judgement:
Appeal No. 605 of 1963.
Appeal by special leave from the judgment and order dated the January 24, 1961 of the Punjab High Court in Income tax Case No. 16 of 1956.
Niren De, Additional Solicitor General, Gopal Singh and R. N. Sachthey, for the appellant.
178 Bishan Narain, O.C. Mathur and J. B. Dadachanji, for the respondent.
The Judgment of Sarkar and Bachawat JJ.
was delivered by Bachawat J. Mudholkar J, delivered a dissenting Opinion.
Bachawat, J.
This appeal by special leave is from an order of the Punjab High Court rejecting an application by the Commissioner of Income tax Punjab under section 66(2) of the Indian Income tax Act, 1922.
On April 21, 1953, 14 partners of the firm of Messrs. Chander Bhan Harbhajan Lal of Rupar (hereinafter referred to as the assessee firm) constituted under the instrument of partnership dated December 5, 1952, applied to the Income tax Officer, Project Circle, Ambala for registration of the firm under section 26 A of the Indian Income tax Act.
It may be.
mentioned at this stage that there was another firm of the name of Chander Bhan & Co., of Ferozepore (hereinafter referred to as the Ferozepore firm), consisting of 8 partners and constituted under a deed dated June 14, 1952, which provided inter alia: "If any one of the executants enters into business individually or along with another person all the partners of the firm shall be entitled to the profit and liable for the loss, accruing from that business according to the shares hereinbefore mentioned.
" One Gosain Chander Bhan was a partner of both the assessee firm and the Ferozepore firm.
In course of proceedings arising out of the application for registration of the assessee firm under section 26 A, Harbhajan Lal, one of its partners, stated on January 30, 1954 : "I Harbhajan Lal son of Shri Ram Chand of Rupar solemnly declare that firm M/s. Chander Bhan Harbhajan Lal consisted of 14 partners as mentioned in the return and deed of partnership.
Gosain Chander Bhan was partner not in his individual capacity but on behalf of the firm M/s. Gosain Chander Bhan and Company Ferozepur having about six partners.
Other partners are partners in their individual capacity. ' It seems that other partners of the assessee firm made similar statements on February 27, 1954.
The capital of the assessee firm was supplied by Gosain Chander Bhan.
It appears that Gosain Chander Bhan had taken the capital from the Ferozepore firm, and the amount was shown as an item in his accounts with the Ferozepore firm.
179 By his order dated February 27, 1954, the Income tax Officer rejected the application under section 26 A. He held that (1) the deed dated December 5, 1952 did not specify the date of the constitution of the assessee firm; (2) some of the parties to deed having no experience in the business of the firm were not really partners therein, and the number of partners in the firm had been artificially increased with a view to reduce the taxable liability; (3) the firm was not genuine, as it had no banking account, did not possess the income tax clearance certificate, did not notify its constitution to the P.W.D., and payments were received from the P.W.D. in the name of Harbhajan Lal.
On appeal, the Appellate Assistant Commissioner, Ambala Branch,.
set aside all these findings of the Income tax Officer.
The correct ness of the decision of the Appellate Assistant Commissioner on! these points is no longer challenged.
The Income tax Officer so held that thought the deed dated December 5, 1952 stated that Gosain Chander Bhan was the partner having 6/16th share, in reality the Ferozepore firm was the partner of the assessee firm having 6/16th share therein and consequently, the assessee firm was illegally constituted, because (1) the Ferozepore firm could not legally be a partner in the assessee firm; (2) the total number of partners of the assessee firm was 21; and (3) moreover, the individual shares of the eight partners of the Ferozepore firm were not specified in the deed dated December 5, 1952.
On these findings, the Income tax Officer rejected the application 'Under section 26 A.
On appeal, the Appellate Assistant Commissioner set aside these findings, and held that Gosain Chander Bhan was the partner of the assessee firm in his individual capacity and not as representative of and on behalf of all the partners of the Ferozepore firm.
He held that Gosain Chander Bhan had merely agreed to share his profits and losses in the assesses firm with his other partners of the Ferozepore firm, that such an agreement did not make the other partners of the firm, partners in the assessee firm, and the effect of the agreement was to constitute a sub partnership only.
On further appeal, the Income tax Appellate Tribunal, Delhi Branch, upheld these findings of the Appellate Assistant Commissioner, and held that those findings were supported by the decisions in Commissioner of Income tax vs Messrs. Agardih Colliery(1) and Commissioner of Income tax vs Laxmi Trading Company(2).
The Commissioner of Income tax, Punjab then applied to the Appellate Tribunal under section 66(1) of the Indian Income tax Act (1) A.I.R. 1955 Patna 225.
(2) [1953]24 I.T.R. 173. 180 requiring the Tribunal to refer the following questions to the Punjab High Court: "1.
Whether the Income tax Appellate Tribunal was right in applying the decision of the Patna High Court in the case of Commissioner of Income tax versus M/s. Agardih Colliery Company and of the Punjab High Court in the case of Commissioner of Income tax versus Lakshmi Trading Company to the facts of this case.
If the answer to question No. 1 is in affirmative whether the rulings noted above lay down a correct law.
Whether there is any material to show that there was a sub partnership formed by Gosain Chander Bhan with other persons at Ferozepore.
Whether in the circumstances of the case the correct status of the assessee was firm or association of persons and whether registration under section 26 A of the Indian Income tax Act could be allowed in this case.
" By its order dated September 5, 1955, the Tribunal rejected the application, and held that the questions were concluded by judicial decisions and no useful purpose will be served by referring them again to the High Court.
On September 18, 1956, the Commissioner of Income tax applied to the Punjab High Court under section 66(2) of the Indian Income tax Act for an order directing the Tribunal to refer the aforesaid questions to the High Court, At the hearing of the application before the High Court, Counsel for the Commissioner of Income tax gave up questions Nos. 2 and 4, and submitted that the following two questions of law arose for decision : "(a) is there any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and is not a partner in a representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepore, and (b) whether the present is a case of sub partnership to which the two cases referred to in the order by the Tribunal apply ?" By its order dated January 24, 1961, the High Court dismissed the application, and held that the questions of law were well settled.
The Commissioner of Income tax now appeals to this Court by special leave.
181 Counsel for the appellant contended that all the partners of the Ferozepore firm were the partners in the assessee firm having, regard to (1) the fact that the capital of the assessee firm was secured by Gosain Chander Bhan from the Ferozepore firm, (2) the clause in the deed of partnership dated June 14, 1952 under which all the partners of the Ferozepore firm were entitled together profit and liable for the loss in respect of the share of Gosain Chander Bhan in the assessee firm, and (3) the statement of Harbhajan Lal and other partners of the assessee firm that Gosain Chander Bhan was a partner in the assessee firm not in his indivi dual capacity but on behalf of the Ferozepore firm.
We are unable to accept this contention.
The real question before us is whether any substantial question of law arises out of the order of the Tribunal.
We think that no such question arises.
The deed dated December 5, 1952 clearly stated that Gosain Chander Bhan and 13 other parties to the deed were the partners of the assesee firm.
On the face of the deed, it does not appear that Gosain Chander Bhan was a partner in a representative capacity on behalf of the Ferozepore firm, or that the Ferozepore firm was the partner in the assessee firm.
On the materials on the record, the Appellate Tribunal was entitled to come to the conclusion that Gosain Chander Bhan and not the Ferozepore firm was the partner in the assessee firm.
The capital of the assesses firm was supplied by Gosain Chander Bhan.
Gosain Chander Bhan in his turn had taken the amount of the capital from the Ferozepore firm, but there is no evidence to show that he took the money otherwise than in his individual capacity.
The clause in the partnership deed constituting the Ferozepore firm to the effect that all the partners of the Ferozepore firm are entitled to the profits and liable for the losses accrued in the share of Gosain Chander Bhan in the assesses firm may show that there is a partnership between Gosain Chander Bhan and other partners of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the profits and losses of the assessee firm.
This partnership, if any, between the members of the Ferozepore firm does not make the Ferozepore firm a partner in the assessee firm.
The Ferozepore firm is not a party to the agreement of partnership constituting the assesses firm.
Gosain Chander Bhan in his individual capacity could legally be a partner in the assessee firm, and the fact that he secured the capital from the Ferozepore firm, or that he entered into a partnership with the other members of the Ferozepore firm in respect of his share in the assessee firm does not show that the Ferozepore firm is a partner of the assessee firm, or that the assessee firm is not validly 182 Exporting Co.(1), Subba Rao, J. observed: "A partner of a firm can certainly secure his capital from any source or surrender his profits to his sub partner or any other person.
Those facts cannot conceivably convert a valid partnership into a bogus one.
" The statements of Harbhajan Lal and other partners of the assessee firm do not carry the matter any further.
In the statement dated January 30, 1954, Harbhajan Lal clearly stated that the assessee firm consisted of 14 partners as mentioned in the deed of partnership dated December 5, 1952.
It is true that he stated also that Gosain Chander Bhan was a partner not in his individual capacity but on behalf of the Ferozepore firm, but this statement must be read in the background of the clause in the partnership deed constituting the Ferozepore firm, under which the partners of the Ferozepore firm were entitled to the profits and liable for the losses in the share of Gosain Chander Bhan in the assessee firm.
The statement fairly read shows that only the 14 persons mentioned in the deed dated December 5, 1952 were the partners in the assessee firm.
If the 8 partners of the Ferozepore firm were partners in the asses see firm, Harbhajan Lal could not have stated 'that the number of the partners of the assessee firm was 14 only.
Counsel for the appellant pointed out that the High Court erron eously assumed that the partnership deed constituting the Ferozepore firm was dated June 14, 1954, whereas, in fact, this partnership was dated June 14, 1952.
Counsel for the appellant rightly pointed out that on the erroneous assumption that the partnership deed constituting the Ferozepore firm was executed after 'December 5, 1952 when the assessee firm was constituted, the High 'Court held that there was a sub partnership between Gosain Chander.
Bhan and the other partners in the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm. 'Counsel then contended that in law, a sub partnership can be entered only after the partnership is constituted, and, therefore, there was no sub partnership between the members of the Ferozepore firm in respect of the share of Gosain Chander Bhan in the assessee firm.
In support of this contention counsel relied on the following passage in Lindley on Partnership, 12th Edn, pp. 99 100: "A sub partnership is as it were, a partnership within a partnership; it presupposes the existence of a partnership to which it is itself subordinate." (1) ; , 27.
183 We did not enquire into the correctness of counsel 's assumption that this passage is an authority for the proposition that there cannot be an agreement of sub partnership in anticipation of the head partnership coming into existence.
But the question whether the relevant clause in the deed dated June 14, 1952 created a sub partnership in respect of the share of Chander Bhan in the assessee firm having regard to the fact that this deed was executed before the assessee firm came to be constituted is not material for the purpose of the case, and need not be decided.
The clause regulated the relationship of the partners of the Ferezepore firm inter se, and created a partnership between them in respect of the share of Gosain Chander Bhan in the assessee firm.
Assuming, without deciding that this partnership was not, strictly speaking, a subpartnership, it does not follow that the partners of the Ferozepore firm became partners in the assessee firm.
By reason of this clause vis a vis the partners of the Ferozepore firm, Gosain Chander Bhan could be reagrded as their representative in the assessee firm; nevertheless, they were strangers to the contract of partnership constituting the assessee firm and did not become partners therein.
In Commissioner of Income tax vs Bagyalakshmi & Co.(1), Subba Rao, J. observed: "A contract of partnership has no concern with the obligation of the partners to others in respect of their shares of profit in the partnership.
it only regulates the rights and liabilities of the partners.
A partner may be the Karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another.
In all such cases he occupies a dual position.
Qua the partnership, he functions in his personal capacity; qua the third parties, in his representative capacity.
The third parties, whom one of the partners repre sents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties.
Their right is only to a share in the profits of their partner representative in accordance with the terms of the agreement, as the case may be." Quite plainly, the relevant clause in the deed dated June 14, 1952 was not part of the agreement of partnership dated December 5, 1952 constituting the assessee firm, and did not affect the Tight of the partners of the assessee firm, to claim registration of (1) , 26. 184 the assessee firm under section 26 A.
It is not possible to say that there are no materials on the record to support the finding that Gosain Chander Bhan was a partner of the assessee firm in his individual capacity and not as representing the Ferozepore firm.
The question whether there was a sub partnership between the members of, the Ferozepore firm in respect of the share of Gosain Chander Bhan is not material because assuming that there was no sub partnership the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the relevant clause in the deed dated June 14, 1952 or otherwise.
We are, therefore, satisfied that no substantial question of law arises out of the order of the Appellate Tribunal.
Counsel for the appellant submitted that as a question of law arose out of the order of the Tribunal, the High Court was bound to call for a statement of case.
We are not inclined to accept this contention.
Where, as in this case, the question of law is not substantial and the answer to the question is self evident, the High Court is not bound to require the Tribunal to refer the question.
In our opinion, the High Court in the exercise of its discretion under section 66(2) rightly rejected the appellant 's application.
In the result, the appeal is dismissed with costs.
Mudholkar, J. This is an appeal from a judgment of the high Court of Punjab rejecting a petition made by the Commissioner of Income tax, Punjab under section 66(2) of the Indian Income tax Act, 1922 for calling upon the Income tax Appellate Tribunal to refer certain questions of law to the High Court.
The relevant facts are these On December. 29, 1948 Gosain Chander Bhan and four others entered into a partnership for carrying on the business of contractors in the name of "Gosain Chander Bhan & Co." The partnership was entered into at Ferozepore and Gosain Chander Bhan wag a major shareholder in the firm.
By a deed of partnership dated June 14, 1952 the firm was re constituted and three other persons were admitted as partners therein.
old name, however, was continued.
One of the terms of the partnership was that if any work was carried on by any one of the partners individually or in partnership with others, the profits and losses arising out of that work would be divided amongst all the partners in proportion of their shares in the firm.
On December 5, 1952 a partnership firm bearing the name of "Messrs. Chander Bhan Harbhajan lal" was formed at Rupar.
The dead of partnership sets out the names 185 object of the firm was to carry on business similar to that carried on by Gosain Chander Bhan & Co. It may be mentioned that in this firm also Gosain Chander Bhan was the major shareholder.
For convenience we would call the firm constituted on June 14, 1952 as the Ferozepore firm and the one constituted on December 5, 1952 as the Rupar firm.
On April 21, 1953 an application was presented by the part ners of the Rupar firm, accompanied by the deed of partnership dated December 5, 1952 before the Income tax Officer, Ambala for registration of the firm under section 26 A of the Act for the assessment year 1953 54.
The Income tax Officer examined the partners constituting the firm and recorded their statements in order to ascertain the true position with regard to the constitution of the firm.
Harbhajan Lal in his statement dated January 30, 1954 and the other partners in their statements dated February 27, 1954 admitted that Gosain Chander Bhan had entered into the partnership not in his individual capacity but on behalf of the Ferozepore firm.
The Income tax Officer also found that the funds invested in the Rupar firm in the name of Gosain Chander Bhan were also provided by the Ferozepore firm.
Upon these and some other facts he came to the conclusion that the deed of partnership dated December 5, 1952 did not specify the real partners of the firm and, therefore, the firm cannot be registered.
He further came to the conclusion that as in reality all the partners of the Ferozepore firm and not Gosain Chander Bhan alone, were also partners along with 13 other persons in the Rupar firm, the total number of partners exceeded 20.
Such a partnership being invalid in law the firm could not be registered under section 26A of the Act.
He, therefore, dismissed the application by his order dated February 27, 1954.
In appeal his order was, however, reversed by the Appellate Assistant Commissioner by his ' order dated August 12, 1954.
The appeal preferred therefrom by the Income tax Officer before the Income tax Appellate Tribunal (Delhi Branch) was dismissed by it by its order dated September 5, 1955.
In doing so the Tribunal based itself on the decisions in The Commissioner of Income tax vs Agardih Colliery Company(1) and Commissioner of Income tax vs Laxmi Trading Co.(2) The Commissioner of Income tax then applied to the Tribunal under section 66(1) to refer to the High Court four questions of law.
The Tribunal, however, rejected the application on March 5, 1956.
The Commissioner thereupon preferred a petition before the High Court under section 66(2) for (1) A.I.R. 1955 Patna 225.
L 9 Sup C T /66 13 (2) 186 directing the Tribunal to refer four question of law to it.
At the hearing, however, only the following two questions were pressed on his behalf : "(1) Whether there is any material on the record to support the finding that Gosain Chander Bhan was the real partner of the assessee firm and was not a partner in the representative capacity representing all the partners of Gosain Chander Bhan and Company of Ferozepur ? (2) Whether the present is a case of sub partnership to which two cases A.I.R. 1935 Patna 225 and referred to in the order of the Tribunal apply?" The High Court, as already stated, dismissed the application and now the matter is before us by special leave.
Before us the learned Additional Solicitor General, appearing for the department, has raised the following two points : (1) that there was a question of law which it was incumbent on the Tribunal to refer to the High Court; (2) that both the Tribunal and the High Court proceeded to decide the question of law on erroneous premises.
The question of law, according to learned Additional Solicitor General, is : "whether on the facts and circumstances of the case the firm Chander Bhan Harbhajan Lal was registrable under section 26A".
It must be borne in mind that the question is not whether there was material on record on the basis of which the Tribunal could come to the conclusion that the firm was registrable but whether, upon the facts found it was registrable.
In other words, the question is as to what is the cumulative effect of all the facts and not what is the effect of only some of the facts found.
The contention of learned Additional Solicitor General is that when a question of law is said to arise the High Court is bound to call for a reference and it is immaterial that the question is settled already.
If in the facts and circumstances of the case a question of Law arises, there is little doubt that under section 66(1) the Tribunal is bound to draw up a statement of the case and refer the question to the High Court.
The Tribunal has no discretion in the matter.
Where, however, the Tribunal refuses to do so and the High Court is moved under section 66(2) of the Act, the position 187 becomes different.
Section 66(2) confers a discretion on the High Court and if the High Court is of the opinion that though a question of law arises it is not substantial or that it is well settled it can reject the petition.
What we have, therefore, to ascertain is whether a question of law at all arises in this case and if so whether it is a substantial question of law.
In order to ascertain whether a question of law arises it is necessary to ascertain the facts which have been found established by the Income tax authorities.
I will recapitulate the facts found by the Income tax Officer.
(1) The original firm Gosain Chander Bhan & Co., was formed at Ferozepore on December 29, 1948.
(2) Gosain Chander Bhan had a major share therein.
(3) This firm was dissolved and re constituted on June 14, 1952.
(4) In the original firm there were only 5 partners including Gosain Chander Bhan while in the reconstituted firm there were 8 partners including Gosain Chander Bhan.
(5) The largest share in the reconstituted partnership was that of Gosain Chander Bhan.
(6) The partnership deed of December 5 1952 specified the names of 14 persons including Gosain Chander Bhan as partners but did not specify the names of all the partners of Gosain Chander Bhan & Co. of Ferozepore.
(7) The funds invested by Gosain Chander Bhan in the Rupar firm came out of the funds belonging to the Ferozepore firm.
(8) Harbhajan Lal and other partners of Rupar firm admitted that Gosain Chander Bhan was not a partner in the Rupar Firm in his individual capacity but had joined it on behalf of the Ferozepore firm.
(9) The business carried on by the Ruper firm is similar to that carried on by the Ferozepore firm.
None of these findings on questions of fact has, been negatived or upset by the Appellate Assistant Commissioner or by the Tribunal.
These findings must, therefore, be taken as the basis for ascertaining whether a question of law arises, and if it does they have to be home in mind for deciding the question.
At this stage 188 I would like to mention that the High Court committed an ob vious error in stating in its judgment that the re constituted Ferozepore partnership was formed on June 14, 1954, that is, after the Rupar partnership was formed.
This error has obviously led it into a further error, that is, of coming to the conclusion that the Ferozepore partnership was a sub partnership in relation to the Rupar partnership.
Now, ordinarily there can be a sub partnership only when there is already in existence another partnership. 'Since in point of fact the Rupar partnership came into existence after the formation of the Ferozepore partnership the latter cannot stand in relation to the former as a sub partnership.
The law as stated in Lindley on Partnership at p. 99 is : "A sub partnership is as it were, a partnership within a partnership : it presupposes the existence of a partnership to which it is itself subordinate." The correctness of this statement of law is not assailed before us by either side.
It is no doubt settled law that where an application for registration of a firm complies with the requirements of section 26 A and of the rules and it is found that the partnership is not genuine the Income tax Officer is not bound to admit the firm to registration.
But it does not follow from this that for ascertaining whether the requirements of law have been satisfied and for ascertaining whether a firm is genuine or is bogus or that it has no legal existence the Income tax Officer must confine himself to the deed of partnership.
He has power to examine the partners and to require them to adduce evidence for satisfying himself about the genuineness or otherwise of the firm and also for satisfying himself about compliance with the requirements of law.
Paragraphs 2 and 3 of the order of the Appellate Assistant Commissioner, however, show that he has treated the recitals in the partnership deed of December 5, 1952 as conclusive of the question as to who were the real partners in the Rupar firm.
I can find no discussion or even reference to the findings of the Income tax Officer which I have earlier summarised.
No doubt in paragraph 4 he has referred to some of the facts found by the Income tax Officer and the inference drawn by him and rejected them.
Leaving these facts out of account there are other facts which are relevant for consideration but they appear to have been ignored by the Appellate Assistant Commissioner. 'Ascertainment of the legal effect of those facts would in my judgment be a question of law.
It is not disputed before us that the application for registra 189 tion should set out the names of all the persons who are real partners of the firm and, therefore it is incumbent on the Income tax authorities to ascertain whether any of the partners had joined the partnership in his individual capacity Dr as representing a group of persons.
If, to the knowledge of the other partners he represents a group of persons, be they members of another partnership or a joint Hindu family, it would be a question for decision as to whether all those persons have thereby become partners and that would be a question of law.
In paragraph 6 of his order the Appellate Assistant Commissioner seems to have had this in mind and it will be useful to quote the relevant portion of the paragraph : "There are two essential conditions before it can be stated that contractual relationship has been brought about between the partners which is the relationship of a partnership and the two conditions are that the partners must agree to share the profits of the business and the business must be carried on by all or any of them for all of them.
There can in law be a partnership between the partner in a Head Firm and another individual in respect of the partner 's share in the Head Firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A of the Indian Income tax Act.
If several persons are partners and one of them agrees to share the profits derived by him with a stranger, this agreement does not make the stranger a partner in the original firm.
The result of such an agreement is to constitute a sub part nership.
It makes the parties to it partners inter se; it does not affect the other members of the principal firm.
" The sole ground given by the Appellate Assistant Commis sioner for holding that Gosain Chander Bhan was a partner in the Rupar firm in his individual capacity is that the preamble to the partnership deed 'clearly sets out that the contracting parties were 14 and that Gosain Chander Bhan was a partner in his individual capacity. ' It is true that he has repelled some of the grounds given by the Income tax Officer in support of his conclusion but, as already stated, he has entirely omitted to consider other facts found by the Income tax Officer which bear directly on the point.
It may be that the finding cannot be said to be based on no evidence but even so, as it has been arrived at by ignoring relevant facts, it is vitiated by an error of law.
190 The first sentence of Para 6 of the order, of the Appellate Assistant Commissioner quoted above paraphrases the provisions of section 4 of the Partnership Act and is unexceptionable.
The rest of the quotation appears to have been lifted from the head note of the decision in Commissioner of Income tax, Punjab vs Laxmi Trading Co(1).
The question which fell for decision in that case was "Whether there could in law be a partnership between a partner in a head firm and another individual in respect of the partner 's share in the head firm so as to entitle the partners in the sub firm to apply for registration thereof under section 26 A, Income tax Act, 1922?" and it was answered in the affirmative.
A sub partnership can also, as stated by the learned Appellate Assistant Commissioner, apply for registration under section 26 A.
But where does it all lead to ? Here the question which arises is whether the head firm as such has entered into partnership with another or whether only one of the partners of the head firm has entered into partnership with another.
For, that is what the question really is.
According to the appellant, the Ferozepore firm as a firm has become partner in the Rupar firm and not merely Gosain Chander Bhan.
The learned Appellate Assistant Commissioner has not addressed himself to this aspect of the case.
At the end of the paragraph the learned Appellate Assistant Commissioner has observed : "there is no data on the record to substantiate the finding of the Income tax Officer that the firm was not genuine in view of the local enquiries by him." That, however, is not the whole question.
The whole question which arises in this case is whether in the facts and circumstances of this case the firm Chander Bhan Harbhajan Lal was registrable under section 26 A, the circumstances being that a partner of another and pre existing firm became a partner in Chander Bhan Harbhajan Lal on behalf of the partners of that other firm, that he had brought in funds belonging to that firm and that the new firm was to carry on business of the same kind as the old firm was carrying on.
Further, the reasoning of the Appellate Assistant Commissioner would be pertinent only to a case of sub partnership.
To put it somewhat differently the question is whether the application for registration reflects the true position as regards the real partners in the Rupar Firm.
This has not been considered either by the Appellate Assistant Commissioner or by the Tribunal.
(1) A.I.R. 1955 Pat.
191 The Tribunal merely referred to the decisions in Laxmi Trading Co. 's case (1) and in Agardih Colliery Co. 's case(2) and dismissed the department 's appeal.
The latter is also a case of sub partnership and does not assist us in deciding the matter arising here.
It is contended on behalf of the respondents that the question arising here has already been settled by three decisions of this Court.
The first of these is Commissioner of Income tax, Madras vs Sivakasi Match Exporting Co., Sivakasi(3).
In that case this Court held that the mere fact that one of the, partners of the firm seeking registration brought his capital from another firm of which he was one of the partners and the further circumstance that he shared the profits received by him from the former firm with his partners in the latter firm did not make the former partnership bogus.
In the first place the circumstance that upon a certain set of facts this Court arrived at a particular decision would not necessarily make that a binding precedent even though the inference drawn by the Court upon which its judgment rests is one of law.
In the second place we have here the fact that one of the partners of the firm seeking registration was a partner in his representative capacity and not merely a partner in his individual capacity.
The next case relied on is Commissioner of Income tax, Ahmedabad vs Abdul Rahim & Co.(4) In that case this Court held that the circumstance that one of the partners was a benamidar for another does not justify a refusal to register the firm under section 26 A and reiterated the essential conditions which must be satisfied by the firm seeking registration which have been stated in Commissioner of Income tax, Bombay vs Dwarkadas Khetan & Co.(5) It does not advance the respondent 's case any further.
The third decision is that in Commissioner of Income tax vs Bagyalakshmi & Co.(6).
There Subba Rao J., speaking for the Court has observed : "A partner may be the karta of a joint Hindu family; he may be a trustee; he may enter into a sub partnership with others; he may, under an agreement, express or implied, be the representative of a group of persons; he may be a benamidar for another.
In all such cases he occupies a dual position.
Qua the partnership he functions in his personal capacity; qua the third parties, in his representative capacity.
The third parties, whom (1) A.I.R. 1955 Pat.
(3) ; (5) ; (2) (4) ; (6) ; 192 one of the partners represents, cannot enforce their rights against the other partners nor the other partners can do so against the said third parties.
Their right is only to a share in the profits of their partner representative in accordance with law or in accordance with the terms of the agreement, as the case may be.
" It is upon these observations that learned counsel for the respondents has placed strong reliance.
These observations are based on the fact that the person admitted as a partner in the firm seeking registration was so admitted as an individual.
They cannot apply and were apparently not intended to apply to a kind of case as the one we have here, that is, where the partner to the knowledge of other partners was joining on behalf of and representing several persons.
What has to be determined is the cumulative effect of this circumstance taken along with the other cir cumstances established in the case.
That is a question of law and I am clear that question is far from being settled and also that it is a substantial question of law.
A further question which arises on the particular facts of this case is whether the Rupar firm can be said to have legal existence because its real partners are not merely 14 persons but there are 7 persons in addition to that number.
Under the provisions of section 11 of the (section 4 of the 1913 Act) where the number of partners exceeds 20 the firm has to be incorporated and that is admittedly not what has been done here.
If, therefore, the number is in excess of 20 the firm being unincorporated, it cannot be said to have a legal existence.
Unfortunately the Income tax Appellate Tribunal has not discussed the facts and circumstances of this case but dismissed the second appeal preferred by the appellant on the short ground that there was no merit in it in view of the decisions cited by it.
It was necessary for the Tribunal to ascertain whether on the facts of this case those decisions concluded the matter.
The questions which arise are, in My Opinion, substantial between the parties and are not settled.
For these reasons I allow the appeal, set aside the judgment of the High Court and direct the Tribunal to refer the question earlier set out to the High Court.
Costs so far incurred will abide the result.
ORDER In accordance with the opinion of the majority, Civil Appeal No. 605 of 1963 is dismissed with costs.
Civil Appeals Nos. 810 and 811 are dismissed, but there will be no order as to costs.

summary/full:
The assessee firm, consisting of 14 partners, applied for registration under section 26A of the Income tax Act, 1922.
One G, who was a partner of the assessee firm, was also partner of another firm, the Ferozepore firm.
The Ferozepore firm consisted of 8 partners who had agreed that if any work was carried on by any one of them with others the profits and losses arising out of that work would be divided amongst all the partners in proportion to their shares in that firm.
In the course of the proceedings for the registration of the assessee firm all its partners had stated before the Income tax Officer that G was a partner in the as firm, not in his individual capacity but on behalf of the Ferozepore firm.
It was found by the Income tax Officer that the capital of the assesseefirm was supplied by G who had taken the amount from the Ferozepore firm, and, that the assessee firm was to carry on the same kind of business as the Ferozepore firm.
The Incom tax Officer rejected the application for the reason that 'in reality it was not G but the Ferozepore firm that was the partner of the assessee firm and consequently, the assessee firm was illegally constituted because : (i) Ferozepore firm could not legally be a partner in the assessee firm; (ii) the total number of partners of the assessee firm would then be 21; and (iii) the individual shares of the partners of the Ferozepore firm were not specified in the partnership deed of the assessee firm.
The Appellate Assistant Commissioner, on appeal, reversed that order, holding that G was a partner of the assaw firm in his individual capacity and not as a representative of the Ferozepom Am and that the effect of his agreement to share his profits and losses in the assessee firm with the other partners of the Ferozepore firm was only to constitute a sub partnership between G and the other partners in the Ferozepore firm, in respect of the share of G in the assessee firm.
The Appellate Tribunal upheld the order of the Appellate Assistant Commissioner on the short ground that there was no merit in the appeal in view of certain decisions cited by it, and also dismissed the application under section 66(1) to refer to the High Court four questions of law.
The Commissioner preferred a petition before the High Court under section 66(2) for directing the Tribunal to refer the questions; (1) whether G was a partner of the assessee firm in his individual capacity or representing the partners of the Ferozepore, firm, and (ii) whether the Ferozepore firm was a sub partnership; but the High Court dismissed the application holding that the questions of law were well settled.
In appeal to this Court, it was contended that : (i) under the circumstances, G was a partner of the assessee firm not in his individual capacity but on behalf of the Ferozepore firm; (ii) the High Court held that there was a sub partnership on the erroneous assumption that the: Ferozepore firm came into existence after the assessee firm was constituted; and since a sub partnership can be entered into only after a partnership was constituted, there could be no sub partnership between the members of the 177 Ferozepore, firm; and (iii) as a question of law arose out of the order of Tribunal, the High Court was bound to call for a statement of case.
HELD : (per Sarkar and Bachawat, JJ.) on the materials on record, the Appellate Tribunal was entitled to come to the conclusion that G and not the Ferozepore firm was the partner in this assessee firm [181 D E] Commissioner of Income tax vs Sivakasi Match Exporting.
Co. ; , followed.
(ii) The question whether there was a sub partnership between the members of the Ferozepore firm in respect of the share of G is not materail, because, assuming that there was no sub partnership, the members of the Ferozepore firm did not become partners in the assessee firm by virtue of the clause which only regulated the relationship of the partners of the Ferozepore firm inter se and created a partnership between them in respect of the share of G in the assessee firm.
[183 B D] Commissioner of Income tax vs Bagyalakshmi & Co. ; , followed.
(iii) Though a question of law arose out of the order of the Appellate Tribunal, since it was not a substantial question of law and the answer to the question was self evident, the High Court was not bound to require the Tribunal to refer the question.
[184 D] Per Mudholkar, J. (dissenting) : The main question which arose in the present cast was whether in the circumstances of the case, the assesseefirm was registrable under section 26A.
Ascertainment of the legal effect of &we circumstances would be a question of law.
The Appellate Assistant Commissioner and the Tribunal had not considered the question whether the application for registration reflected the true position as regards the real partners in the assessee firm.
The reasoning of the Appellate Assistant Commissioner was pertinent only to a case of sub partnership, and the Tribunal merely referred to certain decisions and dismissed the Department 's appeal.
Since the finding of the Appellate Assistant Commissioner and also of the Tribunal was arrived at by ignoring the relevant facts found by the Income tax Officer, the finding was vitiated by an error of law.
The High Court has also committed an obvious error as to when the Ferozepore firm was constituted and that error has led to the further error that the Ferozepore firm was sub partnership in relation to the assessee firm.
Moreover the decisions in Commissioner of Income tax vs Sivakasi Match Exporting Co. and Commissioner of Income tax vs Bagyalakshmi & Co. ; do not apply to the facts of this case, because, the observations in those cases are based on the fact that the person admitted as a partner in the firm seeking registration was admitted as an individual, whereas in the present case one of the partners of the firm seeking registration was a partner in his re presentative capacity.
Thus the question in the instant case was a substantial question of law which has not been settled.
Therefore, the High Court should have directed the Tribunal to refer the question.
[188 H; 190 H. 189 H; 188 A B; 192 B D]


judgement:
il Appeal No. 543 of 1963.
Appeal from the judgment and decree, dated October 10, 1958 of the Madras High Court in O.S. Appeal No. 1 of 1954.
209 T. V. R. Tatachari, for the appellant.
M. Sundaram, K. Jayaram and R. Thiagarajan, for respondent No. 1.
The Judgment of the Court was delivered by Mudholkar, J.
This is an appeal from a judgment of the Madras High Court modifying the decree passed by a single Judge of that High Court in a suit for recovery of money.
Admittedly the appellant had executed a promissory note at Madras for a sum of Rs. 10,600 in favour of one Narayana Iyer, since deceased, on January 28, 1946 and agreed to pay interest on that amount at 12% p.a.
It is also admitted that no repayment was made by the appellant.
Narayana Iyer, therefore, instituted a suit against him for recovery of a sum of Rs. 14,402 5 0, which includes interest upon the sum of Rg. 10,600.
The appellant contended that the promissory note was only a renewal of a previous promissory note which itself as well as three earlier promissory notes were in renewal of the original promissory note for Rs. 1,000 executed in the year 1930.
According to the appellant that promissory note was executed by his brother but was renewed by the appellant himself in the year 1932; that this promissory note was renewed on January 11, 1937 by him and that at that time Narayana Iyer had given an additional amount of Rs. 350 to him.
The amount for which his promissory note was executed was Rs. 4,000 and it included interest on the first advance up to that date.
Narayana lyer, however, instead of taking a promissory note in his own name took it in the name of General Bank which is a private limited company which admittedly was under his control.
The debt was renewed in favour of the General Bank on January 3, 1940 by executing a fresh promissory note for Rs. 5,650 on that date and again on September 13, 1944 when it was renewed by obtaining a promissory note for Rs. 9,275.
According to the respondents Narayana lyer paid off the dues to the General Bank at the instance of the appellant and obtained a promissory note in his favour for Rs. 10,600.
As the amount was not paid, Narayana lyer instituted the suit out of which this appeal arises.
He, however, died during the pendency of the suit and is now represented by his sons, the respondents.
Upon the aforesaid facts and the further fact that the appellant is an agriculturist he claimed that he was entitled to the benefits of the Madras Agricul 210 turists Relief Act IV of 1938.
He claimed that under the provisions of that Act he was entitled to have the debts scaled down.
His plea was upheld by the learned single Judge of the High Court who held that the respondents after scaling down the interest as provided in the Act were entitled to a sum of Rs. 1,350 together with interest thereon at 6 1/4% from March 22, 1938 up to the date of the decree.
In the appeal preferred by the respondents under the Letters Patent the appeal court held that the respondents were entitled to a decree for the entire amount for which the promissory note was executed, that is, Rs. 10,600 together with interest thereon at 61% p.a.
In coming to this conclusion the appeal court placed an interpretation on explanation III to section 8 of the Act different from that placed by the learned single Judge.
Section 7 of the Act provides that all debts payable by an agriculturist at the commencement of the Act shall be scaled down in accordance with the provisions of Chapter II.
The Act received assent of the Governor General on March 11, 1938 and was first published in the Official Gazette on March 22, 1938 and must be deemed to have come into force as from the former date.
Section 8 provides for the scaling down of debts incurred before December 1, 1932.
Sub section (1) thereof says that all interest outstanding on the 1st of October, 1937 against an agriculturist shall be deemed to be discharged and only the principal outstanding on that date shall be deemed to be the amount repayable by the agriculturist debtor.
Sub sections (2), (3) and (4) of that Act deal with classes of cases in which payments have been made from time to time by the debtor to the creditor.
It is not necessary to refer to them because even according to the appellant he had not made any repayments before the execution of the promissory note in the suit.
It is common ground that explanations 1, II and IV have no application to the present case.
The only explanation which is relevant is explanation III.
This explanation has been twice amended.
The original explanation was as follows : "Where a debt has been renewed or included in a fresh document in favour of the same creditor the principal originally advanced by the creditor together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable by the agriculturist under this section.
" 211 The amending Act 23 of 1948 substituted for it the following "Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same or a different debtor and whether in favour of the same or a different creditor the principal originally advanced together with such sums, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.
" This was amended by Madras Act 24 of 1950 and now runs thus : "Where a debt has been renewed or included in a fresh document executed before or after the commencement of this Act, whether by the same debtor or by his heirs, legal representatives or assigns or by any other person acting on his behalf or in his interest and whether in favour of the same creditor or of any other person acting on his behalf or in his interest, the principal originally advanced together with such items, if any, as have been subsequently advanced as principal shall alone be treated as the principal sum repayable under this section.
" It is common ground that it is the explanation which was amended by Act 24 of 1950 which applies to the case before us.
It will be seen that under the original explanation the benefit of sub section
(1) of section 8 was available only in cases where the debt had been renewed in favour of the same, creditor as the one from whom it was originally obtained.
It is contended on the appellant 's behalf that by virtue of the amendment of 1948 the benefit of the provision was available even if the creditor in whose name the debt was renewed was different from the one who had originally advanced the loan and also even where the original debtor was different from the one who executed the document under which the debt was renewed.
It is pointed out that the second amendment was necessitated by reason of certain decisions of the Madras High Court holding that the words "different creditor" in Explanation III to section 8 did not include a third party in whose favour the debtor had executed a document renewing an earlier debt.
According to learned counsel this interpretation defeated the object which the Legislature had in view in amending Explanation III in 1948 and that, therefore, that explanation was amended a second time to make it 212 clear that once it is found that a document was in renewal of a previous debt the benefit of section 8 would be available to the promisor whether the person renewing it or the person in whose favour it is renewed is different.
It is unnecessary for us to consider what the reason for amending Explanation III by Act 23 of 1948 was.
All that we are concerned with is the explanation as amended by Act 24 of 1950.
By virtue of this explanation the benefit of section 8(1) would be available in a case where (a) a debt has been renewed or included in a fresh document; and where that is done (b) (i) by the same debtor, or (ii)by his heirs, legal representatives or assigns; or (iii)by any other person acting on his behalf; or (iv) by any other person acting in his interest.
Such a transaction will be entitled to the benefit of the Act if the renewal or fresh agreement is in favour of (a) the same creditor; or (b) of any other person acting in his behalf or (c) any other person acting in his interest.
In the instant case though the debtor in the transaction of 1930 was stated to be the appellant 's brother, in all subsequent transactions it was the appellant who was the debtor It would follow, therefore, that the requirements of the explanation pertaining to the debtor are satisfied in the sense that the same person has been the debtor.
The second requirement of the explanation is with respect to the creditor.
As already stated, after 1940 it was not Narayana lyer but the General Bank which was the creditor up to January 28, 1946 on which date the promissory note in suit was executed by the appellant in his favour.
The General Bank has an independent existence and even though the controlling interest therein was with Narayana lyer and his family it would not be correct to say that there is an identity between that bank and Narayana lyer.
Mr. Tatachari, however, contended that it was Narayana lyer who was the original creditor and that as he had full power of management and control with respect to the General Bank he went on obtaining promissory notes from the appellants, sometimes in his own favour and some times in favour of the Bank.
For all practical purposes, therefore, according to the appellant, the creditor has been the same throughout.
We cannot accept this argument in the absence of any material to show that the Bank acted on his behalf when the appellant executed the promissory notes, dated January 3, 1940 ,and September 30, 1944 in favour of the Bank.
The contention 213 of Mr. Tatachari then is that the Bank in obtaining those promissory notes in renewal of the original debt was acting in his interest and that, therefore, the explanation was available to the appellant.
In the High Court it was urged that when the appellant executed the promissory note dated January 28, 1946 Narayana lyer acted in the interest of the Bank.
The ground on which the argument advanced before the High Court and the argument advanced before us is, however, the same.
It is that the words "in the interest of" mean "for the benefit of".
Even assuming that that is the meaning to be given to these words the argument of learned counsel cannot be sustained on the facts of this case.
It has been found as a fact by the appeal court that Narayana Iyer actually paid Rs. 10,600 by cheque in favour of the General Bank Ltd., to the credit of the appellant.
It has also been found by the High Court that Narayana lyer paid off the debt due from the appellant to the Bank at the request of the appellant for discharging the appellant 's liability upon the promissory note executed by him in favour of the Bank.
These findings of the High Court have not been seriously challenged before us and in our opinion quite rightly.
In view of these findings the contention of learned counsel that the payment was made "in the interest of the creditor" cannot be sustained.
In the circumstances, therefore, we uphold the decree of the appeal court and dismiss the appeal with costs.
Appeal dismissed.

dataset_name: IN-Abs

summary/full:
In 1932, the appellant renewed a promissory note executed in 1930 by his brother in favour of N, the father of the respondents, for Rs. 1,000.
The promissory note was renewed in 1937, 1940 and 1944 for the principal amount together with interest.
The last 3 promissory notes were taken in the name of a Bank which was admittedly under the control of N.
In 1946, at the instance of the appellant, N paid off the debt due from the appellant to the Bank and obtained a promissory note in his own favour for Rs. 10,600, the amount then due.
As no repayment was made, N instituted a suit on the original side of the High Court which was decided by a judge sitting singly.
Applying Explanation III to section 8 of the Madras Agriculturists ' Relief Act, 1938, he gave a decree only for Rs. 1,350 together with interest at 6 1/4 % from the date of the Act.
In appeal therefrom under the Letters Patent, the High Court held that the respondents were entitled to a decree for the entire amount of Rs. 10,600 with interest at 6 1/4 %.
Before this Court, it wag contended that, under the Explanation as amended by Act 24 of 1950, once it was found that a document was in renewal of a previous debt the benefit of section 8 would be available was promisor even if the creditor in whose name the debt was renewed was different from the one who had originally advanced the loan and also even where the original debtor was different from the one who executed the document under which the debt was renewed.
HELD : Though the requirement of the Explanation pertaining to the debtor was satisfied in the sense that the same person had been the debtor, the requirement with respect to the creditor was not satisfied.
The benefit of the Act would be available to a debtor if the renewal was in favour of: (a) the same creditor; or (b) any other person acting in his behalf; or (c) any other person acting in his interest.
Since the Bank has an independent existence, even though the controlling interest herein was with N, it would not be correct to say that there was identity between him and the Bank.
Neither was there any material to show that the Bank acted on N 's behalf when the appellant executed the promissory notes in favour of the Bank; and, even if the words "in the interest of" mean "for the benefit of" it cannot be said that the Bank, in obtaining the promissory notes in renewal of the original debt was acting in N 's interest.
Therefore, the Explanation was not available to the appellant.
[212 D G; 213 A E]


judgement:
Appeal No. 885 of 1963.
Appeal from the judgment and decree, dated April 8, 1960 of the Andhra Pradesh High Court in Appeal No. 21/1 of 1956.
T. V. R. Tatachari, for the appellant.
N. section Bindra and R. N. Sachthey, for the respondent.
The Judgment of the Court was delivered by Wanchoo, J.
The only question raised in this appeal on a certificate granted by the Andhra Pradesh High Court is whether the suit brought by the appellant is barred under section 46 of the Administration of Evacuee Property Act, No. 31 of 1950, (hereinafter referred to as the Act).
The facts are not in dispute and may be briefly narrated.
On November 15, 1946, the appellant claimed to have pur chased certain patta lands from one Abdul Aziz Khan and paid him Rs. 6,127/8/ in Osmania Sicca.
The appellant got possession of the land and thereafter in June 1949 Abdul Aziz Khan applied in the Tahsil office for the transfer of the patta in the name of the appellant.
Before, however, any transfer was made, Abdul Aziz Khan seemed to have migrated to Pakistan.
Consequently, the Deputy Custodian took steps to declare Abdul Aziz Khan an evacuee.
In that connection the appellant received notice from the Deputy Custodian in December 1950 under section 7 of the Act asking him to show cause why the land should not be declared evacuee property.
Though the appellant 's case was that he engaged a counsel to appear on his behalf before the Deputy Custodian, no one seems to have appeared on his behalf, and in consequence, the Deputy Custodian declared the property to be evacuee property.
Thereafter the appellant was given a notice requiring him to surrender possession of the land to the Tahsildar.
The appellant then made representation before the Deputy Custodian that he had purchased the property from Abdul Aziz Khan in 1946 and was the owner thereof from before the Evacuee Property Law came into force.
The Deputy Custodian called upon him to produce evidence and thereafter recommended to the Custodian that the property might be declared not to be evacuee property.
The Custodian did not accept this recommendation on the ground that there was no registered sale deed duly executed by Abdul Aziz Khan in favour of the appellant and 216 no transfer of property could therefore be said to have taken place in 1946, and ordered that the declaration of the property as evacuee property should stand and further said that if the appellant was aggrieved by this decision he could obtain a declaration of his rights from a competent court.
In consequence, the appellant filed the suit out of which the present appeal has arisen in the court of the Subordinate Judge, Nizamabad and prayed that a declaration be made that he was the owner of the property and in possession thereof and that the Custodian be ordered to execute and register a sale deed thereof in his favour.
The suit was resisted by the Custodian and the main contention raised on his behalf was that the suit was barred under section 46 of the Act.
The Subordinate Judge however held that the appellant was entitled to the benefit of section 53 A of the Transfer of Property Act (No. 4 of 1882) and that the civil court had jurisdiction inasmuch as the sale had taken place before 1947.
The Custodian then went in appeal to the High Court, and the only question raised there was that the suit was barred under section 46 of the Act.
The High Court reversed the decision of the Subordinate Judge and held that the appellant had been given notice under section 7 of the Act in December 1950 and did not appear before the Deputy Custodian with the result that the property was declared as evacuee property.
The High Court further held that after this declaration the appellant 's remedy was to proceed by way of appeal or revision under the Act and that a suit was barred in view of section 46 thereof.
The appellant 's contention that as he was a third party he was entitled to maintain the suit was negatived by the High Court.
In consequence the High Court dismissed the suit but directed the parties to bear their own costs.
The appellant then obtained a certificate from the High Court to appeal to this Court, and that is how the matter has come up before us.
We are of opinion that there is no force in this appeal.
It is unnecessary to consider the cases cited at the bar on behalf of the appellant for whatever may be the position of law where the title of the evacuee himself is in dispute, as to which we express no opinion, there can be no doubt that where the property admittedly belonged to the evacuee and the person filing the suit claims to be a transferee from the evacuee, the suit would certainly be barred in view of section 46 of the Act.
Section 46 inter alia lays down that "save as otherwise expressly provided in this Act, no civil or revenue court shall have jurisdiction to entertain or adjudicate upon any question whether any property or any right to or 217 interest in any property is or is not evacuee property.
" It is admitted that the appellant had received notice from the Deputy Custodian under section 7(1) of the Act but had neglected to appear before him and it was in those circumstances that the Deputy Custodian declared the property to be evacuee property.
That order of the Deputy Custodian could be taken in appeal under section 24 by the appellant to the authorities provided under the Act, and if necessary the appellant could also go in revision to the Custodian General under section 27.
The scheme of the Act clearly is that where the property admittedly belongs to the evacuee any person claiming the property or any interest or right therein has on receipt of a notice under section 7(1) to appear before the authorities entitled to deal with the matter under the Act.
Any person aggrieved by an order of such an authority made under section 7 has the right to appeal under section 24 and if necessary to go in revision under section 27.
The Act thus provides a complete machinery for a person interested in any property to put forward his claims before the authorities competent to deal with the question and to go in appeal and in revision if the person interested feels aggrieved.
Having provided this complete machinery for adjudication of all claims with respect to evacuee property, the Act, by section 46, bars the jurisdiction of civil or revenue courts to entertain or adjudicate upon any question whether any property or any right to or interest in any property is or is not evacuee property.
Where therefore the property or any right to or interest in any property undoubtedly belonged to the evacuee and any transferee from the evacuee claims the property or any right to or interest therein he has to avail of the remedies provided under the Act.
If he fails to do so he cannot file a suit in the civil or revenue court to have the question whether any property or any right to or any interest therein is or is not evacuee property decided in view of the clear provision of section 46 (a) of the Act.
The fact that the Custodian in his order said that the appellant could go and establish his right in a competent court is of no assistance to the appellant, for if the law bars the jurisdiction of civil and revenue courts the Custodian 's observation that the party before him could go to a competent court to establish his right will not confer jurisdiction on a civil or revenue court.
Nor can it be said on the facts found in the present case that the appellant had become the owner of the property before 1947, for, admittedly the property was worth more than Rs. 100 and it is not disputed that a registered sale deed was necessary to pass title from Abdul Aziz Khan to the appellant.
No registered sale deed was executed in this case and therefore the property did not pass from Abdul Aziz Khan to 218 the appellant even up to the time when Abdul Aziz Khan became an evacuee.
It may be that if Abdul Aziz Khan had tried to get back the property, section 53 A of the Transfer of Property Act would come to the aid of the appellant in defence.
But the present suit has been filed to establish the right of the appellant as owner of the property and in such a suit the appellant cannot take the benefit of section 53 A of the Transfer of Property Act.
We, therefore, hold in agreement with the High Court that the suit is clearly barred under section 46 (a) of the Act.
The appeal therefore fails and is hereby dismissed.
In the circumstances we pass no order as to costs.
G.C. Appeal dismissed.

summary/full:
The appellant purchased certain land from one A in 1946.
Although the land was valued at more than Rs. 100 no registered deed of sale was executed.
In 1949, A was declared an evacuee and the appellant was given notice by the Deputy Custodian of Evacuee Property to show cause why the land should not be declared evacuee property.
No appearance was put in by the appellant in answer to the notice and the land was declared evacuee property.
The appellant represented to the departmental authorities that he had become owner of the land before the Evacuee Property law came into force.
The Custodian did not accept the plea and observed that if the appellant was aggrieved by the decision he could obtain a declaration of his rights from a competent court.
The appellant therefore filed a suit which was contested by the department on the ground that section 46 of the Administration of Evacuee Property Act was a bar.
The subordinate Judge held that the court had jurisdiction because of section 53A disagreed with the Subordinate Judge and reversed his decision.
The appellant then came to this Court by special leave.
HELD : The scheme of the Evacuee Property Act clearly is that when the property admittedly belongs to the evacuee any person claiming the property or any interest or right therein has, on receipt of a notice under section 7(1), to appear before the authorities entitled to deal with the matter under the Act.
Any person aggrieved by an order of such an authority made under 3. 7 has the right to appeal under section 24 and if necessary to go in revision under section 27.
The Act thus provides a complete machinery for a person interested in any property to put forward his claims before the competent authorities.
Having provided this machinery the Act by section 46 bars the jurisdiction of civil and revenue courts to entertain or adjudicate upon any question whether any property or any right or interest in any property is or is not evacuee property.
Any transferee from an evacuee claiming the property or any right or interest therein has to avail of the remedies under the Act and cannot go to a civil court.
The fact that in the present case the Custodian in his order said that the appellant could go to a competent court could not confer jurisdiction on the Court.
Nor could it be said on the facts found that the appellant had become the owner of the property before 1947, for, admittedly the property was worth more than Rs. 100 and without a registered sale deed it was not possible for the title to pass.
It way be that if A tried to get back the property section 53 A of the Transfer of Property Act would come to the aid of the appellant in de 215 fence.
But the present suit had been filed to establish the right of the appellant as owner of the property and in such a suit the appellant could not take the benefit of section 53 A. [217 B 218 B]


judgement:
Appeal No. 328 of 1965.
Appeal from the judgment and order dated June 20, 1962 of the Mysore High Court in Income tax Reference Case No. 15 of 1961.
K. Srinivasan and R. Gopalakrishnan, for the appellant.
A. V. Viswanatha Sastri, R. Ganapathy lyer and R. N. Sach they, for the respondent.
section T. Desai, R. P. Kapur for I. N. Shroff, for the intervener.
The Judgment of the Court was delivered by Shah, J.
One Buddappa, his wife, his two unmarried daughters and his adopted son Buddanna were members of a Hindu undivided family.
Buddappa died on July 9, 1952.
In respect of the business dealings of the family, Buddappa was assessed during his life time in the status of a manager of the Hindu undivided family.
For the assessment year 1951 52 the Additional Income tax Officer, Raichur assessed Buddanna in respect of the income of the previous year which ended on November 8, 1950 as a Hindu undivided family under the title "Sri Gowli Buddappa (deceased) represented by his legal successor Sri Gowli Buddanna, On Mills Owner, Raichur".
The order of assessment was confirmed in appeal by the Appellate Assistant Commissioner, subject to the variation that the assessment was made under the title "Buddanna a Hindu undivided family".
The Income tax Appellate Tribunal confirmed the order of the Appellate Assistant Commissioner.
The Tribunal then referred the following questions of law to, High Court of Mysore for opinion under section 66(1) of the Indian Income tax Act : (i) Whether the sole male surviving coparcener of the Hindu joint family, his widowed mother and sisters constitute a Hindu undivided family within the meaning of the Income tax Act ? 226 (ii) Whether the assessment of the income in the hands ' of the Hindu undivided family was correct ? (iii) Whether the Appellate Assistant Commissioner was entitled to correct the status ?" The High Court recorded answers in the affirmative on all the questions.
With certificate granted by the High Court under section 66 A of the Indian Income tax Act, Buddanna has appealed to this Court.
Before the Appellate Assistant Commissioner it was contended by Buddanna that he could in law have only been assessed as an individual and that the Income tax Officer was precluded by virtue of the proviso to section 26(2) to pass the order for assessment for the year 1951 52 against him.
The Appellate Assistant Commissioner and the Appellate Tribunal rejected that contention.
Buddappa was a resident of and carried on business at Rai chur which before January 26, 1950, formed part of the territory of H.E.H. the Nizam.
The joint family of Buddappa and Buddanna was governed by the Mitakshara School of Hindu law, and there was at the material time no legislation in force in the territory by which on the death of a male member in a joint Hindu family interest in the family estate devolved upon his widow.
Such a widow had therefore only a right to receive maintenance from the estate.
Counsel for the appellant urged that the expression "Hindu undivided family" used in section 3 of the Income tax Act a Hindu coparcenary and when on the death of one out of two coparceners the entire property devolves upon a single coparcener, assessment cannot be made on the surviving coparcener in the status of a Hindu undivided family.
Alternatively, it was contended that even if the entity Hindu undivided family in the charging section of the Income tax Act is intended to mean a Hindu joint family, there must be at least two male members in the family, and where there are not two such members the sole surviving male member of the family, even if there be widows entitled to maintenance out of the estate, may be assessed in the status of an individual, and not of a Hindu undivided family, unless , .
the widows of deceased male members are entitled to the benefit of the Hindu Women 's Rights to Property Act, 1937, or the .
227 The first contention is plainly unsustainable.
Under section 3 of the Income tax Act not a Hindu coparcenary but a Hindu undivided family is one of the assessable entities.
A Hindu joint family consists of all persons lineally descended from a common ancestor, and includes their wives and un married daughters.
A Hindu coparcenary is a much narrower body than the joint family: it includes only those persons who acquire by birth an interest in the joint or coparcenary property, these being the sons, grandsons and great grandsons of the holder of the joint property for the time being.
Therefore there may be a joint Hindu family consisting of a single male member and widows of deceased coparceners.
In Kalyanji Vithaldas & Others vs Commissioner of Income tax, Bengal(1), delivering the judgment of the Judicial Committee, Sir George Rankin observed: "The phrase "Hindu undivided family" is used in the statute with reference not to one school only of Hindu law but to all schools; and their Lordships think it a mistake in method to begin by pasting over the wider phrase of the Act the words "Hindu coparcenary", all the more that it is not possible to say on the face of the Act that no female can be a member." The plea that there must be at least two male members to form a Hindu undivided family as a taxable entity also has no force.
The expression "Hindu undivided family" in the Income tax Act is used in the sense in which a Hindu joint family is understood under the personal law of Hindus.
Under the Hindu system of law a joint family may consist of a single male member and widows of deceased male members, and apparently the Income tax Act does not indicate that a Hindu undivided family as an assessable entity must consist of at least two male members.
Counsel for the appellant said that there are certain intrinsic indications in the annual Finance Acts which support the contention that the income received or arising from property in the hands of a sole surviving male member in a joint Hindu family, even if there be females having a right to maintenance out of that property, is taxable as income of an individual, and not of the family.
He relied by way of illustration upon the Finance Act, 1951, which in the First Schedule sets out the rates of income tax payable by individuals, Hindu undivided family, unregistered firm (1) 64 I.A. 28. 228 and other association of persons.
The relevant part of the First Schedule prescribing rates of tax is as follows "Provided that (i) no income tax shall be payable on a total income which, before deduction of the allowance, if any, for earned income, does not exceed the limit specified below; The limit referred to in the above proviso shall be (i) Rs. 7,200 in the case of every Hindu undivided family which satisfies as at the end of the previous year either of the following conditions, namely : (a) that it has at least two members entitled to claim partition who are not less than 18 years of age; or (b) that it has at least two members entitled to claim partition neither of whom is a lineal descendant of the other and both of whom are not lineally descended from any other living member of the family; and (ii) Rs. 3,600 in every other case." But the.
Schedule sets out the limits of exempted income: it does not state or imply that a Hindu undivided family must consist of at least two members entitled to claim partition.
The text of the clause furnishes a clear indication to the contrary.
Reliance was also placed upon the form of "Return" prescrib ed under the Rules, which by section 59 of the Income tax Act, 1922 have effect as if enacted in the Act.
Part IIIA of the Form prescribes certain particulars to be incorporated in the case of a Hindu undivided family, viz. names of members of the family at the end of the previous year who were entitled to claim partition, relationship, age at the end of the previous year and remarks, but thereby it is not intended that a Hindu undivided family as an assessable entity does not exist so long as there are not at least two or more members entitled to claim partition.
The informa tion is required to be given in Part MA of the Form merely to enable the Income tax Officer to consider which of the two parts of the proviso in the First Schedule to the relevant Finance Act prescribing the limit of exemption in respect of the Hindu undivided family applies.
229 Sub section (1) of section 25 A on which reliance was placed also does not imply that a Hindu undivided family must consist of more male members than one.
The subsection only prescribes the procedure whereby the members of a family which has kither to been assessed in the status of a Hindu undivided family may obtain an order that they may, because of partition of the joint status, be assessed as separated members. 'Me clause is purely procedural: it does not enact either expressly or by implication that a Hindu undivided family assessed as a unit must consist of at least two male, members who are capable of demanding a partition.
Counsel for the appellant placed strong reliance upon certain observations of the Judicial Committe in the judgment in Kalyanji Yithaldas 's case(1) in which they disapproved of the view expressed by the Bombay High Court in Commissioner of Income tax Bombay vs Gomedalli Lakshminarayan (2 ).
In the case decided by the Bombay High Court a joint family consisted of a father and a son and their respective wives.
The father died, and in the year of assessment the joint family consisted of the son, his mother and his wife.
In dealing with the question referred by the Commissioner of Income tax whether the income received by the son should be regarded as his individual income or as the income of a Hindu undivided family for the purpose of assessment to super tax under the Indian Income tax Act, the Bombay High Court held that the expression "Hindu undivided family" as used in the Income tax Act includes families consisting of a sole surviving male member and female members entitled to maintenance, and the income of the assessee should therefore be treated as the income of a Hindu undivided family.
In Kalyanji Vithaldas 's case(1) which dealt with a group of appeals from the judgment of the Calcutta High Court in In re Moolji Sicka & Others(3) the Judicial Committee observed : "The High Court (of Calcutta) approached the cases by considering first whether the assessee 's family was a Hindu undivided family, and in the end left unanswered the question whether the income under assessment was the income of that family.
This is due no doubt to the way in which the Commissioner had stated the questions.
But, after all if the relevant Hindu law had been that the income belonged,.not to the assessee L.R. 64 T. A. 28.
(3) (2) 230 himself, but to the assessee, his wife and daughter jointly, it is difficult to see how that association of individuals could have been refused the description "Hindu joint family"The Bombay High Court, on the other hand, inLaxminarayan 's case having held that the see,his wife and mother were a Hindu undivided family, arrived too readily at the conclusion that the income was the income of the family." The Judicial Committee further observed "Under Section 3 or Section 55 income is not to be attributed to any one of the five classes of persons mentioned by any loose or extended interpretation of the words, but only where the application of the words is warranted by their ordinary legal meaning .
In an extra legal sense, and even for some purposes of legal theory, ancestral property may perhaps be described, and usefully described, as family property; but it does not follow that in the eye of the Hindu law it belongs, save in certain circumstances, to the family as distinct from the individual.
By reason of its origin a man 's property may be liable to be divested wholly or in part on the happening of a particular event, or may be answerable for particular obligations, or may pass at his death in a particular way; but if, in spite of all such facts, his personal law regards him as the owner, the property as his property and the income therefrom as his income, it is chargeable to income tax as his, i.e, as the income of an individual.
In their Lordships ' view it would not be in consonance with ordinary notions or with a correct interpretation of the law of the Mitakshara, to hold that property which a man has obtained from his father belongs to a Hindu undivided family by reason of his having a wife and daughters.
" The facts of the cases which were decided by the Judicial Committee need to be scrutinized carefully.
Before the Judicial Committee there were six appeals by six partners of the firm Moolji Sicka: they were Moolji, Purshottam, Kalyanji, Chaturbhuj, Kanji and Sewdas.
Moolji, Purshottam and Kalyanji had each a son or sons from whom he was not divided.
But the income of the firm, which had to be assessed to super tax was the separate 231 income of each of these partners.
Chaturbhuj had a wife and daughter but no son, and the income was his separate property.
Kanji and Sewdas, sons of Moolji, were married men, but neither had a son : they received by gift from Moolji their respective interests in the firm, and for the purpose of the case it was assumed that the interest of each was ancestral property in which if he had a son the son would have taken an interest by birth.
But no son having been born, the interest of Kanji and Sewdas in the property was not diminished or qualified.
The Judicial Committee held that the wife and the daughters of a Hindu had right to maintenance out of his separate property as well as out of his coparcenary interest, but the mere existence of a wife or daughter did not make ancestral property in his hands joint.
They observed : "Interest ' is a word of wide and vague significance, and no doubt it might be used of a wife 's or daughter 's right to be maintained which right accrues in the daughter 's case on birth; but if the father 's obligations are increased, his ownership is not divested, divided or impaired by marriage or the birth of a daughter.
This is equally true of ancestral property belonging to himself alone as of self acquired property." The Judicial Committee accordingly held that in none of the six appeals before them could the income falling to the shares of the partners of a registered firm be treated as income of a Hindu undivided family and assessed on that footing.
In the view of the Judicial Committee, income received by four out of the six partners was their separate income: in the case of the remaining two partners the income was from sources which were ancestral.
But merely because the source was held by a member who had received it from his father and was on that account ancestral, the income could not be deemed for purposes of assessment to be income of a Hindu undivided family, even though Kanji had a wife and a daughter, and Sewdas had a wife who had rights to be maintained under the Hindu law.
In Gomedalli Lakshminarayan 's case(1) the property was an cestral in the hands of the father, and the son had acquired by birth an interest therein.
There was a subsisting Hindu undivided family during the life time of the father and that family did not come to an end on his death.
On these facts the High Court of Bombay held that the income received from the property was (1) S I.T.R. 367.
L10SupCI/66 2 232 liable to super tax in the hands of the son who was the surviving male member of the Hindu undivided family in the year of assessment.
This distinction in the facts in the case then under discussion and the facts in Gomedalli Lakshminarayan 's case(1) was not adverted to and the Board observed in Kalyanji Vithaldas 's case (2) that the Bombay High Court "arrived too readily at the conclusion that the income was the income of the family.
" When Gomedalli Lakshminarayan 's case(1) was carried in appeal to the Judicial Committee, the Board regarded themselves as bound by the interpretation of the words "Hindu undivided family" employed in the Indian Income tax Act in the case of Kalyanji Vithaldas (2) , and observed that since the facts of the case were not in any material respect different from the facts in the earlier case, the answer to the question referred should be that "the income received by right of survivorship by the sole surviving male member of a Hindu undivided family can be taxed in the hands of such male member as his own individual income for the purpose of assessment to super tax under section 55 of the Indian Income tax Act, 1922.": Commissioner of Income tax vs A. P. Swamy Go medalli(8).
It may however be recalled that in Kalyanji Vithaldas 's case( 2 income assessed to tax belonged separately to four out of six partners : of the remaining two it was from an ancestral source but the fact that each such partner had a wife or daughter did not make that income from an ancestral source income of the undivided family of the partner, his wife and daughter.
In Gomedalli Lakshminarayan 's case(1) the property from which income accrued belonged to a Hindu undivided family and the effect of the death of the father who was a manager was merely to invest the rights of a manager upon the son.
The income from the property was and continued to remain the income of the undivided family.
Ibis distinction which had a vital bearing on the issue falling to be determined was not given effect to by the Judicial Committee in A. P. Swamy Gomedalli 's case(3).
A recent judgment of the Judicial Committee in a case aris ing from Ceylon Attorney General of Ceylon vs A. R. Aruna chalam Chetiar and Others (4 ) is in point.
One Arunachalam a Nattukottai Chettiar and his son constituted a joint family governed by the Mitakshara School of Hindu law.
The father and the son were domiciled in India and had trading and other interests in India, Ceylon and Far Eastern Countries Vide Attorney (2) 64 I.A. 28.
(3) (4) I.T.R. Suppl.
233 General vs A. R. Arunachalam Chettiar (No. 1) (L.R.[1957] A. C. 513).
The undivided son died in 1934 and Arunachalam became the sole surviving coparcener in a Hindu undivided family to which a number of female members belonged.
Arunachalam diedin 1938 shortly after the Estate Duty Ordinance No. 1 of 1938 came into operation in Ceylon.
By section 73 of the Ordinance itwas provided that property passing on the death of a member of a Hindu undivided family was exempt from payment of estate duty.
At all material times, the female members of the family had the right of maintenance and other rights which belonged to them as such members.
The widows in the family including the widow of the predeceased son had also the power to introduce coparceners in the family by adoption, and that power was exercised after the death of Arunachalam.
On a claim to estate duty in respect of Arunachalam 's estate in Ceylon, it was held that Arunachalam was at his death a member of a Hindu undivided family, the same undivided family of which his son, when alive was a member, and of which the continuity was preserved after Arunachalam 's death by adoptions by the widows of the family.
The Judicial Committee observed at p. 543: ". . though it may be correct to speak of him (the sole surviving coparcener) as the "owner", yet it is still correct to describe that which he owns as the joint family property.
For his ownership is such that upon the adoption of a son it assumes a different quality : it is such too, that female members of the family (whose members may increase) have a right to maintenance out of it and in some circumstances to a charge for maintenance upon it.
And these are incidents which arise, notwithstanding his so called ownership, just because the property has been and has not ceased to be joint family property. . it would not appear reasonable to imp art to the legislature the intention to discriminate, so long as the family itself subsists, between property in the hands of a single coparcener and that in the hands of two or more coparceners.
" Dealing with the question whether a single coparcener can alienate the property in a manner not open to one of several coparceners, they observed that it was, "can irrelevant consideration.
Let it be assumed that his power of alienation is unassailable: that means no more than that he has in the circumstances the power to alienate joint family property.
That is what it is 234 until he alienates it, and, if he does not alienate it, that is what it remains.
The fatal flaw in the argument of the appellant appeared to be that, having labelled the surviving coparcener "owner", he then attributed to his ownership such a congeries of rights that the property could no longer be called "joint family property".
The family, a body fluctuating in numbers and comprised of male and female members, may equally well be said to be owners of the property, but owners whose ownership is qualified by the powers of the coparceners.
There is in fact nothing to be gained by the use of the word "owner" in this connexion.
It is only by analysing the nature of the rights of the members of the un divided family, both those in being and those yet to be born, that it can be determined whether the family property can properly be described as "joint property" of the undivided family.
" Property of a joint family therefore does not cease to belong to the family merely because the family is represented by a single coparcener who possesses rights which an owner of property may possess.
In the case in hand the property which yielded the income originally belonged to a Hindu undivided family.
On the death of Buddappa the family which included a widow and females born in the family was represented by Buddanna alone but the property still continued to belong to that undivided family and income received therefrom was taxable as income of the Hindu undivided family.
The High Court was therefore right in recording their answers referred for opinion.
We may observe that in this case we express no opinion on the question whether a Hindu undivided family may for the purpose of the Indian Income tax Act be treated as a taxable entity when it consists of a single member male or female.
The appeal is dismissed with costs.
Appeal dismissed.

summary/full:
B, his wife, his two unmarried daughters and the appellant who was B 's adopted son, were members of a Hindu undivided family.
In respect of the income from dealings of the family, B was assessed during his life time in the status of a manager of the Hindu undivided family.
After his death for the assessment year 1951 52, the Income tax Officer the appellant on the basis that the income was that of a Hindu undivided family and rejected the latter 's contention that he should be assessed as an individual.
The order of assessment was confirmed by the Appellate Assistant Commissioner, the Tribunal and on a reference, by the High Court.
It was contended on behalf of the appellant that the expression 'Hindu undivided family ' used in section 3 of the Income Tax Act, 1922, means a Hindu coparcenary and when on the death of one out of two co parceners the entire property devolves upon a single co parcener, asssesment cannot be made of the surviving co parcener, in the status of a Hindu undivided family.
Alternatively it was contended that even if the entity 'Hindu undivided family ' in section 3 is intended to mean a Hindu joint family.
a sole surviving male member of the family, even if there be widows in the family entitled to maintenance, may only be assessed as an indivi dual.
HELD : Property of a Joint family does not cease to belong to the family merely because the family is represented by a single co parcener who possesses rights similar to those of an owner of property.
In the present case the property which yielded the income originally belonged to a Hindu undivided family.
On the death of B although the family which included a widow and females born in the family was represented by the appellant alone, the property continued to belong to the undivided family and income received therefrom was taxable as income of the Hindu undivided family.
[234 D] Under section 3 of the Act, it is not a Hindu coparcenary but a Hindu undivided family which one of the assemble entities.
A Hindu joint family consists of all persons lineally descended from a common ancestor and includes their wives and unmarried daughters.
A Hindu coparcenary is a much narrower body and includes only those persons who acquire by birth a status in the joint or co parcenary property.
Therefore there may be a Joint Hindu family consisting of a, single male member and widows of deceased of co parceners.
[227 A] There was no force in the alternative plea that there must be at least two male members to form a Hindu undivided family as a taxable entity.
The expression 'Hindu undivided family ' in the Act is used in the sense in which a Hindu joint family is understood in Hindu law.
Under the 225 Hindu system of law a joint family consist of a single male member and widows of deceased male members and there is nothing in the Act to indicate that a Hindu undivided family as an assessable entity must consist of at least two male members.
[231 E] Kalyanji Vithaldas & Others vs C.I.T., Bengal, (64 I.A. 28) C.1.7 '.
, Bombay vs Gomedalli Lakshminarayan, ; ln re Moolji Sicka & others, ; C.I.T. vs A. P. Swamy Gomedalli, ; Attorney General of Ceylon vs A. R. Arunachalam Chettiar and others, ; 34 I.T.R. Supp. 42, discussed.