judgement:
Civil Appeals Nos. 85 & 389 of 1957.
Appeal from the judgment and order dated August 26, 1955, of the Calcutta High Court in Income tax References Nos. 44 of 1954 and 17 of 1953.
section Mitra and P. K. Mukherjee, for the appellant (in C. A. No. 85/57.) N. C. Chatterjee and P. K. Ghosh, for the appellant (in C. A. No. 389/57).
R. Ganapathy Iyer, R. H. Dhebar and D. Gupta, for the respondent.
April 15.
The judgment of Sinha and Kapur, JJ., was delivered by Sinha, J. Hidayatullah, J., delivered a separate judgment.
SINHA, J.
The common question of law arising in these two appeals on certificates of fitness granted by the High Court of Calcutta under section 66A(2) of the Indian Income tax Act, 1922, is the effect and scope of the words " constituted under an instrument of partnership" in section 26A of the Income tax Act, which, in the course of this judgment, will be referred to as the Act.
644 The facts of the two cases, leading upto these appeals, though not dissimilar, are not identical.
They are, therefore, set out separately.
In Civil Appeal No. 85 of 1957, Messrs. R. C. Mitter and Sons, 54, Rani Kanto Bose Street, Calcutta, claim to be a firm said to have been constituted in April 1948, with four persons whose names and shares in the nett profits of the partnership business, are stated to be as under (a) Ramesh Chandra Mitter 40 per cent.
of the nett profits.
(b) Sudhir Chandra Mitter 30 per cent.
of the nett profits.
(c) Sukumar Mitter 20 per cent.
of the nett profits.
(d)Sushil Chandra Mitter 10 per cent.
of the nett profits.
The firm intimated its bank, the Bengal Central Bank, Limited, (as it then was), of the constitution of the firm as set out above, by its letter dated April 15, 1948.
The letter also stated that a partnership deed Was going to be drawn up and executed by the partners aforesaid, and that the deed so drawn up, will be forwarded to the bank in due course.
Though the firm is said to have come into existence in April 1948, the deed of partnership which is set out as annexure " A " at P. 5 of the paper book, was drawn up only on September 27, 1949.
This deed of partnership appears to have been registered under the provisions of the Indian Partnership Act, on October 1,2, 1949.
It was also forwarded to the Bengal Central Bank, Ltd., Head Office at Calcutta, as it appears from the seal of the bank and the signature dated December 7, 1949.
An application to register the firm under section 26A, for the assessment year 1949 50, was made to the Income tax Authorities.
The date of the said application does not appear from the record before us.
The application was rejected by the Income tax Authorities.
The firm preferred an appeal to the Income tax Appellate Tribunal, which was also dismissed by the Tribunal by its order dated September 7, 1953.
The ground of the order of the Tribunal was that as the firm admittedly 645 was formed by a verbal agreement in April 1948, and not by or under an instrument in writing dated September 27, 1949, and as the assessment was for the year 1949 50, for which registration of the firm was sought, the registration could not be ordered.
The Tribunal also referred to the letter aforesaid to the Bengal Central Bank, and observed that the letter merely contained information as to the formation of the partnership and of the personnel thereof, but it did not contain the terms on which the partnership had been formed.
It also showed that a partnership had been created but not by deed.
Hence, the Tribunal further observed, the letter might be useful for consideration on the question of the genuineness of the firm, but it could not fulfil the requirements of section 26A, namely, that the firm should be constituted under an instrument of partnership.
Therefore, the Tribunal held that assuming the firm to be genuine, it was not entitled to be registered under section 26A of the Act.
Thereupon, the assessee moved the Tribunal under section 66(1) of the Act.
That application was granted by the order dated February 2, 1954, and the case stated to the High Court for its decision on the following question : " Whether the assessee firm which is alleged to have come into existence by a verbal agreement in April, 1948, is entitled to be registered under section 26A for the purpose of assessment for 1949 50, where the Instrument of Partnership was drawn up only in September, 1949, after the expiry of the relevant previous year ".
The High ' Court Bench, presided over by Chakravarti, C. J., by its judgment dated August 26, 1955, answered the question in the negative.
The learned Chief Justice considered the matter from all possible view points, including grammatical, etymological and textual matters, and came to the conclusion that " constituted " meant created ".
He also considered that the preposition under " is " obviously inappropriate after having convinced himself that " constituted could be equated with "created".
He also found no difficulty in observing that " some of the 646 paragraphs of the Form appear to be ill adjusted to the provisions of the Act and the Rules ".
In the end, therefore, he concluded with the remarks: " It appears to me to be desirable that the language of the section, as also that of the Rules should receive legislative attention ".
In Civil Appeal No. 389 of 1957, Messrs. D. C. Auddy & Brothers, Calcutta, claim to be a partnership consisting of Dulal Chand Auddy, Prem Chand Auddy, Gora Chand Auddy and Kalipada Nandy.
The partnership business is said to have begun in June, 1944.
An application was made on August 24,1949, for the registration of the partnership.
The Income tax Officer and the Appellate Assistant Commissioner were of the opinion that the partnership was not a genuine one, and could not be registered.
Another reason for not ordering registration was that the partnership deed, having been executed on June 2, 1948, could not be operative during the two years under consideration, namely, 1945 46 and 1946 47.
On appeal, the Income.
tax Appellate Tribunal rested its decision on the finding that the alleged partnership had not been constituted under an instrument of partnership within the meaning of those words in section 26A of the Act.
At the instance of the assessee, the Tribunal framed the fol lowing question for determination by the High Court: " Whether the assessee firm constituted orally in June, 1944, can validly be registered in the assessment years 1945 46 and 1946 47 under Section 26A of the Indian Income Tax Act on the basis of a Memorandum of Partnership executed in June 1948.
" The other parts of the statement of the case by the Tribunal, refer to the merits of the assessment, with which we are not concerned in this appeal.
Hence, it is not necessary to set out those facts.
On this part of the statement of the case, the High Court gave the same answer as in the other appeal.
In this case also, the High Court granted the necessary certificate under section 66A(2), read with article 135 of the Constitution.
As both the cases raise the same question of law, they have been heard together, and will be governed by this judgment.
647 It is convenient at this stage to set out the relevant provisions of the Act.
Section 26A is in these terms :" 26A. Procedure in registration of firms. (I) Application may be made to the Income tax Officer on behalf of any firm, constituted under an instrument of partnership specifying the individual shares of the partners, for registration for the purposes of this Act and of any other enactment for the time being in force relating to income tax or super tax.
(2) The application shall be made by such person or persons and at such times and shall contain such particulars and shall be in such form, and be verified in such manner, as may be prescribed and it shall be dealt with 'by the Income tax Officer in such manner as may be prescribed.
" The section contemplates the framing of rules laying down the details of the Form in which the application has to be made and the particulars which should be stated in the application, and other cognate matters.
Section 59 of the Act, authorizes the Central Board of Revenue, subject to the control of the Central Government, to make rules for carrying out the purposes of the Act, and sub section
(5) of section 59 provides that rules made under the section, shall be published in the Official Gazette, and " shall thereupon have effect as if enacted in this Act".
Income tax Rules 2 to 6B lay down the details of the procedure for making an application for the registration of a firm, as contemplated under section 26A, quoted above.
These rules have been amended extensively in 1952, but we are concerned in this case with the rules before those amendments.
Rule 2 requires such an application to be signed by all the partners personally, and to be made before the income of the firm is assessed for the year, under section 23 of the Act.
Rule 3 requires that the application be made in the Form annexed to the rule, and that the application shall be accompanied by the original Instrument of, Partnership under which the firm is constituted. .
The Form appearing in r. 3, requires the assessment year to be specified.
Thus, the registration is for a particular year of assessment, and not for future years also, and therefore, the application for registration has 648 to be made every year, which in fact means an application for renewal of the registration.
Paragraph 3 of the Form requires a certificate to be signed by the applicants for registration, to the effect that the profits (or loss, if any) of the previous year were divided or credited as shown in Section B of the Schedule.
The Form contains the Schedule in 7 columns which require the names of the partners, their addresses, the date of admittance to partnership, their shares in the profits or loss, etc., to be filled in.
Under the Schedule, there are Section A and Section B. Section A has to contain particulars of the firm as constituted at the date of the application, and Section B has to contain the particulars of the apportionment of the income, profits or gains (or loss) of the business in the previous year between the partners who in that previous year were entitled to share therein.
Rule 4 provides that if the Income tax Officer.
is satisfied that there is or was a firm in existence constituted as shown in the instrument of partnership, and that the application has been properly made, he has to enter a certificate at the foot of the Instrument of Partnership that the firm has been registered under section 26A of the Act, and that the certificate of registration shall have effect for the assessment for the year specified therein.
Rule 5 is as follows:" 5.
The certificate of registration granted under Rule 4 shall have effect only for the assessment to be made for the year mentioned therein.
"And Rule 6 makes provision for the certificate of registration to be renewed for a subsequent year, on an application being made in that behalf in accordance with the preceding Rules.
It is manifest that for a true and proper construction of the relevant provisions of the Act, relating to registration of firms, sections 26, 26A and 28, and the Rules summarized above, have to be read together.
So read, it is reasonably clear that the ' following essential conditions must be fulfilled in order that a firm may be held entitled to registration: (1) That the firm should be constituted under an Instrument of Partnership, specifying the individual shares of the partners.
649 (2) That an application on behalf of, and signed by, all the partners, containing all the particulars as set out in the Rules, has been made; (3) That the application has been made before the assessment of the income of the firm, made under section 23 of the Act (omitting the words not necessary for our present purpose), for that particular year; (4) That the profits (or loss, if any) of the business relating to the previous year, that is to say, the relevant accounting year, should have been divided or credited, as the case may be, in accordance with the terms of the Instrument; and lastly, (5) That the partnership must have been genuine, and must actually have existed in conformity with the terms and conditions of the Instrument.
It is clear from what has been said above with reference to the relevant provisions of the Act, that the certificate of registration has reference to a particular assessment year, and has effect for the assessment to be made for that particular year.
In other words, the terms of the partnership should appear in the Instrument of Partnership in respect of the relevant accounting year.
It is equally clear that the firm to be registered, should have been in existence during the accounting year, " constituted as shown in the Instrument of Partnership ".
The Rules, thus, contemplate a document operative during the accounting year.
We are not here concerned with the further question whether the document should be in existence at the very inception of the accounting year, or before the year is out.
The provisions of the Act, set out above, do not present any serious difficulty except for the words it constituted under an Instrument of Partnership " occurring in section 26A and the relevant Rules.
On the interpretation of these words, there has been a conflict of judicial opinion, as will presently appear.
On behalf of the assessee appellants, it has been contended that so long as the assessment has not been made, the assessees are entitled to have their firms registered in accordance with the terms of the Instrument of 82 650 Partnership, irrespective of the year in which the Instrument may have come into existence.
Strong reliance was placed upon the decision of the Bombay High Court (Chagla, C. J., and Tendolkar, J.) in the case of Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay(1), wherein, the following observations have been made: " Any firm can make an application under section 26A for registration and the two conditions that it has got to comply with are that it must be constituted under an instrument of partnership and the second condition is that the instrument of partnership must specify the individual shares of the partners.
If these two conditions are satisfied it would be entitled to registration.
The section does not say that the firm must be constituted by the instrument of partnership.
It does not require that the firm must come into existence by reason of the instrument of partnership, or that the firm should be the creature of the instrument of partnership, or that the firm must not exist prior to the instrument of partnership being executed.
In the case decided by the Bombay High Court, the Instrument of Partnership had been executed on March 27, 1946, with effect from January 1, 1946.
On an application made to the Department to register the firm, the matter was determined by the Income tax Appellate Tribunal against the assessee on the ground that the partnership was in existence before the deed was executed, and that, therefore, it could not be registered.
Before the Bombay High Court, reliance had been placed on behalf of the Department on the decision of the Calcutta High Court, now before us in appeal, as also on a decision of the Punjab High Court.
The decision of the Calcutta High Court now under examination, in the case of R. C. Mitter & Sons vs Commissioner of Income tax (2), takes the view that section 26A of the Act contemplates a firm created or brought into existence by an Instrument of Partnership, which governs the distribution of shares in the relevant accounting period.
Such a deed should have (1) [1956) , 907.
(2) , 704, 705.
651 come into existence on or, before the commencement of the relevant accounting period.
The other decision relied upon in the Bombay High Court, had been given by a Division Bench of the Punjab High Court, reported in Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi (1).
On the other hand, it has been contended on behalf of the Revenue that in order to entitle a firm to be registered, the firm should have been created by an Instrument of Partnership, or at any rate, such an Instrument should be in existence during the relevant accounting year, that is, the year previous to the year of assessment in respect of which the application for registration has been made.
For the first part of the submission on behalf of the respondent, there is ample authority in the decision under appeal, which bad been relied upon before the Bombay High Court.
In that case, (R. C. Mitter & Sons vs Commissioner of Income tax (supra) (2) ), Chakravarti, C. J., who delivered the opinion of the Court under section 66(1) of the Act, after a very elaborate discussion, came to the conclusion which may best be expressed in his own words, as follows: " If by the expression I constituted under an instrument of partnership ' is meant a firm which originated in a verbal agreement but with respect to which a formal deed was subsequently executed, there would be no room in the section for partnerships actually created by an instrument and such partnerships, although most obviously entitled to registration, would be excluded from the purview of the section.
Even etymologically or textually, I do Dot think that the word constituted ', when used in relation to a firm or such other body, can mean anything but I created when the reference is to some deed or instrument to which the inception of the firm or other body is to be traced. " After having, thus, held that section 26A contemplated firms created or brought into existence by a deed in writing, he had no difficulty in substituting " by " for " under ", thus, making the crucial words " constituted (I) (2) , 704, 705. 652 by " instead of " constituted under ".
In our opinion, the learned Chief Justice fell into the error of re constructing the provisions of the statute, instead of construing them.
The word " by " could be substituted for the word " under " in section 26A only if the words, as they stand in the section, were not capable of making sense, and it would, thus, have been necessary to amend the wording of the section.
Turning his attention from the wording of the section to that of the Rules and the Form appearing under the Rules, he again came to the conclusion that " some of the paragraphs of the Form appear to be ill adjusted to the provisions of the Act ".
Referring to other parts of the Rules, he was constrained to observe that they" would lend strong support to the view that what is meant by 'any firm constituted under an instrument of partnership ' in section 26A is no more than a fir of which the constitution appears from an instrument in writing.
It is obvious that if such be the meaning of the expression 'constituted under an instrument of partnership ', the instrument need not be one by which the partnership was created ".
But then he attempted to get over that difficulty by observing that the language of the Rules and the Form could not supersede a provision contained in the Act itself.
He further opined that the language in para.
4(1) is " un doubtedly unsatisfactory ".
In our opinion, any attempt to reconstruct the provisions of the relevant section and the Rules, on the assumption that the intention of the legislature was to limit the registration of firms to only those which have been created by an Instrument of Partnership, is, with all respect, erroneous.
The proper way to construe the provisions of the statute is to give full effect to all the words of the relevant provisions, to try to read them harmoniously, and then to give them a sensible meaning.
Hence, we have to consider, at the threshold, the question whether the words " constituted under an Instrument of Partnership " have some meaning which can be attributed to them harmoniously with the rest of the relevant provisions.
A partnership may be created or set up by a contract in writing, 653 setting out all the terms and conditions of the partnership, but there may be many cases, and perhaps, such cases are more numerous than the other class, where a partnership has been brought into existence by an oral agreement between the parties on certain terms and conditions which may subsequently be reduced to writing which will answer the description of an Instrument of Partnership.
Such an instrument would, naturally, record all the terms and conditions of the contract between the parties which,.
at the initial stages, had not been reduced to writing.
In such a case, though the partnership had been brought into existence by an oral agreement amongst the partners, if the terms and conditions of the partnership have been reduced to the form of a document, it would be right to say that the partnership has been constituted under that instrument.
The word " constituted " does not necessarily mean " created " or " set up ", though it may mean that also.
It also includes the idea of clothing the agreement in a legal form.
In the Oxford English Dictionary, Vol.
II, at pp.
875 & 876, the word " constitute " is said to mean, inter alia, " to set up, establish, found (an institution, etc.) " and also " to give legal or official form or shape to (an assembly, etc.) ".
Thus, the word in its wider significance, would include both, the idea of creating or establishing, and the idea of giving a legal form to, a partnership.
The Bench of the Calcutta High Court in the case of R. C. Mitter and Sons vs Commissioner of Income tax(1), under examination now, was not, therefore, right in restricting the word " constitute " to mean only " to create ", when clearly it could also mean putting a thing in a legal shape.
The Bombay High Court, therefore, in the case of Dwarkadas Khetan and Co. vs Commissioner of Income tax, Bombay City, Bombay (2), was right in holding that the section could not be restricted in its application only to a firm which had been created by an instrument of partnership, and that it could reasonably and in conformity with commercial practice, be held to apply to a firm which may have come into existence earlier by an (1) , 704, 705.
(2) , 907.
654 oral agreement, but the terms and conditions of the partnership have subsequently been reduced to the form of a document.
If we construe the word " constitute " in the larger sense, as indicated above, the difficulty in which the learned Chief Justice of the Calcutta High Court found himself, would be obviated inasmuch as the section would take in cases both of firms coming into existence by virtue of written documents as also those which may have initially come into existence by oral agreements, but which had sub.
sequently been constituted under written deeds.
The purpose of the provision of the Income tax Acts.
26A is not to compel the firms which had been brought into existence by oral agreements, to dissolve themselves and to go through the formality of constituting themselves by Instruments of Partnership.
If we construe the words " constituted under " in that wider sense, we give effect to the intention of the legislature of compelling a firm which bad existed as a result of an oral agreement, to enter into a document defining the terms and conditions of the partnership, so as to bind the partners to those terms, before they could get the benefit of the provisions of section 23 (5) (a).
Section 23 (5) (a) confers a privilege upon partners who may find it more worth their while to be assessed upon their individual total income than upon the total income of the partnership.
It is, therefore, very important from the point of view of the Revenue that the Department should be apprised in time of the true constitution of the partnership, the names of the true partners and the precise share of each of them in the partnership profits (or loss, if any).
The very object of this provision will be defeated if the alleged partner ship is not genuine, or if the true constitution of the partnership and the respective shares of the partners, are not fully and correctly placed on record as soon as possible, for the purpose of 'assessment.
In this connection, the provisions of section 28(2) of the Act, are also worth noticing.
That sub section provides that if the Income tax Officer or the Appellate Authorities under the Act, are satisfied that the profits of a registered firm have been distributed otherwise than 655 in accordance with the shares of the partners, as shown in the Instrument of Partnership registered under the Act, and governing such distribution, and that any partner has concealed any part of his profits, the penalty prescribed therein may be imposed upon such a partner.
Unless the Instrument of Partnership has been registered in respect of the accounting year and before the assessment has been done, the penal provisions aforesaid cannot be enforced.
It is, therefore, essential, in the interest of proper administration and enforcement of the relevant provisions relating to the registration of firms, that the firms should strictly comply with the requirements of the law, and it is incumbent upon the Income tax Authorities to insist upon full compliance with the requirements of the law.
But, in our opinion, there is no warrant in the words of the relevant provisions of the statute for restricting registration under section 26A of the Act to those firms only which have been created or brought into existence by an Instrument of Partnership.
In our opinion, it is more in consonance with the terms of the relevant provisions of the Act, referred to above, to hold that the words " constituted under an instrument of partnership " include not only firms which have been created by an Instrument of Partnership but also those which may have been created by word of mouth but have been subsequently clothed in legal form by reducing the terms and conditions of the partnership to writing.
We have already indicated that there has been a conflict of judicial opinion in the different High Courts in India on the question now before us.
But on a consideration of the facts in each case, it will be found that the decision arrived at in most of the cases, was correct, though the reasons given appear to have gone beyond the requirements of the case.
The decision of the Bombay High Court in Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay (1), discloses that the partnership then in question had come into existence with effect from the beginning of 1946, though the Instrument of Partnership (1) [1956) , 907.
656 was executed on March 27, 1946.
Thus, the Instrument of Partnership came into existence during the accounting year, whatever that year may have been, because the year 1946 was the starting year of the partner Ship.
Hence, even the earliest assessment year, presumably the year 1947 48, would be governed by the terms and conditions of the written Instrument of Partnership aforesaid.
The decision of the Bombay High Court was followed by the same Bench of that Court in the case of Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & Co. (1).
In the second case, the learned Judges ruled that the second partnership deed of September 12, 1951, which set out the names and shares of all the partners who constituted the partnership, could be registered in respect of the accounting year November, 1948 to October, 1949.
This conclusion was arrived at without even a mention, far less a discussion, of the relevant provisions of the Act.
Apparently, the matter was not critically placed before the learned Judges, when they decided the second case.
The con clusion in this case is, with all respect, apparently wrong in view of our conclusion that the Instrument of Partnership should have been in existence in the accounting year.
In the High Court of Punjab, the question was fully discussed in a judgment of a Division Bench, given by one of us (Kapur, J., as he then was), in the case of Kalsi Mechanical Works, Nandpur vs Commissioner of Income tax, Simla (2).
In that case, the firm had come into existence by a verbal agreement in June, 1944.
The deed of partnership was drawn up as late as May 9, 1949.
The application for registration of the firm under section 26A for the assessment year 1949 50, was dismissed by the lncome tax Authorities as also by the Tribunal.
The High Court, after an elaborate examination of the relevant provisions of the Act, including the Rules and the Forms, upheld the orders of the Department.
The conclusion of the Bench was in these terms: " The sections of the Income tax Act show that (1) (2) , 361. 657 for the purpose of registration it is necessary that the firm should be constituted by an instrument of partnership and in my opinion the Rules read with Sections 26 and 28 of the Act indicate that such a firm as is constituted under an instrument of partnership should have been in existence during the account period and should not come into existence during the assessment year, and if it was not in existence during the account period it cannot be registered so as to affect the liabilities of the partners for income tax accruing during the account period.
" The conclusion reached is correct, except, with all respect, for the observation that under section 26A, it is necessary that the firm should be constituted " by " an instrument of partnership.
That is the leading judgment in the High Court of Punjab.
It was followed by another Division Bench of that Court in the case of Padam ParshadRattan Chand vs Commissioner of Income tax, Delhito the effect that constituted under an instrument in section 26A, meant created or formed by a formal deed".
In this case, the business of the firm had started from April 1, 1947, but the Instrument of Partnership was executed on April 10, 1950.
The application for registration was made in respect of the assessment year 1948 49.
It is clear with reference to these dates that the Instrument of Partnership was not in existence either during the accounting year or even during the assessment year, and the Court, therefore, rightly held that the partnership could not be registered in respect of the assessment year; but they proceeded further to observe that there was no objection to the firm being treated as having been constituted under the Instrument as from the date of the Instrument itself.
The answer of the Court to the question posed, was that the firm could be registered not in respect of the assessment year for which the application had been made, but with effect from the date of the Instrument.
Apparently, the attention of the Court was not drawn to the Rules aforesaid, particularly, Rules 2 and 3, which require (1) 83 658 that the application has to be made before the assessment is completed and for a particular assessment year.
More or less to the same effect, are two other Division Bench rulings Of that High Court in Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi (1) and Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal (2).
In all these cases in the Punjab High Court, the deeds came into existence later than the accounting year or the assessment year, and therefore, could not have been registered.
The actual decisions in these cases were correct, though there are orbiter dicta to the effect that section 26A requires that the firm should have been created or set up by an Instrument of Partnership.
In the Patna High Court, the very same question was discussed at great length by a Division Bench of that Court, presided over by Ramaswami, C. J., in the case of Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa (3).
The learned Chief Justice, after an elaborate examination of the relevant provisions of the Act, came to the conclusion in these terms " It is necessary for the purpose of registration under Section 26A that the partnership should be constituted by an instrument of partnership and that such a partnership as is constituted under an instrument of partnership should have been in existence during the accounting year ".
It is on the same lines as the leading judgment of the Punjab High Court, supra.
With reference to the dates given in the judgment, the decision is right, though, in this case also, the words " constituted under " have been construed as " constituted by ", without discussing the necessity for so amending the words of the statute, even as in the Punjab High Court decisions.
As a result of the above discussion, the conclusion is reasonably clear that unless the partnership business was carried on in accordance with the terms of an Instrument of Partnership which was operative during (1) (2) (3) , 470. 659 the accounting year, it cannot be registered in respect of the following assessment year.
As in these cases, the partnership did not admittedly function under such a deed of partnership, the Department and the High Court were right in refusing registration.
We would, therefore, dismiss these appeals, but for different reasons to those given below.
The respondent is entitled to his costs one set of hearing fees to be paid half and half by the appellants.
HIDAYATULLAH, J. I have had the advantage of reading the judgment just delivered by my brother, Sinha, J.
I agree that section 26A of the Indian Income tax Act must be read as it is.
The words of the section, as they stand, are not meaningless, and in view of the decision in Commissioners for special Purpose of the Income tax vs Pemsel (1) it is not possible to read for the expression " constituted under " the words constituted by ".
I entertain, however, some doubt as to whether the instrument sought to be registered, should be in existence in the accounting year, before registration can be claimed.
There is nothing in the Act which says this specifically.
My brother has reasoned from the contents of the Act and the Rules that such a condition is implied.
While I entertain some doubts, I am not prepared to record a dissent, more so as the Board of Revenue has issued instructions that all firms should be registered, whether the documents under which they were constituted existed in the accounting year or not, provided the Income tax Officer was satisfied about the genuineness of the firms.
In the result, I agree that the appeals should be dis.
missed with costs.
Appeals dismissed.
(1) ; 542.

summary/full:
The question for determination in these two appeals was whether the appellant firms were entitled to registration under section 26A of the Indian Income tax Act and the common point of law involved was the interpretation of the words " constituted under an instrument of partnership " occurring in that section.
In Appeal No. 85 the assessee firm was said to have been constituted by a verbal agreement in April, 1948, and the deed of partnership was drawn up in September, 1949.
The application for registration under section 26A of the Act for the assessment year 1949 1950 was made thereafter to the Income tax Officer.
In Appeal NO. 389 the assessee firm was verbally constituted in 81 642 June, 1944, and a memorandum of partnership was executed in June 1948.
The application for registration under section 26A for the assessment years 1945 46 and 1946 47 was made on August 24, 1949.
The applications were rejected by the Income tax Officer and the appeals preferred by the assessees were also dismissed by the Income tax Appellate Tribunal.
The High Court took the view that section 26A of the Indian Income tax Act contemplated a firm created or brought into existence by an instrument of partnership and answered the questions against the assessees.
It was contended on their behalf that solong as the assessment was not made, they were entitled to registration irrespective of the year in which the instrument of partnership came into existence.
This was controverted on behalf of the Revenue and their case was that a firm seeking registration under section 26A of the Act should be created by an instrument of partnership, or at any rate, such instrument should be in existence during the relevant accounting year, i. e. the year previous to the year of assessment in respect of which the application for registration was made.
Held, that the words " Constituted under an instrument of partnership occurring in section 26A of the Indian Income tax Act included not only firms that were created by instruments of partnership but also those that were subsequent to their creation, clothed in legal form by reducing the terms and conditions of the partnership in writing.
Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , approved.
Kalsi Mechanical Woyks, Nandpur vs Commissioner of Income tax, Simla, , Padam Parshad Rattan Chand vs Commissioner of Income tax, Delhi, , Bery Engineering Co., Delhi vs Commissioner of Income tax, Delhi, , Income tax Commissioner, Delhi vs Messrs. Birdhi Chand Girdhari Lal, and Khimji Walji & Co. vs Commissioner of Income tax, Bihar and Orissa, , dissented from.
Section 26A, read with SS. 26, 28 and Rules 2 to 6B, laid down the following essential conditions that a firm must fulfil before it could claim registration under section 26A of the Act (1) that it must be constituted under an Instrument of Partnership, specifying the individual shares of the partners; (2) that an application on behalf of and signed by, all the partners, containing all the particulars as set out in the Rules, must be made; (3) that the application must be made before the assessment of the income of the firm was made under section 23 Of the Act for that particular year; (4) that the profits (or loss, if any) of the business relating 643 to the previous year, i. e., the relevant accounting year, must be divided or credited, as the case may be, in accordance with the terms of the Instrument ; and lastly, (5) that the partnership must be genuine and in actual existence in conformity with the terms and conditions of the Instrument.
Where, therefore, as in the instant cases, the partnership did not admittedly function in terms of an instrument of partnership which was operative during the accounting year, it could not be registered during the following assessment year.
Commissioner of Income tax, Bombay North vs Shantilal Vrajlal & Chandulal Dayalal & CO. , dis approved.
Per M. HIDAYATULLAH, J. While it was clearly not possible to read " constituted by " for the words " constituted under " occurring in section 26A of the Act, it was doubtful whether the instrument of partnership sought to be registered must be in existence in the accounting year in order to entitle it to registration.
Dwarkadas Khetan & Co. vs Commissioner of Income tax, Bombay City, Bombay, , referred to.


judgement:
minal Appeal No. 398 of 1993.
From the Judgment and Order dated 12.3.1992 of the IVth Metropolitan Megistrate, Hyderabad in Crl.
M.P. No. 92/92 in C.C. No. 234 of 1985.
WITH Writ Petition No. 623 of 1993.
(Under Article 32 of the Constitution of India) K.K. Venugopal, L.K. Pandey and section Anand for the Petitioner.
D.P. Gupta.
Solicitor General and Ms. A. Subhashni for the Respondents.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
The brief facts leading to this appeal are that the appellant 's daughter Geetha married respondent No. 1 (original accused No. 1) sometime in October 1976 according to Hindu rites and thereafter left for Ireland.
A daughter was born to the couple on July 27, 1978 in Ireland.
She was named Nivedita.
In April 1979, the couple along with the child moved to the United States of America, the Child travelling on an Irish passport.
In October 1979 Geetha wrote to her mother.
the appellant, expressing her desire that Nivedita should be brought up under her care in India.
On the appellant expressing her willingness to look after the child, Nivedita was sent to India via Bombay where the appellant received her.
The child then remained in the custody of the appellant.
In March 1980 Geetha returned to 470 India presumbly because her husband had developer intimacy with an American girl and had started to ill treat her.
Within a week after her arrival in India she committed suicide by setting herself on fire.
Nivedita continued to remain in the care and custody of the appellant.
The first respondent married the American girl, with whom he had developed intimacy, sometime in the year 1983 84 and embraced Christianity.
Thereupon the appellant filed an application in the Court of the Chief judge, City Civil Court, Hyderabad, being O.P. No. 203 of 1984, for appointing her as the guardian of the person of the minor child under the provisions of , Respondent No. 1 entered an appearance in the said proceedings through his Advocate and sought time to file a counter.
Leter, he returned to India on December 14, 1984, After reaching India he obtained a duplicate passportfor Nivedita and thereafter with the help of his associates picked up Nivedita fromher school ignoring the protests of the Head Mistress of the School.
The HeadMistress immediately filed a complaint with the commissioner of police and informed the appellant about the same who in turn lodged a First Information Report in that behalf.
On enquiry the appellant 's son traced respon dent No. 1 and his three companions (who had assisted him in procuring the child) at the Madras Airport.
Despite his entreaties, respondent No. 1 forcibly took the child to U.S.A via Singapore.
Since then Nivedita is in the custody of respondent No. 1 and his newly married wife Maureen.
After thus removing the child from the lawful custody of the appellant, respondent No. 1 's Advocate withdrew from the guardianship proceedings.
The Court, however, appointed the appellant as the guardian of the person of Nivedita.
The appellant also filed a complaint alleging kidnapping against respondent No. 1 and his three companions who had aided and abetted him in the Court of the IVth Metropolitan Magistrate.
Hyderabad, which came to be numbered as C.C.No. 234 of 1985.
Process was issued in the said proceedings land the accused persons were duly served.
The respondents thereafter moved an application under Section 482 of the Code of Criminal Procedure, 1973 (hereinafter called 'the Code ') for quashing the process on the plea that in law a father is entitled to his daughter 's custody and hence cannot be liable under section 363, [PC.
In that application the High Court directed that the child be produced before it.
However, the child was not produced before the Court and the Court ultimately dismissed the application against which a Special Leave Petition was filed in this Court.
This Court also rejected the Special Leave Petition.
On the other hand while the application under Section 482 of the Code was pending in the High Court, the father of respondent No. 1 filed an application for rescinding the order appointing the appellant as the guardian of the person of Nivedita.
In the meantime, the Supreme Court in New Jersey U.S.A., was moved which court passed an order permitting respondent No.1 to retain No. 1 to retain the custody of the child on the ground that the Indian Courts had violated the due process clause.
The Chief Judge, City Civil Court, Hyderabad, ultimately dismissed the father 's application for rescinding the 471 earlier order by which the appellant was appointed the guardian of the person of the child.
As staed earlier the Superior Court, New Jersey, having permitted respondent No. 1 to retain the custody of Nivedita, the child 's step mother Maureen applied for permission to adopt Nivedita who had by then been converted to Christianty.
On that permission being granted the adopted mother and respondent No. 1 sent the Child to a Christian school.
In the complaint lodged against respondent No. 1 and his associates.
respondent No. 1 applied for exemption from personal attendance which was granted on condition that he will appear whenever called upon to do so by the court.
Respondent No. 1 was thus represented in the said complaint through his Advocate.
In the said criminal complaint after framing the charge for kidnapping evidence of the prosecution witnesses was recorded in the presence of the Advocate for respondent No. 1 and the other respondents and on completion of the evidence respondent No. 1 's Advocate sought permission to be examined in place of respondent No. 1 under section 313 of the Code.
This permission was granted and he was examined under section 313 of the Code.
On completion of the examination the appellant not being satisfied with some of the replies given by the Advocate filed an application prayino that respondent No. 1 should be directed to personally appear in Court and be examined under section 3 13 of the Code.
The learned Magistrate dismissed the said application whereupon the present appeal has been filed on the plea that no appeal or revision lay against the order impugned herein.
These are the averments on which the present appeal is founded.
The question then is whether the learned Magistrate was right in examining the Advocate of respondent No. 1 in place of respondent No. 1 himself under section 313 of the Code? Sub section (1) of section 313 reads as under: "Power to examine the accused (1) In every inquiry or trial, for the purpose of enabling the accused personally to explain any circumstances appearing in the evidence against him, the Court (a)May at any stage, without previously warning the accused, put such questions to him as the Court considers necessary; (b)shall, after the witnesses for the prosecution have been examined and before he is called on for his defence, question him generally on the case: 472 Provided that in a summons case, where the Court has dispensed with the personal attendance of the accused, it may also dispense with his examination under clause (b).
" This sub section was introduced in its present form pursuant to the recommendations made in the 41st Report of the Law Commission.
It now begins with the words 'in every inquiry or trial ' to set at rest any doubt in regard to its application to summons cases.
the old sub section (1) of section 342 has now been divided into two clauses (a) & (b).
Clause (a) uses the expression 1 may to indicate that the matter is left to the discretion of the Court to put questions to the accused at any stage of the inquiry or trial whereas clause (b) uses the expression 'shall ' to convey that it is mandatory for the Court to examine the accused after the witnesses for the prosecution have been examined before he is called on for his defence.
The proviso is a new provision Which came to be added to sub section (1) with a view to enabling the Court to dispense with the examination of the accused under clause (b) in a summons case if the Court has already dispensed with his personal attendance at an earlier point of time.
Therefore, if the Court on completion of the prosecution evidence finds that there are certain circumstances appearing in the evidence against the accused, the Court is obliged by clause (b) to question the accused before he is called on for his defence.
This provision is general in nature and applies to all inquiries and trials under the Code.
The purpose of the said provision is to give the accused an opportunity to explain the circumstances appearing against him in evidence tendered by the prosecution so that the said explanation can be weighed vis a vis the prosecution evidence before the Court reaches its conclusion in that behalf.
It is thus clear on a plain reading of section 313 (1) of the Code, that the Court is empowered by clause (a) to question the accused at any stage of the inquiry or trial while clause (b) obligate the Court to question the accused before he enters of his defence on any circumstance appearing in the prosecution evidence against him.
The section incorporates a rule of audi alteram partem and is actually intended for the benefit of the accused person.
The newly added proviso is in the nature of an exception to clause (b) of subsection (1) of section 313 of the Code.
It applies to a summons case; it states in no uncertain terms that in a summons case where the court has dispensed with the personal attendance of the accused it would be open to the court to dispense with the examination of the accused under clause (b) of section 313 (1) of the Cods.
Even in cases where the personal presence of the accused has been dispensed with under section 205(1) or section 317 of the Code the Magistrate can dispense with the mandatory requirement of clause (b) only in a summons case i.e, a case other than a warrant case This is clear on plain reading of the definitions of a summons 473 case in Section 2(w)and a warrant case in section 2(x)of the Code.
A warrant case is defined as one relating to an offence punishable with death, imprisonment for life or imprisonment for a term exceeding two years.
Since an offence under section 363 IPC is punishable with imprisonment for a term exceeding two years it is a warrant case and not a summons case.
Therefore, even in cases where the court has dispensed with the personal attendance of the accused under section 205(1) or section 317 of the Code, the court cannot dispense with the examination of the accused under clause (b) of section 313 of the Code because such examination is mandatory.
If the accused is a company or a juridical person it may be open to examine the person conversant with the facts of the case.
It would thus appear that the mandate of section 313 (1) (b) demands that the accused person, if not a company or other juridical person, most be personally examined to explain the incriminating circumstances appearing against him in the prosecution evi dence and the examination of his lawyer would not be sufficient compliance with the mandate of said provision.
A similar question arose for consideration in Bibhuti Bhushan Das Gupta & Anr.
vs State of West Bengal ; = under the provisions of the old Code.
In that case this Court noticed that the accused was not personally examined under section 342 of the Code.
It was submitted that the trial was vitiated as the accused was not personally examined as required by section 342 of the old Code.
The said argument was sought to be repelled on the ground that the examination of the pleader was sufficient compliance with the said provision since the pleader was authorised to appear on behalf of the accused and do all acts which the accused could personally do.
Dealing with this submission this court on a reading of Section 342 pointed out that the privilege of making a statement under that section is personal to the accused and the requirement cannot be satisfied by examining his pleader in his place.
The right of the pleader to represent the accused does not extend to the pleader answering questions under section 342 in place of the accused person.
The submission that such a view will cause inconvenience and harassment to the accused was also repelled in the following words: "We are not impressed with the argument that an accused person will suffer inconvenience and harassment if the Court cannot dispense with his attendance for purposes of section 342.
The examination under the section becomes necessary when at the close of the prosecution evidence the magistrate finds that there are incriminating circumstances requiring an explanation by the accused.
" 474 Proceeding further this Court observed as under "There are exceptional cases when an examination of the accused personally under section 342 is not necessary or possible.
Where the accused is a company or other juridical person it cannot be examined personally.
It may be that the Court may then examine a director or some other agent on its behalf.
" It is another matter that in that case this Court did not interfere with the conviction and sentence on the ground that the non examination of the accused had not caused any prejudice and in the absence of material showing prejudice the conviction and sentence could be sustained by virtue of old section 537 (section 465 of the new Code).
In the result the order impugned in the present appeal/writ petition of the learned Magistrate cannot be allowed to stand, more so in the instant case for the reason that the accused may raise the plea of violation of the due process clause if the order is sought to be executed in the foreign court.
We, therefore, set aside the order of the learned Magistrate and direct him to pass appropriate orders in the light of this judgment in regard to the examination of the accused under section 313(1) (b) of the Code.
As the prosecution is pending since long, the learned Magistrate will take it up immediately, SPS.
Appeal disposed of.

dataset_name: IN-Abs

summary/full:
The daughter of the appellant was married to the respondent and a girt child was born out of the wed lock.
The couple went to the U.S.A. alongwith the child, but the latter was sent back on her mother 's behests.
While the child was in the custody of the appellant the mother also came back, and committed suicide, leaving the child in the custody of the appellant.
Meanwhile the first respondent married an American girl and embraced christianity.
Thereupon the appellant applied to the local court for appointment as guardian of the child.
The respondent appeared in court but took the child to U.S.A. forcibly, and entrusted her to the custody of his newly wedded wife.
On being appointed as guardian of the child the appellant filed a complaint of kidnapping against the respondent and three others.
The respondent applied for exemption from personal appearance in the proceedings in criminal court.
The permission was granted subject to the condition that he will appear whenever called upon to do so.
On the completion of the evidence, the advocate of the respondent sought permission for examination under section 313 Cr.
P.C. in place of the respondent.
Thereupon the appellant sought direction for personal appearance of the respondent for being examined under Section 313 Cr.
The Magistrate dismissed the application of the appellant This Court examined the provision of Sub Section (1) of Section 313 Cr.
P.C. and, HELD:Introduced in its present form pursuant to the recommendations made in the 41st Report of the La* Commission, sub section (1) of 468 Section 313 begins with the words: "In every inquiry or trial.
" (472 B) The old sub section (1) of Section 342 has been divided Into two (a) & (b).
Clause (a) us" the expression 'may ' to indicate dot the matter is left to the discretion of the court to put questions to the accused at any stage of the inquiry or trial, whereas clause (b) uses the expression "shall" to convey that it is mandatory for the court to examine the accused after the witnesses for the prosecution have been examined.
(472 C) The proviso was added to sub section (1) with a view to enabling the court to dispense with the examination of the under clause (b) in a summons case in the court has already dispensed with this personal attandence if the court on completion of the prosection evidence finds that there are certain circumstances appearing in the evidence against the accused, the court is obliged by clause (b) to question the accused before be Ls called upon to enter his defence.
(472 D) Section 313 (1) applies to all inquiries and trials under the co&, to give the accused an opportunity to explain the circumstances appearing against him.
The trial court is empowered by clause (a) to question the at any stage of inquiry or trial, while clause (b) obligates it to question the accused before he enters his defence.
The rule of audi alterm partem incorporated therein is intended for the benefit of the accused.
(472 F) The proviso is in the nature of an exception to dawn (b) of sub section (1) of section 313 Cr.
P.C. and applies to a sommons case.
Where the personal presence of the accused has been dispensed with, the magistrate can dispense with the mandatory requirement of clause(b).
(472 G) Since the offence under section 363 [PC is punishable with imprisonment for a term exceeding two years it is a warrant cm, so even if the court has dispensed with the personal attendence of the accused the examination of the accused u/s 313 Cr.
P.C. is mandatory.
The examination of a lawyer would not be sufficient complaince@ with the @ate of the mid provision.
(473 B) BibhWi Bhushen Dat GWM & Aar.
vs State of West Be"W, A.I.R. (1%9) S.C. 381= 11%9] 2 SCR 104, referred to.
469 In that case this court pointed out that the privilege of making a statement under Section 342 of the old code, is personal to the accused.
This requirement cannot be satisfied by examining his pleader in his place, as the right of the pleader to represent the accused does not extend to the pleader answering questions under section 342 (now 313) Cr.
P.C. (473 E) This court set aside the impugned order and directed the trial magistrate, to pass appropriate orders in regard to the examination of the respondent under section 313 (1) (b) Cr. P. C. (474 D)


judgement:
Appeal No. 4233 of 1984.
From the Judgment and Order dated 25.3.1983 of the Bombay High Court in W.P. No. 25 of 1982.
S.B. Bhasme and A.S. Bhasme for the Appellant.
Umesh Bhagwat and V.B. Joshi for the Respondent.
The Judgment of the Court was delivered by R.M. SAHAI J.
Can a statutory tenant create a licence? If the answer is in affirmative then can such licensee claim immunity from eviction in execution proceedings in view of Section 15A of this Bombay Rent Hotel and Loging House Rates Control Act 57 of 1947 (hereinafter referred to as 'the Act ')? These are questions which arise for consideration in this appeal directed against the judgment and order of the Bombay High Court.
462 What happened was that the landlord determined the tenancy of the contractual tenant in October 1966 and filed a suit for his eviction in 1967 which was decreed ex parte on 5th October 1973.
In execution of the decree the licensee obstructed and claimed to be protected licensee under Section 15A of the Act.
The objection was rejected by the executing and the appellate court.
The appellate court found that even though the first licence was, created in 1966 before determination of the tenancy for a period of six years but the second licence having been created in 1972, it was not necessary to examine the validity of the first, as second was created when contractual tenant had become statutory tenant therefore he was incapable of transferring any right or interest in favour of the licensee.
The High Court did not disturb the finding that the licence was created in 1972 but it held that creation of licence by a statutory tenant, was valid.
Consequently the licensee was in occupation of the premises as licensee on the date the Bombay Rent Act was amended and was entitled to the benefit of Section 15A of the Act.
For this reliance was placed on certain observations made by a Division Bench of that Court in Vasant Tatoba Hargude and Others vs Dikkava Mutta Pujari, to the following effect: "On this point of initial presumption as to the subsisting incidence of the tenancy, we shall have to follow the ratio of Damadilal 's case ; in preference to the decision in Anand Nivas case and shall have to proceed on the assumption that statutory tenant does ordinarily possess transferable interest in his tenancy.
" Who is a statutory tenant, what right or interest he can assign or transfer have been dealt by this Court in more that one decisions.
In Anand Nivas Private Lid vs Anandji Kalyanji 's Pedhi & others AIR 1965 SC 414 a decision rendered under Bombay Rent Act the majority held, "A person remaining in occupation of the premises let to him after the determination of or expiry of the period of the tenancy is commonly though in law not accurately, called 'a statutory tenant '.
Such a person is not a tenant at all: he has no estate or interest in the premises occupied by him.
He has merely the protection of the statute in that he cannot be turned out so long as he pays the standard rent and permitted increases, if any, and performs the other conditions of the tenancy.
His right to remain in possession after the determination of the contractual tenancy is personal: it is not capable of being transferred or assigned, and devolves on his death 463 only in the manner provided by the statute.
The right of a lessee from a landlord on the other hand is an estate or interest in the premises and in the absence of a contrant to the contrary is transferable and the premisses may be sublet by him.
But with the determination of the lease, unless the tenant acquires the right of a tenant holding over, by acceptance of rent or by assent to his continuing in possession by the landlord, the terms and conditions of the lease are extinguished, and the rights of such a person remaining in possession are governed by the statute alone.
Section 12 (1) of the Act merely recognises his right to remain in possession so long as he pays or is ready and willing to pay the standard rent and permitted increases and performs the other conditions of the tenancy, but not the right to enforce the terms and conditions of the original tenancy after it is determined.
" In Jai Singh Morarji and others vs M/s Sovani (P) Ltd., ; yet another decision from Bombay the ratio in Anand Nivas was reiterated and It was held that tenant in Section 15 of the Bombay Rent Actmeant the contractual tenant and not the statutory tenant.
Then came another decision, Damadilal and others vs Parashram and others; , on M.P. Accommodation Control Act.
It in the Court traced the genesis of the concept of statutory tenant derived from the English Rent Act but carved out an exception, where, the sanctity, of the contract ' was touched by legislation.
It was held that where the statute itself provided continuance in possession of the tenant after determination of the tenancy in some right the tenant was at par with contractual tenant.
Reason was the definition of 'tenant ' under Section (2) (i) of the Act.
It read as under: "a person by whom or on whose account or behalf for the rent of any accommodation is, or, but for a contract express or implied, would be payable for any accommodation and includes any person occupying the accommodation as a sub tenant and also any person continuing in possession after the termination of his tenancy whether before or after the commencement of this Act; but shall not include any person against whom any order or decree for eviction has been made.
" This section was construed thus, "The definition makes a person continuing in possession after the determination of his tenancy a tenant unless a decree or order for eviction has been made against him 464 thus putting him on par with a person whose contractual tenancy still subsists.
The incidents of such tenancy and a contractual tenancy must therefore be the same unless any provision of the Act conveyed a contrary intention.
That under this Act such a tenant retains an interest in the premises, not merely a personal right of occupation, will also appear from Section 14 which contains provisions restricting the tenant 's power of subletting.
Section 148 is in these terms:. . .
No such provision existed in the Bombay Rent Act.
The ratio in Damadilal 's case, therefore, could not apply to right or interest created by a statutory tenant under the Bombay Act.
The decisions in Damadilal 's case did not in any way deviate from the decisions given earlier by this Court in Anand Nivas case.
All these cases however were of sub tenants.
In 1981 this Court had an occasion to deal with the case of a licensee under the Bombay Rent Act and his rights under Section 15A of the Act.
The Bench was of the opinion that the licensee was not entitled to obstruct the eviction proceedings which had become final against the tenant as a statutory tenant could not assign or create any interest after termination of his tenancy.
It was observed in Ludhichem Agencies vs Ahmed R. vs Peer Mohamed and Anr.
1: "An agreement for licence can subsist and continue to take effect only so long as the licensor continues to enjoy a right, title or interest in the premises.
On the termination of his right, title or interest in the premises, the agreement for licence comes to an end.
If the licensor is a tenant, the agreement for licence terminates with the tenancy.
No tenant is ordinarily competent to grant a licence enduring beyond his tenancy.
On the termination of the licensor 's tenancy the licensee ceases to be a licensee.
" On facts however since the statutory tenancy too cam to an end before Section 15A was amended due to passing of the decree by the trial court the High Court distinguished this decision ignoring the material difference between the two enactments.
What was lost sight of was that the observation made by this Court in Damadilas 's case at page 2234 to the following effect, "We find it difficult to appreciate how in this country we can proceed on the basis that a tenant whose contractual tenancy has determined but who is protected against eviction by the statute, has no right of property but only a personal right to remain in occupation, without ascertaining what his rights 465 are under the statute. . .
It is not possible to claim that the "sanctity" of contract cannot be touched by legislation.
Were on the language of the Section as it stood under that Act.
Therefore, in absence of any legislation touching the contract it appears to be settled that contractual tenant is left with no transferable right after determination of his tenancy.
In our opinion the learned judge in drawing an inference from Ludhichem Agencies (supra) that, 'a licence by a statutory tenant would continue to subsist 'lawfully till it was terminated and therefore if on the facts of that case the decree of ejectment against Saraswatibai had been made after 1.2.1973, then the licence in favour of the petitioners could have been considered to the subsisting on 1.2.1973,.
committed an error of law.
Section 15A reads as under: "15A (1)Notwithstanding anything contained elsewhere in this Act or anything contrary in any other law for the time being in force, or in any con tract, where any person is on the lst day of February 1973, in occupation of any premises or any part thereof which is not less that a room as a licensee thereof, he shall on that date he deemed to have become, for the purposes of this Act, the tenant of the landlord in respect of the premises or part thereof in his occupation.
(2)The provisions of sub section (1) shall not affect in any manner the operation of sub section (1) of Section 15 after the date aforesaid.
" The section brought into force with effect from 1st February 1973 undoubtedly protected a licensee form eviction.
But it could operate in his favour only if he was in occupation of the premises on the date the Act came into force as a licensee.
It is, thus, not mere occupation but occupation as licensee which has been statutorily protected.
In other words the law would operate in favour of a person who held the premises under valid licence.
A valid licence could be created, as explained earlier, by a contractual tenant or by a statutory tenant if he continued at par with contractual tenant by operation of legislation.
In absence of any such provision in the Bombay Rent Act the licence created in favour of licensee by the statutory tenant could riot render the respondent, a licensee within the meaning of Section 15A of the Act.
466 Even a valid licence stands revoked in circumstances mentioned in Section 62 of the Indian Easements Act.
Its clause (a) reads as under: "62.
A license is deemed to be revoked (a)when, from a cause preceding the grant of it, the grantor ceases to have any interest in the property affected by the license:" The licence was granted by the contractual tenant in 1972.
But his tenancy had been determined by the landlord in 1966.
He thus had become statutory tenant.
He did not, in law had any assignable interest on the date he created the licence.
The grantor therefore from a cause preceding the grant had ceased to have any interest, and was incapable of creating any valid licence unless he could be deemed to be at par with the contractual tenant by any provision in the statute.
In absence of any such provision in the Bombay Rent Act the licence was invalid and stood revoked.
The occupation of the respondent thus was not as licensee within the meaning of Section 15A of the Act.
In the result this appeal succeeds and is allowed.
The order passed by the High Court in the Writ Petition is set aside and it shall stand dismissed.
In the circumstances of the case, however, there shall be no order as to costs.
V.M. Pretition dismissed.

summary/full:
The appellant landlord determined the tenancy of the contractual tenant in 1966 and filed a suit for his eviction.
The suit was decreed ex parte.
In execution proceedings the licensee obstructed and claimed to be protected licensee under Section 15A of the Bombay Rent Hotel and Lodging House Rates Control Act, 1947.
The objection was rejected by the executing Court.
The appellate Court confirmed the same holding that even though the first licence was, created in 1966 before determination of the tenancy for a period of six years and the second licence having been created in 1972, it was not necessary to examine the validity of the first, as the second one was created when contractual tenant had become statutory tenant, and therefore, he was incapable of transferring any right or interest in favour of the licensee.
On appeal, the High Court upheld the finding of the appellate court that the licence was created in 1972 It also held that creation of licence by a statutory tenant, was valid.
Being aggrieved by the judgment of the High Court, the appellant landlord preferred an appeal, before the Court.
Allowing the appeal, this Court, HELD: 1.1 In the absence of any legislation touching the contract, a contractual tenant is left with no transferable right after determination of his tenancy.
(465 B) 1.2 The law would operate in favour of a person who held the premises under valid licence.
A valid licence could be created, by a contractual tenant or by a statutory tenant if he continued at par with contractual tenant by 461 operation of legislation.
(465 G) 1.3In the instant case, the licence was granted by the contractual tenant in 1972.
But his tenancy had been determined by the landlord in 1966.
He thus had become statutory tenant.
He did not, in law had any assignable interest on the date he created the licence.
The grantor, therefore, from a cause preceding the grant had ceased to have any interest, and was incapable of creating any valid licence unless he could be deemed to be at par with the contractual tenant by any provision in the Statute.
In absence of any such provision in the Bombay Rent Act, the licence was invalid and stood revoked.
The occupation of the respondent thus was not as licensee within the meaning of Section 15A of the Act.
(466 B C) Vasant Tatoba Hargude and Ors.
vs Dikkaya Muttaya Pujari: , approved.
Anand Nivas Private Ltd. vs Anandji Kalyanji 's Pedhi & Others, AIR 1965 SC 414; Jai Singh Morarji and others vs M/s Sovani (P) Ltd., ; ; Damadilal and others vs Parashram and Others, ; and Luadhichem Agencies vs Ahmed R. vs Peer Mohamed and Anr., 1, referred to.