judgement:
Appeals Nos. 225, 226, 228, 229 and 248 of 1955.
Appeals from the judgments and orders dated October 5, 1953, in Misc.
Judicial Cases Nos. 418/52 and 124/53 and October 8, 1953.
, in T. section No. 106/53, 565 Misc.
Judicial Cases Nos.
188/53 and 235/53 of the Patna High Court.
R. Patnaik, for the appellant (in C. A. No. 225/55).
R. C.Prasad, for the appellants (in C. As.
Nos. 226, 228, 229 & 248/55).
Mahabir Prasad, Advocate General for the State of Bihar, Tribeni Prdsad Sinha and section P. Varma, for the respondents (in C. As.
225, 226, 228 & 229/55).
Mahabir Prasad, Advocate General for the State of Bihar and section P. Varma, for the respondent (in C. A. No. 248/55).
April 15.
The Judgment of the Court was delivered by ' section K. DAS, J.
This is a batch of five appeals which have been heard together and the principal question for decision in these appeals is the constitutional validity of the Bihar Hindu Religious Trusts Act,, 1950 (Bihar I of 1951), hereinafter referred to as the Act.
Four of these appeals arise out of writ proceedings taken in the High Court of Patna on petitions made under articles 226 and 227 of the Constitution.
One of them, namely, Civil Appeal No. 228 of 1955, arises out of a suit which was originally instituted in the Court of the Subordinate Judge of Patna but was later transferred to the High Court by an order made by it tinder article 228 of the Constitution.
The Petitioners in the writ petitions and the plaintiffs in the suit challenged the constitutional validity of the Act on certain grounds to which we shall presently refer.
The petitions and the suit were contested by the State of Bihar and/or the President, Bihar State Board of Religious ,trusts, who are now respondents before us.
The High Court in three separate judgments, two dated October 5, 1953, and the third dated October 8, 1953, held that the Act was a valid piece of legislation and on that main finding dismissed the writ petitions and the suit.
The petitioners and the plaintiff ,, appellants before us, applied for and obtained certificates from the High Court under article 132 of the Constitution to the effect that the cases involved substantial ques 566 tions of law as to the interpretation of the Constitution and the appeals have been brought to this Court in pursuance of those certificates.
The facts lie within a very narrow compass.
In Civil Appeal No. 225 of 1955 the appellant is Mahant Moti Das, and he alleged that he was the Mahant of a math or astral situate in village Parbatta, district Monghyr, in Bihar, that he was a follower of the religion founded by Sri Kabir Sahib, that the properties of the asthal were treated as private properties of the mahants and that the President of the Bihar State Board of Religious Trusts constituted under the Act had no authority to serve him with a notice under section 59 of the Act, inasmuch as the Act was ultra vires and unconstitutional and, in any event, did not apply to his math or asthal.
In Civil Appeal No. 226 of 1955 the appellant Mahant Ram Das similarly alleged that he was the mahant of a math or asthal situate in village Bhuthari in the same district of Monghyr, that he was a "bairagi sadhu " and follower of Ramanandi Laskari Sri Vaishnava Sampradaya, that he was the absolute owner of the properties belonging to the math and that the President, Bihar State Board of Religious Trusts, had no authority to issue a notice to him asking him to furnish statements and accounts of the properties in his possession.
In Civil Appeal No. 228 of 1955 the appellants made similar allegations in their plaint and challenged the " vires " of the Act, mentioning as their cause of action the date on which the assent of the President of India to the Act was first published in the Bihar Gazette.
In Civil Appeal No. 229 of 1955 the appellant Mahant Mahabir Das stated that he was the Mahant of a asthal known as Bisanpur Asthal situate in the self same district.
He also received a notice from the President, Bihar State Board of Religious Trusts, to furnish statements and accounts, and he challenged the vires of the Act on similar grounds.
In Civil Appeal No. 248 of 1955 Mahant Ram Krishna Das alleged that the temple in question, known as Bhikam as Thakurbari in the town of Patba, was constructed by one Benidasji with his own money and he installed certain deities therein.
567 The allegation was that the temple and the properties thereof did not constitute a ' religious trust ' within the meaning of that expression in the Act and further that the Act was ultra vires the Constitution inasmuch as it infringed some of his fundamental rights.
The defence in all these cases was that the Act was valid, and applied to the asthals or temple in question and the properties thereof.
The principal argument presented before us on behalf of the appellants is that the Act is bad on the ground that its several provisions infringe the appellants ' fundamental rights guaranteed under (a) article 14; (b) article 19 (1)(f); and (e) articles 25, 26 and 27 of the Constitution.
The Act has also been impugned on the ground that it imposes an Unauthorised tax and also contravenes article 133 of the Constitution.
At this stage, it is necessary to advert to the object or purpose of the Act and set out the relevant provisions thereof The Act was passed by the Bihar Legislature and received the assent of the President,, which assent was published in the Bihar Gazette on February 21, 1951.
The long title of the Act and the preamble give the object of the Act.
The long title says that it is an "Act to provide for the better administration of Hindu Religious Trusts and for the protection and preservation of properties appertaining to such trusts." The preamble repeats the same object or purpose, and makes it further clear that the Act is meant to provide for the better administration of Hindu Religious Trusts in the State of Bihar.
Section I gives the short title, and provides for extent and commencement, the Act having come into force on August 15, 1951.
Section 2 is the definition section, and the word 'Hindu ' in the Act means a person professing any religion of Hindu origin and includes a Jain and a Buddhist, but does not include a Sikh.
The expressions " religious trust " and " trust property " are defined in the following way : "Section 2 (1).
I religious trust ' means any express or constructive trust created or existing for any purpose recognised by Hindu Law to be religious, pious or charitable, but shall not include a trust created 568 according to the Sikh religion or purely for the benefit of the Sikh community and a private endowment created for the worship of a family idol in which the public are not interested ; (p) I trust property ' means the property appertaining to a religious trust Section 3 states: " This Act shall apply to all religious trusts, whether created before or after the commencement of this Act, any part of the property of which is situated in the State of Bihar.
" Section 4 was amended by Bihar Act 16 of 1954, and it provides for necessary amendment or repeal, as the case may be, of certain earlier Acts dealing with public religious trusts and charitable endowments, such as, the (20 of 1863), the (6 of 1890) and the Charitable and Religious Trusts Act, 1920 (14 of 1920).
Sub section (5) of section 4 has an important bearing on one of the questions before us and must be quoted in full : "Section 4 (5).
The , and section 92 of the Code of Civil Procedure, 1908, shall not apply to any religious trust in this State, as defined in this Act." Chapter II of the Act deals with the constitution of the Board.
Section 5 provides for the constitution of the Bihar State Board of Religious Trusts.
Section 5(3) states that the Board shall be a body corporate and shall have perpetual succession and a common seal with power to acquire and hold property, both moveable and immovable.
Section 7 makes provision for the appointment of the President and the members of the first Board and their terms of office.
Section 8 contains the terms of the constitution of the second and every subsequent Board.
Chapter IV refers to the appointment and qualification of the Superintendent of the religious trusts.
The chapter further provides for the appointment of officers and servants for the Board.
Chapter V relates to the power and duties of the Board.
Section 28 (1) provides that the general superintendence of all religious trusts in the State shall be vested in the 569 Board and the Board shall do all things reasonable and necessary to ensure that such trusts are properly supervised and administered and that the income ' thereof is duly appropriated and applied to the objects of such trusts and in accordance with the purposes for which such trusts were founded and for which they exist.
Section 28 (2) enumerates in great detail the powers and duties of the Board in regard to certain matters.
Section 28(2)(e), for example, states that the duty of the Board shall be to cause inspection to be made of the property and the office of any religious trust including accounts and to authorise the Superintendent or any of its members, officers or servants for that purpose.
Section 28(2)(g) empowers the Board to give directions for the proper administration of a religious trust in accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained.
Section 32 empowers the Board to settle a scheme for the proper administration of religious trusts.
Chapter VI refers to the establishment of regional trusts committees and the powers and duties imposed on such committees.
Chapter VIII refers to transfer of immovable properties and borrowing of money by trustees.
Section 44 of this chapter states that no transfer made by a trustee, of any immovable property of a religious trust by way of sale, mortgage, or lease for a term exceeding three years shall be valid unless made with the previous sanction of the Board.
Section 45 prohibits a trustee from borrowing money for the purpose of any religious trust without the previous sanction of the Board.
Chapter X relates to trustees and their duties.
Section 59 of this chapter imposes a duty on the trustee to furnish particulars of the religious trust.
Section 60 relates to the budget of religious trusts and submission of such budgets to the Board and the Board may alter or modify the budget in such manner and to such extent as it thinks fit.
Chapter Xi relates to audit of accounts and recovery of irregular expenses from the trustees in default.
Chapter XIII provides for the creation of a trust fund which is to be vested in the 72 570 Board.
Section 70 states that for the purpose of defraying the expenses incurred in the administration of the Act the trustee of every religious trust shall pay to the Board such fee, not exceeding five per centum of its net income as the Board may from time to time with the previous sanction of the State Government determine.
Chapter XVI provides for the dissolution or supersession of the Board.
Section 80 states that if in the opinion of the State Government the Board makes default in the performance of the duties imposed on it or exceeds or abuses its powers, the State Government may declare the Board to be in default and direct that the Board shall be superseded.
Section 81 provides that where an order of supersession has been passed, all the members of the Board shall vacate their offices as such members and all the powers and duties to be performed by the Board shall be performed by such person as the State Government may direct.
Section 81 empowers the State Government to make rules and section 83 empowers the Board to make bye laws not inconsistent with the Act and the rules made thereunder.
We proceed now to consider the contentions urged on behalf of the appellants.
The first contention is that the provisions in sections 2, 5, 6, 7 and 8 infringe article 14 of the Constitution.
It is pointed out that the definition of the word ' Hindu ' in section 2 does riot include Sikhs; and section 5 constitutes a Board for religious trusts other than Jain religious trusts, and also two separate Boards one for Swetambar Jain religious trusts and the other for Digambar Jain religious trusts.
It is further pointed out that under sections 6, 7 and 8 the constitution of the Board for religious trusts other than Jain religious trusts differs in material particulars from the constitution of the two Boards for Jain religious trusts.
The submission is that there is inequality of treatment as between Hindu religious trusts on one hand and Sikh religious trusts on the other, the latter having been excluded from the purview of the Act; secondly, there is inequality of treatment even as between Hindu religious trusts and Jain religious trusts, though both come under the Act.
We do not 571 think that there is any substance in this contention.
The provisions of article 14 of the Constitution had come up for discussion before this Court in a number of earlier cases (see the cases referred to in Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1)).
It is, therefore, unnecessary to enter upon any lengthy discussion as to the meaning, scope and effect of the Article.
It is enough to say that it is now well settled by a series of decisions of this Court that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation, and in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differential which distinguishes persons or things that are grouped together from others left out of the group and (2) that differentia must have a rational relation to the object sought to be achieved by the statute in question.
The classification may be founded on different bases such as, geographical, or according to objects or occupations and the like.
The decisions of this Court further establish that there is a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional guarantee ; that it must be presumed that the legislature understands and correctly appreciates the needs of its own people and that its laws are directed to problems made manifest by experience and that its discriminations are based on adequate grounds; and further that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest.
It is not disputed before us, and this has been pointed out by the High Court, that there are some differences between Hindus, Sikhs and Jains in some of the essential details of the faith which they profess and the religious practices they observe; the Sikhs have no caste or priests, though they have grantis who officiate at marriages and other ceremonies; they do not believe in the Vedas, Puranas or Shastras, at least not in the same (1) ; 372 way as the Hindus believe in them.
The Jains also do not recognise the divine authority of the Vedas and do not practise sradhs or ceremonies of the dead, nor do they recognise the spiritual authority of the Brahmins (Maine 's Hindu Law, 11th Edition, p. 82).
It has been further pointed out that there are also organizational differences in the matter of religious trusts between Hindus, Sikhs and Jains.
There are not many Sikh religious trusts in Bihar, and their organization is essentially different.
Jains consist of two main branches Swetambar Jains and Digambar Jains and each branch has a separate central organisation.
Section 8 of the Act recognises these differences; for example, there is an assembly ' of Swetambar Jains known as Shree Sangh and under section 8(2)(c) of, the Act the Shree Sangh is entitled to elect five per .
sons to the Board of Swetambar Jain Religious Trust.
Similarly, Digambar Jains also have an assembly known as the Digambar Samaj and under section 8(3)(c) of the Act this assembly is entitled to elect five persons to the Board for Digambar Jain Religious Trust.
In view of these differences it cannot be said that in the matter of religious trusts in the State of Bihar, Sikhs, Hindus and Jains are situated alike or that the needs of the Jains and Hindus are the same in the matter of the administration of their respective religious trusts; therefore, according to the well established principles laid down by this court with regard to legislative classification, it was open to the Bihar Legislature to exclude Sikhs who might have been in no need of protection and to distinguish between Hindus and Jains.
Therefore, the contention urged on behalf of the appellants that the several provisions of the Act contravene article 14 is devoid of any merit.
The next contention urged on behalf of the appellants is that the provisions in Chapter V, and in particular sections 28 and 32, violate the fundamental right guaranteed to the appellants under article 19(1)(f) of the Constitution, namely, their right to acquire, hold and dispose of the trust properties.
This argument before us has proceeded on the footing that the properties which the appellants bold are trust properties within 573 the meaning of the Act ; but we must state here that the appellants have also alleged that the properties are their private properties, to which aspect of the case we shall advert later.
Chapter V of the Act, and in particular section 28 thereof, lays down the powers and duties of the Board.
To some of these powers and duties we have already made a reference earlier.
Section 32 gives power to the Board, of its own motion or on application made to it in that behalf by two or more persons interested in any trust, to settle schemes for proper administration of the religious trust.
There are other sections in the chapter which give the Board power to enter into contracts and to borrow money, etc., for carrying out any of the purposes of the Act or to give effect to the provisions thereof.
Under section 58 every trustee must carry out all directions which may from time to time be issued to him by the Board under any of the provisions of the Act.
The powers given under section 28 include the power to prepare and settle the budget, to cause inspection to be made of the property and the office of any religious trust, to call for information, reports, returns, etc., to give directions for the proper administration of a religious trust in accordance with the law governing such trusts and the wishes of the founder, to remove a trustee from his office in certain circumstances, and to control and administer the trust fund, etc.
The argument before us is that the position of a maharani or shebait of a Hindu religious trust is a combination of office and proprietary right and under the provisions of the Act the mahant or shebait practically loses his right of management and is reduced to the position of a mere servant of the Board; this, it is contended, is violative of the appellants ' fundamental right under article 19(1)(f).
In Angurbala Mullick vs Debabrata Mullick (1) Mukherjea, J., delivering the majority judgment of this Court, has said that the exact legal position of a, shebait may not be capable of precise definition, but its implications are fairly well established.
It is now settled that the relation of a shebait in regard to (1) , 1133.
574 debutter property is not that of a trustee to trust property under the English law.
Mukherjea, J., said : " In English law the legal estate in the trust property vests in the trustee who holds it for the benefit of cestui que trust.
In a Hindu religious endowment on the other hand the entire ownership of the dedicated property is transferred to the deity or the institution itself as a juristic person and the shebait or mahant is a mere manager.
But though a shebait is a manager and not a trustee in the technical sense, it would not be correct to describe the shebaitship as a mere office.
The shebait has not only duties to discharge in connection with the endowment, but he has a beneficial interest in the debutter property. .
In almost all such endowments the shebait has a share in the usufruct of the debutter property which depends upon the terms of the grant or upon custom or usage.
Even where no emoluments are attached to the office of the shebait, he enjoys some sort of right or interest in the endowed property which partially at least has the character of a proprietary right.
Thus, in the conception of shebaiti both the elements of office and property, of duties and personal interest, are mixed up and blended together ; and one of the elements cannot be detached from the other.
It is the presence of this personal or beneficial interest in the endowed property which invests shebaitship with the character of proprietary rights and attaches to it the legal incidents of property.
" It is to be remembered that even before the passing of the Act here impugned, there was statutory machinery for enforcing the obligations and duties imposed Upon mahant or shebait.
Section 92 of the Code of Civil Procedure provided that in the case of an alleged breach of any express or constructive trust created for public purposes of a charitable or religious nature or where the direction of the court was deemed necessary for the administration of any such trust, the Advocate General, or two or more persons having an interest in the trust and having obtained the consent in writing of the Advocate General, might institute 575 a suit to obtain a decree (a) to remove any trustee, (b) appointing a new trustee, (c) vesting any property in a trustee, (d) directing accounts and enquiries, (e) declaring what proportion of the trust property or of the interest therein shall be allocated to any particular object of the trust, (f) authorising the whole or any part of the trust property to be let, sold, mortgaged or exchanged, (g) settling scheme and/or (h) granting such further or other relief as the nature of the case might require.
The section therefore provided an important machinery for enforcing the obligations and duties imposed on trustees and the jurisdiction given to the court was of a very wide extent.
Now, the right guaranteed under article 19(1)(f) is subject to cl.
(5), thereof, which says inter alia that nothing in sub clause (f) shall prevent the State from making any law imposing reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the general public.
We are of the view, in agreement with that of the High Court, that the restrictions imposed by the Act on the power of the trustees are really intended, as the preamble of the Act states, for the better administration of Hindu religious trusts in the State of Bihar and for the protection and preservation of properties appertaining to such trusts.
It is indeed true that the Act provides a better and more speedy remedy for the enforcement of the obligations and duties imposed on the trustees than the lengthy and cumbrous procedure of a suit under section 92 of the Civil Procedure Code.
The Board is vested with summary powers in various matters, but the control is to be exercised for the better and more efficient administration of the trust and for the protection and preservation of the trust properties.
It is germane to refer in this connection to sub section
(1) of section 28 which states that the Board shall do all things reasonable and necessary to ensure that the religious trusts are properly supervised and administered and that the income thereof is duly appropriated and applied to the objects of such trusts and in accordance with the purposes for which such trusts were founded.
Section 576 60 (2) no doubt empowers the Board to alter or modify the budget of any religious trust in such manner and to such extent as it thinks fit ; but sub section
(6) of section 60 makes it clear that nothing contained in the section shall be deemed to autborise the Board to alter or modify any budget in a manner or to an extent inconsistent with the wishes of the founder, so far as such wishes can be ascertained, or with the provisions of the Act.
Section 28 (2) (h) gives the Board power to remove a trustee from his office in certain contingencies; but sub section
(3) of section 28 says that an order of removal passed by the Board under el.
(h) of sub section
(2) shall be communicated to the trustee concerned and such trustee may within 90 days of the communication of such order apply to the District Judge for varying, modifying or setting aside the order.
Section 28 (2) (j) empowers the Board to sanction the conversion of any property of a religious trust into another property if the Board is satisfied that such conversion is beneficial for the trust; there is, however, an important proviso that no such conversion shall be sanctioned unless the Board so resolves by a majority which includes at least three fourths of its members and the resolution is approved by the District Judge.
Even with regard to the settling of a scheme under section 32 there is a safeguard under sub section
(3) thereof, which says that the trustee or any person interested in the trust may within three months of the publication of the scheme make an application to the District Judge for varying, modifying or setting aside the scheme.
These and similar other safeguards clearly indicate Act, and we are of the view that having regard to the position of a trustee as respects the trust property which he holds and the object or purpose of the Act,the restrictions imposed are really for the purpose of carrying out the objects of the trust and for better administration, protection and preservation of the trust properties ; they are, therefore, reasonable restrictions in the interests of the general public within the meaning of el.
(5) of article 19 of the Constitution.
In 577 this respect, the impugned provisions of the Act differ from those provisions of the Madras Hindu Religious and Charitable Endowments Act, 1951, and the Orissa Hindu Religious Endowments Act, 1939, as amended by the Amending Act 11 of 1952, which came under consideration of this Court in The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt (1) and Mahant Shri Jagannath Ramanuj Das vs The State of Orissa (2), and were held to be invalid on the ground that they were not reasonable restrictions within the meaning of el.
(5) of article 19 of the Constitution.
The third contention of the appellants rests upon articles 25 and 26 of the Constitution.
The appellants have invoked in aid article 25 (1) which says inter alia, that subject to public order, morality and health, all persons have the right freely to profess, practice and propagate religion.
Article 26 is also relied on for the contention that every religious denomination or any section thereof has a, right (a) to establish and maintain institutions for religious and charitable purposes and (b) to manage its own affairs in matters of religion.
It is difficult to see how any of the provisions of the Act can be said to interfere with the right guaranteed by article 25, viz., freedom of conscience and the right freely to profess, practice and propagate religion.
Learned counsel for the appellants has not been able to point out to us any particular provision of the Act which interferes with such a right.
On behalf of the appellants it has been submitted that the power to alter or modify the bud get relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a way as to affect the due observance, of religious practices in a math or temple so as to constitute an encroachment on the right guaranteed under article 25, and learned counsel for the appellants had placed reliance on The Commissioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1), for his submission that (I) ; 73 (2) ; 578 freedom of religion in our Constitution is not confined to religious beliefs only, but extends to religious practices as well subject to the restrictions which the Constitution itself has laid down.
The answer to this submission is two fold : we have pointed out earlier that the power to alter the budget is subject to cl.
(6) of section 60 of the Act and the Board is nit authorised to alter or modify the budget in a manner or to an extent inconsistent with the wishes of the founder or with the provisions of the Act.
The power to give directions to the trustee is also subject to a similar restriction, namely, the directions must be for the proper administration of the religious trust in ' accordance with the law governing such trust and the wishes of the founder in so far as such wishes can be ascertained and are not repugnant to such law.
The keynote of all the relevant provisions of the Act is the due observance of the objects of the religious trust and not its breach or violation.
Secondly, as was observed in The Commissioner, Hindu Religious Endowments, Madras vs Shri Lakshmindra Thirtha Swamiar of Shri Shirur Mutt(1), at p. 1030, " an apprehension that the powers conferred. may be abused in individual cases does not make the provision itself bad or invalid in law ".
With regard to article 26, cls.
(a) and (b), the position is the same.
There is no provision of the Act which interferes with the right of any religious denomination or any section thereof to establish and maintain institutions for religious and charitable purposes; nor do the provisions of the Act interfere with the right of any religious denomination or any section thereof to manage its own affairs in matters of religion.
Learned counsel for the appellants has drawn our attention to Sri Venkataramana Devaru vs The State of Mysore, (2), where following the earlier decision in The Commisssioner, Hindu Religious Endowments, Madras vs Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt (1), it was observed that matters of religion included even practices which are ,regarded; by ' the community as part of its religion.
Our attention has also been drawn (I) (2) ; 579 to Ratilal Panachand Gandhi vs The State of Bombay in which it has been held that a religious sect or denomination has the right to manage its own affairs in matters of religion and this includes the right to spend the trust property or its income for religion and for religious purposes and objects indicated by the founder of the trust or established by usage obtaining in a particular institution.
It was further held therein that to divert the trust property or funds for purposes which the charity commissioner or the court considered expedient or proper, although the original objects of the founder could still be carried out, was an unwarranted encroachment on the freedom of religious insti tutions in regard to the management of their religious affairs.
We do not think that the aforesaid decisions afford any assistance to the appellants.
Granting that matters of religion ' include practices which a religious denomination regards as part of its religion, none of the provisions of the Act interfere with such practices; nor do the provisions of the Act seek to divert the trust property or funds for purposes other than those indicated by the founder of the trust or those established by usage obtaining in a particular institution.
On the contrary, the provisions of the Act seek to implement the purposes for which the trust was created and prevent mismanagement and waste by the trustee.
In other words, the Act by its several provisions seeks to fulfill rather than defeat the trust.
In our opinion, there is no substance in the argument that the provisions of the Act contravene articles 25 and 26 of the Constitution.
Lastly, the appellants have challenged the validity of section 70 of the Act,the relevant portion of which states: expenses incurred or to be incurred in the administration of this Act, the trustee of every religious trust shall, in each financial year, pay to the Board such fee, not exceeding five per centum of its net income in the last preceding financial year, as the Board may, from time to time, with the previous sanction of the State Government, determine." (I) [1954] S.C.R. 1055.
580 The argument is that section 70 imposes an unauthorised tax.
The point is, we think, concluded by our decision in Mahant Sri Jagannath Ramanuj Das vs The State of Orissa (1) where the distinction between a tax and a fee for legislative purposes under our Constitution was pointed out and with regard to an identical imposition under section 49 of the Orissa Hindu Religious Endowments Act, 1939, it was held that the contribution levied was a fee and not a tax.
It was observed there at p. 1054: " The collections made are not merged in the general public revenue and are not appropriated in the manner laid down for appropriation of expenses for other public purposes.
They go to constitute the fund which is contemplated by section 50 of the Act.
We are further of opinion that an imposition like this cannot be said to be hit by article 27 of the Constitution.
What is forbidden by article 27 is the specific appropriation of the proceeds of any tax in payment of expenses for the promotion or maintenance of any particular religion or religious denomination.
The object of the contribution under section 49 is not the fostering or preservation of the Hindu religion or of any denomination within it; the purpose is to see that religious trusts and institutions wherever they exist are properly administered.
It is the secular administration of the religious institutions that the legislature seeks to control and the object, as enunciated in the Act, is to ensure that the endowments attached to the religious institutions are properly administered and their income is duly appropriated for purposes for which they were founded or exist.
As there is no question of favouring any particular religion or religious denomination, article 27 could not possibly apply.
" These observations apply with equal force to the present case.
It has also been argued that section 55 (2) of the Act con travenes article 133 of the Constitution and is accordingly invalid.
Section 55 is in these terms: 55 (1).
"Unless otherwise provided in this Act, an appeal shall lie to the High Court against every order passed by the District Judge under this Act.
(I) ; 581 (2) No appeal shall lie from any order passed in appeal under this section.
" We do not think that section 55 (2) of the Act overrides or is intended to override article 133 or any other Article of the Constitution relating to appeals to the Supreme Court.
Such appeals must undoubtedly lie to the Supreme Court, provided the necessary requirements for such appeals are fulfilled.
It is, we think, obvious that the Act cannot affect the jurisdiction of the Supreme Court.
We now come to that part of the case of the appellants in which they claim the properties to be their private properties or, in the alternative, the trusts to be private trusts.
The High Court has pointed out that in M. J. C. 418 of 1952 out of which has arisen Civil Appeal No. 225 of 1955, though there was an assertion that the properties were not trust properties, there was a counter affidavit on behalf of the State of Bihar that the asthal in question was a public asthal and the properties appertaining thereto trust properties within the meaning of the Act.
In M. J. C. 124 of 1953 out of which has arisen Civil Appeal No. 226 of 1955 there was a similar claim that the mahant of the asthal was the absolute owner of the properties belonging to the math.
In Suit No. 34 of 1952/106 of 1953 out of which has arisen Civil Appeal No. 228 of 1955 there was a prayer for adjournment in order to enable the plaintiffs (now ap pellants before us) to file a petition to amend the plaint, and the purpose of the amendment sought to be made was to claim that the institutions in question were of a private charater and the Act had no application to them.
This prayer was disallowed by the High Court on the ground that the amendment sought to be made would alter the whole character of the suit.
In M. J C. 188 of 1953 out of which has arisen Civil Appeal No. 229 of 1955 the claim was that there was no trust,.
express or implied.
In M. J. C. 235 of 1953 out of which has arisen Civil Appeal No. 248 of 1955 there was a counter affidavit on behalf of the State of Bihar that the temple in question was a public temple and the Act applied to it.
In all these cases the High Court has 582 taken the view, rightly in our opinion, that the questions whether the trusts are public or private trusts or the properties are private or trust properties are questions which involve investigation of complicated facts and recording of evidence and such investigation could not be done on writ proceedings.
In the one suit which was tried in the High Court the question did not arise as no amendment was allowed.
Therefore, in these cases there are no materials on which the question as to the nature of the trust can be determined, though in Civil Appeal No. 343 of 1955 (1) in which also judgment is being delivered today, we have held that having regard to the preamble to the Act, the provisions in section 3 and the provisions of sub section
(5) of section 4 the definition clause of 'religious trust ' in the Act must mean public trusts express or constructive, recognised by Hindu law to be religious, pious or charitable.
That finding, however, is of no assistance to the appellants in the present cases.
The fate of these cases must depend on the sole question whether the Act is constitutionally valid or not.
We have held that the Act is constitutionally valid.
In the result we hold that the appeals are without any merit.
They are accordingly dismissed with costs.
Appeals dismissed.

summary/full:
The appellants as the Mahants of the respective maths or asthals were served with notices under section 59 of the Bihar Hindu Religious Trusts Act, 195o, by the President, Bihar State Board of Religious Trusts, asking them to furnish statements and accounts of the properties in their possession.
They challenged the constitutional validity of the Act by proceedings taken in the High Court on the grounds (1) that sections 2, 5, 6, 7 and 8 of the Act infringe article 14 Of the Constitution, inasmuch as there was inequality of treatment as between Hindu religious trusts on one hand and Sikh religious trusts on the other, the latter having been excluded from the purview of the Act, and that there was inequality of treatment even as between Hindu religious trusts and Jain religious trusts, though both came under the Act; (2) that the provisions of ch.
V of the Act and in particular sections 28 and 32 violate article 19(1)(f) of the Constitution, as under those provisions the mahant or Shebait practically loses his right of management and is reduced to the position of a mere servant of the Board; (3) that the provisions of the Act contravene articles 25 and 26 of the Constitution, as the power to alter or modify the budget relating to a religious trust or the power to give directions to a trustee may be exercised by the Board in such a way as to affect the due observance of religious practices in the math or temple; (4) that section 70 imposes an unauthorised tax, and (5) that section 55(2) contravenes article I33 of the Constitution.
Held, (1) that in view of the fact that in the matter of religious trusts in the State of Bihar, there are differences between Sikhs, Hindus and jains and that the needs of jains and Hindus are not the same in the matter of the administration of 564 their respective religious trusts, it is open to the Bihar Legislature to exclude Sikhs who might have been in no need of protection and to distinguish between Hindus and jains.
Accordingly, SS. 2, 5, 6, 7, and 8 of the Act do not infringe article 14 Of the Constitution.
It is well settled that while article 14 forbids class legislation, it does not forbid reasonable classification for the purposes of legislation, and in order to pass the test of permissible classification, two conditions must be fulfilled, namely, (1) that the classification must be founded on an intelligible differentia which distinguished persons or things that are grouped together from others left out of the group and (2) that that differentia must have a rational relation to the object sought to be achieved by the statute in question.
Shri Ram Krishna Dalmia vs Shri Justice section R. Tcndollkar, ; , relied on.
(2) that having regard to the position of a trustee in respect of the trust property which he holds and the object or purpose of the Act, the restrictions imposed in Ch.
V of the Act are really for the purpose of carrying out the objects of the trust and for the better administration, protection and preservation of the trust properties, and are reasonable restrictions in the interests of the general public within the meaning Of cl.
(5) Of article 19 of the Constitution.
(3) that the Act does not contravene articles 25 and 26 of the Constitution, as the provisions of the Act relating to the power of the Board to alter the budget and to give directions to the trustee are subject to restrictions, namely, that they must be for the proper administration of the religious trust ; and, further, none of the provisions interfere with " matters of religion " including practices which a religious denomination regards as part of its religion.
(4) that section 70 Of the Act is a valid provision as it only provides for the levy of a fee for the purpose of defraying the expenses incurred or to be incurred in the administration of the Act and is not a tax.
Mahant Sri jagannath Ramanuj Das vs The State of Orissa, ; , followed.
(5) that section 55(2) Of the Act does not contravene article I33 Of the Constitution as it does not override or is not intended to override article 133 or any other Article of the Constitution relating to appeals to the Supreme Court.


judgement:
appeal Nos.
1450 51 of 1993.
From the Judgment and Order dated 16.7.92.of the Delhi High Court in Civil Writ Petition No. 1780 of 1992 and Civil Misc.
No. 3485 of 1992.
K.T.S. Tulsi, Addl.
Solicitor General and S.N. Terdol for the Appellants.
Kapil Sibal, Vikas Singh, L.R. Singh, Yunus Malik and Gopal Singh for the Respondents.
The Judgment of the Court was delivered by R.M. SAHAI, J.
Was there any valid justification for the appellants, the Union of India, to withhold the payment of subsidy to the respondents, the small scale manufacturers of fertiliser, is the main question that arises for consideration in this appeal directed against the judgment and order of the Delhi High Court? Two other questions that arise in this connection are if the High Court committed any error in exercise of its extraordinary jurisdiction to interfere at the stage of show cause and if a report prepared by the Project Development India Limited (in brief 'PDIL ') behind the back of the respondents could be relied for rejecting the specification of standard fertilizer produced by the respondents.
Before adverting to these issues we consider it necessary to mention that the payment of subsidy to manufacturers of fertilisers was introduced in 1982 under a scheme framed by the Government of India in pursuance of which every manufacturer was required to give a written undertaking to the President of India.
In 1985 Government of India issued a Fertilizer (Control) Order under the Essential Commodities Act.
Sub clause (h) of Clause (2) of the order defines 'fertilizer ' to mean, any substance used or intended to be used as a fertiliser of the soil and/or crop and specified in Part A of Schedule I and includes a mixture of fertiliser, mixtures of micro nutrient fertilisers and special mixture of fertilisers '.
Sub clause (q) of the same clause explains 'prescribed standard of fertilizer ' as under: "Prescribed standard" means (i) in relation to fertiliser included in Column 1 of Part A of 763 Schedule 1, the standard set out in the corresponding entry in Column 2, subject to the limits of permissible variation as specified in Part B of that Schedule; and (ii)in relation to a mixture of fertilisers, the standard set out in respect of that mixture under sub clause (1) of Clause 13 by the Central Government, subject to the limits of permissible variation as specified in Part B of Schedule 1; (iii)in relation to a [mixture of NPK fertilisers, mixture of micronutrient fertilisers and combination thereof], the standard set out in respect of that mixture under sub clause (2) of Clause 13 by the State Government, subject to limits of permissible variation as specified in Part B of Schedule 1.;" And standard specified of single super phosphate (SSP) sulphur manufactured by the respondents is described in Schedule I of the Order as under: "Single Super Phosphate Granulated) (i) Moisture, per cent by weight, maximum (ii) free phosphoric acid (as P 2 0 5) per cent by weight, maximum (iii) Water soluble phosphates (as P 205 per cent by weight , maximum (iv) Particle size Notless than 90 per cent of the material shall pass through 4 nun IS sieve and shall be retained on 1 mm IS sieve.
Not more than 5 per cent shall pass through 1 mm IS sieve.
" The Control Order further deals in detail with price control, distribution,restriction on manufacturers and sale etc. of fertiliser.
Chapter VII deals with enforcement authorities.
Paragraph 27 empowers the State Government and the Central Government to appoint inspectors of fertilisers.
Paragraph 28 empowers the inspectors to secure compliance of the Order by requiring the wholesaler or retail dealer to give any information in his possession with respect to manufacture, draw samples of any fertiliser, enter upon and search any premises etc.
How the sample has to be analysed has been provided by Schedule 11 of the Order.
The basic raw material for manufacture of fertiliser is rock phosphate.
There 764 are various mines spread all over the country from where these rocks are obtained.
They are canalised through State mineral corporations.
One of such mines is located in Hirapur in the State of Madhya Pradesh.
The Government of the State requested the PDIL to undertake laboratory test of these rocks and submit a report for determining disability allowance payable to SSP producers.
The conclusion o f the report is extracted below : "The world reserve of good quality rock phosphate is gradually depleting making the use of non standard and low grade phosphate, in the manufacture of phosphatic fertiliser as essential.
In India, compared to other countries, the availability of usable quality rock phosphate is rather limited, though available in abundance.
This study was made, at the request of Madhya pradesh Government with a view to effectively utilise, to the extent possible the lower grade indigenous rock phosphate from HIRAPUR MINES for SSP production.
Experiments in PDIL laboratory has shown that this rock phosphate cannot be processed in the conventional route to produce SSP, as such, and it is imperative to make blends with any standard rock phosphate.
The report establishes that the rock phosphate available in our country whether it is in Madhya Pradesh or Jaipur appears to be incapable of producing SSP unless it is blended with imported rock.
Proportion of the two depends on the strength of rock obtained from different mines.
The PDIL conducted the test for those rocks whose strength varied from 05 and 0 5 and opined that blending of rock with 24% should be in proportion of 20% and 80%.
The extract from the report runs as under : "The chemical analysis has shown 24.85% P 2 0 5 and 30.03% Silica plus insoluble besides other impurities like high R 2 0 3 compared to 32.4% P 2 0 5, 4.56% Silica plus insoluble and 0.75% R2 03 in standard Jordon variety.
Many proportions of blends were tried in laboratory to find out the optimum blend which would produce SSP of specification laid down by F.C.O. and finally it was concluded that a blend of 20% Hirapur rock matrix and 80 Senegal will be a suitable proportion.
This was confirmed even in pilot plant trials where for a comparison purpose two blends were tested e.g. 30:70 and 20:80 for Hirapur, Senegal rock phosphates.
There 765 was found from analytical results that 20:80 proportion was most suited.
Accordingly study was concentrated towards this 20:80 Hirapur:Senegal blend.
" We now turn to the various issues that arise in this case.
Relying on these reports the subsidy Payable to the manufacturers was withheld and they were required by a letter dated 20th April 1990 to explain as to how they were able to achieve the standard specification.
The letter reads as under: "It is generally observed from the quarterly cost date being submitted by your company that you are either using only low grade rock phosphate for manufacture the P2 05 content of which is less than 30%, or in large proportion thereof.
Please therefore intimate how you are manufacturing SSP of standard specification i.e. of 16% P2 05 content, SSP as required under the specification laid down on the F. C. 0.
" Both the assumptions in the letter were without any foundation.
We shall examine it in detail later.
It was at this stage that the manufacturers approached the High Court.
They claimed that the fertiliser manufactured by them having been checked and verified by the inspectors appointed under the Control Order the opposite parties were not justified either in withholding the subsidy or issuing any notice.
In the counter affidavit filed in the High Court the reason for issuing notice was explained as under: "That in reply to Paras 15 and 16 of the Petition, it is submitted that upto 1.4.1992 imported Rock Phosphate was being procured by the SSP units, including the petitioners through the Minerals & Metals reading Corporation (MMTC) which was a canalising agency.
Rock Phosphate is also available through the State owned indigenous sources such as Rajasthan State Mineral Development Corporation (RSMDC), Rajasthan State Mines & Minerals Limited (RSMML), Uttar Pradesh State Minerals Development Corporation (UPSMDC), Madhya Pradesh State Mining Corporation (MPSMC) and Hindustan Zinc Limited (HZL), and SSP is manufactured by using rocks of standard grade.
The quality of indigenous rock phosphate from the above mentioned State owned sources varies considerably from low grade rock of 14% to 16% P2 05 content to high degree rock of +3 1 % P2 05 content.
For producing 766 SSP of 16% W.S. P2 05 the rock phosphate used should contain a minimum of +3 1% P2 05 and the conversion efficiency of the rock should be more than 9 1 %.
SSP of 16% W.S. P2 05 can be produced by using low grade rocks only after suitably blending it with standard/high grade rock phosphate to have a feed conforming to the above mentioned minimum specifications of +31% P2 05.
That in reply to Para 17 of the Petition it is submitted that indigenous rock phosphate is being procured by the SSP Units from Madhya Pradesh State Mining Corporation, Uttar Pradesh Sate Minerals Development Corporation, Rajasthan State Mining Development Corporation and Rajasthan Mines and Minerals limited.
Since detailed technical examination of th e various grades of indigenous rock phosphate available from sources other than RSMML was not available, the SSP Units were informed that pending detailed technical examination, the prices of such indigenous, rock phosphate would be reimbursed at par with RSMML price for rock phosphate (having +3 1 % P2 05) on a provisional basis only.
A copy of the circular letter issued by the Office of the FICC dated 29th September 1986 to all manufacturers of SSP is at Annexure 1.
Subsequently, Projects and Development India Ltd (PDIL), Sindri, which is a Consultancy and R & D organisation for fertilisers in the public sector, which had conducted an evaluation of MPSMC Rock Phosphate of Hirapur and Jhabua Mines, submitted its report, which indicated that taking into account the P2 05 content and the impurities present in both Jhabua and Hirapur Rock, it is unsuitable to make SSP of 16% W.S. P2 05 content, unless it is blended with minimum of 7O% which grade imported Senegal rock with 30% low grade Jhabua rock and minimum of 80% high grade Senegal rock with 20% low grade Hirapur rock." After considering this a Division Bench of the High Court allowed the writ petition and issued a direction to the appellant to pay the subsidy which was payable to respondents after determining it in accordance with the terms of the scheme under which it was payable within the period specified in the order.
The direction was issued as the Bench found that the basis for denying the subsidy was the report submitted by PDIL prepared behind the back of the manufacturers without issuing any notice to them or inviting their participation.
After excluding the report the bench held that since the payment of subsidy was dependent on basis of laboratory reports furnished by the manufacturers and these reports had been furnished by 767 them and they had not been questioned at any time by the appropriate authorities it was not open to opposite parties either to withhold the subsidy or to initiate the proceedings by issuing show cause notices.
To assail the finding on merits the learned Additional Solicitor General launched a two pronged attack.
He urged that subsidy under the scheme of 1982 was payable only if the fertiliser conformed to specification of 16% water soluble phosphoric penta oxide.
The learned counsel submitted that under the scheme the Department of Fertilisers was entitled to conduct survey and check the quality and the manufacturers were required to give an undertaking that they were to supply prescribed information along with the monthly claim for subsidy.
According to learned counsel claim for subsidy.
According to learned counsel under the said scheme a circular was issued on September 29, 1986 to all the manufacturers of SSP wherein it was clarified that the indigenous rock phosphate being obtained by the manufacturers from sources other than Udaipur was pending a detailed technical examination.
He urged that the circular further stated that the prices were to be worked out on the basis of rock phosphate having plus 3 1% P2 05.
Therefore, pending completion of detailed technical examination the subsidy worked out was provisional.
Anti when the technical examination conducted by the PDIL indicated that on the admitted figures famished by the manufacturers in their quarterly invoices the standard specification could not have been achieved the notice were issued, therefore, the High Court was in error in quashing it.
According to him it was open to the department to get it ascertained from an authentic source if the manufacturers of fertiliser were using proper material and achieving the specified standard.
He urged that the PDIL being independent and reputed body it was not required to issued any show cause notice.
We do not consider it necessary to express any opinion if the PDIL report could have been discarded for want of show cause notice or for being ex party as there are certain features about the report which obviate the necessity of considering its validity on this ground.
From the counter affidavit filed by Managing Director of M/s Brij Fertilizers Pvt Ltd it appears that the manufacturers of SSP have been using rock phosphate which is of hard quality but in order to encourage use of indigenous rock phosphate and to avoid loss of foreign exchange the Government of Madhya Pradesh directed the PDIL laboratory to undertake laboratory test to find out the grade of phosphate from Hirapur mines to enable the manufacturers to claim disability allowance.
The report, therefore, was not concerned with finding out whether any of the manufacturers who were engaged in producing fertilizer were doing so in accordance with standard provided in the Control Order.
In the circumstances it may be that it was not necessary to issue any notice to the manufacturers.
768 Yet the question is, could it furnish material for rejecting the claim of respondents and withholding their subsidy? The learned Additional Solicitor General urged that the non release of subsidy was not based, solely, on report of PDIL but on basis of input cost data supplied by the manufacturers which indicated that on basis of analysis of raw material input provided by the respondents the manufacturers could not have produced SSP of 16% water soluble P2 05.
This assumption appears to be unfounded for more than one reason.
Under the Control Order there is a detailed procedure provided for carrying out test to find out if the fertiliser produced was of specified standard.
It is not disputed that no such test as provided was ever carried by any authority.
Rather the report submitted by the inspectors appointed under the Control Order, indicates that the fertiliser manufactured by the respondents was standard.
We are not willing to accept the submission of the Additional Solicitor General that these reports were incorrect and have been obtained through the connivance of the official machinery.
There is no material on record to indicate that the Government at any point of time doubted the correctness of there ports or initiated an proceedings against any inspector or any officer for it is not possible to draw an inference against the authenticity of the reports which have been given by the authority empowered under the order.
It is not the claim of department that at any point of time prior to submission of the PDIL report any step was taken or the government ever required the inspectors to find out if the manufacture carried on by respondents was in accordance with law and rules.
To discard the certificate issued by the inspector in the circumstances would be arbitrary without any valid reason.
With this we may now examine the PDIL report itself.
As has been seen earlier the purpose of getting the rock tested was to pay disability allowance.
The purpose being entirely different it could not be utilised for a different purpose.
How risky it is to embark on such exercise shall be clear when the result of report obtained by the PDIL is applied to the dates of respondents relied by appellant to justify their action of issuing show cause notice.
From paragraph two of the conclusions of the PDIL, extracted earlier, it is clear that the study was made at the request of Madhya Pradesh Government with a view to effectively utilise to the extent possible the lower grade indigenous phosphate from Hirapur mines for SSP production.
The report concludes, that experiments in PDIL laboratory has shown that this rock phosphate cannot be processed in the conventional route to produce SSP, as such, it is imperative to make blends with any standard rock phosphate.
The objection of the department is not that the rock phosphate should not be blended with imported one but that on the proportion shown along with the strength of indigenous rock used the standard as provided could not have been 769 achieved.
From the analysis of rock phosphate purchased by the manufacturers as per their invoices and attempt was made to demonstrate that if the figures mentioned therein were taken as correct and they are compared with the calculation given by the PDIL it would be clear that the standard specification could not have been achieved.
It is necessary to mention at this stage that the rock phosphate found in Hirapur mines was of three grades.
That is clear from the letter of Assistant General Manager, Mines to the Joint Director, Fertiliser Coordination Committee.
Relevant part of the letter reads, "We were selling Hirapur Phosphorite for so many Fertiliser S.S.P. manufactures since starting of the mining and were never found any complaint regarding its suitability to manufacture SSP Fertiliser.
We have learnt form Fertiliser Manufacturing Units that our Phosphorite is suitable for SSP Fertiliser manufacturing but in case of F0203 contents increases in Phosphorite the Wear and Tear of the plant increases.
We had also been directed by Joint Director (F&A) FICC, vide their letter dated 31.8.89 to sale our Phosphorite in category 'A ' to SSP Units.
This further certifies the suitability of our Phosphorite for SSP manufacturing of requisite grade.
The material supplied to these units are of 32% category 'A ' and not 25% as given in PDIL report hence the question of blending with other Rock Phosphate does not require to Manufacture the requisite grade SSP.
The M.P.S.M.C. was selling Hirapur Phosphorite in different percentages P2 05 grades and not in mix condition.
Out grades and other specifications indicated as below: Before 5.3 1991 From 6.3. 1991 1.1st (A) 1st (A) P2 05 + 30%, Sio2 P2 05 + 29% 3 1 %, + 15%18% Sio2 + 15% 1 8% F0203 below 4.5% Fo203 below 24% A. +1/2" 2.1/2" Size A)+ 1/2"2. 1/2" size B. R.O.M. B. R.O.M. 2.
1st (B) 1st (B) P205+ 28% 30% PrO5 + 27% 29% Sio2 + 18% 770 Sio2+22% Fo203 F 203 above 4.5% above 4.5% A) 1/2" size A) 1/2" size B) R.0 M. B)R.O.M. C) By Product Dust 3.
II Grade P205 + 22% 25% Sio2 and Fo2O3 No grantee.
R.O.M." Further no rock phosphate has been or could be purchased by any manufacturer except through corporation of the State.
This fact is admitted in the counter affidavit of the appellant extracted earlier.
It is also clear from the letter of Assistant General Manager that Brij Fertilisers did not use any rock except Grade 'A '.
It is claimed by the respondents that on a technical assessment conducted by Bhabha Research Institute for Lalitpur rocks that the water soluble in rock phosphate with P2 05 with 29 to 32% is more than 16%.
Even if this report is ignored the letter of Assistant Mines Inspector establishes that water soluble phosphate in Hirapur mines of grade 'A ' was 16%.
Each respondent has filed details of rock phosphate consumed by its unit from various corporations.
The average grade mentioned is 3 1 %.
Not one has used grade II.
Even Avadh Fertiliser has not used rock phosphate below 27%.
From the chart appended in respect of Hirapur mines the blending in proportion of 50% indigenous and 50% indicates that even with rock of 30.66% the water soluble actually was 17.57%.
These figures could not be disputed in the reply filed on behalf of Union of India.
From the PDIL report it is clear that it had undertaken test of rock with 24.85% P2 05 and 30.03% Silica and suggested that most suited blend with such rock was 20% indigenous and 80% imported.
It could not furnish any guideline or material to reject the rock phosphate used by the respondents which varies between 27% P2 05 to 3 1 % P2 05.
In absence of any reliable data or any material the inference drawn by the appellants in the notice was baseless.
The counter affidavit filed in the High Court by the appellant did not explain the basis for concluding that for producing SSP of 16% or P2 05 the rock phosphate should contain a minimum of 3 1 % P2 05.
It is contrary to the letter of Assistant General Manager Mines.
In any case PDIL could not furnish any basis for it.
In absence of any valid justification the entire exercise undertaken by the appellant was vitiated being tainted with arbitrariness.
Failing in his effort to assail the order on merits the learned Additional Solicitor General vehemently urged that the department was not precluded form issuing show cause notice and requiring the manufacturers to appear and explain their claim.
It was urged that the High Court was not justified in quashing the show 771 cause notice and issuing the directions for paying the subsidy without giving an opportunity to the department to verify if the respondents had in fact complied with Control Order.
True, the High Court should normally not interfere at the stage of show cause notice.
But where, from the facts it is apparent that there was no material available with the department to doubt the statement on behalf of the respondents and their own officers at every point of time had issued the certificate the correctness of ' which could not be disputed or doubted except by raising unfounded suspicion or drawing on imagination it would be failing to exercise jurisdiction if the Court does not discharge its constitutional obligation of protecting the manufacturers who, as is apparent from the counter affidavit filed in this Court and the various letters issued from different authorities are in perilous condition as they are not able to meet their liabilities to pay to financial institutions and various other authorities and are facing proceedings on various accounts and have virtually closed their unit.
We are pained to say that the authorities did not realise either the purpose of granting subsidy or the harassment to which the manufacturers have been exposed.
Entire litigation appears to he a sad plight for those who have set up small scale units in the hope that they will stand on their own on the subsidy given by the government as admittedly the price of manufacturing fertilizers is much more than the price fixed by the government for which it assured to pay subsidy.
show cause notice issued by the appellants and issuing the directions to pay the subsidy.
The appeals fail and are dismissed with costs which is assessed at Rs. 10,000 one set.
U. R. Appeal dismissed.

dataset_name: IN-Abs

summary/full:
The respondents were small scale manufactures of fertilizers.
They were entitled to payment of subsidy on meeting prescribed standard in the manufacture of single super phosphate (SSP).
The Government of Madhya Pradesh requested PDIL, a consultancy and R.& D Organisation, to test the rock phosphate at Hirapur mines for determining disability allowance payable to SSP producers.
On the basis of this report, the payment of subsidy was withheld, and a show cause notice issued to the respondents.
A writ petition filed in the High Court was allowed by a Division Bench which quashed the show cause notice and ordered that the subsidy be paid.
It found that the PDIL report had been made without notice to the manufacturers or inviting their participation and that the laboratory report ; furnished by the manufacturers on which the payment (of subsidy was dependent had not been questioned.
On appeal before this Court, the questions to be decided were whether the withholding of payment of subsidy to the respondent was justified; whether the High Court committed any error in interfering at the stage of show cause in exercise of its extraordinary jurisdiction; and whether tile report of PDIL, prepared behind the back of the respondents could be used to reject the standard fertilizer of the respondent.
It was contended for the appellants that a detailed technical examination was pending and the subsidy worked out had on in been provisional, and that PDIL had carried out the examination.
PDIL being independent and reputed, it was not required to here the manufacturers.
Further, the non release of 761 subsidy was also on the basis of input cost data.
It was urged that the High Court was not justified in quashing the show cause notice and issuing directions for paying the subsidy without giving the department an opportunity to verify if the respondents had in fact compiled with the Control Order.
Dismissing the appeal, this Court HELD : 1.
PDIL was engaged to rind out the grade of phosphate from Hirapur mines to enable the manufacturers to claim disability allowance, and not whether they were producing fertilizer in accordance with the standard provided in the Control Order.
The purpose being entirely different, the report could not be utilised for a different purpose.
(767 G) 2.
There is no evidence to doubt the authority of the reports submitted by the inspectors appointed under the Control Order that the fertilizer produced was of specified standard.
(768 B) 3.
On facts, in the absence of any reliable data or any material the inference drawn by the appellants in the notice that the fertiliser was not of a specified standard was baseless.
The entire exercise was therefore vitiated being tainted with arbitrariness.
(770 F G) 4.
The High Court should normally not interfere at the stage of show cause notice.
But where, from the facts it is apparent that there was no material available with the department to doubt the statement on behalf of the respondent, it would be failing to exercise jurisdiction if the Court does not discharge its constitutional obligation of protecting the manufacturers who are in perilous condition as they are not able to meet their liabilities to pay to financial institutions and various other authorities and are facing proceedings on various counts and have virtually closed their unit.
The authorities did not realise either the purpose of granting subsidy or the harassment to which the manufacturers have been exposed.
Entire litigation appears to be a sad plight for those who have set up small scale units in the hope that they will stand on their own on the subsidy given by the Government as admittedly the price of manufacturing fertilisers is much more than the price fixed by the Government for which it assured to pay subsidy.
(771 B D) 762