judgement:
Appeal No. 77 of 1957.
Appeal from the judgment and decree dated the August 6, 1954, of the Calcutta High Court in Appeal from Original Decree No. 73 of 1952.
M. C. Setalvad, Attorney General for India, W. section Barlingay and A. 0.
Ratnaparkhi, for the appellant.
A.V. Viswanatha Sastri and P. K. Chatterjee, for respondent No. 1. 1961.
March 1.
, J. This appeal arises from a suit filed by respondent 1 Durga Prosad Chamaria against respondent 2 the heirs of John Carapiet Galstaun and others in which he sought to recover Rs. 4 p 64,213 5 3 on the mortgaes in suit.
He had prayed for a preliminary mortgage decree according to 0.
XXXIV, r. 4 of the Code of Civil Procedure and had asked for the appointment of a receiver in that behalf. 'The said mortgages were created by delivery of documents of title to immovable properties by the mortgagor John Carapiet Galstaun who died pending the suit.
The properties mortgaged consisted of three items all of which are situated in Calcutta.
These items are 24, Amratolla Lane, 96, Karaya Road 142 and premises 167/1 and 167/5 Dhurrumtolla Street (Chandni Bazar).
In the present appeal we are concerned with premises 167/1.
Respondent 1 's case was that he had advanced several amounts on seven different occasions to the mortgagor between August 2, 1926, and November 27, 1931.
According to the terms of the transaction no specific time for payment of the mortgage dues had been fixed, and it was agreed that the monies advanced would become due and be repaid on demand being actually made by the mortgagee.
With this plea we are not concerned in the present appeal.
It was further pleaded by the mortgagee that the mortgagor had acknowledged his liability of the mortgagee 's claim by letters of March 5, 1932, and February 17, 1943, which were signed by him.
It is on the strength of these acknowledgments that the mortgagee purported to bring his claim within time the suit having been filed on May 18, 1944.
Pending the suit the appellant was added as a party defendant on August 23, 1944.
By his application made by respondent 1 in that behalf it was alleged that the appellant had become the auction purchaser of premises 167/1 at a sale held by the Sheriff of Calcutta on May 3, 1944, in execution of a decree passed in Suit No. 2356 of 1931 by the Calcutta High Court with notice of mortgage in favour of respondent 1.
Since the said sale had been confirmed on July 6, 1944, the appellant bad become a necessary party to the suit.
That is how the appellant became a party to the proceedings and was interested like the mortgagor in disputing the validity of the claim made by respondent1.
The principal issue which arose between the parties in the suit was one of limitation.
It was not seriously disputed that the letter written by the mortgagor on February 17, 1943, amounted to an acknowledgment and it helped to bring within time respondent 1 's claim in respect of the last advance of Rs. 2,500 made on November 27, 1931.
Respondent 1 's case that the earlier letter of March ' 5, 1932, amounted to an acknowledgment was, however, seriously disputed by the appellant.
If this letter is held to amount to a 143 valid acknowledgment two items of consideration pleaded by respondent I would be within time; they are Rs. 20,000 and Rs. 35,000 advanced on the same day , September 10, 1926.
Mr. Justice Banerjee, who tried the suit on the Original Side of the Calcutta High Court, held that the letter in question did not amount to an acknowledgment, and so he found that only the last item of Rs. 2,500 was in time.
In the result he passed a decree for Rs. 5,000 only in favour of respondent 1.
Then respondent 1 took the dispute before the Court of Appeal in the Calcutta High Court.
The Court of Appeal has upheld the case made out by respondent I in regard to the acknowledgment based on the letter of March 5, 1932, and in consequence it has been held that the principal amounts due to respondent 1 are Rs. 55,000 and Rs. 2,500, and at the rate of interest payable thereon at 8% simple, the total amount payable being subject to the maximum allowable under the Money lenders ' Act.
In accordance with these findings a preliminary decree has been drawn.
It is this decree which is challenged before us by the appellant who has brought his appeal to this court with a certificate issued by the Calcutta High Court; and the only point which is raised for our decision is whether the letter in question amounts to a valid acknowledgment under section 19 of the Limitation Act.
The decision of this question would naturally depend upon the construction of the letter on which respondent 1 relies; but before reading the said letter it would be relevant to consider the essential requirements of section 19 which provides for the effect of acknowledgment in writing.
Section 19(1) says, inter alia, that where before the expiration of the period prescribed for a suit in respect of any right, an acknowledgment of liability in respect of such right has been made in writing signed by the party against whom such right is claimed, a fresh period of limitation shall be computed from the time when the acknowledgment was so signed.
It would be noticed that some of the relevant essential requirements of a valid acknowledgment are that it must be made before the relevant period of limitation has 144 expired, it must be in regard to the liability in respect of the right in question and it must be made in writing and must be signed by the party against whom such right is claimed.
Section 19(2) provides that where the writing containing the acknowledgment is undated oral evidence may be given about the time when it was signed but it prescribes that subject to the provisions of the , oral evidence of its contents shall not be received; in other words, though oral evidence may be given about the date oral evidence about the contents of the document is excluded.
Explanation 1 is also relevant.
It provides, inter alia, that for the purpose of section 19 an acknowledgment may be sufficient though it omits to specify the exact nature of the right or avers that the time for payment has not yet come, or is accompanied by a refusal to pay, or is coupled with &.,claim to a set off, or is addressed to a person other than the person entitled to the right.
It is thus clear that acknowledgment as prescribed by section 19 merely renews debt; it does not create a new right of action.
It is a mere acknowledgment of the liability in respect of the right in question; it need not be accompanied by a promise to pay either expressly or even by implication.
The statement on which a plea of acknowledgment is based must relate to a present subsisting liability though the exact nature or the specific character of the said liability may not be indicated in words.
Words used in the acknowledge judgment must, however, indicate the existence of jural relationship between the parties such as that of debtor and creditor, and it must appear that the statement is made with the intention to admit such jural relationship.
Such intention can be inferred by implication from the nature of the admission, and need not be expressed in words.
If the statement is fairly clear then the intention to admit jural relationship may be implied from it.
The admission in question need not be express but must be made in circumstances and in words from which the court can reasonably infer that the person making the admission intended to refer to a subsisting liability as at the date 145 of the statement.
In construing words used in the statements made in writing on which a plea of acknowledgment rests oral evidence has been expressly section excluded but surrounding circumstances can always be considered.
Stated generally courts lean in favour of a liberal construction of such statements though it does not mean that where no admission is made one should be inferred, or where a statement was made clearly G. without intending to admit the existence of jural relationship such intention could ' be fastened on the maker of the statement by an involved or far fetched process of reasoning.
Broadly stated that is the effect of the relevant provisions contained in section 19, and there is really no substantial difference between the parties as to the true legal position in this matter.
It is often said that in deciding the question as to whether any particular writing amounts to an acknowledgment as in construing wills, for instance, it is not very useful to refer to judicial decisions on the point.
The effect of the words used in a particular document must inevitably depend upon the context in which the words are used and would always be conditioned by the tenor of the said document, and so unless words used in a given document are identical with words used in a document judicially considered it would not ,serve any useful purpose to refer to judicial precedents in the matter.
However, since decisions have been cited before us both by the learned Attorney General and Mr. Viswanatha Sastri we propose to refer to them very briefly before turning to the document in question.
The question as to what is an acknowledgment has been answered by Fry, L., J., as early as 1884 A. D. in Green vs Humphreys (1).
This answer is often quoted with approval.
"What if; an acknowledgment", asked Fry, L.J., and he proceeded, "in my view an acknowledgment is an admission by the writer that there is a debt owing by him, either to the receiver of the letter or to some other person on whose behalf the letter is received but it is not enough that he refers to a debt (1) (1884) 26 Ch.
D 474, 481 146 as being due from somebody.
In order to take the case out of the statute there must upon the fair construction of the letter, read by the light of the surrounding circumstances, be an admission that the writer owes the debt".
With respect, it may be added, that this statement succinctly and tersely gives the substance of the provisions contained in section 19 of the Limitation Act.
Mr. Sastri has relied on the decision of the Privy Council in Beti Maharani vs Collector of Etawah (1) in which the Privy Council has recognised that it would be legitimate for the purpose of construing a document to look at the surrounding circumstances and that oral evidence about the intention of the maker of the statement cannot be admitted for the purpose of construing the said statement.
"Their Lordships", observed Lord Hobhouse, who spoke for the Board, "cannot follow the learned judges of the High Court in admitting the Collector to give oral evidence of his intentions for the purpose of construing the notice.
But they may for that purpose properly, look at the surrounding circumstances".
In Sukhamoni Chowdhrani vs Ishan Chunder Roy (2) the statements on which reliance was placed by the creditor was contained in the directions given by the debtor to apply surplus income "to the payment of the ijmali debts of us three co owners of which a list is given below".
It was held that by this statement the defendant acknowledged a joint debt and "from that follow the legal incidents of her position as a joint debtor with the plaintiff, one of which is that he may sue her for contribution".
In other words, admission about a joint debt amounted to an acknowledgment though the liability to be sued for contribution is a matter of legal inference from the said admission and it had not been specifically included in the statement in question.
Mr. Sastri has also relied on the decision of the Full Bench of the Allahabad High Court in Munshi Lal vs Hira Lal (3) where it has been held that a document said to constitute an acknowledgment has to be construed in the context in which it is given and that (1) (1894) 22 I.A. 31, 41 (2) (1897) 25 I A 95 (3) I.L.R. [1947] All. 11. 147 where its language is not clear in itself the context must be examined to see what it is to which the words referred.
The Court, however, added that its decision She did not mean that any equivocation in an acknowledgment can be cured by ascertaining what the probable intention of the acknowledger was.
Similarly in L Swaminatha Odayar vs Subbarama Ayyar (1) the Madras High Court has held that an acknowledgment for liability under section 19 need not be express but may be implied from facts and circumstances under which a statement in a deposition was made but it cannot be implied as a matter of law.
On the other hand, the learned Attorney General has strongly relied on an earlier decision of the Bombay High Court in Dharma Vithal vs Govind Sadvalkar (2).
In that case certain statements made in the receipt given for the delivery of the land to the officer of the Court were relied upon as amounting to an acknowledgment.
The said receipt referred to the suit and decree and the decree to which reference was thus made had set forth in ordinary course the then plain.
tiff 's claim as resting on a mortgage.
The contention was that the reference to the decree made the decree a part of the receipt and since the decree referred to the plaintiff 's claim as resting on a mortgage the receipt itself served as an acknowledgment of a mortgage subsisting in 1827.
This plea was rejected by the High Court.
The High Court held that all that the receipt admits by implication is that the land had been awarded by the decree to the party who passed the receipt. "To extend it", observed West, J., "so as to make it an admission of the reasoning and legal grounds stated in the decree, would be to go beyond what probably was present at all to the consciousness of the recipient when he acknowledged having been put into possession".
The learned judge then added that "the intention of the law manifestly is to make an admission in writing of an existing jural relation of the kind specified equivalent for the purposes of limitation to a new contract".
As we will make it clear when we deal with the document before us it would be realised (1) Mad.
(2) Bom.
99. 148 that this case cannot assist the appellant.
The receipt itself did not contain any admission about the jural, relation between the parties.
It merely referred to the decree which had set out the material allegations made in the plaint.
Now 5 it would be plainly unreasonable to attribute to the party passing the receipt an intention to make the admissions which may be inferred from the averments made in the plaint which were incidentally recited, and so the Bombay High Court naturally rejected the plea that the receipt amounted to a valid acknowledgment.
Incidentally we may add that when West, J. referred to a new contract file had perhaps in mind the definition of acknowledgment under section 4 of Act XIV of 1859 which required a promise to pay in addition to the subsistence of jural relationship.
The element of promise was omitted in the subsequent Act XV of 1877, and it continues to be omitted ever since.
As we have already indicated, under the present law acknowledgment merely renews the debt and does not create a fresh cause of action.
It is now necessary to consider the document on which the plea of acknowledgment is based.
This document was written on March 5, 1932.
It, however, appears that on November 26, 1931, another letter had been written by respondent 2 to respondent 1; and it would be relevant to consider this letter before construing the principal document.
In this letter respondent 2 had told respondent 1 that the Chandni Bazar property was being sold the next morning at the Rekistrar 's sale on behalf of the first mortgagee and that the matter was urgent.
, otherwise the property would be sacrificed.
It appears that the said property was subject to the first prior mortgage and respondent 2 appealed to respondent 1 to save the said threatened sale at the instance of the prior mortgagee.
It is common ground that respondent 1 paid to respondent 2 Rs. 2,500 on November 27, 1931 and the threatened sale was avoided.
This fact is relevant in construing the subsequent letter.
The said property was again advertised for sale on March 11, 1932, and it was about this sale that the 149 letter in question came to be written by respondent 2 to respondent 1 on March 5, 1932.
This is how the letter reads: "My dear Durgaprosad, Chandni Bazar is again advertised for sale on Friday the 11th instant.
I am afraid it will go very cheap.
I had a private offer of Rs. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew.
As you are interested why do not you take up the whole.
There is only about 70,000 due to the mortgagee a payment of 10,000 will stop the sale.
Yours sincerely, Sd.
J. C. Galstaun.
" Does this letter amount to an acknowledgment of respondent 1 's right as a mortgagee? That is the question which calls for our decision.
The argument in favour of respondent 1 's case is that when the document refers to respondent 1 as ' being interested it refers to his interest as a puisne mortgagee and when it asks respondent 1 to take up the whole it invites him to acquire the whole of the mortgage interest including the interest of the prior mortgagee at whose instance the property was put up for sale.
On the other hand, the appellant 's contention is that the word "interest" is vague and indefinite and that respondent 1 may have been interested in the property in more ways than one.
In that connection the appellant relies on the statements made by respondent 1 in his evidence.
He stated that he was interested in the property in many ways and he clarified by adding that in the first instance he was a mortgagee having a charge on the property so that if the mortgagor was not able to pay him the money then he could have given him the property or the appellant could have got the property from him.
He also stated that at one time he was thinking of buying or taking lease of the property in order to liquidate the debt but he added that negotiations in regard to the lease had taken place in 1926 and they bad ended in failure.
According to him no such negotiations had taken place in 150 1932.
It is urged that when the letter refers to the interest of respondent 1 in the property in question it may be interest as an intending purchaser or as an intending lessee.
In construing this letter it would be necessary to bear in mind the general tenor of the letter considered as a whole.
It is obvious that respondent 2 was requesting respondent 1 to avoid the sale as he did on an earlier occasion in November, 1931.
The previous incident shows that when the property was put to sale by the first mortgagee the mortgagor rushed to the second mortgagee to stop the sale, and this obviously was with a view to persuade the second mortgagee to prevent the sale which would otherwise affect his own interest as such mortgagee.
The theory that the letter refers to the interest of respondent 1 as an intending lessee or purchaser is far fetched, if not absolutely fantastic.
Negotiations in that behalf had been unsuccessful in 1926 and for nearly five years thereafter nothing was heard about the said proposal.
In the context it seems to us impossible to escape the conclusion that the interest mentioned in the letter is the interest of respondent 1 as a puisne mortgagee and when the said letter appeals to him to take, up the whole it can mean nothing other than the whole of the mortgagee 's interest including the interest of the prior mortgagee.
An appeal to respondent 1 to stop the sale on payment of Rs. 10,000, as he in fact had stopped a similar sale in November, 1931, is an appeal to ensure his own interest in the security which should be kept intact and that can be achieved only if the threatened sale is averted.
We have carefully considered the arguments urged before us by the learned Attorney General but we see no reason to differ from the conclusion reached by the Court of Appeal below that this letter amounts to an acknowledgment.
The tenor of the letter shows that it is addressed by respondent 2 as mortgagor to respondent 1 as puisne mortgagee, it reminds him of his interest as such mortgagee in the property which would be put up for sale by the first mortgagee, and appeals to him to assist the avoidance of sale, and thus acquire the 151 whole of the mortgagee 's interest.
It is common ground that no other relationship existed between the parties at the date of this letter, and the only subsisting relationship was that of mortgagee and mortgagor.
This letter acknowledges the existence of the.
said jural relationship and amounts to a clear acknowledgment under a. 19 of the Limitation Act.
It is conceded that if this letter is held to be an acknowledgement there can be no other challenge against the decree under appeal.
In the result the appeal fails and is dismissed with costs.
Appeal dismissed.

summary/full:
In a mortgage suit brought by him, the respondent 1, the mortgagee, pleaded that limitation was saved by a letter written to him by the mortgagor, the respondent 2, which amounted to acknowledgment under section 19 of the Indian Limitation Act.
There was a prior mortgage and before writing the letter in question the mortgagor had written another letter appealing to respondent 1 to save the property from being sold at the instance of the prior mortgagee.
Thereupon the respondent No. 1 paid the required amount and the threatened sale was averted.
The property was again advertised for sale and that was why the letter in question was written; it ran as follows, "Chandni Bazar is again advertised for sale on Friday the 11th instant.
I am afraid it will go very cheap.
I had a private offer of Rs. 2,75,000 a few days ago but as soon as they heard it was advertised by the Registrar they withdrew.
As you are interested why do not you take up the whole.
There is only about 70,000 due to the mortgagee a payment of Rs. 10,000 will stop the sale".
The question was whether this letter amounted to an acknow ledgment of the respondent 1 's right as mortgagee under section 19 of the Indian Limitation Act.
The trial judge held that it did not, but the Court of appeal took the contrary view.
The auction purchaser appealed to this Court.
Held, that it was obvious that the interest mentioned in the letter in the context of the previous one was none other than that of respondent 1 as a puisne mortgagee and the appeal to take up the whole meant the entirety of the mortgagee 's interest including that of the prior mortgagee.
Since admittedly the only subsisting relation between the parties at the date of the letter was that of mortgagee and mortgagor and the letter acknowledged the existence of that jural relationship, it clearly amounted to an acknowledgment under section 19 of the Act.
Held, further, that the essential requirement for sustaining a plea of acknowledgment under section 19 of the Act is that the statement on which it is sought to be founded must relate to a 141 subsisting liability, indicate the existence of the jural relationship between the parties and must be intended, either expressly or impliedly, to admit that jural relationship.
The words used in a particular statement must be construed in the light of its own tenor and according to the context and unless the words used are identical and the interest is similar, previous decisions interpreting somewhat similar documents are not of much help.
Green vs Humphreys,, , referred to.
Beti Maharani vs Gollector of Etawah, (1894) L.R. 22 I.A. 3,, Sukkamoni Choudhrani vs Ishan Chunder Roy, (1897) L.R. 25 I.A. 95, Munshi Lal vs Hira Lal, I.L.R. 1947 All.
II and Swaminatha Odayar vs Subbarama Ayyar, Mad. 548, considered.
Dharma Vithal vs Govind Sadvalkar, Bom.
99, held inapplicable.


judgement:
Appeal No. 272 of 1956.
Appeal from the judgment and decree dated June 28, 1954, of the former Nagpur High Court, in First Appeal No. 107 of 1946.
M. C. Setalvad, Attorney General for India, Purshottam Trikamdas, section T. Khirwadkar and I. N. Shroff for the appellant.
Achhru Ram, A. R. Chaubey and Naunit Lal for the respondents.
February 22.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal on a certificate granted by the Nagpur High Court.
The brief facts necessary for present purposes are these.
One Ramchandar Jat originally owned Annas 10/8 share in Mauza Tamalawadi while the rest belonged to others.
Ramchandar executed a simple mortgage deed on July 27, 1920, in favour of Seth Ram Jiwan and two.
minors Ram Narain and Radhey Sham.
The plaintiffs.
respondents are the representatives of the mortgagees.
On August 27, 1926, the defendant appellant purchased Annas /5/4 share belonging to the other share holders in the village.
Thereafter, the appellant brought a 915 suit against Ramchandar who was lambardar of the village for profits, in which 9, decree was passed against Ramchandar.
In execution of that decree the appellant purchased the entire Annas /10/8 share of Ramchandar in the village about the year 1932.
In consequence, the appellant became the owner of the entire village subject to the mortgage of the respondents on Annas /5/4 share therein.
On July 27, 1932, the respondents sued Ramchandar on the basis of their mortgage deed and a preliminary decree for sale was passed in March, 1937.
To this suit the appellant was also a party.
The preliminary decree was followed by a final decree and thereafter the property was put to sale and was purchased by the respondents on March 1, 1940.
This sale was confirmed on April 12, 1940, and a sale certificate was granted to the respondents.
So by the year 1940 the respondents were the owners of Annas /5/4 share in the village while the appellant was the owner of Annas /10/8 share.
The appellant was also a lambardar.
Ramchandar Jat held sir land in certain khasras with a total area of 252 49 acres.
On the sale of Ramchandar 's share to the appellant, Ramchandar became an ex proprietary tenant of his sir land.
Thereafter Ramchandar was ejected from his exproprietary tenancy sometime in 1936 and the lands came into possession of the appellant.
There were certain other lands which were nominally recorded as Muafi Khairati in the name of Ramchandar 's mother but were actually in the possession of Ramchandar.
It appears that Ramchandar was ejected from these lands also and they came into, the possession of the appellant.
Further the appellant as a lambardar came into possession of certain other lands by surrender or otherwise.
The respondents filed a suit for partition before the Sub Divisional Officer, Hard&, in 1942.
In that suit they claimed half share in the lands of Ramchandar and his mother which came into.
the possession of the appellant.
They also claimed a share in other lands which came into the possession of the appellant as lambardar.
Their case was that these lands were 916 accession to the mortgage in their favour and they were therefore entitled to a proper share in them '.
This claim was resisted by the appellant before the Sub Divisional Officer.
On October 20, 1943, the Sub Divisional Officer passed an order which in effect rejected the contention of the respondents and accepted the plea of the appellant.
Thereupon the respondents filed the present suit for a declaration in the civil court in 1944 claiming that they were entitled to a proportionate share in the lands specified in the plaint.
The suit was resisted by the appellant and his contention was that the respondents had purchased specific khudkashat and chhotaghas plots and that they therefore could not be allowed anything more than what was mentioned in the decree and the sale certificate which were the basis of their title.
As the specific lands with respect to which the respondents claimed a declaration in this suit were not mentioned in the sale certificate, they were not entitled to any share in them.
A large number of issues were framed by the trial court, which decreed a part of the claim put forward by the respondents but dismissed the rest.
Consequently, the respondents went up in appeal to the High Court.
The appeal was allowed so far as the respondents ' claim to one half share in the sir plots held by Ramchandar was concerned.
Further, they were allowed one third share in the lands held by the mother of Ramchandar and also in certain other lands which came into the possession of the appellant as lambardar subject to payment of certain amounts.
This was followed by an application by the appellant for leave to appeal to this Court and a certificate was granted by the High Court.
That is how the matter has come up before us.
The main contention of the appellant before us is that the mortgage deed of 1920 which is the basis of the title of the respondents did not include the sir plots in the possession of, Ramchandar nor the plots of Ramchandar 's mother.
Nor were these plots included in the suit which was brought by the respondents on the basis of the mortgage deed.
Further, the sale certificate also did not include these plots, though 917 some other plots were mentioned therein.
Therefore, the respondents were not entitled to these plots as accession to the mortgage.
This brings us to a consideration of the mortgage in favour of the respondents.
The mortgage was without possession and the property mortgaged was mentioned in these terms: " I do hereby mortgage without possession half share /5/4, five annas and four pies, area 678.31 acres, jama sarkar Rs. 326/10/8 together with khudkashat, chhotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and prvileges appertaining to the village.
" It will be seen that what was mortgaged was the entire half share of Ramchandar in /10/8 share which he owned in the village.
It is true that the mortgage goes on to describe certain other things but that in our opinion is merely by way of precaution, for even if the part underlined* was not there in the mortgage, the respondents being the mortgagees of /5/4 share would be entitled to everything contained in that share.
The underlined* part of the mortgage therefore does not cut down the amplitude of the mortgage with respect to the entire /5/4 share out of /10/8 share of Ramchandar.
It is true that sir is not specifically mentioned in the mortgage but as the mortgage was of the entire /5/4 share out of /10/8 share it will include (unless there is a specific exclusion of sir) the area of sir also pertaining to the share mortgaged.
In this connection our attention was drawn to as.
68 and 69 of the Central Provinces Land Revenue Act, No. 11 of 1917, which was in force at the relevant time.
Section 68 deals with sir land and section 69 wit khudkashat.
Sir is defined in section 2 (17) and khudkashat is defined in section 2 (5) as " that part of the home farm of a mahal which is cultivated by the proprietor as such and which is not sir land.
" Thus though sir land may be a part of the home farm it is a different entity Here printed in italics.
918 from khudkashat land.
Reference was also made to sections 49 and 50 of the Central Provinces Tenancy Act, No. 1 of 1920 (hereinafter called the Tenancy Act) which deal with transfer of sir land.
Under section 49 (1) a proprietor who temporarily or permanently loses whether under a decree or order of a civil court or by transfer or otherwise his right to occupy any portion of his sir land as a proprietor shall at the date of such loss, become an occupancy.
tenant except where he has obtained a sanction under section 50 of the Tenancy Act.
Further under section 49 (2) there is a prohibition on the registration of documents which purport to transfer all the rights of a proprietor in big sir land without reservation of the right of tenancy specified in sub section
It is urged for the appellant that the reason why sir land was not mentioned in the mortgage deed of 1920 was that otherwise sanction of the Revenue Officer would have been required under section 50 of the Tenancy Act.
Now section 50 provides that if a proprietor desires to transfer the proprietary rights in any part of his sir without reservation of a right of occupancy specified in section 49(1) he may apply to the Revenue Officer and if such Revenue Officer is satisfied that the transferor is not wholly or mainly an agriculturist or that the property is self acquired or has been acquired within the twenty years last preceding, he shall sanction the transfer.
Sections 49 and 50 in our opinion only come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently and sanction has to be obtained under section 50 only where the transfer is to be made without reservation of the right of occupancy.
But the mortgage in this case is a simple mortgage and there was no transfer of possession under it.
Therefore the proprietor Ramchandar never lost his right to occupy his sir land by this mortgage and there was therefore no necessity for him to make any reservation in that respect or to apply for sanction under section 50, for he was not losing the right to occupy his sir at all.
But that does not mean that when he mortgaged his entire share of /5/4 out of /10/8 share,, he was excluding from the mortgage the area of sir 919 corresponding to the share mortgaged.
As the mortgage deed of 1920 stands, it is a mortgage of all the proprietary rights in /5/4 share including the proprietary right in the sir pertaining to that share ; but as the proprietor was not losing his right to occupy the sir land, the mortgage being without possession, it was not necessary for him to make any application under section 50 of the Tenancy Act.
We are therefore of opinion that the appellant cannot take advantage in the circumstances of the fact that no application was made under section 50 of the Tenancy Act and therefore there was no effect of this mortgage on the sir rights.
As we read the mortagage it clearly affected the sir Tight also pertaining to /5/4 share and it was not necessary to make an application under section 50 of the Tenancy Act, for the mortgagor was not losing possession of his sir and there would be no question of any ex proprietary tenancy arising in his favour, to relinquish which he would have to apply under section 50.
Turning now to the plaint in the mortgage suit we find that the property subject to the mortgage is mentioned in para.
2 thereof inexactly the same terms as in the mortgage deed.
In para.
13 it is again recited that the mortgagor mortgaged /5/4 share out of his /10/8 share.
Paragraph 13 then goes on to say that on the date of the mortgage, the mortgagor had certain khudkashat and chhotaghas lands and both cultivating and proprietary rights in them pertaining to half share only were liable to be sold.
No mention was made of sir in this paragraph.
But that in our opinion was not necessary, for the mortgage included the mortgage of sir land also pertaining to /5/4 share though without possession.
The prayer in the suit was for sale of the mortgaged property together with khudkashat, etc.
; but this again was a mere matter of precaution, for in any case the entire proprietary right in sir, khudkashat, etc., relating to /5/4 share would be sold on a decree following on the mortgage.
Then coming to the sale certificate we find that it certifies that the respondents had purchased /5/4 share in the village with abadi, khudkashat, chhotaghas and all rights pertaining to the 'share.
It is true that 920 khudkashat and chhotaghas are specifically mentioned in the sale certificate but the words " all rights pertaining to the share " appearing in the sale certificate would include such proprietary rights in the sir land as belonged to the share mentioned in the sale certificate.
We are, therefore, of opinion.
that so far as sir land is concerned, the proprietary right in it pertaining to /5/4 share was mortgaged and the respondents by their sale certificate got a right in the sir land also.
Now what happened after the mortgage deed in favour of the respondents was that the appellant purchased the entire /10/8 share of Ramchandar subject to the mortgage of the respondents in 1932.
At that time Ramchandar became an ex proprietary tenant of his entire sir relating to this share under section 49 of the Tenancy Act.
In 1936 Ramchandar was ejected from the ex proprietary tenancy which came in the possession of the appellant as lambardar and has apparently since then remained in his possession.
The case of the respondents is that in 1936 their mortgage was subsisting and the sir land which thus came into the possession of the appellant on the extinction of the ex proprietary tenancy became an accession to the mortgage and, therefore, they as mortgagees were entitled to half share in the lands which thus came into the possession of the appellant.
We have already pointed out that the mortgage covered the sir plots also so for as the proprietary rights in them were concerned.
Therefore, when Ramchandar 's ex proprietary rights came to an end and the land came into the possession of the appellant and became khudkashat, the mortgage would cover this khudkashat land to the extent of the mortgagees ' share therein.
It is, true that if Ramchandar 's ex proprietary tenancy had continued, the mortgagee would have no right to ask for half share in it; but when the ex proprietary tenancy was extinguished and this land came in the possession of the lambardar mortgagor it, was an accession to the mortgage under section 70 of the Transfer,of Property Act and the mortgagees could claim a share in it.
, It was however urged that accession to be available to 921 the mortgage must be a legal accession.
We however see no illegality in the accession which took place.
There is also no doubt that the accession took place when the mortgage was still subsisting.
Therefore, we agree with the High Court that on the ex proprietary tenancy being extinguished, the sir land which Would otherwise have remained in the exclusive possession of Ramchandar as an ex proprietary tenant became an accession to the mortgaged property and the respondents would be entitled to half of it on their purchasing the /5/4 share in execution of the decree on the mortgage.
The fact that the rent of an ex proprietary tenant is due to the person whose ex proprietary tenant he becomes by virtue of the sale or mortgage with possession would make no difference after ex proprietary tenancy is extinguished, for on such extinction the land would go to the entire proprietary body and would thus in this case be an accession to the mortgage to the extent of the share mortgaged.
This brings us to the lands in the name of Ramchandar 's mother.
It appears that these lands came into the possession of Ramchandar after the mortgage but before the institution of the mortgage suit.
They were nominally recorded in the name of his mother and in 1932 after his entire share was purchased by the appellant lie was recorded as an occupancy tenant of these lands.
Later the appellant came into possession of them apparently as a lambardar.
It is not clear when and how the appellant got possession of them.
There can be no doubt however that his possession was for the entire body of proprietors and the respondents would be entitled to a share in them.
But it was urged that the claim of the respondents to these lands was barred by 0. 11, r. 2 of the Code of Civil Procedure, because they were not specified in the plaint based on the mortgage deed of 1920.
Reliance in this connection is placed on Hazarilal vs Hazarimal (1) and Seth Manakchand vs Chaube Manoharlal (2).
These cases in our opinion do not apply, because they are cases of foreclosure while in (1) A. I. R. , (2) A.I.R. 1944 P.C 46, 922 the present case the respondents ' suit was for sale of the share mortgaged with them.
Further in the plaint, when specifying the khudkashat plots it wag made clear that they were khudkashat on the date of the mortgage; the respondents thus did not specify the khudkashat plots on the date of the plaint.
Though they had specified some plots in the plaint which were mentioned in the sale certificate also, the suit " as for the sale of the entire /5/4 share and that would include khudkashat lands pertaining to the share existing at the time when the suit was filed.
It is not necessary in a suit for sale to specify the lands in the possession of the mortgagor specifically and they would pass on sale along with the share sold.
The claim, therefore, would not be barred under 0. 11, r. 2, on the ground that these plots entered in the name of the mother of Ramchandar were not specifically mentioned in the plaint.
This leaves certain lands which came into the possession of the appellant as a lambardar in the ordinary course of management.
The respondents would clearly be entitled to a share in these lands also on payment of proportionate expenses incurred by the appellant in the course of suits in which he came into possession.
This is what the High Court has ordered and we see no reason to disagree with that view.
The appeal, therefore, fails and is hereby dismissed with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
One Ramchandar executed a simple mortgage deed without possession of his share in the property in dispute in favour of the respondents and others the relevant Portion of which ran thus :" I do hereby mortgage without possession half share, five annas and four pies, area 678 31 acres, jama sarkar Rs. 326/10/8 together with Khudkashat, chbotaghas, big shrubs, abadi, gair abadi, cultivated and that lying vacant, and the rights and privileges appertaining to water, forests, chahat, gardens, and right of cultivation, malguzari and trees of every kind whether giving fruits or no fruits and prohibited and unprohibited wood with entire rights and privileges appertaining to the 'village." After the mortgage Ramchandar 's share was sold to the appellants and certain other lands recorded in Ramchandar 's mother 's name also came into the possession of the appellant.
The main questions arising for decision were whether the mortgage included the sir land of Ramchandar and whether the other lands coming into the possession of the appellant were accession to the mortgage.
Held, that as the mortgage deed stood it was a mortgage of all the proprietary rights in the mortgagor 's share in the property including the proprietary right in the sir pertaining to that share.
As the mortgage was without possession the mortgagor was not losing possession of his sir and it was not necessary for him to make an application under section 50 of the Central Provinces Tenancy Act relating to the reservation of a right of occupancy.
Sections 49 and 50 come into play when the proprietor making a transfer loses his right to occupy any portion of his sir land temporarily or permanently.
Although in the plaint of the suit based on the mortgage no mention was made of sir, the entire proprietary right in sir, khudkashat etc.
relating to the mortgagor 's share would be sold on a decree passed in the suit.
The words " all rights pertaining to the share " appearing in the sale certificate following the execution of the decree in the mortgage suit passed in favour of the respondents would include the mortgagor 's proprietary rights in the sir land and the respondents by their sale certificate would get a right 'in the sir land also.
914 As the appellant had purchased the entire share of Ram chandar who was later ejected from his ex proprietary tenancy which came into the possession of the appellant as lambardar his sir land which thus came into the appellant 's possession while the mortgage was subsisting became an accession to the mortgage under section 70 Of the and the mortgagees were entitled to half share in the lands which came into the appellant 's possession.
The lands recorded nominally in the name of Ramchandar 's mother but in the actual possession of the former having also came into the possession of the appellant as lambardar were held by him for the entire body of proprietors and the respondent would be entitled to a share in them.
The respondent 's claim to those lands were not barred by 0.
II, r. 2 of the Code of Civil Procedure merely because they were not mentioned in the plaint of the mortgage suit.
Hazarilal vs Hazarimal, A.I.R. 1923 Nag.
130 and Seth Manakchand vs Chaube Manohar Lal, A. I.R. , held not applicable.


judgement:
Appeals Nos. 173 to 175 of 1960.
134 Appeals from the judgment and orders dated March 11, 1958, of the Bombay High Court in I. T. R. No. 36 of 1957.
of. A. V. ViSwanatha Sastri, section M. Dubash and G. Gopalakrishnan, for the appellants.
K. N. Rajagopal Sastri and D. Gupta, for respondents.
March 1.
The Judgment of the Court was delivered by KAPUR, J.
These are three appeals pursuant to a certificate under a. 66A(2) of the Indian Income tax Act, 1922 (hereinafter called the 'Act), against the judgment and orders of the High Court of Bombay in Income tax Reference No. 36 of 1957.
The appeals though directed against the same order are three in number because each partner of the firm has brought a separate appeal.
The firm was carrying on the business of wine merchants at Bombay and came into existence prior to April 1, 1939.
The firm had been assessed to income tax under the provisions of the Income tax Act of 1918.
The firm which was registered under the provisions of the Income tax Act of 1922 (hereinafter termed the Act) was dissolved on March 24, 1945, and from the day following that i.e. March 25, 1945, a Private limited company i.e. section section Miranda and Co. Ltd. succeeded to the business of the firm.
A claim made under section 25(4) of the Act to the effect that no tax was payable on the profits of the registered firm for the period between April 1, 1944, to March 24, 1945, was allowed.
In respect of the chargeable accounting period April 1, 1944, to March 24, 1945, the registered firm was taxed to excess profits tax under the Excess Profits Tax Act, 1940.
It also deposited as required certain sums of money tinder section 10 of the Finance Act, 1942, read with section 2 of the Excess Profits Tax Ordinance, 1943.
In accordance with those provisions the firm became entitled to repayment of a portion of the excess profits tax amounting to a sum of Rs. 2,35,704.
The shares of the three partners who are respective appellants in 135 the three appeals were James Miranda Rs. 58,926, Donald Miranda Rs. 58,926 and Mrs. N. Q. Miranda Rs. 1,17,854.
It was submitted that the amount refunded, was business profit and therefore exempt con from tax under section 25(4) of the Act.
The Income tax Officer rejected that submission and the share of each of the appellants was assessed to income tax and super tax and the balance after deducting the same he repaid to each of the partners but he computed the rate applicable to the tax by including the appellants ' total business income which was exempt under s;.
25(4) of the Act.
On appeal this assessment was confirmed but on further appeal the Income tax, Appellate Tribunal held that the sum which was refunded was income from business and was therefore, exempt from income tax under section 25(4) of the Act.
At the instance of the Commissioner of Income tax, the Tribunal referred the following question of law for the opinion of the High Court: "Whether the repayment of excess profits tax made by the Central Government in pursuance of Section 10 of the Indian Finance Act, 1942, or Section 2 of the Excess Profits Tax Ordinance, 1943, is profits from business for the purposes of Section 25(4) of the Indian Income tax Act?" The High Court held that the amount so refunded was income from other sources taxable under section 12 of the Act and the appellants were therefore not entitled to the benefit of section 25(4) of the Act.
In dealing with the nature of the tax the learned Chief Justice said: .lm15 "Clearly the view of the Legislature was that this income should be treated as a statutory income with the consequences that must necessarily follow by reason of its being a statutory income.
" It was argued on behalf of the appellants that the amount refunded was income, profits and gains from business and fell under section 10 of the Act and was therefore exempt under section 25(4) of the Act.
For the determination of this question it is necessary to refer to the relevant provisions of the Excess Profits Tax Act, 1940, and the Finance Act, 1946.
Section 12(1) of the Excess Profits Tax Act was as follows: 136 .lm15 section 12(1) "The amount of the excess profits tax payable in respect of a business for any chargeable accounting period diminished by any amount allowable by way of relief under the provisions of section 11 or section 11 A shall, in computing for the purposes of income tax or super tax the profits and gains of that business, be allowed to be deducted as an expense incurred in that period.", The relevant part of section 11(11) of the Indian Finance Act, 1946, provided: "Any sum being excess profits tax repaid in respect of any chargeable accounting period under the provision; of section 10 of the Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, shall be deemed to be income for the purposes of the Indian Income tax Act 192 2, and shall, notwithstanding the provisions of section 34 of that Act, be treated as income of the previous year which constitutes or includes the chargeable accounting period in respect of which the said sum is repayable: Provided that any such sum repaid in respect of any profits which are.
also assessable to excess profits tax under the law in force in the United Kingdom shall be treated, for the purpose of assessment to income tax and super tax, as income of the previous year during.
which the repayment is made.
" It is not necessary to quote section 10(1) of the Finance Act, 1942, or the relevant provisions of the Excess Profits Tax Ordinance, 1943.
Section 12(1) of the Excess Profits Tax Act shows that the amount of excess profits tax payable ,in respect of a business for any chargeable accounting period was an allowable expenditure.
Under section ll(ll) of the Indian Finance Act, 1946, any excess profits refunded under the provisions of Indian Finance Act, 1942, or of section 2 of the Excess Profits Tax Ordinance, 1943, were deemed to be income and were to be treated as income of the previous year which constituted or which included the chargeable accounting period in respect of 'which the said sum was repayable.
Thus the sum repaid was 137 to be treated as income for the purposes of the Act for the previous year, notwithstanding section 34 of the Act.
The preamble of the Excess Profits Tax Act shows that the object of that Act was to impose a tax on profits arising out of certain businesses.
Therefore when any portion of the tax collected on excess profits tax was refunded under the provisions of the Finance Act, 1942 or the Excess Profits Tail, Ordinance, '1943, it necessarily had the same quality which it had before the amount which was charged with the payment of tax had under the provisions of those Acts.
In a, judgment of this Court, Mc Gregor.
and Balfour Ltd. vs Commissioner of Income Tax, West Bengal (1), the amount received as a refund by the assessee was held to be income for the purpose of the Act and for assessment it was treated as income of the previous year.
After reference in that case to R. 4(1) of the Rules applicable to oases I and II of Schedule 'D '.
of the English Income Tax Act, 1918 (8 and 9 Geo.
V, c. 40), it was observed "The object and purpose of the legislation in each case is the same, and though the two provisions are not ipsissima verba, they are substantially in the same words and also in pari materia.
There can be no doubt that the intention underlying the two provisions is the same and the language is substantially similar.
" Thus this Court was of the opinion that the intention of the legislature ins.
11(14), of the Indian Finance Act, 1946, which was the section applicable in that case and of R. 4(1) of the English Income Tax Act was the same.
The operative words of section 11(11) of the Finance Act, 1946, and of section 11(14) of that Act are almost identical.
It would, thus appear that the amount of excess profits tax was an allowable deduction for the purpose of computation of the business profits of an, assessee under section 12(1) of the Excess Profits Tax Act and when it or a portion of it wag refunded it had to be treated as income of the assessee.
When it was deposited with 138 the Central Government it was a portion of the profits of the business of the assessee and when it was returned to the assessee it must be restored to its character of being a part of the profits of a business.
It cannot be said that its nature changes merely because it is refunded as 'a consequence of some provisions in the Finance Act or the Excess Profits Tax Ordinance.
Its nature remains the same.
The effect of the deposit under the Acts above mentioned, was as if a slice of the business profit was taken and deposited with the Central Government Treasury and then when it was found that a larger amount had been deposited than was exigible a portion of it was returned.
By being put in a Government Treasury it does not cease to be what it was before i.e. profits of a business.
As we have said it is significantly clear from the very preamble of the Excess Profits Tax Act i.e., it was a tax imposed on profits arising out of certain businesses.
An argument was raised on behalf of the Commissioner that the tax was not paid out of the profits of the business, but in respect of the profits.
That is immaterial; it was charged, levied and paid on the amount by which the profits during any chargeable accounting period exceeded the standard profits.
It would be mere quibbling with words if one were to say that it was not a slice taken out of the profits of a business.
In the cage Mc Gregor and Balfour Ltd. vs Commissioner,of Income Tax (1) this Court quoted with approval the observation, of the Master of the Rolls in A. & W. Nesbitt Ltd. vs Mitchell (1) where it was said: "But in respect of what is that payment made? It is not a legacy, it is not a sum which has fallen from the skies; it is a sum which is repaid because there was too large a sum paid by the company to the revenue authorities over the whole period 'during which Excess Profits Duty was paid, and that sum, means and is intend to represent a repayment of a sum which was paid by them in respect of the duty charged upon the excess profits of their trading.
It comes back,, therefore, not having lost its character but being still the repayment of a sum too much, it is true but a sum taken (1) (2) , 217, 218 139 out of the profits which were made by the company in the course of its trading, profit,; which at the time they were made were subject to income tax and subject to excess profits duty, and that is the character of the repayment that has been made.
" The amount deposited comes back without losing its character.
No doubt the words in the English Rule are "shall be treated as profits for the year in which the payment is received", and in B 11(11) of the Indian Finance Act, 1946, such sum has to be treated as income of the previous year but as pointed out by this Court in Balfour and Mc Gregor case (1), the intention underlying the two provisions is the same and even the language used in the two provisions is substantially the same.
Counsel for the Commissioner drew our attention to Kirke 's Trustees vs Commissioners of Inland Revenue (2), and it was submitted that the Lord Chancellor held at p. 329 that for the amount so received the assessment falls to be made under Case VI of Schedule 'D '.
Lord Shaw of Dunfermline at p. 332 said that the repayment was to be treated as trading profits for the year of repayment and therefore assessable as such under Schedule 'D '.
He was also of the opinion that the charge was to be one under Case VI.
Lord Sumner said that it became a minor matter to decide whether the charge was to be made under Case I or Case VI but this is little consolation to the respondent (the Commissioner of Income tax) because Case VI was also dealing with taxes in respect of annual profits and gains which do not fall in one of the other cases.
In our opinion the amount refunded did not lose its character which it had before the deposit and therefore it is an erroneous view to take that the income was assessable under section 12 of the Act and not under B. 10.
If it was income falling under section 10, as in our opinion it was, then the appellants were entitled to get the benefit of section 25(4) of the Act and the amount was not liable to taxation.
The appeals are therefore allowed with costs.
One hearing fee.
Appeals allowed.

summary/full:
The appellants were partners in a registered firm which was dissolved on March 24, 1945.
A private limited company succeeded to the business of the firm from March 25, 1945.
For the accounting period April 1, 1944, to March 24, 1945, the firm was assessed to excess profits tax under the Excess Profits Tax Act, 1940.
It had deposited certain sums of money as required under section 10 of the Indian Finance Act, 1942, read with section 2 Of the Excess Profits Tax Ordinance, 1943, and in accordance with those provisions became entitled to repayment of a portion of the excess profits tax.
The appellant 's claim before the Income.
tax Officer under section 25(4) of the 'Indian Income tax Act, 1922, that no tax was payable on the profits of the firm for the period between April 1, 1944, to March 24, 1945, was allowed, but their plea that the amount of refund of the excess profits tax was business profit and therefore similarly exempt from tax, was rejected.
The High Court, on a reference, took the view that the amount refunded was income from other sources taxable under section 12 Of the Indian Income tax Act, 1922, and that, therefore, the appellants were not entitled to the benefit of section 25(4) Of that Act.
Held, that in view of section 12(1) of the Excess Profits Tax Act, 1940, and section II(II) of the Indian Finance Act, 1946, the amount refunded was income from business for the purposes of the Indian Income tax Act, 1922, and did not lose its character which it had before the deposit.
It fell under section 10 of the Indian Income tax Act and was, therefore, exempt under section 25(4) of that Act.
Mc Gregor and Baljbur Ltd. vs Commissioner of Income tax, Bengal, and A. & W. Nesbitt Ltd. vs Mitchell, [1926] II T.C. 2II, relied on.


judgement:
Appeal No. 395 of 1959.
Appeal by special leave from the Award dated November 25, 1957 of the Industrial Tribunal, Bombay, in Reference (I. T.) No. 24 of 1956.
N. C. Chatterjee, D. H. Buch and K. L. Hathi, for the appellants.
M. C. Setalvad, Attorney General for India, J. B. Dadachanji and section N. Andley, for the respondent Nos. 1 and 2.
M. C. Setalvad, Attorney General for India, Dewan Chaman Lal Pandhi and I. N. Shroff, for the respondent No. 3. 1960.
November 30.
The Judgment of the Court was delivered by WANCHOO, J.
This is an appeal by special leave in an industrial matter.
It appears that the appellants were originally in the service of the Scindia Steam Navigation Co. Ltd. (hereinafter called the Scindias).
Their services were transferred by way of loan to the Air Services of India Limited (hereinafter referred to as the ASI).
The ASI was formed in 1937 and was 813 purchased by the Scindias in 1943 and by 1946 was a full subsidiary of the Scindias.
Therefore from 1946 to about 1951, a large number of employees of the, Scindias were transferred to the ASI for indefinite periods.
The Scindias had a number of subsidiaries and it was usual for the Scindias to transfer their employees to their subsidiary companies and take them back whenever they found necessary to do so.
The ' appellants who were thus transferred to the ASI were to get the same scale of pay as the employees of the Scindias and the same terms and conditions of service (including bonus whenever the Scindias paid it) were to apply.
The Scindias retained the right to recall these loaned employees and it is the case of the appellants that they were entitled to go back to the Scindias if they so desired.
Thus the terms and conditions of service of these loaned employees of the ASI were different from those employees of the ASI who were recruited by the ASI itself.
This state of affairs continued till 1952 when the Government of India contemplated nationalisation of the existing air lines operating in India with effect from June 1953 or thereabouts.
When legislation for this purpose was on the anvil the appellants felt perturbed about their status in the ASI which was going to be taken over by the Indian Air Lines Corporation (hereinafter called the Corporation), which was expected to be established after the , No. XXVII of 1953, (hereinafter called the Act) came into force.
They therefore addressed a letter to the Scindias on April 6, 1953, requesting that as the Government of India intended to nationalise all the air lines in India with effect from 1 June, 1953, or subsequent thereto, they wanted to be taken back by the Scindias.
On April 24, the Scindias sent a reply to this letter in which they pointed out that all persons working in the ASI would be governed by cl. 20 of the Air Corporation Bill of 1953, when the Bill was enacted into law.
It was also pointed out that this clause would apply to all those actually working with the ASI on 103 814 the appointed day irrespective of whether they were recruited by the ASI directly or transferred to the ASI from the Scindias or other associated concerns.
It was further pointed out that if the loaned employees or others, employed under the 'ASI, did not want to join ,the proposed Corporation they would have the option not to do so under the proviso to cl.
20(1) of the 'Bill; but in case any employee of the ASI whether loaned or otherwise made the option not to join the proposed Corporation, the Scindias would treat them as having resigned from service, as the Scindias could not absorb them.
In that case such employees would be entitled only to the usual retirement benefits and would not be entitled to retrenchment compensation.
Finally, it was hoped that all those in the employ of the ASI, whether loaned or otherwise, having been guaranteed continuity of employment in the new set up would see that the Scindias would not be burdened with surplus staff, requiring consequential retrenchment of the same or more junior personnel by the Scindias.
On April 29, 1953, a reply was sent by the union on behalf of the appellants to the Scindias.
It was pointed out that the loaned staff should not be forced to go to the proposed Corporation without any consideration of their claim for re absorption into the Scindias.
It was suggested that the matter might be taken up with the Government of India and the persons directly recruited by the ASI who were with other subsidiary companies might be taken by the proposed Corporation in place of the appellants.
It seems that this suggestion was taken up with the Government of India but nothing came out of it, particularly because the persons directly recruited by the ASI.
who were employed in other subsidiary companies did not want to go back to the ASI.
In the meantime, the Scindias issued a circular on May 6,1953, to all the employees under the ASI including the loaned employees, in which they pointed out that all the persons working with the ASI would be governed by cl.
20(1) when the Bill became law and would be absorbed in the proposed Corporation, unless 815 they took advantage of the proviso to cl.
20(1).
It was also pointed out that such employees as took advantage of the proviso to el.
20(1) would be treated as having resigned from service and would be entitled to usual retirement benefits as on voluntary retirement, and to nothing more.
It was also said that their conditions of service would be the same until duly altered or amended by the proposed Corporation.
The circular then dealt with certain matters relating to provident fund with which we are however not concerned.
It appears that the Act was passed on May 28, 1953.
20(1) of the Act, with which we are concerned, is in these terms: "(1) Every officer or other employee of an existing air company (except a director, managing agent, manager or any other person entitled to manage the whole or a substantial part of the business and affairs of the company under a special agreement) employed by that company prior to the first day of July, 1952, and still in its employment immediately before the appointed day shall, in so far as such officer or other employee is employed in connection with the undertaking which has vested in either of the Corporations by virtue of this Act, become as from the appointed date an officer or other employee, as the case may be, of the Corporation in which the undertaking has vested and shall hold his office or service therein by the same tenure, at the same remuneration and upon the same terms and conditions and with the same rights and privileges as to pension and gratuity and other matters as he would have held the same under the existing air company if its undertaking had not vested in the Corporation and shall continue to do so unless and until his employment in the Corporation is terminated or until his remuneration, terms or conditions are duly altered by the Corporation : Provided nothing contained in this section shall apply to any officer or other employee who has, by notice in writing given to the Corporation concerned prior to such date as may be fixed by the Central Government by notification in the official gazette 816 intimated his intention of not becoming an officer or other employee of the Corporation." After the Act was passed, notice was sent on June 17, 1953, to each employee of all the air companies which were being taken over by the proposed Corporation m and he was asked to inform the officer on special duty by July 10, 1953, if he desired to give the notice contemplated by the proviso to section 20(1).
A form was sent in which the notice was to be given and it was ordered that it should reach the Chairman of the Corporation by registered post by July 10.
The appellants admittedly did not give this notice as required by the proviso to section 20(1).
In the meantime on June 8, 1953, a demand was made on behalf of the appellants in which the Scindias were asked to give an assurance to them that in the event of retrenchment of any loaned staff by the proposed Corporation within the first five years without any fault, the said staff would be taken back by the Scindias.
Certain other demands were also made.
The Scindias replied to this letter on July 3 and pointed out that they could not agree to give an assurance to take back the loaned staff in case it was retrenched by the proposed Corporation within the next five years.
We are not concerned with the other demands and the replies thereto.
On July 8, a letter was written on behalf of the appellants to the Scindias in which it was said that the appellants could not accept the contention contained in the circular of May 6, 1953.
Though the appellants were carrying on this correspondence with the Scindias, they did not exercise the option which was given to them under the proviso to section 20(1) of the Act,.
by July 10, 1953.
First of August, 1953, was notified the appointed day under section 16 of the Act and from that date the undertakings of the "existing air companies" vested in the Corporation established under the Act (except the Air India International).
So on August:1, 1953, the ASI vested in the Corporation and section 20(1) of the Act came into force.
Hence as none of the appellants had exercised the option given to them under the proviso, they would also be governed by the said provision, 817 unless the contention.
raised on their behalf that they could in no case be governed by section 20(1), is accepted.
The tribunal came to the conclusion that, whatever the position of the appellants as loaned staff from the Scindias to the ASI, as they were informed on May 6, 1953, of the exact position by the Scindias and they did not ask for a reference of an industrial dispute immediately thereafter with the Scindias and as they" ' did not exercise the option given to them by the proviso to section 20(1) before July 10, 1953, they would be governed by section 20(1) of the Act.
In consequence, they became the employees.
of the Corporation as from August 1, 1953 and would thus have no right there after to claim that they were still the employees of the Scindias and had a right to revert to them.
The consequence of all this was that they were held not to be entitled to any of the benefits which they claimed in the alternative according to the order of reference.
It is this order of the tribunal rejecting the reference which has been impugned before us in the present appeal.
The main contention of Mr. Chatterjee on behalf of the appellants is that they are not governed by section 20 (1) of the Act and in any case the contract of service between the appellants and the Scindias was not assignable and transferable even by law and finally that even if section 20(1) applied, the Scindias were bound to take back the appellants.
We are of opinion that there is no force in any of these contentions.
20(1) lays down that every officer or employee of the "existing air companies" employed by them prior to the first day of July, 1952, and still in their employment immediately before the appointed day shall become as I from the appointed day an officer or employee, as the case may be, of the Corporation in which the undertakings are vested.
The object of this provision was to ensure continuity of service to the employees of the "existing air companies" which were being taken over by the Corporation and was thus for the benefit of the officers and employees concerned.
It is further provided in section 20(1) that the terms of service etc. would be the same until they are duly altered by the Corporation.
One should have thought that the employees of the air 818 companies would welcome this provision as it ensured them continuity of service on the same terms till they were duly altered.
Further there was no compulsion on the employees or the officers of the "existing air companies" to serve the Corporation if they did not want to do so.
The proviso laid down that any officer or other employee who did not want to go into the service of the Corporation could get out of service by notice in writing given to the Corporation before the date fixed, which was in this case July 10, 1953.
Therefore, even if the argument of Mr. Chatterjee that the contract of service between the appellants and their employers had been transferred or assigned by this section and that this could not be done,, be correct, it loses all its force, for the proviso made it clear that any one who did not want to join the Corporation, was free not to do so, after giving notice upto a certain date.
Mr. Chatterjee in this connection relied on Nokes vs Doncaster Amalgamated Collieries Ltd. where it was observed at p. 1018 "It is, of course, indisputable that (apart from statutory provision to the contrary) the benefit of a contract entered into by A to render personal service to X cannot be transferred by X to Y without A 's consent, which is the same thing as saying that, in order to produce the desired result,, the old contract between A and X would have to be terminated by notice or by mutual consent and a new contract of service entered into by agreement between A and Y." This observation itself shows that a contract of service may be transferred by a statutory provision; but in the present case, as we have already said, there was no compulsory transfer of the contract of service between the "existing air companies", and their officers and employees to the Corporation for each of them was given the option not to join the Corporation, if he gave notice to that effect.
The provision of section 20(1) read with the proviso is a perfectly reasonable provision and, as a matter of fact, in the interest of employees themselves.
But, Mr. Chatterjee argues that section 20(1) will only apply to those who were in the employ of the "existing air companies"; it would not (1) , 819 apply to those who might be working for the "existing air companies" on being loaned from some other company.
In other words, the argument is that the, appellants were in the employ not of the ASI but of the Scinaias and therefore section 20(1) would not apply to them and they would not become the employees of the Corporation by virtue of that provision when they failed to exercise the option given to them by the proviso.
According to him, only those employees of the ASI who were directly recruited by it, would be covered by section 20(1).
We are of opinion that this argument is fallacious.
It is true that the appellants were not originally recruited by the ASI.
They were recruited by the Scindias and were transferred on loan to the ASI on various dates from 1946 to 1951.
But for the purposes of section 20(1) we have to see two things: namely, (i) whether the officer or employee was employed by the existing air company on July 1, 1952, and (ii) whether he was still in its employment on the appointed day, (namely, August 1,1953).
Now it is not disputed that the appellants were working in fact for the ASI on July 1, 1952, and were also working for it on August 1, 1953.
But it is contended that though they were working for the ASI they were still not in its employment in law and were in the employment of the Scindias because at one time they had been loaned by the Scindias to the ASI.
Let us examine the exact position of the appellants in order to determine whether they were in the employ of the ASI or not.
It is not disputed that they were working for the ASI and were being paid by it; their hours of work as well as control over their work was all by the ASI.
From this it would naturally follow that they were the employees of the ASI, even though they might not have been directly recruited by it.
It is true that there were certain special features of their employment with the ASI.
These special features were that they were on the same terms and conditions of service as were enjoyed by the employees of the Scindias in the matter of remuneration, leave, bonus, etc.
It may also be that they could not be, dismissed by the ASI and the Scindias may have had to take action in case it was 820 desired to dismiss them.
Further it may be that they could be recalled by the Scindias and it may even be that they might have the option to go back to the Scindias.
But these are only three special terms of their employment with the ASI.
Subject to these special terms, they would for all purposes be the employees of the ASI and thus would in law be in the employment of the ASI both on July 1, 1952 and on August 1, 1953.
The existence of these special terms in the case of these appellants would not in law make them any the less employees of the ASI, for whom they were working and who were paying them, who had power of control and direction over them; who would grant them leave, fix their hours of work and so on.
There can in our opinion be no doubt that subject to these special terms the appellants were in the employ of the ASI in law.
They would therefore be in the employ of the ASI prior to July 1, 1952 and would still be in its employ immediately before August 1, 1953.
Consequently, they would clearly be governed by section 20(1).
As they did not exercise the option given to them by the proviso to section 20(1), they became the employees of the Corporation from August 1, 1953, by the terms of the statute.
The last point that has been urged is that even if section 20(1) applies, the Scindias are bound to take back the appellants.
Suffice it to say that there is no force in this contention either.
As soon as the appellants became by force of law the employees of the Corporation, as they did so become on August 1, 1953, in the circumstances of this case, they had no further right against the Scindias and could not; claim to be taken back in their employment on the ground that they were still their employees, in spite of the operation of section 20(1) of the Act.
Nor could they claim any of the alternative benefits specified in the order of reference, as from August 1, 1953, they are by operation of law only the employees of the Corporation and can have no rights whatsoever against the Scindias.
We are therefore of opinion that the tribunal 's decision is correct.
The appeal fails and is thereby dismissed.
There will be no order as to costs.
Appeal dismissed.

summary/full:
Section 20(1) of the (XXVII of 1953), read with the proviso, is a perfectly reasonable provision and in the interest of the employees and it is not correct to say that it can apply only to the direct recruits of the existing air 812 companies and not at all to loaned employees working under them.
The two conditions of its applications are (i) that the officer or employee was employed by the existing air company on July 1, 1952, and (ii) that he was still in its employment on August 1, 1953, the appointed day.
In the instant case where the appellants who had been recruited by the Scindia Steam Navigation Co., Ltd., and on purchase by it of the Air Services of India Ltd., loaned to the latter, and were working under its direction and control on and between the said dates and being paid by it, Held, that in law they were the employees of the Air Ser vices of India from the appointed day, notwithstanding the existence of certain special features of their employment, and as such governed by section 20(1) of the Act and since they did not exercise the option given to them under the proviso, they became employees of the Corporation established under the Act and ceased to have any rights against the original employers.
Nokes vs Doncaster Amalgamated Collieries Ltd., [1940] A.C. 1014, considered.


judgement:
Appeal No. 264 of 1960.
Appeal by special leave from the Award dated October 12, 1959, of the Industrial Tribunal, Bombay in Reference (IT) No. 81 of 1959.
section T. Desai, Sukumar Ghose and B. N. Ghose, for the appellant.
C. L. Dhudia and K. L. Hathi, for the respondents.
April 3.
The Judgment of the Court was, delivered by GAJENDRAGADKAR, J.
This appeal by special leave is directed against the award passed by the industrial tribunal in a matter which was referred to it under section 36A(2) of the , for interpretation of certain terms of the award made by the said tribunal on April 28, 1951, in Reference No. 168 of 1950.
It appears that a dispute had arisen between the appellant M/s. Jeewanlal (1929) Ltd. and its workmen in regard to certain demands made by the respondents against the appellant in 1950.
The said dispute was referred for adjudication as a result of which an award was passed which, inter alia, provided for a gratuity scheme.
Some provisions of this award have been referred for interpretation in the present reference.
On August 31, 1957, resignation submitted by the appellant 's employee Bhanu Bala was accepted by the appellant.
The said employee had joined the appellant 's service in 1929 but there was a break in the continuity of his service for nearly 81 months because he had remained absent from duty without permission or leave from.
February 14, 1945 to the end of October, 1945.
According to the appellant the said employee was not entitled to any gratuity under the scheme framed by the award.
Even so the appellant offered him Rs. 1,165 and odd on compassionate grounds.
The employee was not willing to accept that amount because he claimed that he was entitled to Rs. 2,282.50 nP. by way of gratuity.
The demand thus made by the employee led to an industrial dis pute which was taken by the employee before the 720 First Labour Court at Bombay under section 33C of the Act.
The Labour Court entertained the application, decided the point in dispute in favour of the employee and directed the appellant to pay him Rs. 1,781 80 nP. as gratuity.
The appellant then moved the Bombay High Court for a writ under articles 226 and 227 on the ground that the Labour Court had no jurisdiction to entertain the application made before it by the employee.
This writ petition was allowed and the order passed by the Labour Court was quashed.
It was at this stage that the Government of Bombay referred the question of interpretation of the term "continuous service" contained in the award of 1951 to the Industrial Court under section 36A(1) of the Act.
That is how the Industrial Court was possessed of the matter.
It has held that the words "continuous service" I as used by the tribunal when it framed the award in question mean service not broken or interrupted by the termination of the contract of employment by either the employer or the employee or by operation of law.
It is this interpretation the correctness of which is challenged by the appellant in its present appeal.
The relevant part of the gratuity scheme which was framed by the tribunal in the earlier reference reads thus: (i) On the death of an employee while in the service of the company or on an employee becoming physically or mentally disabled to continue further in service half a months wages for each year of service subject to a maximum of ten months ' wages to be paid to him or to his heirs, executors, assigns or nominees as the case may be.
(ii) On the termination of his service by the company after five years ' continuous service Gratuity at the same rate as above.
(iii)On voluntary retirement or resignation of an employee after 15 years ' continuous service Gratuity at the same rate as above.
As we have already seen the employee Bhanu Bala resigned and his resignation was accepted in August, 1957.
He claimed the benefit of el.
(iii) whereas the 721 appellant contended that the said employee had not been employed in continuous service for the requisite period because there was a break in his service between February 14, 1945, to the end of October, 1945, and that affected the continuity of his employment which made his claim incompetent under el.
(iii).
This contention has been rejected by the tribunal.
Mr. section T. Desai contends that in interpreting the words "continuous service" in cl.
(iii) we should compare the provisions of section 49B(l) along with the explanation in the Indian Factories Act, 1934 (XXV of 1934) as well as section 79(1) along with explanation (1) in the Indian (63 of 1948) prior to its amendment in 1954; and he argues that unauthorised absence from work should normally cause a break in service so that if an employee, after uNauthorised absence from work, is allowed to resume after such unauthorised absence he should not be entitled to claim continuous service in view of the break in his service.
In support of this argument reliance has been placed on the decision of this Court in Buckingham and Carnatic Co. Ltd. vs Workers of the Buckingham and Carnatic Co. Ltd. (1).
In that case this Court has held that the continuity of the service of the workers was interrupted by the illegal strike and so they were not entitled to claim holidays with pay under section 49B(1) of the Indian .
It would, however, be noticed that the said decision turned upon the definition of the word "strike" in section 2(q) of the , read with the relevant provision of section 49 B of the Indian Factories Act, 1934; and there can be no doubt that in a different context the same words can and often have different meanings.
As this Court has observed in Budge Budge Municipality vs P. It.
Mukherjee (2), "the same words may mean one thing in one context and another in different context.
This is the reason why decisions on the meaning of particular words or collection of words found in other statutes are scarcely of (1) ; (2) , 198.
91 722 much value when we have to deal with a specific statute of our OWn; they may be helpful but cannot be taken as guides or precedents".
Therefore, the meaning attributed to the words "continuous service" in the context of the Factories Act may not have a material bearing in deciding the point in the present appeal.
The same comment falls to be made in regard to the argument based on the definition of the expression "continuous service" contained in section 2(eee) of the .
The said section provides that "continuous service" means uninterrupted service and includes service which may be interrupted merely on account ' of sickness or authorised leave or an accident or a strike which is not illegal, or a lockout or a cessation of work which is not due to any fault on the part of the workmen.
This definition is undoubtedly relevant in dealing with the question of continuous service by reference to the provisions of Industrial Disputes ' Act but its operation cannot be automatically extended in dealing with an interpretation of the words "continuous service" in an award made in an industrial dispute unless the context in which the expression is used in the award justifies it.
In other words, the expression "continuous service" may be statutorily defined in which case the definition will prevail.
An award using the said expression may itself give a definition of that expression and that will bind parties in dealing with claims arising from the award.
Where, however, the award does not explain the said expression and statutory definitions contained in other Acts are of no material assistance it would be necessary to examine the question on principle and decide what the expression should mean in any given award '; and that is precisely what the tribunal had to do in the present case.
"Continuous service" in the context of the scheme of gratuity framed by the tribunal in the earlier reference postulates the continuance of the relationship of master and servant between the employer and his employees.
If the servant resigns his employment service automatically comes to an end.
If the employer terminates the service, of his employee that 723 again brings the continuity of service to an end.
If the service of an employee is brought to an end by the operation of any law that again is another instance where the continuance is disrupted; but it is difficult to hold that merely because an employee is absent without obtaining leave that itself would bring to an end the continuity of his service.
Similarly, participation in an illegal strike which may incur the punishment of dismissal may not by itself bring to an end the relationship of master and ser vant.
It may be a good cause for the termination of service provided of course the relevant provisions in the standing orders in that behalf are complied with; but mere participation in an illegal strike cannot be said to cause breach in continuity for the purposes of gratuity.
On the other hand, if an employee continues to be absent from duty without obtaining leave and in an unauthorised manner for such a long period of time that an inference may reasonably be drawn from such absence that by his absence he has aban doned service, then such long unauthorised absence may legitimately be held to cause a break in the continuity of service.
It would thus always be a question of fact to be decided on the circumstances of each case whether or not a particular employee can claim continuity of service for the requisite period or not.
In our opinion, therefore, the view taken by the tribunal is substantially right though we would like to make it clear that in addition to the cases where according to the tribunal continuity of service would come to an end there would be the class of cases where long unauthorised absence may reasonably give rise to an inference that such service is intended to be abandoned by the employee.
With this modification we confirm the award and dismiss the appeal.
There would be no order as to costs.
Appeal dismissed.

summary/full:
One Bbanu Bala had joined the appellant 's service as a workman in 1929 and resigned in 1957.
During this period of his service he had remained absent from duty without permis sion or leave for nearly 8 months between February, 1945, to 718 October, 1945.
Under an Award made between the company and its workmen a scheme was framed wherein the concerned clause was that "on voluntary retirement or resignation of an employee after 15 years continuous service gratuity at the same rate as above.
" Dispute arose with regard to the question of granting gratuity to Bhanu Bala who claimed the benefit of the said clause and the company denied the claim on the ground that the said employee had not been in continuous service for the requisite period because there was a break in his service and that affected the continuity of his employment which made his claim incompetent.
The question was as to the interpretation of the term "continuous service" contained in the Award of 1951.
Held, that in different context the same word can often have different meanings and the expression "continuous service" would always be a question of fact to be decided on the circumstances of each case whether or not a particular employee can claim continuity of service for the requisite period.
Where the expression "continuous service" was statutorily defined then the definition would prevail; and where an award itself gave a definition of the expression that would bind the parties in dealing with claims arising from the award but where the award did not explain the expression "continuous service" and statutory definitions contained in other Acts were of no material assistance it would be necessary to examine the question on principle and decide what the expression should mean in any given award.
"Continuous service", in the context of the scheme of gratuity, postulates the continuation of relationship of master and servant between the employer and employees which could come to an end either by act of parties, i.e., by resignation or termination of service, or by the operation of law; but the continuity of service would not come to an end merely because an employee was absent without obtaining leave; though.
there would be cases where long unauthorised absence may reasonably give rise to an inference that such service was intended to be abandoned by the employee.
For the purpose of gratuity mere participation in an illegal strike could not be said to cause breach in the continuity of service though it may he a good cause for its termination, provided the relevant provisions in the Standing Orders in that behalf were complied with.
Buckingham and Carnatic Co. Ltd. vs Workers of the Bucking ham and Carnatic Co. Ltd.; , , distinguished.
Budge Budge Municipality vs P. R. Mukherjee, [1953] 1 L.L.J. 195, referred to. 719