judgement:
Appeal No. 1437 of 1971.
(Appeal by Special Leave from the Judgment and order dated 28 4 1970 of the Delhi High Court in Income Tax Refer ence No. 50/ 65) V.S. Desai, Mrs, Leila Seth and Parveen Kumar for the Appellantt.
S.T. Desai & M.N. Shroff, for the Respondent.
The Judgment of the Court was delivered by SHINGHAL, J.
This appeal by special leave is directed against the judgment of the Delhi High Court dated April 28, 1970 in a reference made by the Income tax Appellate Tribu nal (Delhi Bench A) under section (36(1) of the Income tax Act, 1922, hereinafter referred to as the Act.
in respect of the following question, "Whether on the facts and circumstances of the case the sum of Rs. 7 lakhs received from M/s Orissa Cement Ltd. was pursuant to an adventure in the nature of trade and as such tanable under the Indian Income tax Act, 1922 ?" The High Court has answered the question in the affirmative.
We shall refer to the facts giving rise to the controversy in some detail when we state them in a chronological order.
It may be mentioned, mean while, that the Dalmia Cement Ltd., hereinafter called the appellant, owned certain cement facto ries and it placed an order for the supply of four complete units of cement manufacturing machinery with M/s F.L. Smidth and Co., Copenhagen, on February 7, 1946.
to increase the production in the following factories, , 1.
Shantinagar, 2.
Dandot, 3.
Dalmianagar, 4.
Dalmiapuram.
Since the factory in Dandot fell within the territory of Pakistan on constitution with effect from August 15, 1947, the appellant transferred the machinery which was meant for the Dandot factory (hereinafter referred as the Dandot machinery), to a new company known as Orissa Cement Ltd. some time in 1950 51, and charged only the invoice price which it had paid to M/s F.L. Smidth and Co. The appellant thereafter asked for a higher price and after some negotia tions the Orissa Cement Ltd. agreed on December 4, 1951, to pay a further sum of Rs. 7 lakhs, in lieu of which 70,000 fully paid up ordinary shares of Rs. 10/ each.
were given to the appellant in that company.
The Income tax Officer treated that amount as income earned by the appellant pursu ant to an adventure in the nature of trade in 1952 53 as sessment year, and taxed it as such.
On appeal, the Assistant 4 1234SCI/76 556 Appellate Commissioner also held in his order dated Septem ber 16, 1958 that the transfer of the Dandot machinery was an adventure in the nature of trade and the payment of Rs. 7 lakhs was a revenue receipt which was rightly taxed by the Income tax Officer.
The matter went up in appeal to the Income tax Appellate Tribunal (Delhi Bench) which remanded the case to the Income tax Officer by its order dated Sep tember 13, 1960, for report on certain specific points.
On receipt of the Income tax Officer 's report, the Tribunal held that the transaction in question was "certainly an adventure in the nature of trade" and dismissed the appeal.
It however drew up a statement of the case, and that is how the aforesaid question of law was referred to the High Court under section 66(1) of the Act.
The High Court held that by the time the appellant placed the despatch order with M/s Smidth & Co., "its intention was to purchase it with an idea to resell" and that the fact that it was a single and iso lated transaction did not materially affect the case.
In reaching that conclusion the High Court took the subsequent developments into consideration, and rejected the contention that the machinery was purchased by way of an "investment".
The present appeal has been filed against that judgment of the High Court dated April 28, 1970.
Under section 10 of the Act, income tax is payable by ,m assessee under the head "Profits and gains of business, profession or vocation", inter alia, in respect of the profits and gains of any "business" carried on by him, and the controversy in this case is whether the receipt of the additional sum of Rs. 7 lakhs, over and above the cost of the Bandot machinery, could be said to arise out of any "business" of the appellant.
The term "business" has been defined as follows in clause (4) of section 2 of the Act, "(4) "business" includes any trade, commerce, or manufacureor any adventure or concern in the nature of trade, commerce or manufacture.
" The question in this case is whether the transaction was an "adveuture" in the "nature of trade" within the meaning of the definition ? Some decisions have been rendered by this Court on the point, and our attention has been invited to the decisions in Narain Swadeshi Weaving Mills vs Commis sioner of Excess Profits Tax, (1) Kishan Prasad and Co. Ltd. vs Commissioner of Income tax Punjab,(") G. Venkattaswami Naidu & Co. vs The Commissioner of Income tax,(3) Soroj Kumar Mazurndar vs The Commissioner of Income tax West Bengal Calcutta, (4) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta(5).
Even so, on gener al principle can, for obvious reasons, be laid down to cover.
all cases of this kind because of their varied na ture, so that each case has to be decided on the basis of its own facts and circumstances.
It is however well settled that even a single and isolated transaction can be held to be capable of falling within the definition if it bears clear indicia of trade (vide Natgin (1) (2) (3) [1959] Supp.
(1) S.C.R. 646.
(4) (1959) Supp. (2) S.C.R. 846.
(5) ; 557 Swadeshi Weaving Mills vs Commissioner of Excess Profits, G. Venkataswami Naidu & Co. vs The Commissioner of Income tax, and Sarol Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra)).
It is equally well settled that the fact that the transaction is not in the way or business of the assessee does not in any way alter the character of the transaction (vide G. Venkataswatni Naidu & Co. vs The Commissioner of Income tax, and Saroj Kumar Mazumdar vs The Commissioner of InCome tax, West Bengal, Calcutta (supra).
It would not therefore help the appel lant 's case merely to urge either of these points for the answer to the question will depend on a consideration of all the facts and circumstances.
The question under consideration is essentially a mixed question of fact and law.
It will therefore be desirable, in the first instance, to re state the relevant facts in a chronological order; As has been stated, the appellant owned some cement factories in various parts of India including the one in Dandot.
It placed an order with M/s. Smidth & Co., Copenha gen, for the supply of four complete units of machinery for the manufacture of cement, to increase the production of its factory at Dandot and three other factories.
A firm order for all the four units was placed on February 7, 1946.
It was confirmed by M/s. F.L. Smidth & Company on August 6, 1947 and the appellant was informed that the supply of the Dandot machinery would be made in various months from Febru ary 1948 to October 1948.
India was partitioned, and Paki stan came into existence on August 15, 1947.
Dandot fell in the territory of Pakistan.
The appellant, which was an Indian Company, did not however cancel the order in respect of the Dandot machinery.
On the other hand, a Director of the appellant informed the Orissa Government in his letter dated November 25, 1947 that it had "got a cement plant for which it had placed order a couple of years back", of which early delivery was expected, and that it would be willing to put it in Orissa on "suitable terms." The appellant 's General Manager held discussions with the Orissa Government on January 8, 1948 for the setting up of a cement factory in Orissa.
It was recorded in the note of the proceedings of that meeting that the appellant had ordered machinery for replacing its cement plant, the said machinery was expected to be shipped at an early date and parts of it would start arriving in March 1949.
It was further stated that the complete supply of the plant was estimated to take about six months, and if the negotiations were fruitful the first lot of cement would be produced by the beginning of 1950.
The appellant 's representative insisted that a final decision might be taken at an early date so that the machinery which had to be chipped from abroad could be diverted, depending upon the decision, to the Calcutta or Bombay port.
The appellant thereafter wrote a letter to M/s. F.L. Smidth and Co. (Bombay) Ltd. on September 9, 1948 directing that the plant meant for the Dandot works might be diverted to Oris sa.
It was specially stated in the letter as follows, "There are certain equipments in the specifications of the plants for extension No. 3 and 4, which were peculiar to the layout and design for the extension at Dandot and Shanti 558 nagar and they will not now fit in exactly in the same manner in our proposed new factories.
As such, it is essen tial that the whole specifications are carefully scrutinised and manufacture of the items which are peculiar to the lay out of Dandot and Shantinagar Works only should be kept in abeyance in order to suit the local conditions.
" The plants were expected to arrive from March 1949 onwards, but this would not have been possible without an import licence.
The appellant obtained the licence from the Gov ernment of India and intimated to M/s. F.L. Smidth and Co. in its letter dated August 2, 1948 that it had been permit ted to import in the Indian Dominion the two plants meant for Dandot and Shantinagar.
The suppliers were accordingly requested to intimate the dates upto which extension was required for the import of the machinery.
A formal agree ment was made between the appellant and the Orissa Govern ment on December 23, 1948.
The Dandot machinery arrived in due course.
It was delivered by the appellant to Orissa Cement Ltd. and its actual cost was debited to it.
Quite some time thereafter, on April 7, 1970, a Director of the appellant wrote a letter to the Industries Minister of the Orissa Government that the machinery supplied to the orissa Cement Ltd. should be revalued and the appellant allowed a higher price than the invoice price due to a rise in the cost of the cement .plant at the time of supply as compared with the price at the time when it was originally ordered by the appellant.
The name of one F.B. Mogensen was suggested for the revaluation of the machinery.
This was agreed to by the State Government on June 4, 1950.
Mogensen reported that the Orissa Cement Ltd, had benefited to the extent of almost Rs. 21 lakhs in the bargain.
The Orissa Government passed a resolution dated December 4, 1951 allowing a fur ther sum of Rs. 7 lakhs to the appellant and, in lieu of cash payment, allotted 70,000 fully paid up ordinary shares of Rs. 10/ each of the Orissa Cement Ltd. to the appellant.
The above facts clearly establish that, (i) Even though the appellant initially placed an order on February 7, 1948 for the purchase of the Dandot Machinery for improving the production in the Dandot factory, and the supply was not to commence until February.
1948, it did not make any effort to cancel that order even after Dandot was included in the territory of Pakistan with effect from August 15, 1947.
(ii) On the other hand, in pursuance of an enquiry by the Government of Orissa whether the appellant would be interested in putting up a cement plant in the State, one of the appellant 's Directors informed the State Government on November 25, 1947 that it had got a cement plant for which it had placed an Order a couple of years ago and that it could be put up in Orissa on suitable terms.
The appellant 's General Manager in fact met the State Government authorities in January, 1948 where it was reiterated 559 that the machinery ordered by the appellant was expected to start arriving in March 1949 and could be diverted to Calcutta and that if the appellant 's negotiations with the State Government were suc cessful, the first lot of cement could be supplied by the beginning of 1950.
(iii) The negotiations with the Orissa Govern ment proved successful and the appellant wrote a letter to M/s. F.L. Smidth and Co. on August 2, 1948 informing it that it had obtained the permis sion of the Government of India to import the Dandot machinery in India.
The appellant also informed the suppliers on September 9, 1948 that it should divert the Dandot machinery to Orissa and supply the same according to the revised specifica tions to suit the local conditions.
(iv) A formal agreement was executed by the appellant and the Orissa Government on December 23, 1948 for the setting up of a cement factory in Orissa.
(v) The Dandot machinery arrived and was sup plied by the appellant to the Orissa factory against cost price, which was debited to the Orissa Cement Company.
It would thus appear that, long before the Dandot machinery was due, the appellant knew that it could not be used in Dandot.
It has been found that after the partition of the country the appellant could have cancelled the order for the import of the machinery but it did not do so and decided to import it with a view to supplying it to Orissa on suitable terms.
It therefore resold it to the Orissa factory in accordance with the terms and conditions of its negotiations with the State Government.
The intention of resale was therefore there almost from the beginning, and was really the dominant intention in importing the machinery after the partition of the country.
It is also quite clear that the appellant was not inclined to make it a gratuitous sale, but agreed to it only when it was able to secure a suitable agreement with the State Government for the setting up of a factory in Orissa.
It was in fact.
the appellant 's own case that the price of the Dandot machinery had gone up substan tially.
Even so, the appellant did not care to utilise it for any of its own plants, but sold it to Orissa Cement Ltd. The appellant therefore did not only have the dominant intention of selling the Dandot machinery to its own advan tage but, in doing so, it acted with the set purpose of taking an advantage of its position as the owner of the imported machinery of which the price had on the appellant 's own showing, gone up much higher.
It was therefore a real transaction by way of an adventure in the nature of trade and was as such a business transaction within the meaning of section 2(4)of the Act.
It does not matter if the appel lant did not earn a profit immediately on delivering the machinery, and sold it without any profit in the first instance, for there can be no denying the fact that even if the appellant had not earned any profit whatsoever at the time of the sale or even thereafter, the transaction in the facts and circumstances of the case, would nonetheIess have been adventure in the 560 "nature of trade" and no other.) We are fortified in this view by the decisions in Narain Swadeshi Weaving Mills vs Commissioner Excess Profits Tax (supra) and G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra).
It is true that the question of asking for payment in excess of the cost price was raised by the appellant some time later, but its subsequent course of conduct in bringing about a substantial profit is a clear pointer to the real intention behind the sale.
It was for that reason that the appellant 's Director addressed a letter to the Minister of Inustries of the Orissa Government on April 7, 1950 stating that the Dandot machinery should be revalued and the appel lant allowed a higher price due to the rise in its price at the time of the supply.
The entire correspondence in that respect has not been placed on record by the appellant, but it appears that the appellant was able to secure a further sum of Rs. 7 lakhs, under an agreement dated December 4, 1951 in lieu of which it was able to secure 70,000 fully paid up shares of Rs. 10/ .
The appellant succeeded in doing so merely because it was able to substantiate its claim for a higher price, or profit, on the sole ground that it was entitled to it because of the increase in the price at the time of the sale.
There is therefore nothing wrong in the view which has prevailed with the High Court that it was an adventure in the nature of trade.
It has been argued by Mr. V.S. Desai, for the appellant that as it was a single and isolated transaction of purchase and sale,, the onus of proving that it was a transaction in the nature of trade lay on the department.
This is a correct proposition of law and, .as would appear from what has been stated above, we have examined the controversy on the assumption that the burden of proving that the transac tion was an adventure in the nature of trade lay on the department.
The ancillary argument of Mr. V.S. Desai that a question like the present has to be examined with reference to the indicia or characteristics of the trade, is also quite correct, but counsel has not been able to contend, in the face of the facts and circumstances mentioned above, which indicia or characteristics could be said to be lacking to take it out of the category of an adventure in the nature of trade.
All that Mr. V.S. Desai has pointed out is that there was no intention to make a profit when the Dandot machinery was sold to the Orissa Cement Ltd., and it has been urged that would be sufficient to take it out of the category of an adventure in the nature of trade.
Reference in this connection has been made to the decisions in Kishan Prasad & Co. Ltd. vs Commissioner of Income tax, Punjab (supra), G. Venkataswami Naidu and Co. vs The Commissioner of Income tax (supra), Saroj Kumar Mazurndar vs The Commissioner of In come tax, West Bengal, Calcutta (supra), and Ajax Products Ltd. vs Commissioner of Income tax, Madras(1).
We have given our reasons for the contrary view that the transaction would be an adventure in the nature of trade even if the question of profit was left out of consideration, and that the appellant in fact acted with the set purpose of resell ing the (1) 561 Dandot machinery to its advantage and not by way of a favour or a gratuitous act.
We have also shown how the appellant ultimately claimed and succeeded in securing a higher price merely on the ground that there was an appreciable increase in the price after the purchase of the Dandot machinery.
Lastly, it has been argued by Mr. V.S. Desai that in purchasing the machinery the appellant made a capital in vestment so that it was merely a capital asset.
This argu ment is also futile for, as has been shown, the appellant made the purchase with the dominant intention of reselling the machinery to advantage and made the resale only when it was able to enter into an agreement with the Orissa Govern ment lot the setting of a cement factory in that state on terms and conditions which were suitable from its point of view.
It may also be stated that even in its own profit and loss account and balance sheet, the appellant treated the sale price as a revenue receipt and not as a capital invest ment.
It was therefore an after thought to Claim that the initial purchase was by way of an investment and was a capital asset.
The facts of Kishan Prasad and Co. Ltd. vs The Commis sioner of Income tax, Punjab (supra), Saroj Kumar Mazumdar vs The Commissioner of Income tax, West Bengal, Calcutta (supra) and Janki Ram Bahadur Ram vs Commissioner of Income tax, Calcutta (supra) referred to by Mr. V.S. Desai were different.
In the case of Kishan Prasad and Co. Ltd. (supra) there was agreement to give the managing agency to the assessee on the erection of the mill because it had subscribed to shares worth Rs. 2 lakhs.
The mill was not erected and the assessees sold the shares.
There was there fore justification for holding that the purchase of the shares was an investment to acquire the managing agency and was not an adventure in the nature of trade.
In Saroj Kumar Mazumdar 's case (supra) there was a single transaction of sale of rights for the purchase of land measuring 3/4 acres by the assessee who was an Engineer by profession.
His construction activities declined and that was why he sold his rights in the land for Rs. 74,000 odd in excess of the amount paid by him.
The Incometax department however failed to prove that the assessees dominant intention was to embark on a venture in the nature of trade as distin guished from capital investment.
That was also therefore a different case.
In the case of Janki Ram Bahadur Ram (supra) the assessee was a dealer in iron scrap and hard ware.
He agreed to purchase all rights of a company in a jute pressing factory, but sold it at a profit.
It was held that as the property purchased by the assessee was not such that an inference that a venture in the nature of trade must have been intended could be raised, the profit was not liable to tax.
It was held that a person purchasing a jute press might intend to start his own business or he might let it out on favourable terms.
The property was in fact let out by the earlier owner before the date of sate.
That was also therefore quite a different case and cannot avail the appellant.
In the remaining case of Ajax Products Ltd. (supra) it was held that on the facts the assessee company having acquired the sick mill to open new line of business, the purchase was, really in the nature of an investment and the purchase and sale did not amount to an adventure in the nature of trade.
That was therefore also quite a different case.
562 It would thus appear that in spite of the fact that the appellant withheld some of the correspondence bearing on the controversy, the Department has succeeded in proving that the transaction of sale in question was an adventure in the nature of trade and fail within the definition of "business" in clause (4) of section 2 of the Act.
The High Court has rightly answered the question in the affirmative, and as we find no merit in this appeal, it is dismissed with costs.
M.R. Appeal dismissed.

summary/full:
In 1946, the appellant ordered cement manufacturing machinery from a in Denmark, for its factory in Dandot, but long before the machinery was due, the Country was parti tioned and Dandot went to Pakistan.
Instead of cancelling his order, the appellant imported the machinery.
It was found that the appellant did so with the intention of sell ing it at a profit, to the Orissa State.
At the time of the sale, the appellant charged only the invoice price initially paid by it, but later, obtained a profit.
The Income Tax Officer treated the profit as income earned pursuant to an adventure in the nature of trade, and taxed it as such.
The appellant 's appeals were rejected by the Appellate Taxation Authorities.
The matter was then referred to the High Court section 66 (1 ) of the income Tax Act, but was dismissed.
The appellant contended that making a profit was not its intention at the time of sale, and that being a single and isolated transaction of purchase and sale, it was not an adventure in the nature of trade within the meaning of section 2(4) of the Act, and that the onus of proving anything to the contrary, lay upon the Department.
Dismissing the appeal, the Court HELD: (i) It is well settled that even a single and isolated transaction can be held to be capable of failing within the definition of "business" if it bears clear indi cia of trade.
The fact that the transaction is not in the way of business of the assessee does not in any way alter the character of the transaction.
[556H, 557A] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (251` I.T.R 765), G. Venkataswami Naidu .
& Co. vs The Commissioner of Income Tax [1959] Supp.
(1) S.C.R. 646, Sarol Kumar Mazumdar vs The Commissioner of Income Tax, West Bengal, Calcutta [1959] Supp.
(2) S.C.R. 846 followed.
(2) It is a correct proposition of law that as it was a single and isolated transaction of purchase and sale, the onus of proving that it was a transaction in the nature of trade lay on the department [560 D E] (3) The appellant had the dominant intention of selling the Dandot machinery to its own advantage, and acted with the set purpose of taking an advantage of its position as the owner of the imported machinery Even if the appellant had not earned any profit whatsoever at the time of the sale or very soon thereafter, the transaction, in the facts and circumstances of this case, would nonetheless have been an adventure in the "nature of trade", and a business transac tion within the meaning of Section 2(4) of the Act.
[560H, 561B, 562A B] Narain Swadeshi Weaving Mills vs Commissioner of Excess Profits Tax (Supra).
and G. Venkataswami Naidu & Co. vs The Commissioner of Income Tax (Supra) followed.
Kishan prasad & Co. Ltd. vs Commissioner of Income Tax, Punjab Saroj Kumar Mazumdar vs The Commis sioner of Income Tax.
West Bengal, Calcutta (Supra).
janki Ram Bahadur Ram vs Commissioner of Income Tax., Calcutta ; and Ajax products Ltd. vs Commissioner of IncomeTax, Madras distinguished.


judgement:
Appeal No. 871 of 1974.
(Appeal by Special Leave from the Judgment and Order dated 3 4 1973 of the Allahabad High Court in Civil Misc.
Writ Petition No. 2128/73).
Yogeshwar Prasad and Miss Rani Arora for M/S Bagga for the Appellant.
G.N. Dikshit and O.P. Ran, for Respondents No. 1 and 2.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal by special leave is directed against an order passed by the High Court of Allahabad rejecting a writ petition filed by the appellant challenging the validity of an order of the State Transport Appellate Tribunal confirming an order of the Regional Transport Authority rejecting the application of the appellant for renewal of his stage carriage permit for the route Nagina Jaspur.
The route Nagina Jaspur lies within the jurisdiction of the Regional Transport Authority Bareilly.
The appellant and his brother Mohd. Ashfaq held a stage carriage permit for this route for some years and it was due to expire on 1st July, 1971.
Before the expiration of the period of permit, however, a scheme was prepared and published by the State Transport Undertaking under Section 68C of the (hereinafter referred to as 'the Act ') and this scheme covered the route Nagina Jaspur.
The publication of this scheme did not affect the validity of the permit of the appellant and Mohd. Ashfaq and they continued to ply their motor vehicles on the route Nagina Jaspur on the strength of the permit.
During the currency of the permit, several amendments of a far reaching charac ter were made in the Act by Act 56 of 1969 and sub sections (1A) to (1D) were introduced in Section 68F after sub sec tion (1).
These sub sections are material and they may be reproduced as follows: "68F(1A) Where any scheme has been published by a State Transport Undertaking under section 68C, that Undertaking may apply for a temporary permit.
in respect of any 565 area or route or portion thereof specified in the said scheme, for the period intervening between the date of publication of the scheme and the date of publication of the approved or modified scheme, and where such application is made, the State Transport Authority or the Regional Trans port Authority, as the case may be, shall, if it is satis fied that it is necessary to increase, in the public inter est, the number of vehicles operating in such area or route or portion thereof, issue the temporary permit prayed for by the State Transport Undertaking.
(1B) A temporary permit issued in pursuance of the provisions of sub section (1A) shall be effective, (i) if the scheme is published under sub section (3) of section 68D, until the grant of the permit to the State Transport Undertaking under sub section (1), or (ii) if the scheme is not published under sub section (3) of section 68D, until the expiration of the one week from the date on which the order under sub section (2) of section 68D is made.
(1C) If no application for a temporary permit is made under sub section (1A), the State Transport Authority or the Regional Transport Authority, as the case may be, may grant, subject to such conditions as it may think fit, temporary permit to any person in respect of the area or route or portion thereof specified in the scheme and the permit so granted shall cease to be effec tive on the issue of a permit to the State Trans port Undertaking in respect of that area or route or portion thereof.
(1D) Save as otherwise provided in sub section (1A) of sub section (1C), no permit shall be granted or renewed during the period intervening between the date of publication, under section 68C of any scheme and the date of publication of the approved or modified scheme, in favour of any person for any class of road transport service in relation to an area or route or portion thereof covered by such scheme: Provided that where the period of operation of a permit in relation to any area, route or portion thereof specified in a scheme published under section 68C expires after such publication, such permit may be renewed for a limited peri od, but the permit so renewed shall cease to be effective on the publication of the scheme under sub section (3) of section 68D." Since the permit of the appellant and Mohd. Ashfaq was going to expire on 1st July, 1971, the appellant made an applica tion for renewal of the permit under the proviso to sub section (1D) of Section 68F and submitted the application to the Regional Transport Authority on 22nd March, 1971.
When the application came up for hearing before the 566 Regional Transport Authority, there was admittedly no objec tor against it, but the Regional Transport Authority took the view that under the proviso to sub section (2) of Sec tion 58 an application for renewal of a permit is required to be made not less than 120 days before the date of expiry of the permit and even if there is delay in making the application, it can be condoned under sub section (3) of Section 58 but only if it is a delay of not more than 15 days and since in the present case the application for renewal of the permit was made by the appellant on 22nd March, 1971, it was late by 18 days and hence the delay was not capable of being condoned and in this view, the Regional Transport Authority by an order dated 28th March, 1973 rejected the application for renewal of the permit as time barred.
The appellant preferred an appeal to the State Transport Appellate Tribunal and in the appeal the appellant chal lenged the correctness of the order of the Regional Trans port Authority.
The State Transport Appellate Tribunal, however, agreed with the view taken by the Regional Transport Authority and held that in view of the specific prohibition contained in sub section (3) read with the proviso to subsection (2) of Section 58 it was not competent to the Regional Transport Authority to condone the delay in making of the application for renewal of the permit, since the delay was of more than 15 days.
The State Transport Appellate Tribunal also observed that in any event the material produced before the Regional Transport Authority did not make out any sufficient cause for not making the application for renewal of the permit within time and hence even if there was no statutory bar against condonation of delay of more than 15 days, this was not a fit case in which the delay should be condoned.
The State Transport Appellate Tribunal accordingly confirmed the order of the Regional Transport Authority.
This led to the filing of a writ petition by the appel lant in the High Court of Allahabad.
The High Court sum marily rejected the writ petition stating that no ground had been made out for exercise of the extraordinary juris diction of the High Court under Article 226 of the Constitu tion.
Hence the appellant brought the present appeal with special leave obtained from this Court.
Two contentions were urged on behalf of the appellant in support of the appeal.
The first contention was that the time limit specified in the proviso to sub section (2) of section 58 was not applicable in case of an application for renewal of a permit under the proviso to subsection (10) of section 68F and the Regional Transport Authority was not entitled to reject the application of the appellant for renewal of his permit as time barred.
It has also been contended in the alternative that even if the time limit set out in to proviso to sub section (2) of section 58 was applicable, sub section (3) extended such time limit by fifteen days and even if thereafter there was any delay beyond the extended time limit, it could be condoned by the Regional Transport Authority for sufficient cause by reason of section 5 read with section 29, subsection (2) of the .
The second contention Which followed on the acceptance of the last contention was that the appellant had sufficient cause for not preferring the appli cation for renewal 567 of his permit within the extended time limit and hence the Regional Transport Authority should have condoned the delay and entertained the application on merits.
The validity of both these contentions was disputed on behalf of respondents 1 and 2 and it was urged that the time limit specified in the proviso to sub section (2) of section 58 was applicable in the present case and the only delay which could be con doned was a delay of 15 days and not more and in any event, there was no sufficient cause made out by the appellant for not making the application for renewal within time and hence the application for renewal was rightly rejected as time barred.
We shall proceed to consider the merits of these rival contentions.
The first question which arises for consideration on these contentions is as to whether the time limit pre scribed by the proviso to subsection (2) of section 58 applies in case of an application for renewal of a permit under the proviso to sub section (10) of section 68F.
The argument of the appellant was that Chapter IVA which contains, inter alia, section 68F, is a self contained Chapter and nothing in the other provisions of the Act applies to proceedings under that Chapter and hence neither the procedure under section 57 nor the time limit specified in the proviso 10 sub section (2) of section 58 has any application to an application for renewal of a permit under the proviso to sub section (10) of section 68 F.
This argument is, in our opinion, manifestly wrong.
The scheme of Chapter IVA is clear and it does not exclude the applica bility of the provisions contained in section 57 and the proviso to sub section (2) of section 68.
Chapter IVA contains a fasciculus of sections commencing from section 68A and ending with section 68 B. Section 68 A defines certain expressions used in Chapter IVA.
Section 68 B gives overriding effect to the provisions contained in Chapter IVA by saying that these provisions shall have effect, notwith standing anything inconsistent therewith contained in Chapter IV or in any other law for the time being in force.
Section 68 C provides that where any State Transport Undertaking is of opinion that for the purpose of provid ing an efficient, adequate, economical and properly co ordinated road transport service, it is necessary in the public interest that road transport service in relation to any route should be run and operated by the State Transport Undertaking, a scheme may be prepared by the S1ate Transport Undertaking giving particulars of the nature of the services proposed to be rendered, the route proposed to be covered and other prescribed particulars and such scheme shall be duly published.
Certain categories of persons are empow ered by section 68 D sub section (1) to file objections against the scheme published under sect ion 68 C and the State Government may then, after considering such objections and hearing the parties, approve or modify the scheme under sub section (2) of section 68 D. Section 68 D sub section (3) provides that the scheme as approved or modified under sub section (2) shall be Published in the Official Gazette and it shall thereupon become final and shall be called the approved scheme and the routes to which it relates shall be called the notified routes.
Section 68 E provides for concellation or modification of the scheme.
Then follows section 68 F which is material for our purpose.
Sub section (1) of that section provides for issue of a permit to the State Transport Undertaking in respect of a notified route 568 after publication of an approved scheme.
But what is to happen during the period between the publication of a scheme under section 68 C and the publication of the ap proved scheme under sub section (3) of section 68 D ? That is taken care of by sub sections (1A) to (1 D) of section 68F.
Sub section (1 A) provides that for this intervening period, the State Transport Undertaking may apply for a temporary permit in respect of a route specified in the scheme and where such application is made, the Regional Transport Authority shall, if it is satisfied that it is necessary to increase, in the public interest, the number of vehicles operating on such route, issue the temporary permit prayed for by the State Transport Undertaking.
What shall be the duration of such temporary permit is laid down in sub section (1 B).
Sub section (1 C) deals with the situation where no application for a temporary permit is made by the State Transport Undertaking and it says that in such a case, the Regional Transport Authority may grant temporary permit to any person in respect of a route speci fied in the scheme.
Sub section (1 D) imposes a prohibi tion that "save as otherwise provided in sub section (1 A) and sub section (1 C), no permit shall be granted or renewed during the period intervening between the date of publica tion under section 68 C of any scheme and the date of publi cation of the approved or modified scheme, in favour of any person" in relation to a route covered by such scheme, but this is subject to a proviso that where the period of operation of a permit in relation to any route "specified in a scheme published under section 68 C expires after such publication, such permit may be renewed for a limited period".
It will, therefore, be seen that where a scheme is published under section 68 C, no permit in respect of a route specified in the scheme can be granted or renewed during the intervening period between the publication of the scheme under section 68 C and the publication of the approved scheme, except a temporary permit to the State Transport Undertaking under sub section (1 A) or failing that, a temporary permit to any other person under sub section (1 C), with this qualification that an existing permit can be renewed for a limited period.
The holder of an existing permit would obviously exnecessitas have to make an application, if he wants renewal of his permit and the application for renewal would be considered by the Regional Transport Authority.
The question is: can this application for renewal be made at any time and when it is made, what procedure would govern it.
Section 57 lays down the procedure to be followed in dealing with an application got grant of a permit and by reason of section 58 sub sec tion (2), that procedure is applicable also in relation to an application for renewal of a permit.
There is also a time limit laid down in the proviso to sub_section (2) of section 58 which says, in so far as relevant, that an application for renewal of a .permit shall be made not less than 120 days before the date of expiry of the permit.
These provi sions in section 57 and the proviso to sub section (2) of section 58 on their plain language apply to every applica tion for renewal of a permit and it is indeed difficult to see what difference there is between an application for renewal of a permit under the proviso to sub section (1 D) of section 68 F and any other application for renewal of a permit.
An application for renewal of a permit under.
the proviso to sub section (1 D) of section 68 F is as much an application for renewal as any other.
It had to be special ly provided for in the 569 proviso to sub section (1 D) of section 68 F, because sub section (1 D) imposes a prohibition on grant or renewal of permit during the intervening period between the publica tion of a scheme under section 68 C and the publication of the approved scheme and, ii the proviso were not enacted, renewal of an existing permit expiring after the publication of the scheme under section 68 C would have been barred.
This, the Legislature did not want and hence the proviso was introduced permitting renewal of an existing permit though for a limited period, despite the general prohibition enact ed in sub section (1 D).
This renewal was not intended to be sore6 special kind of renewal different from any other ordinary renewal of a permit.
There is, therefore, no reason in principle why the provisions enacted in section 57 and the proviso to sub section (2) of section 58 should not apply in case of an application for renewal of a permit under the proviso to sub section (1 D) of section 68 F.
If the procedure set out in section 57 does not apply in such a case, there is no other procedure prescribed by the Act which can possibly be invoked and the result would be that them would be no procedure for dealing with such an applica tion.
for renewal and in that event, how would the objec tions be invited against the application for renewal and within what time and who would be entitled to be heard and when ? And equally if the time Limit specified in the proviso to sub section (2) of section 58 does not apply, there would be no time limit for making such an application for renewal and it would be possible to make it any time, even after the expiry of the period of the permit and the Regional Transport Authority would be bound to consider it.
That surely could never have been the intention of the Legislature.
Moreover, it is implicit in the enactment of section 68 B that Chapter IV A is not a self contained Chapter to which the other provisions of the Act are inap plicable.
If Chapter IVA were a self contained Code by itself, there would have been no need to give overriding effect to the provisions in that Chapter as against the other provisions of the Act.
Section 68 F, sub section (3) also proceeds on the assumption that, but for its enactment, an order made by the Regional Transport Authority under sub section (1) or sub section (2) of section 68 F would have been appealable under section 64 and it was to ex clude the applicability of section 64 that sub section (3 ) of section 68 F was enacted.
These two circumstances dearly point to the conclusion that the other provisions of the Act, to the extent to which their language warrants, apply in relation to proceedings under Chapter IVA, save in so far as they may be, expressly or by reason of repugnance or inconsistency, overridden.
We must, therefore, reject the first contention of the appellant which seeks to exclude the applicability of the proviso to sub section (2) of section 58 to an application for renewal of a permit under the proviso to subsection (1 D) of section 68 F. That takes us to the next question as to the applicabil ity of section 5 of the to an applica tion for renewal of a permit.
It would be convenient at this state to refer to the provisions of subsections (2) and (3) of section 58, which, so far as material, read as follows: "(2) A permit may be renewed on an application made 570 and disposed of as if it were an application for a permit: Provided that the application for the renew,d of a permit shall be made (a) in the case of a stage carriage permit or a public carrier 's permit, not less than one hundred and twenty days before the date of its expiry; and (b) in any other case, not less than sixty days before the date of its expiry: Provided further that, other conditions being equal, an application for renewal shall be given preference over new applications for permits.
(3) Notwithstanding anything contained in the first proviso to sub section (2), the Regional Transport Authority may entertain an application for the renewal of a permit after the last date specified in the said proviso for the making of such an application, if the application is made not more than fifteen days after the said last date and is accompanied by the prescribed fee.
" The proviso to sub section (2) requires that an application for renewal of a permit should be made not less than 120 days before the date of expiry of the permit.
But, notwith standing this provision, the Regional Transport Authority may, under sub section (3), entertain an application for renewal of a permit after the last date specified in subsec tion (2), "if the application is made not more than 15 days after the said last date and is accompanied by the pre scribed fee.
" Sub section (3) thus vests a discretion in the Regional Transport Authority to entertain an application for renewal of a permit even if it is beyond time, but in that case the delay should not be of more than fifteen days.
The word used in sub section (3) is "may" and not "shall" and the Regional Transport Authority is given a discretion to entertain ,m application for renewal of a permit even where it is beyond time, though not more than 15 days.
It may condone the delay or it may not, depending on the circum stances of each case.
The discretion is be exercised not on any arbitrary of fanciful grounds or whim or caprice of the Regional Transport Authority, but it is to be a judicial discretion.
It is true that the criterion which is to guide the Regional Transport Authority in the exercise of its discretion is not articulated in sub section (3), but it is implicit in every conferment of discretion on a judicial or quasi judicial authority that the discretion is to be exercised in a judicial manner on well settled legal prin ciples.
would not be right to attribute to the Legislature an intention to confer unguided and unfettered discretion on the Regional Transport Authority which is quasi judicial authority.
The discretion is obviously to be exercised where sufficient cause for not making the application for renewal within time is made out by the applicant.
This 571 criterion can legitimately be imported from section 5 of the which contains an allied provision for condonation of delay where an application is made beyond time.
It could never have been the intention of the Legis lature that even where there is no sufficient cause for delay in making an application for renewal, the Regional Transport Authority should still be bound to entertain the application for renewal merely, on the ground that the delay is of not more than 15 days.
Sub section (3) enacts a provision for condonation of delay in making an application for renewal and not provision extending the time limit specified in the proviso to sub section (2) in all cases as a matter of course.
If the intention of the Legislature were that in every case delay of not more than 15 days in making an application for renewal should be condoned as of course, there was no need for a separate provision in sub section (3), but the Legislature could have very specified "one hundred and five days" instead of "one hundred and twenty days" in the proviso to sub section (2).
It is, therefore, dear that sub section (3) of section 58 confers a discretion on the Regional Transport Authority to entertain an application for renewal when it is made beyond the time limit specified in the proviso to sub sec tion (2), but not more than 15 days late and the discretion is to be exercised in favour of entertaining the application for renewal when it is shown that there was sufficient cause for not making it in time.
Now the question which arises is: does section 5 of the apply so as to empower the Regional Transport Authority, for sufficient cause, to entertain an application for renewal even where it is delayed by more than 15 days? Section 29, sub section (2) of the makes section 5 applicable in the case of an application for renewal unless its applica bility can be said to be expressly excluded by any provision of the Act.
The only provision of the Act sought to be pressed into service for this purpose was sub section (3).
Does sub section (3) expressly exclude further extension of time under section 5 ? If it does, then section 5 cannot be availed of by the appellant for condonation of the delay.
Sub section (3) in so many terms says that the Regional Transport Authority may condone the delay in making of an application for renewal and entertain it on merits provided the delay is of not more than 15 days.
This clearly means that if the application for renewal is beyond time by more than 15 days, the Regional Transport Authority shall not be entitled to entertain it or in other words, it shall have no power to condone the delay.
There is thus an express provision in sub section (3) that delay in making an appli cation for renewal shall be condonable only if it is of not more than 15 days and that expressly excludes the applica bility of section 5 in cases where an application for renew al is delayed by more than 15 days.
This provision may seem harsh, but it has been deliberately and advisedly made because the question of renewal of a permit must obviously be decided before the expiration of the period of the permit and in view of the elaborate procedure set out in section 57 for dealing with an application for renewal, a certain minimum period before the expira 5 1234SCI/76 572 tion of the period of the permit must be provided within which this procedure can be completed so that the, renewal can, if at all, be granted well in time before the permit expires.
If an application for renewal could be entertained even if made at any stage, it would dislocate the procedural machinery set out in section 57 and that is why the Legisla ture prescribed in sub section (3) of section 58 that the delay in making an application for renewal may be condoned by the Regional Transport Authority only if it is of not more than 15 days.
Here, the application made by the appel lant for renewal of his permit was admittedly late by more than 15 days and hence the delay was not condonable and the Regional Transport Authority was right in rejecting the application for renewal as time barred.
We must, in the circumstances, dismiss the appeal, but in view of the peculiar facts of the case we make no order as to costs.
P.B.R. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
Under the proviso to section 58(2) of the an application for renewal of an existing permit shall be made not less than 120 days before the date of expiry of the permit.
The procedure to be followed in this respect is the same as provided in section 57 for the grant of a fresh permit.
Under section 58(3) a delay of not more than 15 days in making the renewal application can be condoned by the Re gional Transport Authority.
The proviso to section 68F(1D) provides for the renewal of an existing permit for a limited period when a Scheme is pub lished under section 68C. Since a Scheme was published under this section the appellant made an application under section 68F(1D) for renewal of his permit.
R was rejected by the RTA on the ground that there was delay of 18 days which was not capable of being condoned.
The Transport Appellate Tribunal dismissed his appeal and the High Court summarily rejected his writ petition.
In appeal to this Court it was contended that (i) Chapter IVA of the Act, which section 68 occurs, being a self contained code the proviso to section 58(2) was not applicable in the case of an application for renewal filed under the proviso to section 68F(1D) or (ii) in the alternative the delay could be con doned by the RTA for sufficient cause under section 5 read with section 29(2) of the .
Dismissing the appeal, HELD: (1) (a) Section 68F(1D) imposes a prohibition on grant or renewal of permit during the intervening period between the publication of a scheme under section 68C and the publication of the approved scheme and if the proviso were not enacted.
renewal of an existing permit expiring after the publication of the scheme under section 68C would have been barred.
This, the legislature did not want and hence the proviso was introduced permitting renewal of an existing permit though for a limited period, despite the general prohibition enacted in sub section
This renewal was not intended to be some special kind of renewal.
There is no reason why the provisions of section 57 and the proviso to section 58(2) should not apply in case of a renewal application under the proviso to section 68F(1D).[569 A B] (b) chapter IVA is not a self contained code and the other sections apply to an application under the proviso to section 68F(1D)of the Act.
[569D] (i) The procedure in section 57 applies because.
there is no other procedure prescribed by the Act.
[569C] (ii) The time limit specified in the proviso to section 58(2) also applied as otherwise there would be no time limit for making an application for renewal.[569D] (iii) Section 68F(3) also proceeds on the assumption that, but for its enactment, an order made by the RTA under sub~3 (1) or (2) of section 68F would have been appealable under section 64 and it was to exclude the applicability of section 64 that 68F(3) was enacted.
[569 E F] 564 (2) The word used in sub section
3 is 'may ' and not 'shall ' and the RTA is given a discretion to entertain an applica tion for renewal of a permit even where it is beyond time, though not more than 15 days.
It could never have been the intention of the legislature that even where there is no sufficient cause for delay in making an application for renewal, the Regional Transport Authority should still be bound to entertain the application for renewal merely on the ground that the delay is of not more than 15 days.
[570F. 571A B] 3 (a) Section 29(2) of the makes section 5 applicable in the ease of an application for renewal unless its applicability can be said to be expressly exclud ed by any provision of the Act.
Sub section (3) of section 58 in so many terms says that the RTA .may condone the delay in making of an application for renewal and entertain it on merits provided the delay is of not more than 15 days.
This clearly means that if the application for renewal is beyond time by more than 15 days, the RTA shall not be entitled to entetain it.
[571E G] (b) There is an express provision in sub section
(3) that delay in making an application for renewal shall be condona ble only if it is of not more than 15 days and that express ly excludes the applicability of section 5 in cases where an application for renewal is delayed by more than 15 days.
[571G]


judgement:
iminal Appeal No. 287/ 71.
Appeal by Special Leave from the Judgment and Order dated 10 9 71 of the Delhi High Court in Criminal Revision No. 310 of 1970.
A.N. Mulla, (Miss) Uma Mehta, R.K. Mehta, S.K. Bagga and (Mrs.) section Bagga, for the Appellants.
S.N. Anand and R.N. Sachthey; for the Respondent.
D. Mookerjee, B.P. Maheshwari, Suresh Sethi and N.K. lain for the Intervener.
The Judgment of the Court was delivered by BHAGWATI, J.
This appeal, by special leave, is directed against a judgment of the High Court of Delhi confirming the conviction of 594 the appellants under section 7(i) read with section 16(1)(a)(i) of the .
The prosecution case was that all material times the 2nd appellant was the owner of a grocery shop situate at Maharani Bagh, New Delhi and the 1st appellant was employed as a salesman in the shop.
On 23rd June, 1969 Bhanot, a Food Inspector went to the shop of the 1st appellant and finding the 1st appellant there as a sales man, took from him a sample of mustard oil for analysis after paying its purchase price.
He divided the sample into three parts and sent one part to the Public Analyst for analysis, handed over the other part to the 2nd appellant and retained the 3rd part with him.
The Public Analyst reported that the sample was misbranded as it was of Lin Seed Oil and it was adulterated due to the presence of artificial dye.
On the strength of this report, the appellants were chargesheeted under section 7(i) read with section 16(1)(a)(i) before the Judicial Magistrate, Delhi.
The defence of the 1st appellant was that the 2nd appellant was at no time engaged by him as the salesman and no mustard oil was purchased by Bhanot from the 2nd appellant.
The 2nd appellant also claimed that he was never an employee of the l st appellant and while he was going to his house after pur chasing sarson oil for his personal use, he was caught by two or three persons near Maharani Bagh and a sample was taken from the oil which he was carrying and his signatures were obtained by threat on certain papers.
The learned Judicial Magistrate accepted the evidence led on behalf of the prosecution and rejected the defence version and held that the appellants were guilty of the offence of selling lin seed oil containing artificial dye which was an offence punishable under section 7(i) read with section 16(1)(a) (i).
The learned Judicial Magistrate accordingly convicted the appellants and sentenced each of them to suffer rigorous imprisonment for nine months and to pay a fine of Rs. 1000/ .
The appellants preferred an appeal, but the appeal was rejected by the learned Sessions Judge and the convic tion was confirmed with only a slight modification in the sentence.
The sentence was reduced from nine months to six months rigorous imprisonment.
This led to the filing of a revision application in the High Court by the appellants, but the revision application was also unsuccessful.
Hence the present appeal by special leave obtained from this Court.
The first contention raised on behalf of the appellant in support of the appeal was that the conviction was bad inasmuch as it rested solely on the evidence of Bhanot and one other Food Inspector, namely, Bhatnagar, who happened to come there at the tinge of taking the sample and there was no independent witness to support the prosecution case.
Now, it is true that the prosecution could not produce :my independent witness to depose to the taking of the sample by Bhanot from the 2nd appellant at the shop of the 1st appel lant but that by itself cannot be regarded as sufficient to warrant rejection of the prosecution case out of hand.
The sample was taken by Bhanot in the presence of one Keshav Dutt Sharma and a panchnama evidencing the transaction was prepared and signed by Keshav Dutt Sharma on the spot.
But in the witness box Keshav Dutt Sharma turned hostile and denied that he was present at the time of taking the sample.
Of 595 course.
he could not deny that the endorsement B to B on the Panchanama was in his hand writing and he had put his signa ture at the foot of it, but his explanation was that one Food Inspector came to the shop where he was working and asked him either to give a sample of the ice cream he was selling at the shop or to give his signature on the. pancha nama.
This explanation is palpably dishonest and cannot be accepted by any court.
Moreover, it does not explain how the endorsement B to B came to be made by Keshav Dutt Sharma in his handwriting.
There can be no doubt that Keshav Dutt Sharma was present at the time of taking of the sample and he wrote down the endorsement B to B on the panchanama and signed it as he was a witness to the transaction.
It is unfortunately not an infrequent occurrence to find that pancha witnesses turn hostile and go back upon what is stated in the panchanama in utter disregard of truth.
This betrays lack of character and absence of civic sense which not only result in the guilty escaping the punishment but lead to general deterioration in standards of honesty and integrity.
This is a highly reprehensible phenomenon which has to be curbed in the larger interest of the administra tion of justice.
Here, apart from the endorsement B to B in the panchanama and the signature at the foot of it showing that Keshav Dutt Sharma was a witness to the taking of the sample, we have the statement of Bhanot who said in his evidence that Keshav Dutt Sharma was taken by him to witness the taking of the sample and Keshav Dutt Sharma made the endorsement B to B on the panchanama and put his signa ture below it and this statement made by Bhanot was not challenged in the cross examination, nor was it even sug gested to Bhanot that Keshav Dutt Sharma was not present at the taking of the sample.
The prosecution case obviously cannot be thrown out merely because Keshav Dutt Sharma refused to support what had been stated by him, in his own hand writing in the panchanama and went back upon it to the utter dismay of the prosecution.
It is true that by reason of the defection of Keshav Dutt Sharma, the prosecution was left only with the evidence of Bhanot and Bhatnagar, but this evidence was regarded by the High Court as well as the learned Judicial Magistrate and the learned Sessions Judge sufficient to found the conviction of the appellants and we do not see why we should interfere with the concurrent view taken by them as regards the appreciation of this evidence.
There is no rule of law that conviction cannot be based on the sole testimony of a food Inspector.
It is only out of a sense of caution that the courts insist that the testimony of a food Inspector should be corroborated by some independ ent witness.
This is a necessary caution which has to be borne in mind because the food Inspector may in a sense be regarded as an interested witness, but this caution is a rule of prudence and not a rule of law: if it were other wise, it would be possible for many guilty persons to escape punishment by resorting to the device of bribing punch witnesses.
The conviction of the appellants cannot, there fore, be assailed as infirm on the ground that it rested merely on the evidence of Bhanot and Bhatnagar.
The appellants then contended that on the opinion expressed by the Public Analyst, the offence committed by the appellants was one 596 under section 16(1)(a)(i) with respect to an article of food adulterated under clause (1) of section 2 and the Court had, therefore, discretion, under the proviso to section 16 (1 ) to impose a lesser sentence of imprisonment than six months for adequate and Special reasons.
The argument of the appellants was that this was a fit case in which the discre tion under the proviso to section 16(1) should have been exercised and the minimum sentence of six months imprison ment should not have been imposed on the appellants.
This was in substance a plea for reduction of the sentence of imprisonment and this plea raises the question as to which is the clause of section 2(i) in which the present case falls.
Does it fail within the clause (1) as claimed by the appellants or within clause (j) as contended on behalf of the prosecution or within both and, if it falls within both, what the effect ? Section 2(i) defines 'adulterated ' and says that an article of food shah be deemed to be adulterat ed if the article fails within the description given in any of the succeeding clauses (a) to (1).
Clause (j) provides that an article of food shall be deemed to be adulterated: "(j) if any colouring matter other than that prescribed in respect thereof and in amounts not within the prescribed limits of variability is present in the article." and clause (1) deems an article of food to be adulterated: "(1) if the quality or purity of the article fails below the prescribed standard or if constitu ents are present in quantities which are in excess of the prescribed limits of variability.
" In the present case what was sold by the appellants was linseed oil which contained artificial dye.
The standard of quality of linseed oil is defined in Paragraph A. 17.04 of Appendix B to the Prevention of Food Adulteration Rules, 1955 as follows: "A l7.04.
Linseed oil (Tilli ka tel) means the oil obtained by process of expressing clean and sound linseed (Linum usitatissimum).
It shall be clear, free from rancidity, suspended or other foreign matter, separated water, added colouring or flavouring substances, or mineral oil.
It shall conform to the following standards: (a) Butyro refractometer reading at 40 deg.
C . 69.5 to 74.3 (b) Saponification value . . 188 to 195 (c) Iodine value . .
Not less than 170 (d) Unsaphnifiable matter . .
Not more than 1.5 per cent (e) Free fatty acid as Oleic acid not more than 2.0 per cent." The argument of the appellants was that the requirement of this paragraph that linseed oil shall be free from foreign matter or added colouring substances lays down a standard of quality of linseed oil and since the linseed oil sold by the appellants contained artificial dye, the quality of the linseed oil fell below the prescribed standard and 597 hence the case was covered by clause (i) of section 2(i).
The appellants contended that if clause (1) of section 2(i) was applicable in the present case, it excluded the applica bility of clause (j) and the linseed oil containing artifi cial dye could not be said to be adulterated under that clause.
It was also urged on behalf of the appellants that, in any event, no colouring matter was prescribed in respect of linseed oil and.
therefore, it could not be said that there was present in the linseed oil sold by the appellants artificial dye "other than that prescribed in respect there of and in amounts not within the prescribed limits 0f variability" so as to bring the case within the scope of clause (j) of section 2(i).
These contentions of the appellants, plausible though they may seem at first sight, are without merit and must be rejected.
Our reasons for saying so are as follows.
It may be made clear at the out set that the different clauses of section 2(i) are not mutually exclusive.
They overlap one another ,red, it is quite possible that an article of food may be found adulterated under two or more clauses of section 2(i).
Take for example a case where an article of food contains a foreign substance which affects injuriously the quality thereof and at the same time renders it unfit for human consumption.
Such a case would clearly fall within clauses (b) and (f) of section 2(i) and the article of food would be deemed to be adulterated under both these clauses.
So also, a case may arise where a colouring matter not permitted under the rules is added to an article of food and such colouring matter affects injuriously the quality of the article of food and in such a case too more than one clause of section 2(i) would be attracted, namely, clause (b) and (i).
These instances which we have given are merely by way of illustration and they show that merely because an article of food is covered by one clause of section 2(i), it does not exclude the applicability of another clause of the section an article of food may be deemed to be adulterated under more than one clauses of section 2(i).
It is, therefore, not a valid argument that because the present case falls under clause (1) of section 2(i), the applicability of clause (j) is ipso facto nega tived and the case cannot come within that clause.
That takes us to the question whether the present case falls within clause (i) of section 2(i), for if it does, it would be immaterial whethere it falls also within clause (1) of section 2 (i) and in so far as the linseed oil sold by the appellants is deemed to be adulterated under clause (j) of section 2(i), the proviso to section 16(1) would not be attracted.
Now, the ;report of the Public Analyst showed that the linseed oil sold by the appellants contained arti ficial dye and this was clearly prohibited under the Rules.
Rule 23 provided that the addition of a colouring matter to an article of food, except as specifically permitted by the Rules, shall be prohibited.
The only artificial dyes, which were permitted to be used in food, were those set out in Rule 28, and Rule 29 prohibited the use of permitted coal tar dyes in or upon any food other than those enumerated in that Rule.
Linseed oil was admittedly not one of the arti cles of food enumerated in Rule 29 and hence even permitted coal tar dyes could not be added to linseed oil.
It does not appear from the report of the Public Analyst 598 as to what was the artificial dye found mixed in the sample of linseed oil sent to him but we will assume in favour of the defence that it was a permitted coal tar dye.
Even so, by reason of Rules 23 and 29, it could not be added to linseed oil.
In the circumstances, the, linseed oil sold by the appellants contained artificial dye which was prohibited under the Rules.
The argument of the appellants was that since colouring matter was prohibited in respect of linseed oil, it could not be said that any colouring matter was prescribed in respect of linseed oil by the Rules and hence the presence of artificial dye in linseed oil did not at tract the applicability of clause (j) of section 2(i).
It was said that clause (j) of section 2(i) would be attracted only if a colouring matter is prescribed in respect of an article of food and the article is found to contain a co louring matter different from that prescribed.
But if no colouring matter is prescribed, which would be the position where colouring matter is totally prohibited, it cannot be said that the article of food contains a colouring matter other than that prescribed in respect of it.
This argument has the merit of ingenuity but it has no force and cannot be sustained.
When no colouring matter is permitted to be used in respect of an article of food, what is prescribed in respect of the article is "nil colouring matter" and if the article contains any colouring matter, it would be "other than that prescribed in respect" of the article.
Clause (j) of section 2(i) is not merely intended to cover a case where one type of colouring matter is permitted to be used in respect of an article of food and the article contains another type of colouring matter but it also takes in a case where no colouring matter is permitted to be used in respect of an article of food, or in other words, it is prohibited and yet the article contains a colouring matter.
There is really no difference h3 principle between the two kinds of cases.
Both are equally reprehensible; in fact the latter may in conceivable cases be more serious than the former.
Where no colouring matter is permitted to be used in an article of food, what is prescribed in respect of the arti cle is that no coIouring matter shall be used and if any colouring matter is present in the article in breach of that prescription, it would clearly involve violation of cl.
(j) of section 2(i).
The words of clause (j) of section 2(i) "other than that prescribed in respect thereof recall to the mind similar words used in section 29(2) of the Limita tion Act which makes certain provisions of the Limitation Act applicable in cases where a special or local law pre scribes a period of limitation different from the period prescribed by the Schedule to the Limitation Act.
These words of section 29(2) of the Limitation Act came up for interpretation before this Court in Vidyacharan Shukla vs Khubchand Baghel.(1) It was contended in that case that on ,a true construction of these words, it is only where a period of limitation is specifically prescribed in the Schedule and a special or local law prescribes a different period of limitation, that section 29(2) would be attracted and that section would have no application where no time limit is prescribed by the Schedule.
This contention was negatived and it was held by this Court that where the Schedule does not specifically prescribe any period of limitation for an application but is silent and a special or local law prescribes a period of limitation for such an ; 599 application, it can appropriately be said that the special or local law has prescribed a period of limitation differ ent from that prescribed in the Schedule and section 29(2) would be applicable.
The analogy of this decision is very apt and it supports the construction we are inclined to place on the words "other than that prescribed in respect thereof" in clause (j) of section 2(i).
We take the view that even where the Rules prescribe that no colouring matter or artificial dye shall be used in respect of an article of food, clause (j) of section 2(i) would apply if it is found that some colouring matter or artificial dye is present in the article.
Here, the linseed oil sold by the appellants contained artificial dye despite the prohibition in the Rules and hence the case was dearly covered by clause (j) of section 2(i) and the linseed oil must be deemed to be adulterated under that caluse.
That would exclude the applicability of the provi so to section (1), since the offence in this view would be one with respect to an article of food deemed to be adul terated under clause (j) of section 2(i).
The appellants ' plea invoking the liberality of the provision enacted in the proviso to section 16(1) must, in the circumstances, be rejected and the minimum sentence of imprisonment for six months must be maintained.
The appellants then pleaded that in any event on the facts and circumstances of the present case the benefit of the should be given to them and they should not be consigned to the rigours of jail life.
This plea also does not impress us.
It is no doubt true and that was laid down by this Court in the first pronouncement made by it on the subject in Isher Das vs State(1) that the operation of the is not excluded in case of persons found guilty of offences under the Prevention of the Food Adulteration Act, 1954.
To quote the words of Krishna lyer, 3., in P.K. Tejani vs
M.R. Dange(2) "The rehabilatory purpose of the is pervasive enough technically to take within its wings an offence even under the Act".
But in the very same decision in Isher Das 's case (supra) this Court sounded a note of caution which must be borne in mind: "Adulteration of food is a menace to public health.
The has been enacted with the aim of eradicating that anti social evil and for ensur ing purity in the articles of food.
In view of the above object of the Act and the intention of the legislature as revealed by the fact that a minimum sentence of imprisonment for a period of six months and a fine of rupees one thou sand has been prescribed, the courts should not lightly resort to the provisions of the in the case of persons above 21 years of age found guilty of offences under the . ." The imperatives of social defence must discourage the applicability of the probation principle.
No chances can be taken by society with a man whose anti social activites, in the guise of a respectable trade, jeopardise the health and well being of numerous innocent consumers.
(1) (2) [1974] 2 S.C.R. 154.
600 The adulterator is a social risk.
It might be dangerous to leave him free to carry on his nefarious activities by applying the probation principle to him.
Moreover, it must be remembered that adulteration is an economic offence prompted by profit motive and it is not likely to lend itself easily to therapeutic treatment by the probationary measure.
It may be pointed out that the Law Commission also in its Forty Seventh Report recommended the exclusion of applicability of the probationary process in case of social and economic offences and presumably in response to this recommendation, the Legislature has recently amended the by introducing section 20AA providing that nothing contained in the or section 360 of the Code of Criminal Procedure, 1973 shall apply to a person convict ed of an offence under the Act unless that person is under eighteen years of age This amendment of course would not apply in the present case but it shows the legislative trend which it would not be right for the court to ignore.
We cannot, therefore, give the benefit of the to the appellants and release them on probation.
We accordingly confirm the conviction and sentence recorded against the appellants and dismiss the appeal.
P.H.P. Appeal dismissed.

summary/full:
The second appellant was the owner of a grocery shop and the first appellant was his salesman in the shop.
Food Inspector Bhanot purchased a sample from appellant No. 1 of mustard oil after complying with the formalities prescribed by the Act.
The Public Analyst reported that the sample was misbranded as it was of in seed oil and it was adulterated due to the presence of artificial dye.
The appellants were charge sheeted under section 16(1)(a)(i).
The learned Magis trate convicted the appellants and sentenced them to suffer rigorous imprisonment for 9 months.
On appeal, the learned Sessions Judge confirmed the conviction but reduced the sentence from 9 months to 6 months.
The High Court, in revision upheld the decision of the Sessions Judge.
On appeal of Special Leave the appellants contended: 1.
The conviction was bad since it rested solely on the evidence of Food: Inspector Bhanot.
The offence committed by the appellants on the opinion of the Public Analyst fell under sec tion 16(1)(a)(i) read with clause (1) of section 2 (i) and, therefore, the Court had discretion under the proviso to section 16(1) to impose a lesser sentence than the minimum of 6 months.
In any event, the benefit of the ,, should be given to the appel lants.
Dismissing the appeal, HELD: 1.
There is no rule of law that conviction cannot be based on the sole testimony of a Food Inspector.
It is only out of a sense of caution that the courts insist that the testimony of a Food Inspector should be corroborated by some independent witness.
This is a necessary caution which has to be borne in mind because the Food Inspector may in a sense be regarded as an interested witness.
But this cau tion is a rule of prudence and not a rule of law.
If it were otherwise it would be possible for many guilty persons to escape punishment by resorting to the device of bribing Panch witnesses.
In the present case, the sample was taken in the presence of witness Krishan Datt Sharma who has turned hostile.
His explanation is palpably dishonest and cannot be accepted.
There is also the evidence of another Food Inspector Bhatnagar.
The Courts below accepted their evidence and there is no reason to interfere with the con current view taken by the courts below.
[595A G] 2.
Section 2(1) defines "Adulterated" and says that an article of food shall be deemed to be adulterated if the article fails within the description given in my of the succeeding clauses (a) to (1).
Clause (j) provides that an article of food shall be deemed to be adulterated if any colouring matter other than 593 that prescribed in respect thereof and in amounts not within the prescribed limits of variability is present in the article.
Clause (1) deems an article of food to be adulter ated if the quality or purity of the article fails below the prescribed standard or its constituents are present in quantities which are in excess of the prescribed limits of variability.
[596C D] 3.
It is wrong to contend that if an article fails within clause (1) it cannot fail under clause (j) or any other clause.
Different clauses of section 2(i) are not mutually exclusive; they, overlap one another and it is quite possible that an article of food may be found adulter ated trader two or more clauses of section 2(i).
[597A C] 4.
The report of the public analyst showed that the linseed oil contained artificial dye and this was clearly prohibited under rule 23.
The only artificial dyes which were permitted to be used in food were those set out in rule 28 and Rule 29.
prohibited the use of permitted coal tar dyes in or upon any articles of food other than those enu merated in that Rule.
Lin seed oil was not one of the arti cles of food enumerated in rule 29 and hence artificial dye, even if permitted coal tar dye could not be added to linseed oil.
[597G H, 598A] 5.
The contention of the appellants that clause (j) would be attracted only if colouring matter is prescribed and the article of food is found to con:sin a colouring matter different from that prescribed was negatived.
When no colouring matter is permitted to be used in respect of an article of food what is prescribed in respect of the article is 'nil ' colouring matter and if the article contains any colouring matter it would be "other than that prescribed in respect" of the article.
[597A C, 598B D] Vidyacharan Shukla vs KhubchandBaghel, ; , relied on.
The operation of the is not excluded in case of persons found guilty of offence under the .
Howev er, imperatives of social defence must discourage the ap plicability of the probation principle.
No chances can be taken by Society with a man whose anti social activities in the guise of a respectable trade jeopardise the health and well being of numerous innocent consumers.
The adulterator is a social risk; it might be dangerous to leave him free to carry on his nefarious activities by applying the probation principle to him.
Adulteration is an economic offence prompted by profit motive and it is not likely to lend itself easily to therapeutic treatment by probationary measure.
[599D, G H, 600A B] Isher Das vs State and 1.
K. Tejani vs
M.R. Dhange, [1974] 2 S.C.R. 154 followed.