judgement:
Civil Appeal No. 504 Of 1985 From the Judgment and Order of the High Court of Bombay, Panaji Bench (Goa) dated the 26th June, 1984, in writ Petition No, 8 of 1984.
B. Zaiwala, Anil B. Divan, Usgaonkar, Ravinder Narain, and Aditia Narayan, for the Appellant.
S.C. Desai, M.M Abdul Khader, Naunit Lal, Kailash Vasdev, Mrs. Vinod Arya, and Miss A Subhashini for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
Special leave granted.
This appeal filed by M/s Fomento Resorts and Hotels Limited raises the short question as to whether compliance with rule 4 of the Land Acquisition (Companies) Rules, 1963 (hereinafter called the Rules) is necessary before issuing notifications under section 4 of the Land Acquisition Act, 1894 (hereinafter referred to as the Act).
It appears that the land in question was purchased by Gustavo Ranato da Cruz Pinto hereinafter referred to as the land owner and the original respondent No. 1 on 10th of March, 1978.
The original respondent No. 2 and the appellant herein on the 15th November, 1978 made an application under Chapter 7 of the Act for the acquisition of the said properties.
The government issued on the 29th October, 1980 notification in respect of the land in question under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980.
The land owner being respondent No. 1 to this appeal objected to the said notification under section 4.
Subsequently government held enquiry under section 5A of the Act and the Deputy Collector submitted the report to the Government in March, 1981.
On or about 10th April, 1981 the Deputy Collector issued notice to respondent No. 1 that enquiry under rule 4 of the Rules would be held on 15th April, 1981.
The respondent No. I filed his objections on merit by the letter dated 4th May, 1981.
On 26th October, 1983, agreement was executed between the government and the acquiring company that the land in question was needed for the purpose of development of tourism.
the government issued notification under section 6 of the Act which was published in the government Gazette dated 27th October, 1983.
941 The petition under Article 226 out of which this appeal arises was filed in the Bombay High Court by respondent No. I challenging the said notifications under sections a and 6 of the Act.
The High Court of Bombay (Goa Bench) quashed the said notification under sections 4 and 6 of the Act only on the ground that enquiry under rule 4 of the Rules was not held prior to the notification under section 4 of the Act.
The propriety 1 and validity of the said decision of the High Court are under challenge in this appeal.
The High Court, however, noted that the impugned notification had been challenged on several other grounds but in the view it had taken on the first ground namely that the notifications under sections 4 and 6 of the Act being bad for prior non compliance with rule 4 of the Rules, the High Court felt that it was not necessary to deal with other grounds.
The petition succeeded before the High Court and the notifications under sections 4 and 6 of the Act were quashed.
This appeal is filed against the judgment of the High Court.
Under the scheme of the Act, it is necessary for the purpose of acquisition of land first to issue a notification under section 4 of the Act, whenever it appears to the appropriate government that land in any locality is needed or likely to be needed for any public purpose.
The purpose and object of the notification under section 4 of the Act have been explained by this Court in the case of Babu Barkya Thakur vs State of ,Bombay (now Maharastra) and others thus: "The purpose of the notification under section 4 is to carry on a preliminary investigation with a view to finding out after necessary survey and taking of levels, and, if necessary, digging or boring into the sub soil whether the land was adapted for the purpose for which it was sought to be acquired.
It is only under section 6 that a firm declaration has to be made by Government that land with proper description and area so as to be identifiable is needed for a public purpose or for a Company.
What was a mere proposal under section 4 becomes the subject matter of a definite proceedings for acquisition under the Act.
Hence, it is not correct to say that any defect in the notification under section 4 (1) ; at 1208.
942 is fatal to the validity of the proceedings, particularly when the acquisition is for a Company and the purpose has to be investigated under section 5A or section 40 necessarily after the notification under S.4 of the Act." This Court emphasised that when the acquisition is for a Company the purpose has to be investigated under section .
A or section 40 necessarily after the notification under section 4 of the Act.
The land acquisition proceedings begin with the publication of the preliminary notification.
Section 5A enjoins hearing of the objections and disposal of objections.
Sections 6 of the Act provides that if the government is satisfied after considering the report, if any, made under section 5A, that any particular land was needed for public purpose, or for a Company, a declaration shall be made to that effect subject to certain conditions mentioned in the various sub sections of section 6 of the Act.
After declaration under section 6, section 7 enjoins the Collector to take order for acquisition of land.
Various steps for the actual acquisition are enumerated in subsequent section of the Act which need not be set out in detail.
Section 16 empowers taking of the possession after an award is made under section 11 and thereafter the land shall vest in the government free from all encumbrances.
It is important to note that section 23 of the Act deals with the matters to be considered in determining compensation for acquisition of land and ht enjoins that the market value should be determined as on the date of the publication of the notification under section 4.
In other words section 23 pegs the market value of the land as on the date of the notification under section 4 as one of the factors to be taken into consideration in determining the compensation to be paid.
Part VII of the Act deals with acquisition of land for companies.
Section 41 of the Act provides that if the appropriate government is satisfied after considering the report, if any, of the Collector under section 5A, or on the report of the officer making an enquiry under section 40 of certain matters, the details of which are not necessary for the purpose of appeal to be set out, it shall require the Company to enter into an agreement with the appropriate government providing for the satisfaction of the appropriate government for certain matters enumerated in different sub sections of section 40 The said provisions need not be set out in detail.
Essentially the satisfaction and agreement with the company arc to ensure that the 943 land in question will be put to such use which will be useful to the A public.
Rule 3 of the Rules provides for the constitution of the Land Acquisition Committee.
Rule 4 is headed "Appropriate Government to be satisfied with regard to certain matters before initiating proceedings" and sub rule (l) of rule 4 lays down certain matters about which the appropriate government has to be satisfied when the acquisition is for the Company.
Sub rule (4) of rule 4 of the Rules provides that no declaration shall be made by the appropriate government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report, if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company.
Rule S of Rules deals with the matters which are to be provided for in the agreement under section 41 of the Act.
Rule 6 similarly deals with the additional matters which might be provided in the agreement under section 41 of the Act.
Rule 7 provides for submission of periodical reports.
Rule 8 of the Rules deals with the conditions under which sanction is to be given for transfer of land.
Rule g deals with special provisions in relation to certain Companies.
It is not necessary to discuss these rules in detail for the present purpose.
A conspectus of the provisions of the Act as well as the Rules indicate that there are two purposes of acquisition of land one being for the public purpose and the other for the purpose of a Company.
In case of acquisition for Company, the appropriate government has to satisfy itself that such acquisition is needed and would be useful also for public need.
Rule 4 of the Rules provides for satisfaction of the appropriate government with regard to various matters before acquisition.
The learned judges of the Bombay High Court were of the view that the enquiry under rule 4 was necessary for the initiation of the acquisition proceedings to be satisfied that acquisition was necessary for the Company.
We are unable to accept this conclusion for the following reasons: (i) To complete the acquisition proceedings, notification under 944 section 6 of the Act is required.
Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a Company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken the land vests under section 16 in the government free from encumbrances.
Section 4 does not require as such this satisfaction of the government.
The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a Company.
That might appear to the government by enquiry aliunde or on a petition or application made by any Company.
Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act.
An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules.
The scheme and the language of the Act and the Rules do not indicate that.
As noted before, section 4 does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a Company.
It may so appear to the government either by independent enquiry or from reports and information received by the government or even from an application by the company concerned.
Section 6 undoubtedly requires satisfaction of the government and enquiry contemplated under rule 4 must precede publication of the notification under section 6 of the Act.
So also there must be before section 6 notification an enquiry under section 5A.
The p significant pointer to the scheme is provided in sub rule (4) 'of rule 4, the material portion of which reads as follows: "(4) No declaration shall be made by the appropriate Government under section 6 of the Act unless (i) the appropriate Government has consulted the Committee and has considered the report submitted under this rule and the report, if any, submitted under section 5A of the Act; and (ii) the agreement under section 41 of the Act has been executed by the Company.
" 945 The said sub rule significantly does not prohibit or forbid A issuance of notification under section 4 of the Act unless rule 4 (l) has been complied with.
If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of lure 4 have been complied with.
We find no warrant to do that.
On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as on the date of the issuance of the notification under section 4 in view.
If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notifications under sections 4 and 6 would make acquisition difficult.
An argument was sought to be built on the basis of the heading of rule 4 which stipulates that "Appropriate Government to be satisfied with regard to certain matters before initiating acquisition proceedings".
It is true that before the initiation of the acquisition proceedings, government had to be satisfied of certain matters mentioned in the various sub rules of rule 4 as well as various provisions of the Act.
Though preliminary steps for initiation of acquisition proceedings are necessary and those can only be taken by the authority of the notification under section 4 as mentioned in the decision of Babu Barkya Thakur vs State of Bombay (now Maharashtra) and Others, (supra) the initiation of the acquisition proceedings for all practical purposes begins after section 6 notification Satisfaction is necessary for proceeding for acquisition under section 6 of the Act but section 4 unlike section 6 does not require for the issuance of the notice to be satisfied but it might act only "when it appears" to it that the land is needed or is likely to be needed for any public purpose.
Reading the Act and the Rules and keeping in view the scheme of the Act, it is apparent, in our opinion, that before the issuance of section 4 notification, there is no requirement as such of compliance with the procedure contemplated by rule 4 of the Rules.
We are therefore unable to subscribe to the view that 946 enquiry by rule 4 must precede the issuance of notification under section 4 (1) of the Act.
Furthermore as indicated before certain matters which are required to be done under rule 4 can not be done because the officer or the person authorised by him would have no authority unless notification under section 4 is issued.
Reliance was placed before the Bombay High Court and before us in support of the judgment of the High Court on a decision of this Court in the case of Abdul Husein Tayabali and Ors.
vs State of Gujarat and Ors.
There the contention before the Court was that Master was only a Special Land Acquisition Officer and not the Collector within the meaning of rule 4.
Furthermore, it was urged, in any event, the notification in question did not 'specially ' appoint him but was a general notification authorising all the Special Land Acquisition Officers in the State appointed not only before the date of section 4 notification but also those who would be appointed in future It was further contended that notification did not "appoint" but simply authorised him to perform the functions of the Collector, the State Government had not given any directions to him to make a report as required by rule 4; therefore the enquiry held by him under that rule and the report made by him was invalid and consequently no notification either under section 4 or section 6 could be validly issued.
It was urged, therefore, the section 6 notification was issued without complying with Part VII of the Act and without the valid consent of the State Government as required under section 39(iii), that the acquisition was made malafide and without application of mind to the relevant facts and the acquisition did not involve any public purpose and the State government was bound to give an opportunity Of being heard to the appellants before taking a decision under section 5A particularly when the report made by Master was against the acquisition.
In this connection our attention was drawn to section 39 of the Act which provides that provisions of sections 6 to 37 (both inclusive) shall not be put into force in order to acquire land for any Company unless with the previous consent of the appropriate Government nor unless the Company shall have executed the agreement therein after mentioned.
This section, in our opinion, has no relevance for determining whether to be a proper acquisition, enquiry contemplat (1) ; 947 ed under rule 4 must precede issuance of the notification under section 4 of the Act.
In the decision of this Court referred to hereinbefore, this question did not really fall for consideration because there was compliance with rule 4 before issuance of the notification and the infirmities of the enquiry under rule 4 urged on behalf of the appellants were not established.
It was urged before this Court that the enquiry under rule 4 was a quasi judicial enquiry and therefore it was incumbent on Master to give an opportunity to the appellants to be heard.
This Court was of the view that the rule provide that an officer conducting the enquiry has to hear the Company before making his report.
Whether he was also to hear the owners of the land or not did not fall for decision in those appeals as the officer had in fact given such an Opportunity to the appellants by serving them with notices and recorded the statement of such of them who cared to appear before him.
It was then contended that the enquiry under rule 4 had to beheld after the notification under section 4 was issued and not before and therefore the enquiry held by Master was not valid.
This Court observed at page 604 of the report "We do not find anything in rule or in any other rule to warrant such a proposition.
The enquiry, the report to be made consequent upon such enquiry, obtaining the opinion of the Land Acquisition Committee, all these intended to enable the Government to come to a tentative conclusion that the lands in question were or were likely to be needed for a public purpose and to issue thereafter section 4 notification In our opinion no objection to the appointment of Master to perform the functions of the Collector under section 3(c) or to his competence to make the enquiry and the report under rule 4 or their legality can be validly made.
" In our opinion when this Court observed that the report of the enquiry under rule 4 was a factor to be taken into consideration and "to issue thereafter section 4 notification" was by general observation.
It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4.
But under the scheme of the Act, the converse is not correct i.e. the enquiry under rule 4 must always precede notification under section 4 of the Act.
In that decision this Court analysed the importance of section SA and it is after considering the report under rule 4 and report under section SA that notification under section 6 will be issued.
It is undoubtedly true that 948 enquiry under rule 4(1) must precede action under section but we do not find reading the said decision of this Court in the context of the facts and circumstances and the contentions urged in that case that this Court laid down any proposition that enquiry under rule 4(1) must precede issuance of notification under section 4.
Indeed as we have mentioned before, notification under section 4 would facilitate the matters to be inquired under rule 4(1).
Reliance was also placed on certain observations in the case of General Govt.
Servants Co operative Housing Society Ltd" Agra vs Wahab Uddin & Ors.
Etc. 1 There the scheme of the Act was analysed and what were matters to be required under rule 4 of the Rules were mentioned.
This Court observed at pages 53 54 of the report as follows: "No declaration shall be made by the appropriate Government under section 6 of the Act unless the Committee has been consulted by the Government and has considered the report submitted by the Collector under section SA of the Act.
In addition, under clause (ii) of sub rule (4) of rule , the Company has to execute an agreement under section 41 of the Act.
The above consideration shows that rule 4 is mandatory; its compliance is no idle formality, unless the directions enjoined by rule 4 are complied with the notifications under section 6 will be invalid.
A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
" It may be borne in mind in that decision the notification under section 6 was quashed but notification under Section 4 was not quashed though observations were made about the purpose and the role of compliance with rule 4.
Reliance was placed on the following observations at page 54 of the report: "A consideration of rule 4 also shows that its compliance precedes the notification under section 4 as well as compliance of section 6 of the Act.
" It appears to us that the reference to rule 4 in the context in which it was made was inadvertent.
What perhaps the Court want (1) ; 949 ed to convey was the need of compliance of entering into agreement A under section 41 before the issuance of notification under section 6 of the Act.
Otherwise it appears that there was no enquiry under rule 4 of the Rules before issuance of the notification under section 4 yet the notification under section 4 was not quashed.
The observation then in any event is obiter.
On the scheme of the Act, we are of the opinion that on a correct interpretation, it is not necessary that enquiry under rule 4 must in all cases precede issuance of the notification under section 4 of the Act.
In an appropriate case if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4.
But it is not a mandatory requirement that it must precede before the issuance of the notification under section 4.
Our attention was drawn to a Bench decision of the Allahabad High Court in the case of Raja Ram Jaiswal vs Collector, Allahabad & Another (1), where it was held that it would not be right to say that a case where a company makes an application for acquisition of land to the Collector it was obligatory that the provisions of rule 4(1) must be complied with before the Collector could issue a notification under section x(1) of the Act.
With this conclusion we are in agreement, though factually the case was slightly different in the sense that there the Collector was authorised to make a notification under section 4(1) of the Act and not the State Government as in this case.
Therefore, though there may be in certain cases compliance with rule 4(1) of the Rules it was not mandatory that before issuance of notification under section 4(1) of the Act there should be an enquiry in compliance with rule 4(1).
In the premises in so far as the Bombay High Court held that non compliance with rule 4 before the issuance of notification under section 4(1) of the Act is bad is set aside.
As mentioned hereinbefore, since the issuance of the notifications was challenged on several other grounds and the High Court had not decided those grounds, we remit the matter back to the High Court to decide those grounds We request the High Court to dispose of those grounds as early as possible.
(1) [1980] 2 ILR Allahabad 269.
950 In a matter of this nature there several contentions factual and legal are urged and when there is scope of an appeal from the decision of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point.
In the facts and circumstances of the case, as the matter is being remitted back to the High Court, costs of this appeal will abide by the result of the High Court decision.

summary/full:
The appellant made an application on the 15th November, 1978 under chapter VII of the Land Acquisition Act, 1894 for the acquisition of the lands earlier purchased by Respondent No. 1 herein.
The Government issued on the 29th October, 1980 a notification for acquisition of the said land under section 4 of the Act which was published in the Government Gazette dated 30th October, 1980.
Respondent No. 1 objected to the said notification.
Subsequently the Government bled an enquiry under section SA of the Act and, after submitting a report in March 1981, on or about 10th April 1981, the Deputy Collector issued notice to Respondent No. I that enquiry under rule 4 of the Land Acquisition (Companies) Rules 1963 would be held on the 15th April, 1981 to which the latter filed his objections on merit by his letter dated 4th May, 1981.
On 26th October, 1983, agreement was executed between the government and the acquiring company.
A notification under section 6 that the land in question was needed for the purpose of development of tourism, was published in the Government Gazette dated 27th October 1983.
Respondent No. 1, thereupon, filed a petition under Article 226 of the Constitution challenging the said notifications under sections 4 and 6 of the Land Acquisition Act.
The High Court of Bombay (Goa Bench) quashed the said notifications on the first ground alone namely, the notifications were bad for prior non compliance with Rule 4 of the Land Acquisition (Companies) Rules 1963, and noted that it was not necessary to deal with other grounds of challenge.
Hence the appeal by special leave 938 Allowing the appeal and remitting the case back, the Court ^ HELD: 1.
ON a correct interpretation of the scheme of the Land Acquisition Act, it is not necessary that enquiry under rule 4 of the Land Acquisition (Companies) Rules, 1963 must in all cases precede issuance of the notification under section 4 of the Act.
In an appropriate cash if it is possible, enquiry under rule 4(1) may be held before the issuance of the notification under section 4.
But it is not a mandatory requirement that it must precede the issuance of the notification under the Act.
[949B C] RAJA Ram Jaiswal vs Collector, Allahabad & Another, (1980) 2 ILR Allahabad 269; conclusion approved.
Babu Barkya Thakur vs State of Bombay (now Maharashtra), ; at 1206, followed.
Abdul Husein Tayabali & Ors.
vs State of Gujrat l Ors.
, [1968] I SCR 597.
explained and distinguished.
A consepectus of the provisions of the Land Acquisition Act as well as Land Acquisition (Companies) Rules 1963 indicate that there are two purposes of acquisition of land one being for the public purpose and other for the purpose of a company, In case of acquisition for company, the appropriate Government has to satisfy itself that such acquisition is needed and would be useful also for public need.
[943E F] 2.2 Land Acquisition proceedings begin with the publication of the preliminary notification under section 4 of the Land Acquisition Act, 1894.
When the acquisition is for a company the Purpose has to be investigated under section SA (by hearing objections and disposing them) or under section 40 necessarily after the notification under section 4 of the Act.
Under section 6 if the Government is satisfied after considering the report, if any, made under section 5A that any particular land was needed for public purposes or for a company a declaration shall be made to that effect subject to certain conditions stipulated therein.
Sub rule 4 of Rule 4 of the Land Acquisition (Companies) Rules 1963 provides that no declaration shall be made by the Appropriate Government under section 6 of the Act unless (i) the appropriate government had consulted the committee and had considered the report submitted under the said rule and the report if any, submitted under section SA of the Act and (ii) further any agreement under section 41 of the Act executed by the Company.
To complete the acquisition proceedings notification under section 6 of the Act is required.
Section 6 of the Act enjoins that the government has to be satisfied that the land is needed for public purpose or for a company and after declaration is made the acquisition is complete after the award is made and possession of the land is taken when the land vests under section 16 in the government free from encumbrances.
Section 4 939 does not require as such this satisfaction of the government.
The government might initiate acquisition proceedings "if it appears" to the government that land is needed either for public purpose or for a company.
That might appear to the government by enquiry aliunde or on a petition or application made by any company.
Whether the need is proper or genuine that can be found by the government subsequently after notice under section 4 of the Act.
An enquiry under rule 4 might be made before issuance of the notification under section 4 of the Act but it is not a sine qua non for the issuance of the notification under section 4 to have an enquiry under rule 4 of the Rules.
The scheme and the language of the Act and the Rules do not indicate that.
Therefore, section 4 as such does not require government to be satisfied, it is sufficient if it appears to the government that land is needed either for public purpose or for a complain.
It may so appear to the Government either by independent inquiry or from reports and information received by the government or even from an application by the company concerned.
[943H; 944A F] 2.3 It is undoubtedly true that a notification under section 4 can be issued after enquiry under rule 4.
But under the scheme of the Act, the converse is not correct, i.e., the enquiry under rule 4 must always precede notification under section 4 of the Act, though enquiry under rule 4(1) must precede action under section 6 of the Act.
Further certain matters which are required to be done under rule 4 cannot be done before because the officer or the person authorised by him would have no authority, unless notification under section 4 is issued.
[945G H; 946A] Rule 4(4) does not prohibit or forbid issuance of notification under section 4 of the Act unless rule 4(1) has been compiled with.
If it is now insisted that there should be no issuance of notification under section 4 of the Act before enquiry under rule 4 then this sub rule has to be re written by stating that no notification under section 4 and no declaration under section 6 issued or made as the case may be unless the requirements mentioned in clauses (i) and (ii) of sub rule (4) of rule 4 have been complied with.
On the contrary, it will be contrary to the scheme and purpose of the acquisition proceedings because the compensation for the acquisition has to be fixed under section 23 of the Act keeping the market rate as or the date of F the issuance of the notification under section 4 in view.
If it be that the enquiry as contemplated by rule 4 should also precede issuance of notice under section 4 of the Act then that may upset the fixation of the market value and escalation of price with the passage of time between publication of the notification under sections 4 and 6 would make acquisition difficult.
[945A.D] 3.
In a matter of this nature where several Contentions factual and legal are urged and when there is scope of an appeal from the decisions Of the Court, it is desirable as was observed by the Privy Council long time ago to avoid delay and protraction of litigation that the court should, when dealing with any matter dispose of all the points and not merely rest its decision on one single point.
[950A B] 940


judgement:
Civil Appeal No. 625 of 1972.
From the Judgment and Order dated 13.9.1971 of the Punjab & Haryana High Court in L.P.A. No. 254 of 1971.
S.K. Bagga, for the Appellants.
The Judgment of the Court was delivered by MISRA, J.
The present appeal by special leave is directed against the judgment of a Division Bench of the High Court of Punjab and Haryana dated 13th September, 1971 dismissing the letters patent appeal against the judgment of a learned Single Judge dated 17th March, 1971 allowing the writ petition filed by the respondents.
The short question that falls for consideration in the present appeal is whether the amount of loan in question can be 707 recovered as arrears of land revenue by arrest and detention in view of cl. 4 of the loan agreement.
Dera Baba Nanak Co operative House Building Society Ltd., respondent No. 2, was a registered society.
It had 32 members to start with.
The society entered into an agreement with the Government of Panjab whereunder the Government agreed to advance a loan of Rs. 1,02,000 to its members under the lower income group housing scheme for the purpose of constructing residential houses on the site measuring 35, 100 sq.ft.
in Dera Baba Nanak.
The agreement was evidenced by a written document.
Under the terms of the agreement the Govt.
was to advance the loan in three instalments the first instalment of Rs. 20,400 was to be paid by the government on the execution of the deed of agreement, the second instalment of Rs. 51,000 was to be paid on the completion of the house to the plinth level ant the last instalment of Rs. 30,600 on the completion of the house to the roof level.
The members of the society on the other hand had to repay the loan advanced with interest in thirty annual instalments, the first instalment was to become due twelve months after the date of sanctioning the first instalment of loan.
It was further stipulated that the society would mortgage the said sites together with houses erected or to be erected thereon thereafter to the government as security for the repayment of the said loan and interest.
The loan agreement further contemplated that the government would recover the amount of loan first from the property mortgaged and if there was a shortfall then the government shall be entitled to recover the same personally from the borrowers as well as from the movable or other immovable property belonging to the borrowers.
The society pursuant to the terms of the agreement executed the mortgage.
The government in their turn issued a cheque for Rs. 71,400 as payment towards the first two instalments on 24th of March, 1956.
The third ' instalment of Rs. 30,600 was, however, not paid by the government to the society on the ground that it had not furnished the required certificates that the houses had reached the roof level.
The members of the society also failed to repay the loan as stipulated.
In the situation a notice was issued by the Collector of the District to the members of the society to deposit the overdue instalments of loan and to appear before the Deputy Commissioner, Gurdaspur on August 24, 1964 to show cause why the entire amount should not be recovered from them by means of arrest and detention.
The society challenged the notice by filling a writ petition in the High Court.
Its stand was 708 that in the absence of any such stipulation in the loan agreement the amount could not be recovered by arrest of the members of the society in the first instance.
The writ petition remained pending for more than six years but no instalments had been paid by the members of the society to the government during that period.
The claim was resisted by the government.
In writ petition was, however, allowed by the learned Single Judge by his judgment dated 17th March, 1971 holding that the government must resort to the contractual remedy which it reserved to itself when entering into the loan agreement.
m e State preferred a letters patent appeal which was summarily dismissed.
The state has now approached this court by special leave.
The learned counsel appearing for the State relied upon cl.
(b) of 8. 67 of the Punjab Land Revenue Act.
This section provides the process for the recovery of arrears of land revenue and one of the modes prescribed by cl.
(b) of 8. 67 is by arrest sums detention of the borrower 's person.
Reliance was also placed on section 98 of the said Act which enumerates what sums are recoverable as arrears of land revenue and cl.
(dd) of section 98 includes a loan advanced by the State Government towards the cost of the house or site under the government sponsored housing scheme together with interest chargeable thereon and costs, if any in making or recovering the same as land revenue.
The counsel for the respondents on the other hand strenuously relies upon cl. 4 of the agreement of loan and contends that in view of the agreement between the parties the government has to proceed first against the property mortgaged and in case of a shortfall other methods could be resorted to.
It will be pertinent at this stage to refer to cl. 4 of the loan agreement which reads: "4.
For the consideration aforesaid and as security for the repayment to the Government of the said loan and interest, the borrower hereby transfers to the Government the said sites together with houses now erected or hereafter to be erected thereon, to the intent that the same shall remain and be charged by way of mortgage in the manner following, namely, that for the purpose of recovering the said loan and interest, and any other sum as may become due by the borrower to the Government by virtue of these presents, the Government may, at its option, either sell the said sites and the houses erected or hereafter to be erected thereon or any part thereof 709 without the intervention of any Court or enforce against the said property all or any of the remedies of simple mortgage and in case the realisation from the property mentioned above falls short of the amount due to the Government under these presents, the Government shall be entitled to recover the same personally from the borrower as well as from the movable or other immovable property belonging to the borrower.
A bare reading of c. 4 of the agreement makes it evidently clear that the Government has first to proceed against the property mortgaged and sell the property.
Only in case the entire amount could not be realised that the Government could proceed against the borrower personally.
The government is as much bound by the agreement as the borrower and, therefore, the government has first to proceed against the mortgaged property.
During the course of argument reliance was placed upon Ram Narayan Agarwal etc.
vs State of U.P. & ors.
In that case the petitioners had committed default in payment of the tax payable by them under the U.P. Sales Tax Act, 1948.
The amount due was sought to be recovered as arrears of land revenue.
The procedure for such a recovery was provided by sections 279 and 281 of the U.P. Zamindari Abolition and Land Reforms Act, 1950 read with rr.
246, 247A, 247B and 251 of the U.P.Z.A. and L.R. Rules, 1952.
Clause (b) of sub section (1) of section 279 of the U.P.Z.A. and L.R. Act contemlates of recovery, of the amount due by resort to arrest and detention of the person concerned.
The procedure contained in U.P.Z.A. and L.R. Act and the rules made thereunder was challenged on the ground that they are violative of Arts 14, 19(1) (g) and 21 of the Constitution but this contention was overruled and it was definitely held that the impugned procedure contained in the U.P.Z.A. and L.R. Act and the rules made thereunder were not violative of articles 14, 19 (1) (d) and 21 of the Constitution.
The writ petitions were, however, allowed in the case on the ground that there was non compliance with Rule 251 of the Rules which obligates an enquiry to be made by the officer who issued the warrant into the question whether the detention of the defaulter would compel him to pay the arrear or a substantial portion thereof and admittedly no such enquiry was held in any of those cases and in these circumstances it was held that the petitioners could not be detained pursuant to any warrants already issued.
Such is not the position in this case and, therefore.
that case is not of much assistance.
710 For the reasons given above we do not find any fault with the judgment of the learned Single Judge as confirmed by the High Court in letters patent appeal.
The appeal, is, therefore, dismissed.
There is, however, no order as to costs.
S.R. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
Respondent No.2 a registered House Building Society with 32 members entered into an agreement with the Government of Punjab where under the Government agreed to advance a loan of Rs. 1,02,000 to its members under the lower income group housing scheme for the purpose of constructing residential houses in Dera Baba Nanak.
As per the written agreement the loan advance was payable in three instalments.
The first instalment of Rs. 20400 was to be paid by the Govt.
On the execution of the deed of agreement, the second instalment of Rs. 51000 to be paid on the completion of the houses to the plinth level and the last instalment of Rs. 30,600 on the completion of the house to the roof level.
The society on the other hand had to mortgage the sites together with the houses erected or to be erected thereon to the govt.
as security for the repayment of loan and the amount of loan was to be paid back in several instalments.
Pursuant to the agreement the Government issued a cheque for Rs. 71,400 towards the first and SECOND instalments.
The third instalment was not paid for failure to furnish the required certificate that the houses had reached the roof level.
The members of the society also failed to repay the loan in the situation, a notice was issued by the Collector of the District to the members of the society to deposit the overdue instalments of loan and to appear before the Deputy commissioner, Gurdaspur on August 24, 1964 to show cause why the entire amount should not be recovered from them by means of arrest and DETENTION.
The society challenged the notice by filing a writ petition in the Court.
Its stand was that in the absence of any such stipulation in the loan agreement the amount could not be recovered by arrest of the members of the 706 society in the first instance.
The writ petition remained pending for more than six years but no instalments had been paid by the members of the society to the government during that period.
The Writ Petition was allowed by the learned Single Judge by his judgment dated 17th March, 1971 holding that the government must resort to the contractual remedy which it reserved to itself while entering into the loan agreement.
The State preferred a letters patent appeal which was summarily dismissed.
Hence the appeal by special leave.
Dismissing the appeal, the Court, ^ HELD: A bare reading of clause 4 of the agreement makes it evidently clear that the Government has first to proceed against the property xaf mortgaged and sell the property.
Only in case the entire amount could not be realised that the Government could proceed against the borrower personally.
The government is as much bound by the agreement as the borrower and, therefore, the Government has first to proceed against the mortgaged property.
In other words, the government must resort to the contractual remedy which it reserved to itself when entering into the loan agreement before resorting to clause (b) of section 67 of the Punjab Land Revenue Act.
[709 B C, 706 H, 710] Ram Narayan Agarwal etc.
vs State of U.P. & Ors.
explained and distinguished.


judgement:
tition No. 7337 of 1981.
(Under Article 32 of the Constitution of India).
Y.S. Chitale and D.N. Misra for the Petitioners.
N.C. Talukdar, M.C. shandare, Miss A. Subhashici, M.N. Shroff and B. Parthasarthi for the Respondents.
784 The Judgment of the Court was delivered by PATHAK, J.
The first petitioner, M/s Sahney Steel and Press Works Ltd.(hereinafter referred to as the Company J, is a public limited company having the registered office and factory at Hyderabad.
784 The Judgment of the Court was delivered by PATHAK, J. The first petitioner, M/s Sahney Steel and Press Works Ltd.(hereinafter referred to as the Company J.
is a public limited company having the registered office and factory at Hyderabad.
The second petitioner, Shri Bhupendra Singh Sahney, is a Director and shareholder of that company.
The company has branches at Amritsar, Bangalore, Bombay, Calcutta, Coimbatore and Delhi.
The registered office of the Company at Hyderabad is registered as a dealer under the Central Sales Tax Act as well as under the Andhra Pradesh General Sales Tax Act.
The Company is engaged in the manufacture and sale of stampings and Laminations made out of steel sheets which are utilised as raw material for making electric motors, transformers and similar goods.
The branches of the company are mainly engaged in electing sales and looking after the sales promotion and Liaison work.
The Company manufactures (a) standard goods according to the company 's own designs and specifications, (b) non standard goods according to the designs and specifications supplied by customers.
In the course of its normal business, the registered office despatches both standard and non standard goods manufactured at the Hyderabad factory to the branches.
Such transfers made by the registered office to the branches at Bombay, Calcutta and Coimbatore of non standard goods form the subject of The instant controversy.
According to the petitioner, the branch offices situate at Bombay, Calcutta and Coimbatore.
which themselves are registered as dealers under the Central Sales Tax Act and under the related State Sales Tax Acts, receive orders from customers within and from outside the respective States for the supply of goods conforming to definite specifications and drawings.
Those branch offices then advise the registered office at Hyderabad to manufacture and despatch the goods.
On receipt of such advice from branch, the goods are manufactured at the Hyderabad factory and thereafter despatched by the registered office to the branches by way of transfer of stock.
Hie despatching the goods, sometimes intimation is also given by the registered office to the customer concerned about the despatch of the goods to the destination indicated by him.
Such goods are booked to 'sheaf ' and sent by lorries.
The goods received by the branches from time to time, whether standard goods or non standard goods, are entered in the stock accounts of the branches and are kept in stock by the branches for ultimate delivery to the customers.
On 785 the goods reaching the branches, they are inspected by the customers and accepted by them where the customers are local parties.
Where delivery has to be effected to customers of other States, the goods are despatched to them by the branch.
The branches raise bills and receive the sales price.
The branches furnish 'F ' forms to the registered office under s.6 A of the Central sales Tax Act in the case of stock transfers to the branches.
These are the facts set forth in the writ petition.
It appears that (the sale of non standard goods WAS assessed to State Sales Tax under the Sales Tax Acts o. Maharashtra, West Bengal and Tamil Nadu.
The Commercial Tax Officer, Company Circle II, Hyderabad, however, expressed the view that the company was liable to Central Sales Tax on the turnover of non standard goods and rejected the contention of the Company that the pertinent turnover was not so liable.
For the assessment year 1979 80 he made an assessment order dated May 4, 1981 assessing a turnover of Rs.1,29,50,248.73 representing what the petitioners claimed to be stock transfers from the Hyderabad registered office to the branches outside the State of Andhra Pradesh.
By way of abundant caution the petitioner had prayed that in the event of their objection to the imposition of Central Sales Tax being overruled they should be allowed time to collect 'C ' forms from the various customers to whom the branches had effected sales and to submit them to the Commercial Tax Officer.
The Commercial Tax Officer, however, did not grant the Company the further time it sought for that purpose.
The petitioners states that the Commercial Tax Officer has also issued notices dated May 2, 1981 seeking to reopen the Central Sales Tax assessments already completed for the years 1977 78 and 1978 79.
In the original assessments for those years the Commercial Tax Officer had excluded the disputed transactions relating to transfers of non standard goods from the registered office to the branches.
The petitioners, therefore, pray for the quashing of the assessment order dated May 4, 1981 made under the Central Sales Tax Act for the assessment year 1979 80, and the consequent demand of tax, in so far as the assessment order includes within the assessed turnover the value of non standard goods transferred to the branches.
The petitioners also pray for an order restraining the Commercial Tax Officer from reopening past assessments tor the purpose of including such transfers in the assessable turnover.
Alternatively, the petitioners pray that in the event 786 of the transactions being held liable to Central Sales Tax an opportunity should be given to the Company to file 'C ' forms to enable it to avail of the concessional rate of tax envisaged under sub s.(1) of s.8 read with sub s.(4) of s.8 of the Central Sales Tax Act.
A further prayer in the alternatives that the assessment made under the local Sales Tax Acts from the assessment year 1978 79 onwards, in so far as the assessments include the turnover of the aforesaid stock transfers transferred by the registered office to the branches should be quashed.
While making the assessment order for the assessment year 1979 80, the Commercial Tax Officer found that the branch offices of the company, after procuring orders for the supply of goods with definite specifications and drawings advised the registered office at Hyderabad to manufacture and supply the goods in accordance therewith.
After the goods were so manufactured in the factory at Hyderabad, the registered office despatched the goods to the branches.
The goods were collected by the branch offices and despatched to various customers according to the orders received earlier.
The Commercial Tax Officer also found that except for the manufacture of goods according to the specifications received from the customers at the registered office and factory at Hyderabad, also other activities including that of booking orders, sales despatching, billing and receiving of the sale price were being carried on by the branch offices situated outside the State of Andhra Pradesh.
In the opinion of the Commercial Tax Officer the movement of the goods from Hyderabad to the stations outside the State was an incident of the contract incorporated in the specific orders procured by the branch offices, and therefore the transactions were inter state sales within the terms of sub s.(a) of s.3 of the Central Sales Tax Act.
The petitioners challenge the finding of the Commercial Tax Officer that the transactions in question constitute inter State sales.
The petitioner contend that when the registered office of the company at Hyderabad despatched the manufactured goods to its branch office it was merely a transfer of stock from the registered office to the branch office, and thereafter the movement of the goods started from the branch office to the buyer.
It is urged that the registered office and the branch office were separately registered as dealers under the Sales Tax law and transactions effected by the branch office could not be identified with transactions effected by the registered office.
The movement of the goods from Hyderabad to the branch office, it is 787 said, was only for the purpose of enabling the sale by the branch A office and was not in the course of fulfillment of the contract of sale.
We are unable to agree.
Even if, as in the present case, the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales despatching, billing and receiving of the sale price, the conclusions must be that the order placed by the buyer is an order placed with Company, and for the purpose of fulfilling that order the manufactured goods commence their Journey from the registered office within the State of Andhra Pradesh to the branch office outside the State for delivery of the goods to the buyer.
We must not forget that both the registered office and the branch office are offices of the same Company, and what in effect does take place is that the Company from its registered office in Hyderabad takes the goods to its branch office outside tile State and arranges to deliver them to the buyer.
The registered office and the branch office do not possess separate juridical personalities.
The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract.
If it is so, as it appears no doubt to us, its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an inter State movement.
In English Electric Company of India Ltd. vs The Deputy Commercial Tax Officer & Ors.[1977] 1 S.C.R. 631 this Court held that when the movement of the goods from one State to another is an incident of the contract it is a sale in the course of inter State sale, and it does not matter which is the State in which property in the goods passes.
What is decisive is whether the sale is one which occasions the movement of goods from one State to another.
It was also pointed out that the branches had no independent and separate entity, that they were merely different agencies, and even where a branch office sold the goods to the buyer it was a sale between the Company and the buyer.
It is true that in that case the goods, on manufacture at the Madras branch factory, were directly despatched to the Bombay buyer at his risk and all prices were shown F.O.R. Madras, and the goods were delivered to the Bombay buyer at Bhandup through clearing agents In the instant case, the goods were despatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad.
In our opinion, that makes no difference at all.
The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract 788 entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer.
There was no break in the movement of the goods.
The branch office merely acted as a conduit through which the goods passed on their way to the buyer.
It would have been a different matter if the particular goods had been despatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer.
In such a case if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad.
It is a sale where the goods moved merely from the branch office to the buyer.
The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of the sale made to the buyer.
The law was clarified in Union of India and Another vs K.G. Khosla and Co. Ltd. and Others.
(1979) 43 S.T.C. 457, where this Court observed that a sale would be an inter State sale even if the contract of sale does not itself provide for the movement of goods from one State to another, provided, however, that such movement was the result of a covenant in the contract of sale or was in incident of that contract.
Two cases on opposite sides of the line were considered by this Court in K.G. Khosla and Co. Ltd. (supra).
In Tata Engineering and Locomotive Co. Ltd. vs Assistant Commissioner of Commercial Taxes Anr.
[1970] 26 S.T.C. 354 =[1970] 3 S.C.R. 862, the appellant carried on the business of manufacturing trucks in Jamshedpur in the State of Bihar.
The sales office of the appellant in Bombay used to instruct the Jamshedpur factory to transfer stocks of vehicles to the stock yards in various States after taking into account the production schedule and requirements of customers in different States.
The stocks available in the stock yards were distributed from time to time to dealers.
The transfer of the vehicles from the factory to the various stock yards was a continuous process and was not related to the requirement of any particular customer.
Until an appropriation of the vehicle was made by the stock yard incharge against a contract of sale out of the stocks available with him it was open to the appellant to allot any vehicle to any purchaser or even to transfer the vehicles from the stock yard in the State to a stock yard in another State.
It was held on the facts that the sale by the appellant to a purchaser from its stock yard was not an inter State sale.
On the other side of the line is State of Bihar & Anr.
vs Tata Engineering & Locomotive Co. Ltd. [1971] 27 S.T.C. 127 = ; In that case, the turnover in dispute related to sales made 789 by the company to its dealers of trucks for being sold in the territories assigned to them under the dealership agreements.
Each dealer was assigned an exclusive territory and under the agreement between the dealers and the company, they had to place their indents, pay the price of the goods to be purchased and obtain delivery orders from the Bombay office of the company.
In pursuance of such delivery orders trucks used to be delivered in the State of Bihar to be taken over to the territories assigned to the dealers.
Under the terms of the contracts of sale the purchasers were required to remove the goods from the State of Bihar to other States.
The Court observed that if a contract of said contained a stipulation for such movement, the sale would be an inter State sale.
Considerable reliance has been placed by the petitioner on one of the illustrations given by this Court in Balabhagas Hulaschand and Another vs State of Orissa [1976] 37 S.T.C. 207, where Case No.II was set out as follows: Case No.II.
A, who is a dealer in state X, agrees to sell goods to but he books the goods from state X to State Y in his own name and his agent in state Y receives the goods on behalf of A. Thereafter the goods are delivered to B in State Y and if B accepts them a sale takes place.
it will be seen that in this case the movement of goods is neither in pursuance of the agreement to sell nor is the movement occasioned by the sale.
The seller himself takes the goods of State Y and sells the goods there.
This, is, therefore, purely ar.
internal sale which takes place in State Y and falls beyond the purview of section 3(a) of the Central Sales Tax Act not being an inter State sale.
It is not clear from this illustration whether the goods were particular and specific goods earmarked for delivery to the buyer when they commenced their movement from State X. Apparently not, because it is pointed out that the movement of The goods was neither in pursuance of the agreement to sell nor was the movement occasioned by the sale The case is distinguishable from the present one where particular goods were manufactured in Hyderabad in satisfaction of an order placed by one buyer who desired delivery outside the State.
The goods moved from the registered office at Hyderabad as the result of a covenant in the contract of sale or an incident of that contract that the goods 790 manufactured at Hyderabad according to the specifications stipulated by the buyer should be the very goods delivered to him outside the State.
Upon all these considerations, we are of opinion that the Commercial Tax Officer is right in holdings that the sale transactions were inter State sales inasmuch as they satisfy the terms of clause (a) of s.3 of the Central Sales Tax Act.
Having held that the disputed transactions are inter State sales, it is only appropriate that an opportunity should be give to the Company to collect 'C ' Forms from the buyers for the purpose of obtaining relief under sub s.(l) of s.8 read with sub s.(4) of s.8 of the Central Sales Tax Act.
The question whether the transactions could be described as inter State sales was in doubt all along, and it is only now that the doubt can be said to have been finally resolved.
Accordingly we direct the Commercial Tax Officer to afford a reasonable opportunity to the Company to collect 'C ' Forms and furnish them to the assessing authority before making an assessment against the Company in respect of such transactions.
We understand that so far as the turnover for the assessment year 1979 80 is concerned, the assessment order has been set aside in appeal and the case has been remanded to the assessing authority for Granting sufficient time to the Company to file the 'C ' Forms in order to enable it to avail of the concessional rate of tax.
The petitioners have prayed for the further relief that as the aforesaid transactions have been held to be inter State sales their inclusion in the assessments made under the corresponding State Sales Act should be deleted.
We give liberty to the petitioner Company to make an application to the assessing authority concerned for the grant of such relief, and if the application is made within two months from 10.9.85 we direct the said assessing authority to entertain the application, notwithstanding any period of limitation prescribed for such a proceeding and to dispose of the claim in accordance with law.
The writ petition is dismissed subject to the directions set forth above.
There is no order as to costs.
S.R. Petition dismissed.

summary/full:
M/s Sahney Steel and Press Works Ltd. is a public limited company having its registered office and factory at Hyderabad.
It is registered as a dealer under the Central Sales Tax Act, as well a under the Andhra Pradesh General Sale Tax Act.
It has branch offices at Amritsar, Bangalore, Bombay, Calcutta, Coimbatore and Delhi.
They are all registered as dealers under the Central Sales Tax Act and under the related State Sales Tax Acts.
The branches of the company are mainly engaged in effecting sales and looking after the sales promotion and liaison work.
The company manufactures (a) standard goods according to the company 's own designs and specifications, (b) non standard goods according to the designs and specifications supplied by customer.
In the course of its normal business, the registered office despatches both standard and non standard goods manufactured at the Hyderabad factory to the branches.
The branch offices situate at Bombay, Calcutta and Coimbatore receive orders from customers within and from outside the respective States for the supply of goods conforming to definite specifications and drawings.
Those branch offices then advise the registered office at Hyderabad to manufacture and despatch the good.
On receipt of such advice from the branch, the goods are manufactured at the Hyderabad factory and thereafter despatched by the registered office to the branches by way of transfer of stock.
While despatching the goods, sometimes intimation is also given by the registered office to the customer concerned about the despatch of the goods to the destination indicated by him.
Such goods are 781 booked to 'self ' and sent by lorries.
The goods received by the branches from time to time, whether standard goods or non standards goods, are entered in the stock accounts of the branches and are kept in stock by the branches for ultimate delivery to the customers.
On the goods reaching the branches, they are inspected by the customer and accepted by them where the customers are local parties.
Where delivery has to be effected to customers of other States, the goods are despatched to them by the branch.
The branches raise bills and receive the sales price.
The branches furnish 'F ' forms to the registered office under section 6 A of the Central Sales Tax Act in the case of stock transfers to the branches.
The sale of non standard goods was Assessed to State & sales Tax under the Sales Tax Acts of Maharashtra, West Bengal and Tamil Nadu.
The Commercial Tax Officer, Company Circle II, Hyderabad, however, expressed the view that the company was liable to Central & sales Tax on the turn over of non standard goods.
For the assessment year 1979 80 he made an assessment order dated May 4, 1981 assessing a turn over of Rs. 1,29,50,248.73 representing what the petitioners claimed to be stock transfers from the Hyderabad registered office to the branches outside the State of Andhra Pradesh.
By way of abundant caution the petitioners had prayed that in the event of their objection to the imposition of Central Sales Tax being overruled they should be allowed time to collect 'C ' forms from the various customers to whom the branches held effected sales and to submit them to the Commercial Tax Officer.
The Commercial Tax Officer, however, did not grant the company the further time it sought for that purpose.
The Commercial Tax Officer has also issued notices dated May 2, 1981 seeking to reopen the Central sales Tax Assessments already completed for the years 1977 78 and 1978 79.
In the original assessments for those years the Commercial Tax Officer had excluded the disputed transactions relating to transfers of non standard goods from the registered office to the branches.
Once the Writ Petitions under Article 32 of the Constitution praying for: (i) to quash the assessment order dated May 4, 1981 made under the Central Sales Tax Act for the assessment year 1979 80 and the consequent demand of tax in respect of the non standard goods; (ii) to restrain the Commercial Tax Officer from reopening the past assessments; (iii) alternatively, in the event of the transactions being held liable under the Central Sales Tax Act, to afford opportunity to the company to file 'C ' forms to enable it to avail of the concessional rate of tax envisaged under section 8(1) of the Central Sales Tax Act and (iv) further 782 alternatively to quash the assessments made under the local Sales Tax Acts for the assessment years 1978 79 onwards in so far as the assessments include the turn over of the aforesaid stock transfers transferred by the registered office to its branches.
Dismissing the petition, the Court ^ HELD: 1.1 The sale transactions were inter state sales in as much as they satisfy the terms of clause (a) of section 3 of the Central Sales Tax Act.
[790 B] 1.2 It cannot be said that the Movement of the goods from Hyderabad to the branch office was only for the purpose of enabling the sale by the branch office and was not in the course of fulfillment of the contract of sale.
Even if the buyer places an order with the branch office and the branch office communicates the terms and specifications of the orders to the registered office and the branch office itself is concerned with the sales despatching, billing receiving of the sale price, the conclusion must be that the order placed by the buyer is an order placed with the Company, and for the purpose of fulfilling that order the manufactured goods commence their journey from the registered office within the State of Andhra Pradesh to the Branch office outside the State for delivery of the goods to the buyer.
Further, both the registered office and the branch office are offices of the same Company, and what in effect does take place is that the Company from its registered office in Hyderabad takes the goods to its branch office outside the State and arranges to deliver them to the buyer.
The registered office and branch office do not possess separate juridical personalities.
The question really is whether the movement of the goods from the registered office at Hyderabad is occasioned by the order placed by the buyer or is an incident of the contract.
The answer being in the affirmative, its movement from the very beginning from Hyderabad all the way until delivery is received by the buyer is an inter state movement.
[787 A D,F] 1.3 The fact that the goods were despatched by the branch office situated outside the State of Andhra Pradesh to the buyer and not by the registered office at Hyderabad makes no difference at all.
The manufacture of the goods at the Hyderabad factory and their movement thereafter from Hyderabad to the branch office outside the State was an incident of the contract entered into with the buyer, for it was intended that the same goods should be delivered by the branch office to the buyer.
There was no break 783 in the movement of the goods.
The branch office merely acted as a conduit through which the goods passed on their way to the buyer.
It would have been a different matter if the particular goods had been despatched by the registered office at Hyderabad to the branch office outside the State for sale in the open market and without reference to any order placed by the buyer.
In such a case if the goods are purchased from the branch office, it is not a sale under which the goods commenced their movement from Hyderabad.
It is a sale where the goods moved merely from the branch office to the buyer.
The movement of the goods from the registered office at Hyderabad to the branch office outside the State cannot be regarded as an incident of the sale made to the buyer.
[787 F H, 788 A C] English Electric Company of India Ltd. vs The Deputy Commercial Tax officer & Ors.; , ; Union of India and Another vs K.G. Khosla and Co. Ltd. and Others, [1979] 43 S.T.C. 457; Tata Engineering and Locomotive Co. Ltd. vs Assistant Commissioner of Commercial Taxes & Anr., [1970] 26 S.T.C. 354 =[1970] 3 S.C.R. 862; State of Bihar & Anr.
Tata Engineering Locomotive Co., Ltd. [1971; 27 S.T.C. 127 =[1971] 2 S.C.R. 849 and Balabhagas Hulaschand and another vs State of Orissa, [1976] 37 S.T.C. 207 referred to.
[The Court directed: (i) the Commercial Tax Officer to afford a reasonable opportunity to the Company to collect 'C ' Forms and furnish them to the assessing authority before making an assessment against the Company in respect of such transactions; (ii) the petitioner Company may make an application to the assessing authority for deleting the turnover of sales found to be inter State sales concerned for re opening the assessments made under the State Sales Tax Acts and (iii) if the application is made within two months from September 10, 1985, the said assessing authority should entertain the application, notwithstanding any period of limitation prescribed for such a proceedings and to dispose of the claim in accordance with law.]


judgement:
Civil Appeal No. 2649 of 1984.
Appeal U/s 116A of the R.P. Act 1951 from the Judgment and Order dated 30.5.1984 of the Punjab & Haryana High Court at Chandigarh in E.P. No. 8 of 1982.
H.L. Sibal, Kapil Sibal, Mrs. Madhu Tewatia Singh and N.M. Popli for the Appellant.
S.N. Kacker and Ravinder Bana for the Respondents.
by VARADARAJAN, J.
This appeal by the first respondent in Election Petition No. 8 of 1982 on the file of the Punjab and Haryana High Court is filed against the judgment of the learned Single Judge, allowing the election petition and setting aside the appellant 's election to the Haryana Legislative Assembly from the Jind constituency in the election held on 19 5 1982.
Out of 26 nomination papers filed, 24 were found to be valid and ultimately 14 candidates remained in the field.
The real contest was between the appellant Brij Mohan, who was an independent candidate supported by the Lok Dal and the first respondent Manga Ram who contested as the Congress (I) candidate.
In the counting which took place on 20 5 1982 it was found that the appellant had secured 27045 valid votes while the first respondent had secured 26899 valid votes and the appellant was accordingly declared elected.
The first respondent filed the election petition challenging the p appellant 's election on the following grounds, namely: (I) corrupt practice of bribery as defined in section 123(1) of the Representation of People Act, 1951; (2) corrupt practice of publication of various statements relating to the personal character of the first respondent which were false; (3) result of the election in so far as it related to the appellant having been materially affected by en masse violation of the statutory provisions and (4) large scale receiption of void votes in favour of the appellant but for which the first respondent would have been declared elected.
The first respondent prayed in the election petition for (I) the appellant 's election being set aside as void on the above grounds; (2) the appellant being declared to have committed corrupt practice and (3) the first respondent being declared to have been duly elected, 315 The learned Single Judge who tried the election petition allowed it with costs on only one ground and set aside the appellant 's election as void on that ground, namely, that he committed the corrupt practice of bribery by contributing a sum of Rs. 5100/towards the cost of construction of a temple for the backward classes in Kandela village in order to get the votes of the members of those classes cast in his favour in that election.
It is, therefore, necessary to state the case of the parties briefly in regard to only this item of corrupt practice.
The first respondent has alleged in the election petition that the appellant visited Kandela village on or about 16 5 1982 accompanied by his father Sita Ram and two others Ram Kishan and Amrit Lal and they contacted Dalip Singh, Sarpanch of the village and one Dewan Singh, Secretary of the backward classes.
The appellant appealed to the backward class voters assembled at the house of one Dharam Singh for casting their votes in his favour.
The voters present there included Dewan Singh, Hari Ram, Devi Ram, Fateh Singh and Mauji Ram.
The voters told the appellant that they intended to cast their votes in favour of the Congress (I) candidate as they had always been in favour of the Congress (I) party.
The appellant, thereafter, had a talk with the Sarpanch Dalip Singh and one Dharam Singh and subsequently stated, for inducing the voters to cast their vote in his favour, that he was prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir.
Accordingly, he gave a sum of Rs. 5100 to the Sarpanch Dalip Singh who passed it on to Dharam Singh and Dewan Singh.
The voters thereafter assured the appellant that they would vote for him and ensure that every vote belonging to their class will go in his favour.
The appellant denied this allegation saying that he never visited Kandela village in the company of Sita Ram, Ram Kishan and Amrit Lal and never gave Rs. 5100 to the Sarpanch Dalip Singh and that the entire allegation in the election petition regarding this item of corrupt practice is false and mischievous.
In regard to this item of corrupt practice there is evidence of the election petitioner/first respondent Mange Ram, P.W. 1, Dewan Singh, P.W, 16, Manuji Ram, P.W. 90, Fateh Singh, P.W. 91 and Prahlad, P.W. 92 on the side of the first respondent and of the appellant, R.W. 1 on the side of the appellant.
The learned Single 316 Judge found that after a Commissioner appointed by the Court contacted P.W. 16 and obtained a register from him.
P.W. 16 was suspended by the District Education Officer, Jind by an order dated 23 11 1982 and transferred to Narnaul situate 200 miles away from his original place which was his home town and he opined that it was done in order to overawe P.W. 16 so that he may not appear as a witness in this election petition.
He further observed that "It was in his (appellant 's) interest to see that this witness did not come on record.
If illegal pressure was brought to bear on a witness who had come to this Court to depose about this charge, normal inference and presumption would be that the pressure had been brought to bear upon him either by the party who was interested in seeing that damaging evidence was not led against him or by some one else at his instance.
I am clearly of the view that respondent No. I had somehow or other secured that order of suspension and transfer of Dewan Singh, P.W. 16".
We are wholly unable to appreciate this reasoning of the learned Judge.
We do not see how the appellant was obliged to explain the circumstances under which P.W. 16 came to be suspended and transferred to Narnaul by the District Educational Officer 's order dated 23 11 1982 after the Commissioner appointed by the Court approached him and obtained a register from him or how the adverse inference could be drawn against the appellant by the learned Judge merely because the appellant was unable to explain how P.W. 16 came to be suspended and transferred by the District Educational Officer 's order dated 23 11 1982 after a register had been obtained from him by the Commissioner appointed by the Court and it came to be known that p.
W. 16 may be examined as a witness in this election petition, We think that there is no justification whatsoever to draw any such adverse inference against the appellant.
The appellant, R.W. 1 had denied that he had gone to Kandela village on 16 5 1982 either alone or in the company of Sita Ram and others.
He has denied that he contacted the Sarpanch Dalip Singh and others and gave Rs 5100 as alleged in the election petition and that the voters of Kandela village held out any promise for casting their votes in his favour.
In the cross examination on suggestion was made to R.W. 1 that he gave a sum of Rs. 5100 for the construction of a mandir for the backward class voters of Kandela village on 16 5 1982 or on any other date, to induce them to cast their votes in his favour, 317 The first respondent.
P. W. l has stated in his evidence that the appellant visited Kandela village on 16.
1982 accompanied by the Sarpanch Dalip Singh, Hari Ram, Dewan Singh and others, that all of them and the members of the backward classes assembled in the house of the Backward Classes Samiti Chairman Dharam Singh, that the appellant gave Rs. 5100 to the members of the backward classes for the construction of a Viswakaram Mandir in the village and the Society passed a receipt for that amount and also made an entry in its own books of accounts kept in the regular course of business and that the members of the backward classes who received the amount promised to cast their votes in favour of the appellant.
In his cross examination he has stated that the bribe money was paid by the appellant on 15.5.1982.
It would appear from his evidence that he claims to have personal knowledge about the alleged visit of the appellant and others to Kandela village on 16.5.1982 and about the alleged payment of Rs. 5100 by the appellant for the construction of a temple for the backward classes people of the village in order to induce the voters of those classes to cast their votes in his favour.
But in his affidavit verifying the election petition he has stated that the allegations made in para 9(d) of the election petition regarding this item of corrupt practice are based upon information received by him from Dewan Singh.
Therefore, the evidence of P.W. I regarding this item of alleged corrupt practice is wholly unacceptable.
Dewan Singh, P.W. 16 has stated in his evidence that he is the Secretary of the Managing Committee of a temple that was being constructed in Kandela village for the members of the backward, classes, that the appellant attended a meeting of the backward classes in Dewan Chand 's house on 15 5 1982, and volunteered to give a donation of Rs. 5100 for that temple provided the members of the backward classes cast their votes in his favour and that on 16.5.1982 one Madan Lal gave Rs. 5100 to the Temple Committee 's President Dharam Singh in his presence and he himself made the entry exhibit PW 16/2 about that payment in the Temple Committee 's cashbook, exhibit P.W. 16/1.
He has admitted that the entire cash book, exhibit P.W. 16/1 is in his hand writing and does not bear the signature of any office bearer of the Viswakarama Samiti.
But he has denied that he has got up this cash book in connivance with the first respondent for the purpose of this election petition.
His evidence that the appellant offered on 15.5.1982 to give a sum of Rs. 5100 in the house of Dewan Chand and that it was given by one Madan Lal to Dharam Chand is inconsistent with the allegation in the election petition 318 that the appellant offered to give Rs. 5100 on 16.5.1982 as donation and gave it himself to the Sarpanch Dalip Singh and he passed it on to Dharama Singh.
Therefore, the evidence of P.W. 16 regarding this item of alleged corrupt practice cannot be accepted.
Mauji Ram, P,W. 90 has stated in his evidence that the appellant and his father and Sarpanch Dalip Singh collected the people belonging to black smith and carpenter communities in the house of the carpenter Diwana on 14.5.1982 and requested the people to cast their votes in his favour, that the people told the appellant and his two companions that they would inform that after discussing about the matter and asked the appellant and his companions to visit the village again on 16.5.1982, that accordingly the appellant and others came to the village on 16 5.1982 and asked the people to vote for the appellant, that the people told the appellant and his companions that they would vote for him if he gave money and that the appellant thereupon gave a sum of Rs 5100 to Dharma Lohar.
The evidence of this witness is that the people asked for money to vote in favour of the appellant and that thereupon he gave Rs. 5100 to Dharma Lohar whereas the allegation in the election petition is that after the voters told the appellant that they intended to vote for the Congress (I) candidate as they had always been in favour of the Congress (I) Party the appellant had a talk with the Sarpanch Dalip Singh and one Dharam Singh and he subsequently stated, for inducing the voters to cast their votes in his favour, that he was prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir and that he accordingly gave Rs. 5100 to the Sarpanch Dalip Singh and he passed it to Dharam Singh and Dewan Singh There is thus a vital discrepancy between the pleading in the election petition and the evidence of P.W. 90.
P.W. 90 has stated that he does not know whether any receipt was passed for the amount whereas P.W. 16 has stated in his evidence that Madan Lal gave Rs 51()0 to the Temple Committee 's President Dharam Singh in his presence on 16 5 1982 and he made an entry for receipt of that amount in exhibit PW. 16/2 in the cash book, exhibit P.W. 16/1 and P.W. ` I has stated in his evidence that the Society passed a receipt for the amount and also made an entry in the cash book about the money.
It is significant to note that P.W. 90 was not cited as a witness in the list of witnesses filed by the first respondent on 11.11.1982 and 26.11.1982 and that he was examined as a witness only on 25.7.1983.
In these circumstances, we think that no reliance would be placed on the evidence of P.W. 90 regarding this item of alleged corrupt practice.
319 Fateh Singh, P.W. 91 is yet another witness whose name was not mentioned in the list of witnesses filed by the first respondent on 11.11.1982.
He has stated in his evidence that four or five days prior to the date of poll 19.5 1982, the appellant and his father and two others, Sarpanch Dalip Singh and Madan Lal, visited Kandela village and come to the house of Diwana Khati, that many voters belonging to the backward classes were summoned to that house and the appellant and his companions offered to donate some money to the temple provided the people assembled there and other members of the community voted for the appellant and they told them that they would discuss about the matter and let them know, that two or three days thereafter the appellant came by a car they assembled in the house of the black smith Dharama and that in his presence Madan Lal who came with the appellant gave Rs. 5100 to the Sarpanch Dalip Singh who in turn passed it on to Dharma Lohar and he promised that the members of his community would vote for the appellant.
The evidence of this witness is not consistent with the allegation made in the election petition that the appellant gave a sum of Rs 5100 to the Sarpanch Dalip Singh and that he passed it on Dharam Singh and Dewan Singh.
We are, therefore, unable to place any reliance on his evidence regarding this item of alleged corrupt practice.
Then there remains the evidence of Prahalad, P.W. 92.
He has stated that the appellant, came to Kandela village on 16.5.1982 alongwith the Sarpanch Dalip Singh and one Madan Lal of that village, that the appellant who had visited the village five days prior to the date of the poll suggested that the voters belonging to the community and the members of the Managing Committee should vote for him and stated that he would make some contribution for the temple funds and asked Madan Lal to give the money, that thereupon Madan Lal gave Rs. 5100 to the Sarpanch Dalip Singh and he passed it on to Dharma Lohar and undertook the responsibility to have votes cast in favour of the appellant and that the temple treasurer Ram Singh passed a receipt for the amount.
The evidence of this witness that Madan Lal of Kandela village gave Rs. 5100 is inconsistent with the allegation made in the election petition that the appellant himself gave that amount.
His evidence that it was given to Dalip Singh though consistent with the allegation made in the election petition and the evidence of P.W. 91 is inconsistent with the evidence of P.W. 90 that it was given to Dharma Lohar.
We 320 are, therefore, unable to place any reliance on his evidence regarding this item of alleged corrupt practice.
The evidence of P.Ws. 1, 16, 90, 91, and 92 referred to above is wholly unreliable and does not prove the corrupt practice of which the appellant has been found guilty by the learned Single Judge.
We may state here that Mr. S.N. Kacker, Senior Advocate who appeared for the respondent, probably felt that the Judgment of the learned Single judge holding the appellant guilty of this item of corrupt practice is wholly indefensible and he candidly admitted that he will not advance any argument at all in favour of the first respondent.
In these circumstances for the reasons mentioned above, we allow this appeal but without costs and set aside the judgment of this learned Single Judge who found the appellant guilty of this item of corrupt practice.
M.L.A. Appeal allowed.

summary/full:
In the election held on 19.5.1982 to the Haryana Legislative Assembly from the Jind Constituency, the appellant was declared elected over his nearest rival respondent No. I with a margin of 146 votes.
Respondent No. I challenged the appellant 's election inter alia, on the ground that the appellant and his father Sita Ram and two others Ram Kishan and Amrit Lal visited Kandela village on or about 16.5.1982 and contacted Dalip Singh, Sarpanch of the village and one Dewan Singh, Secretary of the Backward Classes.
Thereafter all of them went to the house of one Dharam Singh where backward class voters including Dewan Singh, Hari Ram, Devi Ram, Fateh Singh and Mauji Ram had assembled.
The voters told the appellant that they intended to cast their votes in favour of Congress (I) candidate as they had always been in favour of the Congress (I) party Then the appellant had a talk with the Sarpanch Dalip Singh and one Dharam Singh and subsequently stated, for inducing the voters to cast their vote in his favour, that he is prepared to give a donation of Rs. 5100 as he had been told that they needed some money for their mandir.
Accordingly he gave a sum of Rs. 5100 to the Sarpanch Dalip Singh who passed it on to Dharam Singh and Dewan Singh.
The voters thereafter assured the appellant that they would vote for him and ensure that every vote belonging to their class will go in his favour.
Thus, the appellant was alleged to have committed the corrupt practice of bribery as defined in Section 123(1) of the Representation of People Act, 1951.
The appellant had denied that he had gone to Kandela village on 16.5.1982 either alone or in the company of Sita Ram and others.
He also denied that he had contacted the Sarpanch Dalip Singh and others and gave Rs. 5100 as alleged in the election petition and that the voters of Kandela village held out any promise for casting their votes in his favour.
The High Court held that the appellant had committed that corrupt practice of bribery and set aside the election as void.
313 Allowing the appeal by the appellant, A ^ HELD: 1.
As regards the corrupt practice of bribery, there is evidence only of P.Ws. 1, 16, 90, 91 and 92 which is wholly unreliable and does not prove the corrupt practice of which the appellant has been found guilty by the Learned Single Judge.
[320B] 2(i) The first respondent P.W. 1 has stated in his cross examination that the bribe money was paid by the appellant on 15.5.1982.
It would appear from his evidence that he claims to have personal knowledge about the alleged visit of the appellant and others to Kandela village on 16.5.1982 and about the alleged payment of Rs. 5100 by the appellant for the construction of a temple for the backward class people of the village in order to induce the voters of those classes to cast their votes in his favour.
But in his affidavit verifying the election petition he has stated that the allegations made in para 9(d) of the election petition regarding this item of corrupt practice are based upon information received by him from Dewan Singh.
Therefore the evidence of P.W. 1 is wholly unacceptable.
[317C D] 2(ii) The evidence of P.W. 16 that on 15.5.82 the appellant offered to give a sum of Rs. 5100 in the house of Dewan Chand and that it was given by one Madan Lal to Dharam Chand is inconsistent with the allegation in the election petition that the appellant offered to give Rs. 5100 on 16.5.1982 as donation and gave it himself to the Sarpanch Dalip Singh and he passed it on to Dharama Singh.
Therefore the evidence of P.W. 16 also cannot be accepted.
[317H; 318A] 2(iii) The evidence of P.W. 90 is that the people asked for money to vote in favour of the appellant and that thereupon he gave Rs. 5100 to Dharma Lohar on 16.5.82 is contrary to the allegation in the election petition, There is thus a vital discrepancy between the pleading in the election petition and the evidence of P.W. 90.
Moreover P.W. 90 has stated that he does not know whether any receipt was passed for the amount whereas P.W. 16 has stated in his evidence that Madan Lal gave Rs. 5100 to the temple Committee 's President Dharam Singh in his presence on 16.5.1982 and he made an entry for receipt of that amount in exhibit P.W. 16/2 in the cash book.
In these circumstances no reliance could be placed on the evidence of P.W. 90.
[319D; F G] 2(iv) The evidence of P.W, 91 is also not consistent with the allegation made in the election petition that the appellant gave a sum of Rs. 5100 to the Sarpanch Dalip Singh and that he passed in on to Dharam Singh and Dewan Singh.
Therefore no reliance can be placed on his evidence also.
[319D] 2(v) The evidence of P.W. 92 that Madan Lal of Kandela village gave Rs. 5100 is inconsistent with the allegation made in the election petition that the appellant himself gave that amount.
His evidence that it was given to Dalip Singh though consistent with the allegation made in the election petition and the evidence of P.W, 91, is inconsistent with the evidence of P.W. 90 that it was given to Dharma Lohar.
[319G H] 314