directions were issued by the Reserve Bank of India superseding earlier directions of 1966 and 1973.
In 1978, Bill 183 of 1978 called Banking Laws (Amendment) Bill, 1978 was introduced in the Parliament.
The said Bill provided limits on depositors which were lower than the current provisions.
However, the Bill lapsed on dissolution of Parliament.
Thereafter prize chits and Money Circulation Schemes (Banning) Act, 1978 was enacted.
This was also challenged.
But that challenge was thrown out by this Court in Srinivasa Enterprises vs Union of India, ; 838 In 1981, several new regulatory directions were given by the Reserve Bank of India.
Inter alia they included restrictions on accepting or renewing deposits from shareholders, Directors etc.
which exceeded 15 per cent of the net owned funds of the companies as also restricted payment of interest on deposits at a rate of interest exceeding 15 per cent per annum.
The validity of the amendment was upheld by the Madras High Court in the case reported in AIR 1983 Madras 330 A.S.P. Ayar vs Reserve Bank of India.
In State of West Bengal vs Swapan Kumar Guha, known as Sanchaita case, reported in ; , this Court while quashing the F.I.R. launched against the firm, Sanchaita Investments, directed that the Government and Reserve Bank of India should look into the matter deeply.
It is in this background the Banking Laws (Amendment) Act, 1983 came to be enacted.
Section 45S states thus: 45 S : Deposits not be accepted in certain cases (1) No person, being an individual or a firm or an unincorporated association of individuals.
shall at any time, have deposits from more than the number of depositors specified against each, in the table below.
TABLE (i) Individual Not more than twenty five depositors excluding depositors who are relatives of the individual.
(ii) Firm Not more than twenty five depositors per partner and not more than two hundred and fifty depositors in all, excluding, in either case, depositors who are relatives of any of the partners.
(iii) Unincorporated Not more than twenty five depositors per Association of individual and not more than two hundred and individualsfifty depositors in all excluding, in either case, depositors who are relatives of any of the individuals constituting the association.
(2) Where at the commencement of Section 10 of the Banking Laws (Amendment) Act, 1983 the deposits her by any such person are not in accordance with sub section 839 (1), he shall before the expiry of a period of two years from the date of such commencement, repay such of the deposits as are necessary for bringing the number of depositors within the relative limits specified in that sub section.
Explanation : For the purposes of this section (a) a person shall be deemed to be a relative of another if, and only if, (i) they are members of a Hindu undivided family , or (ii) they are husband and wife; or (iii) the one is related to the other in the manner indicated in the list of relatives below List of Relatives 1.
Father.
Mother (including step mother).
Son (including Stepson).
Son 's wife.
Daughter (including step daughter).
Father 's father.
Father 's mother.
Mother 's mother.
Mother 's father.
Son 's son.
Son 's son 's wife.
Son 's daughter.
Son 's daughter 's husband.
Daughter 's husband.
Daughter 's son.
Daughter 's son 's wife.
Daughters daughter.
Daughter 's daughter 's husband.
Brother (including step brother) .
Brother 's wife.
Sister (including step sister).
Sister 's husband; (b) a person in whose favour a credit balance in outstanding for a period not exceeding six months in any account relating to mutual dealings in the ordinary course of trade or business shall not, on account of such balance alone, be deemed to be a depositor." Thus, the number of depositors has come to be limited.
As to the penalty for contravention of Section 45S it is provided for under Section 58B (5A).
It runs thus: "(5A).
If any person contravenes any provision of Section 45S, he shall be punishable with imprisonment for a terms which may extend to two years, or with fine which may extend to twice the amount of deposit received by 840 such person in contravention of that section or rupees two thousand, whichever is more, or with both." These provisions were challenged by the appellants in the various civil appeals as violative of Articles 14 and 19 of the Constitution.
A Division Bench of the High Court of Delhi in, Kanta Mehta 's case supra "Section 45S read with section 58B (5A) of chapter III C of the , as introduced by section 10 of the Banking laws Amendment) Act, 1983, is not violative of articles 14 and 19 of the Constitution.
There is nothing demonstrably irrelevant or perverse in limiting in section 45S the number of depositors that an individual, firm or association could accept.
Nor is there any element of compulsion on individuals and firms or associations which are not incorporated to incorporate themselves as a company and article 19(1)(c) is not violated by the provisions of section 45S limiting the number of depositors whom individuals, firms and unincorporated associations could accept.
Chapter III C of the , imposes reasonable restrictions on the right of individuals, firms and unincorporated associations to carry on the business of acceptance of deposits and advancing or giving loans to the public.
There is also a further safeguard that Chapter 111 C is being operated under the supervision and control of the Reserve Bank of India.
The business of acceptance of deposits from the public does not fall within entry .30 or entry 32 of List II.
of Schedule VII of the Constitution.
It falls within entry 45 or in any case under entry 97 of List I of Schedule VII under which only Parliament has power to pass the impugned legislation.
Parliament had full competence and power to pass Chapter III C of the ." Mr. G. Viswanatha Iyer, learned counsel for the writ petitioners in 841 WP.
508 and 534 of 1988 submits that Section 45B is violative of the fundamental right under Article 19(1)(g) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Money Lenders Act, 1958 (hereinafter referred to as the Kerala Act).
The two years ' period prescribed under Section 42 is unreasonable.
Under Kerala Act, with effect from 15.10.85 only 14 per cent interest alone could be charged.
In any event, while receiving deposits it was not an offence, making it a criminal liability and directing payment, would amount, to ex post facto law, offending Article 20(1) of the Constitution.
In support of this submission, reliance is placed on Chinoy Bottling Co. Pvt. Ltd. vs Assistant Registrar of Companies, Madras, page 770 and Oudh Sugar Mills Ltd. vs Union of India, AIR 1970 SC 1070.
The other learned counsel seriously pressed the point relating to criminal liability and prayed for time to comply with the provisions of Section 45S.
Mr. Anil B. Diwan, learned counsel appearing for Respondent 2 in C.A. No. 447 of 1986, after referring us to the development of law, would submit that it is open to the Government to regulate the economic activities.
While examining the validity of such provisions the courts always have regard to the wisdom of the Legislature because that alone has the necessary information and expertise pointing to the need of such a legislation.
In R.K Garg vs Union of India, ; at 969 70 this aspect of the matter was highlighted.
It was in this view, this Court upheld Maharashtra Debt Relief Act, 1976 in Fatehchand Himmatlal and others vs State of Maharashtra, ; If properly analysed, it can be seen that these provisions constitute.
a regulatory scheme and not a penal liability.
Much is made of the penal provisions under Section 58B (5A).
It is submitted that imprisonment of a recalcitrant debtor is permissible in law.
If one goes by the facts of these cases even after 1986, they collect deposits 842 when law required them not to do so.
Under Section 45(1)(bb) deposit has been defined.
If as per the definition there are enough sources of deposit there is no reason why the appellants cannot reduce the deposits.
If, therefore, the package is reasonable there is no justification to dilute the effect of Section 58B (5A).
While examining the scope of the Section it might be contrasted with Section 125 (3) of the Criminal Procedure Code wherein a sufficient cause is provided.
In Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; this Court had occasion to consider the adventures indulged by the persons like appellants.
It criticised the fraud played by such financial vultures.
This approach was approved in Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, ; @ 354.
The learned counsel also draws our attention to the Non banking Financial Companies (Reserve Bank) Directions of 1966.
They came into force on January 1, 1967.
Clause 4 sub clause (3) specifically provides that the deposit shall be reduced to 25 per cent of the paid up capital for which two year period was provided.
Similar directions of 1977 known as Non Banking Financial Companies (Reserve Bank) Directions, 1977 came to be issued with effect from 1st of July, 1977.
There were complaints, even then, that the financial companies were not paying interest regularly and the Reserve Bank was requested to help the depositor.
Therefore, in the teeth of this provision, to say that suddenly the appellants and the writ petitioners are called upon to reduce, would work hardship and they should not be penalised, is incorrect.
They took a calculated risk and, therefore, they had to suffer for their own fault.
In examining the various submissions addressed on behalf of the appellants and the petitioners we propose to examine the same in the following background since it is a law relating to regulation of economic activities.
In R.K Garg 's case (supra) it is held at pages 969 70 .
"Another rule of equal importance is that laws relating 843 to economic activities should be viewed with greater latitude than laws touching civil rights such as freedom of speech, religion etc.
It has been said by no less a person than Holmes, J. that the legislature should be allowed some play in the joints, because it has to deal with complex problems which do not admit of solution through any doctrinaire or straight jacket formula and this is par ticularly true in case of legislation dealing with economic matters, where, having regard to the nature of the problems required to be dealt with, greater play in the joints has to be allowed to the legislature.
The greater play in the joints has to be allowed to the legislature.
The court should feel more inclined to give judicial deference to legislature judgment in the field of economic regulation than in other areas where fundamental human rights are involved.
Nowhere has this admonition been more felicitously expressed than in Morey vs Dond, ; where Frank further, J. said in his inimitable style: "In the utilities, tax and economic regulation cases, there are good reasons for judicial self restraint if not judicial deference to legislative judgment.
The legislature after all has the affirmative responsibility.
The courts have only the power to destroy, not to reconstruct.
When these are added to the complexity of economic regulation, the uncertainty, the liability to error, the bewildering conflict of the experts, and the number of times the judges have been overruled by events self limitation can be seen to be the path to judicial wisdom and institutional prestige and stability.
" The court must always remember that "legislation is directed to practical problems, that the economic mechanism is highly sensitive and complex, that many 'problems are singular and contingent, that laws are not abstract propositions and do not relate to abstract units and are not to be measured by abstract symmetry ' that exact wisdom and nice adaptation of remedy are not always possible and that 'Judgment is largely a prophecy 844 based on meagre and uninterpreted experience".
Every legislation particularly in economic matters is essentially empiric and it is based on experimentation or what one may call trial and error method and therefore it cannot provide for all possible situations or anticipate all possible abuses.
There may be crudities and inequities in complicated experimental economic legislation but on that account alone it cannot be struck down as invalid.
" At page 988 it is held: "That would depend upon diverse fiscal and economic considerations based on practical necessity and administrative expediency and ,would also involve a certain amount of experimentation on which the Court would be least fitted to pronounce.
The court would not have the necessary competence and expertise to adjudicate upon such an economic issue.
The court cannot possibly assess or evaluate what would be the impact of a particular immunity or exemption and whether it would serve the purpose in view or not.
There are so many imponderable that would enter into the determination that it would be wise for the court not to hazard an opinion where even economists may differ, The court must while examining the constitutional validity of a legislation of this kind, "be resilient, not rigid, forward looking, not static, liberal, not verbal" and the court must always bear in mind the constitutional proposition enunciated by the Supreme Court of the United States in Munn vs Illinois, namely, "that courts do not substitute their social and economic beliefs for the judgment of legislative bodies".
The court must defer to legislative judgment in matters relating to social and economic policies and must not interfere, unless the exercise of legislative judgment appears to the palpably arbitrary.
The court should constantly remind itself of what the Supreme Court of the United States said in Metropolis Theater Co. vs City of Chicago, (57 Lawyers ' Edition 730).
"The problems of 845 government are practical ones and may justify, if they do not require, rough accommodations, illogical it maybe, and unscientific.
But even such criticism should not be hastily expressed.
What is best is not always discernible, the wisdom of any choice may be disputed or condemned.
Mere errors of government are not subject to our judicial review.
No doubt, the impugned legislation places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
From the earlier narration, it would be clear that the Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and then utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to require maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
This was why Section 58A in the Companies Act of 1956 came to be introduced.
It is worthwhile to quote the notes on clauses concerning this provision: "It has been the practice of the companies to take deposits from the public at high rates of interest.
Experience had shown that in many cases deposits taken by the companies have not been refunded on the due dates, either the companies have gone in liquidation or funds are depleted to such an extent that the companies are not in a position to refund the deposits, it was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
We approve of the reasoning of the Delhi High Court in Kanta Mehta 's case (supra).
At pages 798 99 it runs as follows: "The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the 846 hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
For, it must be remembered that "in the ultimate analysis, the mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis of price fixation has to be accepted in the generality of cases as valid.
" See Prag Ice and Oil Mills vs Union of India, ; , para 50).
Also such provisions meant to check such evil must be viewed, as Krishna Iyer J. said, through a socially constructive, not legally captious, microscope to discover glaring unconstitutional infirmity, that when laws affecting large chunks of the community are enacted, stray misfortunes are inevitable and that social legislation, without tears, affecting vested rights is virtually impossible.
See B. Banerjee vs Smt.
Anita Pan, ; , at pages 1150 51.
The stress by learned counsel for the petitioners on the private right of the petitioners to have unrestricted deposits and make advances in any manner they like must receive short shrift, for by now, it is too well settled to be doubted that private rights must yield to be public need and that any form of regulation is unconstitutional only if arbitrary, discriminatory or demonstrably irrelevant to the policy the Legislature is free to adopt.
" May be, Kerala Act restricts the rates of interest under Section 4(2)(iii) but that cannot enable the writ petitioners in W.P. Nos. 508 and 534 of 1988 to disregard these provisions, being the non banking financial institutions.
Hence, we reject the first of the arguments.
As regards the reasonableness of two year period Section 45(1)(bb) of the Reserve Bank Act defines "deposit" as follows: "(bb) "deposit" includes and shall be deemed always to have 847 included any receipt of money by way of deposit or loan or in any other form, but does not include (i) amounts raised by way of share capital; (ii) amounts contributed as capital by partners of a firm; (iii) any amount received from, (iv) any amount received from, (a) the Development Bank; (b) a State Financial Corporation established under the ; (c) any financial institution specified in or under section 6A of the ; or (d) any other financial institution that may be specified by the Bank in this behalf; (v) amounts received, in the ordinary course of business, by way of security deposit or dealership deposit; (vi) any amount received from an individual or a firm or an association of individuals not being a body corporate, registered under any enactment relating to money lending which is, for the time being in force in any State; and (vii)any amount received by way of subscriptions in respect of a conventional chit.
" Therefore, as rightly argued by Mr. Anil Diwan as per this definition, .if there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
Further, non banking financial companies are required under clause 4 sub clause (3) as follows: "(3) Every non banking financial company, not being a hire purchase finance company, or a holding finance company, which on the date of commencement of these 848 directions holds deposits in excess of twenty five per cent of its paid up capital and free reserves shall secure before the expiry of a period of two years from the date of such commencement, by taking such steps as may be necessary for this purpose, that the deposits, received by the company and outstanding on its books are not in excess of the aforesaid limit.
" These directions came into force from 1st of January, 1967.
Similar directions came to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
Clause 5 dealing with acceptance of deposits states as under: "Acceptance of deposits by miscellaneous non banking companies: On and from 1st of July, 1977, no miscellaneous nonbanking company shall: (a) receive any deposit repayable on demand or on notice, or repayable after a period of less than six months and more than thirty six months from the date of receipt of such deposit or renew any deposit received by it, whether before or after the aforesaid date unless such deposit, on renewal, is repayable not earlier than six months and not later than thirty six months from the date of such renewal; Provided that where a miscellaneous non banking company has before the 1st July, 1977, accepted deposits repayable after a period of more than thrity six months, such deposits shall, unless renewed in accordance with these directions, be repaid in accordance with the terms of such deposits; Provided further that nothing contained in this clause shall apply to monies raised by the issue of debentures or bonds.
(b) receive or renew: 849 (i) any deposit against an unsecured debenture or any deposit from a shareholder (not being a deposit received by a private company from its shares holders as is referred to in clause (vi) or paragraph 4) or any deposit guaranteed by any person who, at the time of giving such guarantee, was or is a director to the company, if the amount of any such deposits together with the amount of such other deposits of all or any of the kinds referred to in this sub clause and outstanding in the books of the company as on the date of acceptance or renewal of such deposits, exceeds fifteen per cent of its net owned funds.
(ii) any other deposit, if the amount of such deposit, together with the amount of such other deposits, not being deposits of the kind referred to in sub clause (i) of this clause already received and outstanding in the books of the company as on the date of acceptance of such deposits, exceeds twenty five per cent of its net owned funds.
" If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellant and the petitioners arc called upon to reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
Coming to the last point, as to whether Section 58B (5A) is violative of Article 20(1) of the Constitution, we find, when a similar argument was raised against Section 58A of the Companies Act, that was repelled by this Court in Delhi Cloth and General Mills vs Union of India, ; at page 468 which runs thus: "Mr. G.A. Shah canvassed one more contention.
After stating that Rule 3A became operative from April 1, 19 ',8, he specifically drew attention to the proviso to Rule 3A (1) which required that with relation to the deposits maturing during the year ending on the 31st day of March, 1979, the sum required to be deposited or invested under sub rule 3A (1) shall be deposited or invested before the 30th day of September, 1978.
It was then contended that this provision would necessitate depositing 10% of the 850 deposits maturing during the year ending 31st March, 1979 which may have been accepted prior to the coming into force of rule 3A and to this extent the rule has been made retrospective and as there was no power conferred by sec.
58A to prescribe conditions subject to which deposits can be accepted retrospectively Rule 3A is ultra vires sec.
58A. Unquestionably, Rule 3A is to deposit 10% of the deposits maturing during the year in the manner prescribed in Rule 3.
Some deposits would be maturing between April 1, 1978 and March 31, 1979.
To provide for such marginal situation, a proviso is inserted.
Does it to make the rule retroactive? Of course, not.
In D.S. Nakara vs Union of India, ; a Constitution Bench of this Court has, in this context, observed as under: "A statute is not properly called a retroactive statute because a part of the requisites for its action is drawn from a time antecedent to its passing." Viewed form this angle, the provision can be properly called prospective and not retroactive.
Therefore, the contention does not commend to us.
" In the light of this, we should hold that the ruling of the Madras High Court in Chinoy Bottling Co. Pvt.
Ltd. (supra) is incorrect.
As to the plight of these depositors we need only to quote the case in Peerless General Finance and Investment Co. Ltd.; , At paragraph 37 it is held: "We would also like to query what action the Reserve Bank of India and the Union of India are taking or proposing to take against the mushroom growth of 'finance and investment companies ' offering staggeringly high rates of interest to depositors leading us to suspect whether these companies are not speculative ventures floated to attract unwary and credulous investors and capture their savings.
One has only to look at the morning 's newspaper to be greeted by advertisements inviting deposits and offering interest at astronomic rates.
851 On January 1, 1987 one of the national newspapers published from Hyderabad, where one of in happened to be spending the vacation, carried as many as ten advertisements with 'banner headlines ', covering the whole of the last page, a quarter of the first page and conspicuous spaces in other pages offering fabulous rates of interest.
At least two of the advertisers offered to double the deposit in 30 months.
2000 for 1000, 10,000 for 5,000, they said.
Another advertiser offered interes t ranging between 30 per cent to 38 per cent for periods ranging between six months to five years.
Almost all the advertisers offered extra interest ranging between 3 per cent to 6 per cent deposits were made during the Christmas Pongal season.
Several of them offered gifts and prizes.
If the Reserve Bank of India considers the Peerless Company with eight hundred crores invested in government securities, fixed deposits with National Banks etc.
unsafe for depositors, one wonders what they have to say about the mushroom non banking companies which are accepting deposits, promising most unlikely returns and what action is proposed to be taken to protect the investors.
It does not require much imagination to realise the adventurous and precarious character of these businesses.
Urgent action appears to be called for to protect the public.
While on the one hand these schemes encourage two vices affecting public economy, the desire to take quick and easy money and the habit of excessive and wasteful consumer spending, on the other hand the investors who generally belong to the gullible and less affluent classes have no security whatsoever.
Action appears imperative." And paragraph 42 also requires to be quoted "I share my brother 's concern about the mushroom growth of financial companies all over the country.
Such companies have proliferated.
The victims of the schemes, that the attractively put forward in public media, are mostly middle class and lower middle class people.
Instances are legion where such needy people have been 852 reduced penniless because of the fraud played by such financial vultures.
It is necessary for the authorities to evolve fool proof schemes to see that fraud is not allowed to be placed upon persons who are not conversant with the practice of such financial enterprises who pose themselves as benefactors of people.
" We may also add that this has been reaffirmed in Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354.
Therefore, we are in entire agreement with the Delhi High Court.
Since, as we have stated above, all the appellants and writ petitioners were praying for time to comply with these provisions, the matter was adjourned from time to time.
Though some of them have complied with the requirements of law yet a few others have not done so.
We make it clear that in spite of this indulgence, their failure to comply cannot be countenanced.
We dismiss the appeals and the petitions along with 1A.Nos.1 and 2 in C.A. No.5513 of 1985.
However, there shall be no orders as to cost.
N.V.K. Petitions and appeals dismissed.

dataset_name: IN-Abs

summary/full:
The petitioners in the writ petition challenged the constitutional validity of chapter III C read with Section 58B(5A) of the introduced by the Banking Laws (Amendment) Act, 1983.
Along with the writ petition were had several civil appeals, where the appellants had unsuccessfully challenged the aforesaid provisions as violative of Articles 14 and 19 of the Constitution, in the High Court of Delhi, which upheld their validity, and granted a certificate to appeal to this Court vide Kanta Mehta vs Union of India, The newly incorporated Section 45S of the provided that no individual or firm or an unincorporated association of individuals shall, at any time, have deposits from more than the number of depositors specified against each in the table mentioned therein.
It was further provided that where at the commencement of the Act, the deposits held were not in accordance thereof,a period of two years was prescribed for bringing down the number of depositors within the relative limits specified in the Act, and contravention thereof was rendered penal. 'These provisions were brought into force on February 15, 1984.
On behalf of the petitioners it was submitted that Section 45B was 833 violative of the fundamental rights under Article 19(1) kg) of the Constitution as it restricts the number of depositors and the rate of interest under Section 4(2)(iii) of the Kerala Moneylenders Act, 1958, that the two year period prescribed under Section 42 is unreasonable, and that under the Kerala Act with effect from 15110185 only 149% interest alone could be charged.
It was further submitted that while receiving deposits it was not an offence and making it a criminal liability and directing payment, would amount to ex postfacto law offending Article 20(1) of the Constitution.
The writ petition and appeals were contested by submitting on behalf of the Reserve Bank of India that it was open to the Government to regulate economic activities, and that while examining the validity of such provisions courts a laws have regard to the wisdom of the Legislature as it alone has the necessary information and expertise pointing to the needs for such a legislation.
Attention was also drawn to the provisions of the Non Banking Financial Companies (Reserve Bank) Directions of 1966 which came into force on January 1, 1969 which specifically provided that deposits shall be reduced to 25% of the paid up capital for which a two years period was prescribed and that similar directions knows as Non Banking Financial Companies Reserve Bank Directions, 1977 came to be issued with effect from 1st of July, 1977, Dismissing the writ petition and the appeals, this Court, HELD: 1.
The impugned legislation no doubt places restrictions on the right of the appellants to carry on business, but what is essential is to safeguard the rights of various depositors and to see that they are not preyed upon.
[844G] 2.
The Reserve Bank of India, right from 1966, has been monitoring and following the functioning of non banking financial institutions which invite deposits and utilise those deposits either for trade or for other various industries.
A ceiling for acceptance of deposits and to requires maintenance of certain liquidity of funds as well as not to exceed borrowings beyond a particular percentage of the net owned funds have been provided in the corporate sector.
But for these requirements, the depositors would be left high and dry without any remedy.
[844H, 845A] 3.
Even the corporate sector was not free from blame.
It had done damage to the economy and brought ruination to small depositors.
Ex 834 perience had shown that In many cases deposits taken by the companies had not been refunded on the due dates, either the companies had gone in liquidation or funds are depleted to such an extent that the companies were not in a position to refund the deposits.
It was accordingly considered necessary to control the activities of the companies when accepting deposits from the 'the public".
That was why Section 58A in the Companies Act of 1956 came to be introduced.
[845B, C D] 4.
The danger of allowing deposits to be accepted without regulation is so acute and urgent, that to bind the hands of the Legislature that only one course alone is permissible and not to permit a play of joints would be to totally make it ineffective in meeting the challenge of the social evil.
The mechanics of any economic legislation has necessarily to be left to the judgment of the executive and unless it is patent that there is hostile discrimination against a class, the processual basis has to be accepted 5.
May be, Kerala Moneylenders Act restricts the rates of Interest under Section 4(2)(iii) but that cannot enable the writ petitioners to disregard these provisions introduced by the Banking laws (Amendment) Act 1983 being the non banking financial institutions.
[846D] 6.
Section 45 (1) (bb) of the Reserve Bank Act defines 'deposit.
If there are enough sources of deposit there is no reason why the appellants and the writ petitioners cannot reduce the deposits.
The prescription of the two year period for reduction is therefore reasonable.
[847D] 7.
Moreover, similar directions cam to be issued as Miscellaneous Non Banking Companies (Reserve Bank) Directions.
If, therefore, this was the position, it cannot be contended that suddenly the companies like the appellants and the writ petitioners are called upon the reduce deposits.
Even otherwise, the interests of the depositors is the prime concern.
[847G, 849B] Kanta Mehta vs Union of India and others, Company Cases Vol.
62 1987 page 769, approved.
Chiney Bottling Co. Pw. Ltd. vs Assistant Registrar of Companies, Madras, page 770, disapproved.
DCM Ltd. vs U. O.I., ; ; Srinivasa Enterpries vs Union 835 of India; , ; State of West Bengal vs Swapan Kumar Guha ; ; R.K Garg vs Union of India ; and Fatehchand Himmatlal and others vs State of Maharashtra ; , referred to, Reserve Bank of India vs Peerless General Finance and Investment Co. Ltd, ; ; Peerless General Finance and Investment Co. Ltd vs Reserve Bank of India, @ 354; Delhi Cloth and General Mills vs Union of India; , at page 468 and Reserve Bank of India vs Timex Finance and Investment Co. Ltd., at page 354, referred to.


judgement:
tition (Civil) No. 47 of 1992.
(Under Article 32 of the Constitution of India).
789 P.L Singal and NA.
Siddiqui for the Petitioner.
D.N. Dwivedi, Additional Solicitor General and Mrs. Niranjana Singh for the Respondent.
The Judgment of the Court was delivered by SHARMA CJ.
By the present application under Article 32 of the Constantine of India, the petitioner has challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No.1 of 1992) and the Representation of the people (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992), on the grounds of violation of Articles 14, 19 and 21.
By the first Ordinance, section 52 of the Representation of the People Act, 1951 (the Act) providing for countermanding elections in certain circumstances has been amended.
By the second Ordinance the period of 20 days in section 30 of the Act has been reduced to 14 days.
Later, when the Parliament met, the amendments were incorporated by an amending Act.
2.The provisions of section 52, as they stood before the amendment, provided for countermanding the election in either of 2 contingencies (i) if a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the fist of contesting candidates under section 38, (ii) if a contesting candidate died and a report of his death was received before the commencement of the poll.
On countermanding the Returning Officer will have to report the fact to the Election Commission; and all proceedings with reference to the election will have to be commenced de novo in all respects as if for a new election.
By the first Ordinance, the area attracting the provisions of countermanding has been narrowed down by confining the provisions only to such cases where a candidate of a retired political party dies.
3.Section 30 deals with appointment of dates for nomination, scrutiny and the holding of poll and in clause (d) it is provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view to expedite the whole process the words 'twentieth day ' have been substituted by the words "fourteenth day" in the said clause by the impugned Ordinace.
790 4.
Learned counsel for the petitioner has strenuously contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial inconsistent with the spirit of the election law and discriminatory.
The Constitution does not confer on a candidate set up by a registered political party any special right and treats all candidates similarly.
It does not recognize any categorisation.
It is, therefore, argued that the difference which is being introduced by the impugned amendment is contrary to the scheme of the Constitution and violative of the equality clause in Article 14.
According to the learned counsel this will also infringe the guarantee under Article 19(1)(a) in respect of freedom of speech and expression.
5.Elaborating his argument, the learned counsel contended that the right to choose its representative belongs to the voters of a particular constituency, and this should not be whittled down by amendments which have a tendency to undermine this element.
Lack of wisdom in giving importance to recognized political parties was emphasised by saying that such parties almost always impose their choice of candidates in their own interest and at the cost of the welfare of the constituencies.
By introducing this imbalance in the Act, it is stated, the republican character of the Constitution is jeopardised.
The sum and substance of the argument on behalf of the petitioner is that no distinction can be made between one candidate and another purely depending on recognition as a political party.
6.So far the second Ordinance is concerned, the objection is that the period of 14 days, substituted by the amendment, is too short and the reduction from the period of 20 days is arbitrary and prejudicial to the larger interest for which elections are held.
7.In reply, Mr. Altaf Ahmad, Additional Solicitor General, appearing on behalf of the Union of India has strongly relied upon the statements made in the counter affidavit filed on behalf of the respondent stating that on account of increase in terrorism and physical violence in several parts of the country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process has been fast growing and the problem was, therefore, taken up for serious consideration.
The issue was examined by the Electoral Reforms Committee set up in 1990 under the Chairmanship of the then Minister of law and 791 Justice, late Dinesh Goswami.
After studying the problem deeply and considering various points of view presented in this regard the.
Committee made its recommendation and, accordingly, the impugned amendment was made.
Explaining the urgency of introducing the amendment by an Ordinance (when Parliament was not in session) the counter affidavit states that it had then been decided to hold the General Elections to the House of People from the State of Punjab as also the election to the State Legislature of that State and having regard to the law and order situation prevailing in the State, it was considered essential to curb the danger of disruption of the election process by amending section 52 immediately.
With the same object in view, the period of 20 days mentioned in section 30 was substituted by 14 days.
8.Before proceeding to examine the merits of the argument addressed on behalf of the petitioner it will be useful to note that the right to vote or to stand as a candidate for election is neither a fundamental nor a civil right.
In England also it has never been recognised as a common law right.
In this connection, we may usefully refer to the following observations in,Jyoti Basu & Others vs Debi Ghosal & Others, A.I.R.1982 S.C.983 and 986 which reads as under : "The nature of the right to elect, the right to be elected and the right to dispute an election and the scheme of the constitutional and statutory provisions in relation to these rights have been explained by the Court in N.P. Ponnuswani vs Retuming Officer, Namakkal Constituency, ; : ; and Jagan Nath vs Jaswant Singh, ; We proceed to state what we have gleaned from what has been said, so much as necessary for this case.
A right to elect, fundamental though it is to democracy, is, anomalously enough, neither a fundamental right nor a Common Law Right.
It is pure and simple, a statutory right.
So is the right to be elected.
So is the right to dispute an election.
Outside of statute, there is no right to elect, no right to be elected and no right to dispute an election.
Statutory creations they are, and therefore, subject to statutory limitation.
" 792 The objection raised by the petitioner, therefore, must be examined in this background.
9.The challenge of the petitioner is directed against the differential treatment which the election law in India gives to candidates set up by political parties.
The main thrust of the argument of the learned counsel is that the party system and the recognition of political parties is itself detrimental to the cause of real democracy.
In any event, no additional advantage ought to have been allowed to candidates set up by political parties.
This stand runs counter to the constitutional scheme adopted by the nation.
It has firmly been established that the Cabinet system of Government has been envisaged by our Constitution and that the same is on the British pattern.
(See Shamsher Singh vs State of Punjab; , at 827).
In England where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In the other democratic countries also the party system has been adopted with success.
It has been realised that for a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on the floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
In his book "Cabinet Government" (2nd Edition page 16) Sir Ivory Jennings has very rightly said.
"Party warfare is thus essential to the working of the democratic system".
It is, therefore, idle to suggest that for establishing a true democratic society, the party system should be ignored.
Our Constitution has clearly recognized the importance of this system, which was further emphasized by the addition of the 10th Schedule to it.
The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
There is also no merit whatsoever in the contention that candidates set up by political parties should not receive any special treatment.
The fact that candidates set up by political parties constitute a class separate from the other candidates has been recognized by this Court in numerous cases.
In paragraph 14 of the judgment in the case of Dr. P.N. Thampy Terah vs Union of India [1985] Suppl.
SCC 189, the Constitution 793 Bench observed thus : "It is the political parties which sponsor candidates, that are in a position to incur large election expenses which often run into astronomical figures.
We do not consider that preferring political parties for exclusion from the sweep of monetary limits on election expenses, is so unreasonable or arbitrary as to justify the preference being struck down upon that gournd." In D.M.L. Agarwal vs Rajiv Gandhi, ; a Division Bench of this Court took note of and emphasized the vital role of political parties in a parliamentary form of democracy and anxiety was expressed about the growing number of independent candidates.
For the reasons indicated above, we do not find any substance in the argument of the learned counsel for the petitioner challenging the constitutional validity of the impugned amendment of section 52.
The argument against the reduction of the period of 20 days to 14 days in section 30 is equally without any merit.
The learned counsel could not suggest any good reason for holding that the period of 14 days would be inadequate or inappropriate, especially in the changed circumstances which are prevailing in the country.
Consequently, this writ petition is dismissed with costs assessed at Rs. 2,500 payable to the respondent Union of India.
N.V.K. Petition dismissed.

summary/full:
The petitioner In his Writ Petition Under Article 32 of the Constitution of India, challenged the constitutional validity of the Representation of the People (Amendment) Ordinance, 1992 (Ordinance No. 1 of 1992), and the Representation of the People (Second Amendment) Ordinance, 1992 (Ordinance No.2 of 1992) on the grounds of violation of Articles 14, 19 and 21 of the Constitution of India.
The provisions of Section 52 of the Representation of the People Act, 1951 as they stood before amendment provided for countermanding the election In either of two contingencies: (1) If a candidate whose nomination was found valid on scrutiny under section 36 or who has not withdrawn his candidature under section 37 died and a report of his death was received before the publication of the list of contesting candidates under section 38, (II) If a contesting candidate died and a report of his death was received before the commencement of the poll.
By Ordinance No. 1 of 1992, the area attracting the provisions of countermanding in section 52 had been narrowed down by confining the provisions only to such cases where a candidate of a recognized political party dies.
787 Section 30 of the Representation of People Act, 1951 dealt with appointment of dates for nomination, scrutiny and the holding of poll, and in clause (d) it was provided that the date of poll shall not be earlier than the twentieth day after the last date for the withdrawal of candidatures.
With a view of expedite the whole process, the words 'twentieth day ' have been substituted by the words 'fourteenth day ' in clause (d) of Section 30 by the Second Ordinary viz. Ordinance No. 2 of 1992.
On behalf of the petitioner it was contended that the distinction made by the impugned amendment between a candidate set up by a recognised political party and any other candidate is artificial, inconsistent with the spirit of the election law and discriminatory, that the Con stitution does not confer on a candidate set up by a registered political party any special right, and treats all candidates similarly, and does not any categorisation, that the difference being introduced by the impugned amendment was contrary to the scheme of the Constitution and violative of the equality clause in Article 14, and that it also infringed the guarantee under Article 19(1) (a).
In respect of the Second Ordinance the objection was that the period of 14 days substituted by the amendment was too short, and the reduction from the period of 20 days was arbitrary and prejudicial to the larger interest for which elections are held.
The Petition was contested on behalf of Union of India by stating that on account of increase in terrorism and physical violence in several parts of the Country combined with the phenomenal increase in the number of independent candidates, the danger of disruption of the election process had been fast growing and the problem was, therefore, taken up, examined and it was considered that the amendments were essential to curb the danger of disruption of the election process.
Dismissing the Writ Petition, this Court, HELD : 1.
The right to vote or to stand as a candidate for election is neither a fundamental right nor a civil right In England also it has never been recognised as a common law right [791D] Jyoti Basu & Ors.
vs Debi Ghosal & Ors, ; and 986, referred to. 2.
The Cabinet system of Government has been envisaged by our 788 Constitution, and the same is on the British pattern.
In England, where democracy has prevailed for longer than in any other country in recent times, the Cabinet system of Government has been found to be most effective.
In other democratic countries also the party system has been adopted with success.
[792C D] Shamser Singh vs State of Punjab, ; at 827, referred to.
3.For a strong vibrant democratic Government, it is necessary to have a parliamentary majority as well as a parliamentary minority, so that the different points of view on controversial issues are brought out and debated on 'he floor of the Parliament.
This can be best achieved by the party system, so that the problems of the nation may be discussed, considered and resolved in a constructive spirit.
To abolish or ignore the party system would be to permit a chorus of discordant notes to replace an organised discussion.
[792E] Sir Ivor Jennings 'Cabinet Government 2nd Edn.
p.16, referred to.
4.Our Constitution has dearly recognised the importance of the party system, which was further emphasized by the addition of the 10th Schedule to it The Election Symbols (Reservation and Allotment) Order is also a step in that very direction.
[792F] 5.That candidates set up by political parties constitute a class separate from other candidates has been recognised in numerous cases by this Court which has also emphasized the vital role of political parties in a parliamentary form of democracy and expressed anxiety about the growing number of independent candidates.
[792H, 793C] Dr. P.N. Thampy Terah vs Union of India ; and D.M.L. Agarwal vs Rajiv Gandhi, ; , referred to.
6.The Representation of the People (Amendment) Ordinance, 1992 and theRepresentation of the People (Second Amendment) Ordinance, 1992 are constitutionally valid.
[789C]


judgement:
eal No. 10 of 1950.
Appeal by special leave from a judgment of the High Court of Punjab (Falshaw and Soni JJ.) dated 30th December, 1949, upholding the conviction of the appellant under sections 302 and 307 read with section 34 of the Indian Penal Code and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore on the 20th July, 1949, in Criminal Appeal Case No. 325 of 1949.
Jai Gopal Sethi (R. L. Kohli, with him) for the appel lant.
B.K. Khanna, Advocate.
General of the Punjab, (section M. Sikri, with him) for the respondent.
October 17.
The judgment of the court was deliv ered by FAZL ALI J.
This is an appeal by special leave from the judgment of the High Court of Punjab upholding the convic tion of the appellant.
Mohinder Singh, under sections 302 and 307 read with section 34 of the Indian Penal Code, and confirming the sentence of death passed against him by the Sessions Judge of Ferozepore.
The case for the prosecution which has been substantial ly accepted by the trial Judge and the High Court is briefly as follows.
Sometime in January, 1949, one Bachittar Singh, brother of Dalip Singh who is said, to have been murdered, lodged a complaint before the NaibTehsildar at Zira to the effect that a tree belonging to him had been cut by 7 per sons including Mohinder Singh, the appellant.
On the 28th February, 1949, which was the date fixed for the hearing of the case before the Naib TehsiIdar, Jita Singh and Dalip Singh, the two brothers of Bachittar Singh, were attacked by the appellant and one Gurnam Singh, a lad of 17, near a Gurdwara at about mid day, when 823 they were returning from their field.
Jita Singh was then carrying a load of fodder on his head while Dalip Singh had sickles in his hand.
Jita Singh was the first to be at tacked near a tailor 's shop by Mohinder Singh who fired at him from behind hitting him on the neck whereupon he fell down together with the bundle of fodder.
Dalip Singh, who was following Jita Singh, then ran backwards and he was chased by Gurnam Singh round the outer boundary of a tank which was close by.
Mohinder Singh ran on the other side of the tank in the opposite direction and confronted him and shot him with a gun on the chest whereupon he fell down.
Meanwhile, Gurnam Singh had also reached the spot and he fired with his rifle from a distance of about 4 or 5 feet near about Dalip Singh 's ear while he was lying sideways.
The injuries proved fatal and Dalip Singh died on the spot.
The same day at 3 p.m., Jita Singh went to the police station at Dharamkot, which is at a distance of 3 miles from village Augar, where the occurrence had taken place, and lodged a first information report, charging Mohinder Singh, with having caused injury to him, and Mohinder Singh and Gurnam Singh with the murder of Dalip Singh; and the police after investigating the case sent up a charge sheet against the two accused persons.
Thereafter they were tried by the Sessions Judge of Ferozepore under sections 302 and 307 read with section 34 of the Indian Penal Code.
The appellant was sentenced to death under section 302 and Gurnam Singh was sentenced to transportation for life under that section in view of his youth.
They were also sentenced to 3 years ' rigorous imprisonment each under section 307 read with section 34 of the Indian Penal Code.
It appears that Dalip Singh had 6 injuries altogether which are described by the doctor who performed the post mortem on his body in these words: " 1.
An irregularly round gun shot wound on the left temporal region, 1" diameter.
The wound is 22" behind outer canthus of left eye, its upper portion is at a level with the top of the pinna of the left ear, 824 behind it commences at the cartilages of the ear which are broken.
Brain is visible in the gap of the wound.
An area 4 " x 4 " is blackened, the wound being situated in the middle of this area.
A gun shot wound 3/4" X 1/2" on the back of right mastoid region, upper end of the wound is 1" behind the root of the right ear.
Direction is vertically oblique.
On dissection the left temporal bone under injury No. 1 is, hole and its petrous portion shattered.
A linear fracture extends upwards and backwards, from the hole into the left parietal and occipital bones.
After piercing through the left temporal lobe of the brain the projectile has pierced through the brainstem, and emerged out as injury No. 2, holding the mastoid region of the skull on the right side.
A gun shot wound 3/4" X 5/8" on the left side of chest 21/2" above and behind the left nipple and 1/2" behind the anterior axillary fold as area 1" below the wound is bruised.
A gun shot wound 1/2"X 3/4" on the right side of chest in the mid axillary line.
The top of the wound being 1 3/4" from the apex of right axilla and 4 3/4" above and behind the right nipple.
A gun shot wound 1/2"x 1/4" on the inner aspect of the right arm, upper end of the wound is 11/4" from the top of the anterior axillary fold.
A gun shot wound 3/4"X 1/2" on the front of the right arm.
Its upper end being 21/2" from the top of the anterior axillary fold.
Its distance from injury No. 5 being 1" and it is inter connected with injury No. 5 under the skin.
" The doctor has stated in his evidence that in all two projectiles appeared to have hit Dalip Singh, and injuries Nos. 1 and 2 were caused by one of them, injury No. 1 being the wound of entrance and injury No. 2 being the wound of exit, With regard to the other 4 injuries, his evidence is as follows : "Injury No. 3 is the wound of entrance of another projectile and No. 4 is the wound of its exit.
Wound 825 No. 5 is the wound of its re entrance and wound No. 6 the wound of its final exit from the body." Jita Singh had 4 slight injuries on the back of the neck which are said to have been caused by pellets and two abra sions below the right elbow and right knee said to have been caused by blunt weapons.
It may be stated here that when the investigating police officer arrived at the scene of occurrence, he found an empty cartridge case at the place where Jita Singh is said to have been fired at, and 2 empty cartridge cases and a blood stained cap of a cartridge case near the place where the dead body of Dalip Singh was lying.
Later, when Mohinder Singh appeared before the police, he was asked whether he possessed a gun and he produced a 12 bore gun (exhibit P 16) for which he held a licence.
The gun and the empty cartridges were thereupon sent to Dr. Goyle, Director of the C.I.D. Laboratory, Phillaur, and the opinion that he submitted may be summed up as follows : The gun had signs of having been fired but he could not say when it was fired last.
The cartridge cases P 10 and P 15 could have been fired through the gun P 16, but he could not say wheth er they were actually fired from that particular gun or a similar gun or guns.
He did not make any experiment by firing any cartridge from the gun P 16, nor did he compare the markings on the empty cartridges P 10 and P 15.
A notable feature of the case is that the occurrence is said to have taken place in the vicinity of a Gurdwara and some houses, but in spite of this fact, not a single person of the locality has been cited or examined as a witness by the prosecution.
The whole case rests on the evidence of 3 witnesses, viz., Jita Singh, Harnam Singh and Buta Singh.
Jita Singh, who had been shot at from behind, claims to have seen the two accused firing at his brother.
Harnam Singh admittedly lives at a considerable distance from the place of occurrence but has stated that he was coming from another village where he had gone to fetch some medicine for his maternal cousin, when he 826 saw the occurrence.
Buta Singh, who is a tonga driver, belongs to a distant village and is somewhat remotely related to Harnam Singh, and accounts for his presence near the scene of occurrence by saying that he had come to see Harnarn Singh the evening before.
Harnam Singh admitted in his evidence that there was a dispute between him and Mohinder Singh nearly a month before the occurrence about a wall, but he also says that the dispute ' had been amicably settled by the panchayat".
There is nothing before us to show what the award of the panchayat was and whether or not it left any ill feeling behind.
But, on the argu ments of the counsel and the apparently trivial motive for which Dalip Singh is said to have been murdered, it would appear that among the class of persons with which we are concerned petty quarrels give rise to enmity which does not die soon or easily.
After the close of prosecution evidence in the Ses sions Court, the appellant was examined under section 342 of the Criminal Procedure Code, and he denied that he had fired at Jita Singh and Dalip Singh with the gun P 16 and that Gurnam Singh had fired at Dalip Singh with a rifle.
He added that he was not present in village Augur at the time of the alleged occurrence but had gone to Zira to attend the Naib Tehsildar 's court.
To establish his plea of alibi, he examined 3 witnesses in the court of the Sessions Judge.
The first witness was the Naib Tehsildar before whom Bachittar Singh had lodged the complaint, and he stated that when the case was called on the 28th February, 1949, 6 or 7 persons appeared in court.
He also proved an application for a taccavi loan which purports to have been filed by the appel lant on the 28th February, 1949, and bears his thumb impres sion.
He further stated in his evidence that he had passed orders on that application on the 28th February but he did not know Mohinder Singh and therefore could not say who had produced that application before him on that date.
The second witness for the appellant was his brother in law, Jogindar Singh, who had written the application.
exhibit D C.
He has stated that 827 Mohinder Singh himself was present in the court of the Naib Tehsildar on the 28th February, 1949, that he had signed the application (exhibit D C) and that he was also one of the persons who had appeared before the Tehsildar when Bachittar Singh 's case was called out.
The third defence witness is a hand writing and fingerprint expert.
He has proved that the application (exhibit D C) alleged to have been presented to the Naib Tehsildar on the 28th February bore the thumb impression of the appellant, and he has also given evidence to show that certain handwritings which he was asked to compare did not tally.
The evidence given by him with regard to these handwritings has a bearing on the assertion made by the appellant in a petition filed before the committing Magistrate to the effect that the original service report of the process peon showing that the appellant also was one of the persons served for appearance before the Naib Tehsildar on the 28th February, 1949, had been suppressed and another report with forged handwriting had been substituted in its place.
Both the courts below have held that the alibi has not been proved by satisfactory evidence and that the charges against the appellant have been made 'out.
It seems that the learned Judges of the High Court were not at all impressed by the evidence of Dr. Goyle which they characterized as unsatisfactory and they were not also confident that the gun, exhibit P 16, had been used in causing the injuries to Dalip Singh.
This appears from the folio.wing observations made by them in their judgment: "The gun P 16 was identified by Jita Singh as the gun with which Mohinder Singh fired at him and Dalip Singh but he identified the gun because of a brass plate at its butt end.
We have seen the gun.
Its brass plate could be of no use for the identification of the gun.
" Again, commenting on the nature of the injuries, the learned Judges observed as follows : 828 "Another difficulty which is created in this case is the nature of injuries found on the body of Dalip Singh .
What kind of bullet it was which, though it had blackened the area where it entered the brain showing that it had been fired from not far away, did not shatter the brain we do not know.
What kind of projectile it was which entered the body (which if the evidence as to be believed was fired at from a few feet at Dalip Singh) and passed through the body without shattering the inside of the chest or causing extensive damage therein is also not known.
Mr. Sethi (counsel for the accused) quoted Taylor 's book on medical jurisprudence and Hateher 's book on ballistics and argued that the firing must have been from a place between 600 and 1,200 yards away in order that the projectile may pass through and through the body and not shatter it.
That of course pre supposes that the barrel of the gun, using the word 'gun ' m ' a generic sense, is grooved which causes a projectile to go forward with a rotatory motion of something under a quarter of a million revolutions a minute and travelling at the rate of about 2,000 miles an hour when it leaves the gun . .
We do not know whether the barrel of this gun (exhibit P 16) is grooved or not.
is a single bar relled gun and is country made.
The likelihood is that the barrel is not grooved.
" On a careful reading of the judgment under appeal, it appears that the learned Judges of the High Court strongly felt that they had no adequate explanation in the oral evidence before them for certain puzzling features of the injuries on Dalip Singh.
This is exactly what we also feel in this case, and it seems to us that the evidence which has been adduced falls short of proof in regard to a very mate rial part of the prosecution case.
in a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which and in the manner in which they are al leged to have been caused.
It is 829 elementary that where the prosecution has a definite or positive case, it must prove the whole of that case.
In the present case, it is doubtful whether the injuries which are attributed to the appellant were caused by a gun or by a rifle.
Indeed, it seems more likely that they were caused by a rifle than by a gun, and yet the case for the prosecu tion is that the appellant was armed with a gun and, in his examination, it was definitely put to him that he was armed with the gun P 16.
It is only by the evidence of a duly qualified expert that it could have been ascertained whether the injuries attributed to the appellant were caused by a gun or by a rifle and such evidence alone could settle the controversy as to whether they could possibly have been caused by a fire arm being used at such a close range as is suggested in the evidence.
It is clear, and it is also the prosecution case, that only 2 shots were fired at Dalip Singh and one of the crucial points which the prosecution had to prove was that these shots were fired by two persons and not by one man, and both the shots were fired in such manner and from such distance as is alleged by the eye witnesses.
There is, in our opinion, a gap in the prosecu tion evidence on a most fundamental point and the error which has been committed by the courts below is to ignore the gap and decide the case merely upon the oral evidence of 3 witnesses, two of whom are mere chance witnesses and not altogether independent persons, and the evidence of the third witness is open to criticism on the ground of his partisanship as well as the improbability of his having been able to see the firing at his brother after he had himself been shot at the back of the neck.
The learned Judges of the High Court, after commenting upon the entire evidence, say in their judgment: " We are thus left with the evidence of the three wit nesses of the prosecution together with the state of wounds as shown by the medical evidence and an unsatisfactory statement of Dr. Goyle.
" 106 830 They reject the evidence of Dr. Goyle and they consider the nature of the wounds to have created a serious dificulty in the case.
Having arrived at these conclusions, it was a serious thing to rest the appellant 's conviction wholly upon the oral testimony in the case which has remained unchecked and unconfirmed by expert evidence.
The real position ap pears to be that the prosecution case cannot be said to be wholly proved but only partly proved if it is permissible to use such an expression.
This Court, as was pointed out in Pritam Singh vs The State (1), will not entertain a criminal appeal except in special and exceptional cases where it is manifest that by a disregard of the forms of legal process or by a violation of the principles of natural justice or otherwise substantial and grave injustice has been done.
It seems to us that the present case comes within the rule laid down, because the appellant has been convicted notwithstand ing the fact that the evidence is wanting on a most.material part of the prosecution case.
This is enough to dispose of this appeal, but we are constrained to say that we are not altogether happy about the manner in which the plea of alibi put forward by the appellant has been disposed of by the courts below.
Ordi narily tiffs court will not look beyond the findings of fact arrived at by the courts below, but we find that in the present case the decision on the plea of alibi has been arrived at in disregard of the principle that the standard of proof which is required in regard to that plea must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable stand ard.
It is common ground in this appeal that the appellant was summoned to appear before the Naib Tehsildar on the 28th February, 1949, which was the date fixed for dealing with Bachittar Singh 's complaint.
Ordinarily and without looking at anything else, there should have been nothing improbable about his appearance before the Naib Tehsildar on that date, but in the present case there is positive (1) 831 evidence that an application for a taccavi loan bearing that date and also bearing the thumb impression the appellant was put up before the Naib Tehsildar and that was dealt with by him on that very day.
There is also affirmative evidence of a witness to prove that the appellant was present in the Naib Tehsildar 's court.
This witness is undoubtedly closely related to the appellant but his evidence is supported by probability and a written document.
One of the points raised by the prosecution was that the summons for appear ance on the 28th February was not served upon Mohinder Singh, but such evidence as there is on the record bearing on this point has certain peculiar features.
The prosecu tion having cited the Naib Tehsildar and the Ahlmad (Bench Clerk) as witnesses in the case gave them up and stated that the former had been won over by the appellant.
This allega tion could have been substantiated in the cross examina tion of the Naib Tehsildar who was examined as a defence witness, but nothing was elicited from him to support such a charge.
From the evidence of the Naib Tehsildar, it appears that on the 5th July, 1949, the Public Prosecutor showed him exhibit P.S. (which is an order directing the appearance of the seven persons including the appellant mentioned by Bachittar Singh in his complaint, before the Naib Tehsildar on the 28th February, 1949).
and that he told the Public Prosecutor that 6 or 7 persons appeared in his court.
on that date.
After this incident, on the 6th July, 1949, the Public Prosecutor informed the Court that he would "give up the Naib Tehsildar as he has been won over ".
The evidence of the process peon is of a somewhat suspicious character, because he has conveniently forgotten every material detail.
The appellant asserted at the trial that the original report of the process peon had been suppressed and another report had been fabricated and substituted in its place.
An application to this effect was made by him before the committing Magistrate, and he also examined a handwriting expert to prove some of his allegations.
Neither of the courts below has dealt with the evidence 832 of this expert.
The evidence of the Investigating Officer as recorded by the Sessions Judge is to the following effect : "P.B. and P.C. were obtained by me from the headquar ters.
Along with P.B. and P.C. the Parvana P.S. was also received by me.
After going through the zimnis, the witness states that the aforesaid documents P.B., P.C. and P.S. were summoned by the committing Magistrate and were not sent for by the witness.
On 16th March, 1949, a Foot Constable was certainly sent to Zira to bring the said file.
But since the file had been sent to the headquarters, therefore, the said constable returned quite blank.
I never inspected this file at the headquarters.
" The most material document with which we are concerned is P.S. which should have contained an endorsement of serv ice of summons on the persons against whom Bachittar Singh had complained.
It is clear from the first part of the evidence of the Investigating Officer that he had received the report of the process peon which was endorsed on the back of P.S., from the headquarters, but he says later that the papers were sent for but they did not arrive.
It is surprising that when a document was the subject of so much controversy he should have said by mistake that he had received it.
One of the comments made by the learned Ses sions Judge in dealing with the application alleged to have been made by the appellant on the 28th February, 1949, for a taccavi loan is that after producing the application before the Naib Tehsildar on that date, Mohinder Singh could have reached his village by noon time, but on this point the learned Sessions Judge seems to have wholly ignored the evidence of the Naib Tehsildar that he usually dealt with such applications between 12 and 4 P.M. on working days, and also the affirmative evidence of Joginder Singh.
In our opinion, there has been in substance no fair and proper trial in this case, and we are constrained to allow this appeal, set aside the conviction of the appellant under sections 302 and 307 read with section S4 833 of the Indian Penal Code, and direct that he be set at liberty forthwith.
In ordinary circumstances, we might have remanded the case for a flesh trial, but we consider that such a course would, in the present case, be unfair and contrary to settled practice, seeing that the appellant has been in a state of suspense over his sentence of death for more than a year.
Appeal allowed.

summary/full:
In a case where death is due to injuries or wounds caused by a lethal weapon, it has always been considered to be the duty of the prosecution to prove by expert evidence that it was likely or at least possible for the injuries to have been caused with the weapon with which, and in the manner in which, they are have been caused.
Where in a case of murder, the prosecution case was that the accused shot the deceased with a gun, but it appeared likely that the injuries on the deceased were inflicted by a rifle and there was no evidence of a duly qualified expert to prove that the injuries were caused by a gun, and the nature of the inajuries was also such that the shots must have been fired by more than one person and not by one person only, and the prosection had no evidence to show that another person also shot, and the High Court, though realis ing that there was thus a gap in the prosecution evidence, convicted the accused placing reliance on the oral evidence of 3 witnesses which was not, disinterested: Held, that, the present case fell within the rule laid down in Pritam Singh vs The State ([1959] S C R. 453) inas much as the appellant had been convicted notwithstanding the fact that evidence was wanting on a most material part of the prosecution case, and the conviction could not therefore be upheld, 822 Held also, that the standard of proof which is required in regard to the plea of alibi must be the same as the standard which is applied to the prosecution evidence and in both cases it should be a reasonable standard.