judgement:
ons Nos.112 and 113 of 1961 etc.
Petition under article 32 of the Constitution of India for enforcement of, Fundamental rights.
N. A. Palkhivala, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos. 112 and 113 of 61 and 79 to 80 of 1962).
M. C. setalvad, D. P. Singh, m. K. Ramamurthi, R. K. Garg and section C. Agarwal.
for the respondents (in W.P. Nos. 112 and 113 of, 1961).
887 section V. Gupte, Additional Solicitor General, N. section Bindra and R. H. Dhebar, for the respondents (in W.P. Nos. 79 and 80 of 62).
G. section Pathak, B. Dutta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the petitioners (in W.P. Nos.
202 204/1961).
A. Ranganadham Chetty and T. V. R. Tatachari, for the respondents (in W.P. Nos. 202 and 203 of 1961).
Lal Narain Sinha, M. K. Ramamurthi, R. K. Garg and section C. Agarwal, for the respondent (in W.P. 204 of 1961).
February 25, 1964.
The Judgment of the Court was delivered by GAJENDRAGADKAR, C.J.
These writ petitions have been placed for hearing before us in a group, because they raise a common question of law in regard to the validity of the demand for sales tax which has been made against the respective petitioners by the Sales tax Officers for different areas.
The facts in respect of each one of the writ petitions are not the same and the years for which the demand is made are also different; but the pattern of contention is uniform and the arguments urged in each one of them are exactly the same.
Broadly stated.
the case for the petitioners is that the appropriate authorities purporting to act under the different Sales Tax Acts are attempting to recover from the petitioners sales tax in respect of transactions to which the petitioners were parties, though the said transactions are not taxable under article 286 of the Constitution.
article 286(1) (a) provides that no law of a Sales shall impose, or authorise the imposition of, a tax on the sale or purchase of goods where such sale or purchase takes place outside the State; and the argument is that the sales in question are all sales which took place outside the State and as such, are entitled to the protection of article 286(1) (a).
The authorities under the respective Sales Tax Acts have rejected the petitioners ' contention that the transactions in question are inter State sales and have held that article 286(1)(a) is not applicable to them.
A similar finding has been recorded against the petitioners under article 286(2).
The petitioners ' grievance 888 is that by coming to this erroneous conclusion, a tax is being levied against them in respect of transactions protected by article 286(1)(a) and that constitutes a breach of their fundamental rights under article 3 1 (1).
It is this alleged infringement of their fundamental rights that they seek to bring before this Court under article 32(1).
It has been urged on their behalf that the right to move this Court under article 32(1) is itself a fundamental right, and so, under article 32(2) an appropriate order should be passed setting aside the directions issued by the Sales tax Authorities calling, upon the petitioners either to pay the sales tax, or to comply with other directions issued by them in that behalf.
For dealing with the points raised by these writ petitions, it is not necessary to set out the facts in respect of each one of them.
For convenience we will refer to the facts set out by the Tata Engineering & Locomotive Co. Ltd., the petitioner in W.Ps.
Nos. 112 and 113 of 1961.
The peti tioner is a company registered under the Indian Companies Act, 1913 and carries on the business of manufacturing, inter alia, Diesel Truck and Bus chassis and the spare parts and accessories thereof at Jamshedpur in the State of Bihar.
The company sells these products to dealers, State Transport Organisations and others doing business in various States of India.
The registered office of the petitioner is in Bombay.
In order to promote its trade throughout the country, the petitioner has entered into Dealership Agree ments with different persons.
The modus adopted by the petitioner in carrying on its business in different parts of India is to sell its products to the dealers by virtue of the relevant provisions of the Dealership Agreements.
Accordingly, the petitioner distributes and sells its vehicles to dealers, State Transport Organisations and consumers in the manner set out in the petition.
The petitioner contends that the sales in respect of which the present petitions have been filed were effected in the course of inter State trade and as such, were not liable to be taxed under the relevant provisions of the Sales Tax Act.
The Sales tax Officer, on the other hand, has head that the sales had taken place within the State of Bihar and were intra State sales and as such, were liable to assessment under the Bihar Sales Tax 889 Act.
In accordance with this conclusion, further steps are threatened against the petitioner in the matter of recovery of the sales tax calculated by the appropriate authorities.
The petitioner is a company and a majority of its share holders are Indian citizens, two of whom have joined the present petitions.
The petitioners in W.Ps.
79 and 80/ 1962 are the Automobile Products of India Ltd. and Another.
The majority of the share holders of this company are also citizens of India and one of them has joined the petitions.
Writ petitions Nos. 202 204/1961 have been filed by the State Trading Corporation of India Ltd. The shareholders of this Corporation are the President of India, and two Additional Secretaries, Ministry of Commerce and Industry, Government of India; one of these Secretaries, has joined the petitions.
It may incidentally be stated at this stage that these writ petitions were heard by a Special Bench of this Court on the 26th July, 1963 in order to determine the constitutional question as to whether the State Trading Corporation Ltd. can claim to be a citizen within the meaning of article 19 of the Constitution.
The majority decision rendered in these writ petitions on the preliminary, issue referred to the Special Bench was that the petitioner as a State Trading Corporation is not a citizen under article 19, and so, could not claim the protection of the fundamental rights guaranteed by the said Article [vide State Trading Corporation of India Ltd. vs The Commercial Tax Officer and Others(1)].
That is why this petitioner along with other petitioners have made the petitions in the names of the companies as well as one or two of their shareholders respectively.
It is argued on behalf of the petitioners that though the company or the Corporation may not be an Indian citizen under article 19, that should not prejudice the petitioners case, because, in substance, the Corporation is no more than an instrument or agent appointed by its Indian share holders and as such, it should be open to the petitioners either acting themselves as companies or acting through (1) ; , 890 their shareholders to claim the relief for which the present petitions have been filed under article 32.
These petitions are resisted by the respective States on the ground that the petitions are not competent under article 32.
The respondents contend that the main attack of the petitioners is against the findings of the Sales tax Officers in regard to the character of the impugned sale transactions and they urge that even if the said findings are wrong, that cannot attract the provisions of article 32.
The validity of the respective Sales tax Acts is not challenged and if purporting to exercise their powers under the relevant provisions of the said Acts, the appropriate authorities have, during the course of the assessment proceedings, come to the conclusion that the impugned transactions are intra State sales and do not fall under article 286(1)(a), that is a decision which is quasi judicial in character and even an erroneous decision rendered in such assessment proceedings cannot be said to contravene the fundamental rights of a citizen which would justify recourse to article 32.
In other words, the alleged breach of the petitioners ' fundamental rights being referable to a quasi judicial order made by a Tribunal appointed under a valid Sales tax Act, does not bring the case within article 32.
That is the first preliminary ground on which the competence of the writ petitions is challenged.
In support of this plea, reliance is placed by the respondents on a recent decision of a Special Bench of this Court in Smt.
Ujjam Bai vs State of Uttar Pradesh(1).
There is another preliminary objection raised by the respondents against the, competence of the writ petitions, and that is based upon the decision of this Court in the case of the State Trading Corporation of India Ltd. (2).
It is urged that the decision of this Court that the State Trading Corporation is not a citizen, necessarily means that the fundamental rights guaranteed by article 19 which can be claimed only by citizens cannot be claimed by such a Corporation, and so, there can be no scope for looking at the substance of the matter and giving to the shareholders indirectly the right which the Corporation as a separate (1) [1963] 1 S.C.R. 778.
(2) ; 891 legal entity is not directly entitled to claim.
The respondents have urged that in dealing with the plea of the petitioners that the veil worn by the Corporation as a separate legal entity should be lifted and the substantial character of the Corporation should be determined without reference to the technical position that the Corporation is a separae entity, we ought to bear in mind the decision of this Court in the case of the State Trading Corporation of India Ltd.(1).
Basing themselves on this contention, the respondents have also argued that if the fundamental rights guaranteed by article 19 are not available to the petitioners, then their plea that the sales tax is being collected from them contrary to article 31(1) must fail and in support of this contention reliance is placed upon a recent decision of this Court in the case of Indo China Steam Navigation Co. Ltd. vs The Additional Collector of Customs and Others(2).
Logically, the second preliminary objection would come first, because if the petitioners cannot claim the status of citizens and are not, therefore, entitled to base their petitions on the allegation that their fundamental rights under article 19 have been contravened, that would be the end of the petitions.
It has been conceded before us by all the learned counsel appearing for the petitioners that it is only if both the preliminary objections raised by the respondents are over ruled that the hearing of the writ petitions would reach the stage of considering the merits of their pleas that the sales which are sought to be taxed fall under article 28 6 (1) (a) of the Constitution.
If the respondents succeed in either of the two preliminary objections raised by them, the writ petitions would fail and there would be no occasion to consider the merits of the pleas raised by them.
Since we have come to the conclusion that the second preliminary objection raised by the respondents must be upheld, we do not propose to pronounce any decision on the first preliminary objection.
However, as the point covered by the said objection has been elaborately argued before us, we would prefer to indicate briefly the broad arguments urged fry both the parties in that behalf.
(1) ; (2) ; 892 The controversy between the parties as to the scope and effect of the provisions contained in article 32 on which the validity of the first preliminary objection rests, substantially centres round the question as to what is the effect of the decision of this Court in Smt.
Ujjam Bai 's case(1).
The petitioners argue that though the majority view in that case was that the writ petition filed by Ujjam Bai was incompetent, it would appear that the reasons given in most of the judgments support the petitioners ' case that where the fundamental rights of a citizen are contravened, may be by a quasi judicial order, in pursuance of which a tax is attempted to be recovered from a citizen, the erroneous conclusion in regard to the nature of the transaction must be held to contravene the fundamental right of the citizen, and as such, would justify the petitioners in moving this Court under article 32.
On the other hand, the respondents urge that the effect of the decision.
in Ujiam Bai 's case plainly tends.
to show that if a quasi judicial decision has determined a matter in regard to the taxability of a given transaction, there can be no question about the breach of fundamental rights which would justify an application under article 32.
The argument is that the intervention of a quasi judicial order changes the complexion of the dispute between the parties, and in cases of that character, the only remedy available to an aggrieved citizen is to take recourse to the appeals and other proceedings prescribed by the taxing statute in question.
article 32 is not intended to confer appellate jurisdiction on this Court so as to review or examine the propriety of quasi judicial orders passed by appropriate authorities purporting to exercise their powers and jurisdictions under the several taxing statutes.
It may be that after exhausting the remedies by way of appeals and revisions prescribed by the statute, the party may come to this Court under article 136, but article 32 is inapplicable in such cases.
In Ujjam Bai 's case(1), the first issue which was referred to the Special Bench was whether an order of assessment made by an authority under a taxing statute which is intra vires is open to challenge as repugnant to (1) [1963] 1 S.C.R. 778. 893 article 19 (1)(g), on the sole ground that it was based on a misconstruction of a provision of the Act or of a notification issued thereunder; and the second question was, can the validity of such an order be questioned in a petition under article 32 of the Constitution? The majority view expressed in this case was against the petitioner.
section K. Das J. who delivered the main judgment on behalf of the majority view observed that where a quasi judicial authority makes an ,order in the undoubted exercise of its jurisdiction in pursuance of a provision of law which is intra vires, an error of law or fact committed by that authority cannot be impeached otherwise than on appeal, unless the erroneous determination relates to a matter on which the jurisdiction of that body depends; and so, he held that if the impugned order of assessment is made by an authority under a valid taxing statute in the undoubted exercise of its jurisdiction it cannot be challenged under article 32 on the sole ground that it is passed on a misconstruction of a provision of the Act or of a notification issued thereunder.
Subba Rao J., on the other hand, took the view that article 32 confers wide jurisdiction on this Court to enforce the fundamental rights, and he held that it is the duty of this Court to entertain a writ petition wherever a fundamental right of a citizen is alleged to have been contravened, irrespective of whether the question raised involves a question of jurisdiction, law, or fact; this is the minority view pronounced in Ujjam Bai 's case.
Hidayatullah J., who agreed broadly with the majority view, expressed the opinion that if a quasi judicial tribunal embarks upon an action wholly outside the pale of the law he is enforcing, a question of jurisdiction would be involved and that would justify an application under article 32.
Ayyangar J. held that if it appeared that the impugned order of assessment was based upon a plain and patent misconstruction of the provisions of the taxing statute, that itself would give rise to a plea that the authority was acting beyond its jurisdiction and in such a case, a petition under article 32 may be justified.
Proceeding on this view, the learned Judge held that the construction placed by the taxing authority was not shown to be patently erroneous.
894 and so, he was not prepared to grant any relief to Ujjam Bai.
That is how the learned Judge agreed with the majority decision.
Mudholkar J., who also agreed with the majority decision, was disposed to make an exception in cases where an erroneous construction of the law would lead to the recovery of a tax which is beyond the competence of the legislature, or is violative of the provisions of Part III or of any other provisions of the Constitution.
It would, thus, be seen that though the majority decision was that Ujjam Bai 's petition should be dismissed, the reasons given in the judgments pronounced by the learned Judges who agreed with the majority decision are not all uniform and do not disclose an identity of approach or of reasons, and that naturally has given rise to the arguments in the present writ petitions, both parties suggesting that the majority decision in the case of Ujjam Bai supports the rival views for which they contend.
Mr. Setalvad has strongly urged that if a misconstruction of the notification on which Ujjam Bai rested her case, was not held to justify a petition under article 32, that would necessarily mean that the misconstruction of the nature of the transaction would be no better, even though in this 'latter case, the wrong decision on the question as to the character of the sale transaction may involve taxing a transaction which is protected by article 286(1) (a).
One can understand the argument, said Mr. Setalvad, that a breach of the fundamental rights, however it is caused would justify recourse to article 32; that would be consistent and logical; but once it is held that a breach of the fundamental rights alleged to have been caused by a misconstruction of a notification or a statute placed by an appropriate authority acting under the provisions of a valid taxing law does not attract article 32, it is not logically possible to urge that another kind of breach alleged to have been caused by a misappreciation of the nature of the transaction and an erroneous conclusion as to its taxable character would make any difference.
In the first case, the erroneous construction of the notification violates the provisions of article 265 of the Constitution and thereby brings in the breach of article 895 31 (1); in the other case, the misconstruction as to the taxable character of the transaction violates article 28 6 (1 ) (a) and thereby brings in article 31 (1).
Therefore, it is urged that he necessary consequence of the decision in Ujjam Bai is that even if the Sales tax Officer has held wrongly that the impugned transactions are not inter State transactions, the remedy of petition under article 32 is not open to the aggrieved citizen.
On the other hand, Mr. Palkhivala has strenuously urged that the decision in Ujjam Bai rested on the basis that the misinterpretation of the notification did not involve the violation of any constitutional limitations or prohibitions and he has referred us to some passages in the judgments of Das, Kapur and Mudholkar JJ.
In support of his argument that where an erroneous decision of a salestax officer results in the violation of a constitutional prohibition or limitation, different considerations would arise and an aggrieved citizen would be entitled to move this Court under article 32, Mr. Palkhivala has emphasised the fact that whereas Das J. expressly held that the view taken in Kailash Nath vs State of U.P.(1) was not right, he approved of the other decisions which were cited at the Bar and exhaustively discussed on the ground that those decisions 'fall under the category in which an executive authority acts without authority of law, or a quasi judicial authority acts in transgression of a constitutional prohibition and without jurisdiction"(2).
These decisions are: Thakur Amar Singhji vs State of Rajasthan(3); M/s. Mohanlal Hargovind Dass vs The State of Madhya Pradesh(4); Y. Mahaboob Sheriff vs Mysore State Transport Authority(5); J. V. Gokar & Co. (Private) Ltd. vs The Assistant Collector of Sales tax (Inspection) (6); and Universal Imports Agency vs Chief Controller of Imports and Exports ( 7 ) .
To the same effect is the observation made by Kapur J. when the learned Judge stated that in the case of M/s. Mohanlal Hargovind Dass ( 4 ) ':he dispute did not turn upon a misconstruction of any statute by any quasi judicial authority, but that was a case (1) A.I.R. 1957 S.C. 790(2) [1963] 1 S.C.R. at 842.
(3) ; [1955] 8 S.C.R. 303.(4) (5) ; (7) ; 896 in which the very transaction was outside the taxing powers of the State and any action taken by the taxing authorities was one without authority of law.
In support of the same argument, both Mr. Pathak and Mr. Palkhivala strongly relied upon the two subsequent decisions of this Court where writ petitions filed under article 32 were entertained on grounds somewhat similar to those on which the present writ petitions are founded, The State Trading Corporation of India Ltd. and Another vs The State of Mysore and Another(1) and The State Trading Corporation of India Ltd. and Others vs The State of Mysore and Another(2).
Basing himself on these decisions, Mr. Pathak has argued that the question as to whether a particular transaction of sale attracts the protection of article 286(1) (a) is a collateral fact the decision of which confers jurisdiction on the Sales tax Officer; and he contends that the decision of the Sales tax Officer, who is a Tribunal of limited jurisdiction, on a collateral jurisdictional point can always be challenged under article 32 of the Constitution if the said decision impinges upon the citizen 's right protected by article 28 6 (1) (a).
Mr. Palkhivala urged the argument of jurisdiction in a slightly different way.
He contended that the concept of jurisdiction on which he relied was not based on the view that jurisdiction means authority to decide.
According to him, the concept of jurisdiction was of a different category and was of a vital character when constitutional limitations or prohibitions were involved in the decision of any case brought before a Sales tax Officer.
On the other hand, Mr. Setalvad has urged that the Sales tax Officer is not a Tribunal of limited jurisdiction and the charging sections in the respective Sales tax Acts leave it to the Sales tax Officer and the heirarchy of officers contemplated by them to decide the question about the taxability of any given transaction and impose a tax on it in accordance with the provisions of the Acts.
Where a tribunal is entitled to deal with transactions which fall (1) 14 S.T.C. 188.
(2) 14 S.T.C. 416.
897 under the charging sections of the statute, it would be erroneous to contend that the decision of the Tribunal on the said question about the taxability of the transaction is the decision on a collateral jurisdictional fact.
If the said argument is accepted, logically, it may mean that all questions the decision of which inevitably precedes the imposition of the tax, would be collateral jurisdictional fact; and that clearly cannot be the effect of the charging sections of the different Acts.
In regard to the point of constitutional limitations and prohibitions raised by Mr. Palkhivala, Mr. Setalvad contends that if the provisions of article 286(1) (a) makes the decision of the Sales tax Officer on the character of the sale trans action one of jurisdiction, then it is difficult to see why his decision on other points should also not partake of the same character.
In that connection, he emphasised the fact that the provisions of article 286(1) (a) cannot be distinguished from the provisions of article 265.
As we have already indicated, having regard to the fact that we have come to the conclusion that the other preliminary objection urged by the respondents must be upheld, we do not propose to express any opinion on this part of the controversy between the parties.
That takes us to the question as to whether the petitioners, some of whom are companies registered under the Indian Companies Act and one of whom is the State Trading Corporation, can claim to file the present writ petitions under article 32 having regard to the decision of this Court in the case of the State Trading Corporation of India Ltd. (1).
The petitioners argue that the said decision merely held that the State Trading Corporation of India Ltd. was not a citizen.
The question as to whether the veil of the Corporation can be lifted and the rights of the shareholders of the said Corporation could be recognised under article 19 or not, was not decided, and it is on this aspect of the question that arguments have been urged before us in the present writ petitions.
The true legal position in regard to the character of a corporation or a company which owes its incorporation to (1) ; 134 159 S.C. 57 898 a statutory authority, is not in doubt or dispute.
The corporation in law is equal to a natural person and has a legal entity of its own.
The entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purpose; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation.
This position has been well established ever since the decision in the case of Salomon vs Salomon & Co. (1) was pronounced in 1897; and indeed, it has always been the well recognised principle of common law.
However, in the course of time, the doctrine that the corporation or a company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the corporation can be lifted and its face examined in substance.
The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the corporation.
As a result of the impact of the complexity of economic factors, juidical decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation.
It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more.
But the question which we have to consider is whether in the circumstances of the present petitions, we would be justified in acceding to the argument that the veil of the petitioning corporations should be lifted and it should be held that their shareholders who are Indian citizens should be permitted to invoke the protection of article 19, and on that basis, move this Court under article 32 to challenge the validity of the orders passed by the Sales tax Officers in respect of transactions which, it is alleged, are not taxable.
(1) ; H.L. 899 Mr. Palkhivala has very strongly urged before us that having regard to the fact that the controversy between the parties relates to the fundamental rights of citizens, we should not hesitate to look at the substance of the matter and disregard the doctrinaire approach which recognises the existence of companies as separate juristic or legal persons.
If all the shareholders of the petitioning companies are Indian citizens, why should not the Court look at the substance of the matter and give the shareholders the right to challenge that the contravention of their fundamental rights should be prevented.
He does not dispute that the shareholders cannot claim that the property of the companies is their own and cannot plead that the business of the companies is their business in the strict legal sense.
The doctrine of lifting of the veil postulates the existence of dualism between the corporation or company on the one hand and its members or shareholders on the other.
So, it is no good emphasising that technical aspect of the matter in dealing with the question as to whether the veil should be lifted or not.
In support of his plea, he has invited our attention to the decision of the Privy Council in The English and Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax, Assam(1), as well as the decision of the House of Lords in Daimler Company Ltd. vs Continental Tyre and Rubber Company (Great Britain) Ltd.(2).
It is unnecessary to refer to the facts in these two cases and the principles enunciated by them, because it is not disputed by the respondents that some exceptions have been recognised to the rule that a corporation or a company has a juristic or legal separate entity.
The doctrine of the lifting of the veil has been applied in the words of Palmer in five categories of cases : where companies are in the relationship of holding and subsidiary (or sub subsidiary) companies; where a shareholder has lost the privilege of limited liability and has become directly liable to certain creditors of the company on the ground that, with his knowledge, the company continued to carry on business six months after the number of its members was reduced (1) (2) 900 below the legal minimum; in certain matters pertaining to the law of taxes, death duties and stamps, particularly where the question of the "controlling interest" is in issue; in the law relating to exchange control; and in the law relating to trading with the enemy where the test of control is adopted(1).
In some of these cases, judicial decisions have no doubt lifted the veil and considered the substance of the matter.
Gower has similarly summarised this position with the observation that in a number of important respects, the legislature has rent the veil woven by the Salomon case.
Particularly is this so, 'says Gower, in the sphere of taxation and in the steps which have been taken towards the recognition of enterprise entity rather than corporate entity.
It is significant, however, that according to Gower, the courts have only construed statutes as "cracking open the corporate shell" when compelled to do so by the clear words of the statute; indeed they have gone ' out of their way to avoid this construction whenever possible.
Thus, at present, the judicial approach in cracking open the corporate shell is somewhat cautious and circumspect.
It is only where the legislative provision justifies the adoption of such a course that the veil has been lifted.
In exceptional cases where courts have felt "themselves able to ignore the corporate entity and to treat the individual shareholders as liable for its acts",(2) the same course has been adopted.
Summarising his conclusions, Gower has classified seven categories of cases where the veil of a corporate body has been lifted.
But it would not be possible to evolve a rational, consistent and inflexible principle which can be invoked in determining the question as to whether the veil of the corporation should be lifted or not.
Broadly stated, where fraud is intended to be prevented, or trading with an enemy is sought to be defeated, the veil of a corporation is lifted by judicial decisions and the shareholders are held to be the persons who actually work for the corporation.
That being the position with regard to the doctrine of the veil of a corporation and the principle that the said (1) Palmer 's Company Law 20th Ed.
p. 136.
(2) Gower" Modern Company Law, 2nd Ed. pp. 193 & 195.
901 veil can be lifted in some cases, the question which arises for our decision is; can we lift the veil of the petitioners and say that it is the shareholders who are really moving the Court under article 32, and so, the existence of the legal and juristic separate entity of the petitioners as a corporation or as a company should not make the petitions filed by them under article 32 incompetent? We do not think we can answer this question in the affirmative.
No doubt, the complaint made by the petitioners is that their fundamental rights are infringed and it is a truism to say that this Court as the guardian of the fundamental rights of the citizens will always attempt to safeguard the said fundamental rights; but having regard to the decision of this Court in State Trading Corporation of India Ltd. (1) we do not see how we can legitimately entertain the petitioners ' plea in the present petitions, because if their plea was upheld, it would really mean that what the corporations or the companies cannot achieve directly, can be achieved by them indirectly by relying upon the doctrine of lifting the veil.
If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19.
It is no doubt suggested by the petitioners that though article 19 is confined to citizens, the Constitution makers may have thought that in dealing with the claims of corporations to invoke the provisions of article 19, courts would act upon the doctrine of lifting the veil and would not treat the attempts of the corporations in that behalf as falling outside article 19.
We do not think this argument is well founded.
The effect of confining article 19 to citizens as distinguished from persons to whom other Articles like 14 apply, clearly must be that it is only citizens to whom the rights under article 19 are guaranteed.
If the legislature intends that the benefit of article 19 should be made available to the corporations, it would not be difficult for it to adopt a proper measure in that behalf by enlarging the definition of 'citizen ' prescribed by the Citizenship Act passed by the Parliament by virtue of the powers conferred on it by Articles 10 and 11.
On the other hand, the fact that the Parliament has not chosen to make any such provision indicates that it was not the intention of the (1) ; 902 Parliament to treat corporations as citizens.
Therefore, it seems to us that in view of the decision of this Court in the case of the State Trading Corporation of India Ltd.(1) the petitioners cannot be heard to say that their shareholders should be allowed to file the present petitions on the ground that, in substance, the corporations and companies are nothing more than associations of shareholders and members thereof.
In our opinion, therefore, the argument that in the present petitions we would be justified in lifting the veil cannot be sustained.
Mr. Palkhivala sought to draw a distinction between the right of a citizen to carry on trade or business which is contemplated by article 19(1)(g) from his right to form associations or unions contemplated by article 19 (1) (c).
He argued that article 19(1)(c) enables the citizens to choose their instruments or agents for carrying on the business which it is their fundamental right to carry on.
If citizens decide to set up a corporation or a company as their agent for the purpose of carrying on trade or business, that is a right which is guaranteed to them under article 19(1)(c).
Basing himself on this distinction between the two rights guaranteed by article 19(1)(g) and (c) respectively, Mr. Palkhivala somewhat ingeniously contended that we should not hesitate to lift the veil, because by looking at the substance of the matter, we would really be giving effect to the two fundamental rights guaranteed by article 19(1).
We are not impressed by this argument either.
The fundamental right to form an association cannot in this manner be coupled with the fundamental right to carry on any trade or business.
As has been held by this Court in All India Bank Employees ' Association vs National Industrial Tribunal and Others(2), the argument which is thus attractively presented before us overlooks the fact that article 19, as contrasted with certain other articles like articles 26, 29 and 30, guarantees rights to the citizens as such, and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens, that is to say, the right of the citizens composing the body.
The respective rights guaranteed by article 19(1) (1) ; (2) ; 903 Cannot be combined as suggested by Mr. Palkhivala, but must be asserted each in its own way and within its own limits; the sweep of the several rights is no doubt wide, but the combination of any of those two rights would not justify a claim such as is made by Mr. Palkhivala in the present petitions.
As soon as citizens form a company, the right guaranteed to them by article 19(1)(c) has been exercised and no restraint has been placed on that right and no infringement of that right is made.
Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the ,citizens who get the company or corporation formed or incorporated, and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the rights attributable to the business of individual citizens.
Therefore, we are satisfied that the argument based on the distinction between the two rights guaranteed by article 19(1)(c) and (g) and the effect of their combination cannot take the petitioners ' case very far when they seek to invoke the doctrine that the veil of the corporation should be lifted.
That is why we have come to the conclusion that the petitions filed by the petitioners are incompetent under article 32, even though in each of these petitions one or two of the shareholders of the petitioning companies or corporation have joined.
The result is, the second preliminary objection raised by the respondents is upheld and the writ petitions are dismissed as being incompetent under article 32 of the Constitution.
There would be no order as to costs.
Petitions dismissed.

dataset_name: IN-Abs

summary/full:
The petitioners were ordered to pay sales tax on account of certain transactions made by them in the State of Bihar.
Their contention was that the sales in question took place outside the state and hence they were entitled to the protection of article 286(1)(a).
Their plea was rejected by the Sales tax authorities and it was held that article 286(1)(a) did not apply to them.
The petitioners challenged the orders of the sales tax authorities by writ petitions filed by them under article 32 of the Constitution.
A preliminary objection was taken on behalf of respondents that the petitions were not competent as those were filed by corporations or companies and the provisions of article 19 did not apply to them as corporations were not citizens.
Dismissing the writ petition, Held.
The petitions under article 32 were incompetent although in each of them one or two of the share holders of the petitioning companies or corporations had also joined.
Article 19 guarantees rights to citizens as such and associations cannot lay claim to the fundamental rights guaranteed by that Article solely on the basis of their being an aggregation of citizens.
Once a company or a corporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who got the company or corporation formed or incor porated and the rights of the incorporated body must be judged on that footing and cannot be judged on the assumption that they are the right attributable to the business of individual citizens.
The petitioners cannot be heard to say that their share holders should be allowed to file the present petitions on the ground that in substance, the corporations and companies are nothing more than association of share horders and members thereof.
If their contention is accepted, it would really mean that what the corporations or companies cannot achieve directly, they can achieve indirectly by relying upon the doctrine of lifting the veil.
If the corporations and companies are not citizens, it means that the Constitution intended that they should not get the benefit of article 19. 886 The position of a corporation is that it is in law equal to a natural person and has a legal entity of its own.
That entity is entirely separate from that of its shareholders.
It bears its own name and has a seal of its own.
Its assets are separate and distinct from those of its members.
It can sue and be sued exclusively for its own purpose.
Its creditors cannot obtain satisfaction from the assets of its members.
The liability of the members or share holders is limited to the capital invested by them.
The creditors of the members have no right to the assets of the corporation.
However.
there are some exceptions to the rule that the corporation or a company has a jurisfic or legal entity and the doctrine of lifting the veil of a corporation and examining its face in substance has been applied in many cases but the same does not apply in the present case.
State of Trading Corporation of India Ltd. vs The Commercial Tax Officer & Ors. ; , Smt.
Ujjam Bai vs State of Uttar Pradesh.
[1963] 1 S.C.R. 778, Indo China Steam Navigation Co. Ltd. vs Additional Collector of Customs.
; , Kailash Nath vs State of U.P.
A.I.R. 1957 S.C. 790, Thakur Amar Singhji V. State of Rajasthan, ; , M/s. Mohanlal Hargovind vs State of Madhya Pradesh.
; , Y. Mahaboob Sheriff V. Mysore State Transport Authority.
[1960] 2 S.C.R. 146, J. V. Gokar & Co. (P) Ltd. vs Assistant Collector of Sales tax (inspection), ; , Universal Imports Agency vs Chief Controller of Imports & Exports , State Trading Corporation of India Ltd. vs State of Mysore, 14 S.T.C. 188, State Trading Corporation of India Ltd. vs State of Mysore.
14 S.T.C. 416, Salomon vs Salomon & Co. ; , H.L. The English & Scottish Joint Co operative Wholesale Society Ltd. vs Commissioner of Agricultural Income tax Assam. , Daimler Company Ltd. vs Continental Tyre and Rubber Co. (Great Britain) Ltd. and All India Bank Employees ' Association vs National Industrial Tribunal & Ors. ; , referred to.


judgement:
Appeal No. 77 of 1952.
Appeal from the Judgment and Order dated the 9th January, 1951, of the High Court of Judicature at Calcutta (Harries C. J. and Banerjee J.) in its Special Jurisdiction (Income tax) in Income tax Reference No. 70 of 1950.
C. K. Daphtary, Solicitor General for India (Porus A. Mehta, with him) for the appellant.
N. C. Chatterjee (B. Sen, with him) for the respondents.
September 24.
The Judgment of the Court was delivered by MAHAJAN J.
This is an appeal from a judgment of the High Court of Judicature at Calcutta delivered in a reference under section 66(1) of the Indian Incometax Act, whereby the High Court answered the question referred in the affirmative.
The assessee is a partnership concern.
When income tax was paid under the Act of 1918, the partnership concern consisted of three partners, Mathews, Figgies and Notley.
The name of the firm was A. W. Figgies & Co., and its ' business was that of tea brokers.
There were several changes in the constitution of the firm resulting in a change in the shares of 173 the partners.
In 1924, Mathews went out and his share was taken over by Figgies and Notley.
In 1926 another partner Squire was introduced.
In 1932 Figgies went out, and from 1932 to 1939 the partnership consisted only of Notley and Squire.
In 1939 Hillman was brought in and the partnership consisted of these three partners.
In 1943 Notley went out and the partnership business was carried on by the two partners, Squire and Hillman.
In 1945 Gilbert was brought in.
This arrangement continued up to 31st May, 1947, when the partnership was converted into a limited company.
For the assessment year 1947 48 the assessee claimed that it was entitled to relief under section 25(4) of the Act as the partnership firm had been succeeded by a private limited company.
There was a provision in the partnership deed of 1939 that on the retirement of any partner the partnership would not be determined but would be carried on by the remaining partners.
It appears that a fresh partnership deed was drawn up in the year 1945 when Gilbert was brought in.
The partnership constituted by these three partners continued to carry on the same business that had been started when the tax was paid under the Act of 1918.
From the statement of the case it does not appear that apart from the mere change in the personnel of the partners and in their respective shares there was any actual dissolution of the firm, and any division of its assets and liabilities or a succession to its business by any outside person.
The Income tax Officer disallowed the claim of the assessee on the ground that the partners of the firm in 1939 being different from the partners of the firm in 1947, no relief could be given to the applicant.
The Appellate Assistant Commissioner upheld this view.
On appeal to the Income tax Tribunal, this decision was reversed and relief was granted to the applicant under section 25(4).
Before the Tribunal it was argued on behalf of the Commissioner that the partnership was nothing but an association of persons and therefore, in 24 174 order to get relief under section 25(4) of the Act the partners of 1939 must be the same as the partners of 1947 when the firm was succeeded by the company.
The Tribunal repelled this contention and held that the relief contemplated by section 25(4) of the Income tax Act was to be given to the business and not to the persons carrying on the business and that mere changes in the constitution of the firm had to be ignored.
It was not disputed before the Tribunal that the business of the partnership firm of A. W. Figgies & Co. continued as tea brokers right from its inception till the time it was succeeded by the limited company.
The Tribunal took the view that for purposes of incometax the firm was to be regarded as having a separate juristic existence apart from the partners carrying on the business and that the firm could be carried on even if there was a change in its constitution.
At the instance of the appellant the Tribunal stated a case and referred the following question to the High Court under section 66(1) of the Act : "In the facts and circumstances of the case, was the firm as constituted on 31st May, 1947, entitled to the relief under section 25(4) of the Indian Incometax Act ?" The High Court answered the question referred in the affirmative.
It upheld the view taken by the Tribunal.
It was contended before us that the construction placed by the High Court upon section 25(4) of the Act was erroneous and was not warranted by the language of the section and that by reason of the change in the composition of the firm the same firm did not continue throughout and hence there was no right to relief under section 25(4) of the Act in the changed firm.
In our opinion, this contention is without force.
Section 25 (4) is in these terms: "Where the person who was at the commencement of the Indian Income tax (Amendment) Act, 1939, carrying on any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, is succeeded in such capacity by another person, the change not being 175 merely a change in the constitution of a partnership, no tax shall be payable by the first mentioned person in respect of the income, profits and gains of the period between the end of the previous year and the date of such succession, and such person may further claim that the income, profits and gains of the previous year shall be deemed to have been the income, profits and gains of the said period.
Where any such claim is made, an assessment shall be made on the basis of the income, profits and gains of the said period, and, if an amount of tax has already been paid in respect of the income, profits and gains of the previous year exceeding the amount payable on the basis of such assessment, a refund shall be given of the difference.
" The section does not regard a mere change in the personnel of the partners as amounting to succession and disregards such a change.
It follows from the provisions of the section that a mere change in the constitution of the partnership does not necessarily bring into existence a new assessable unit or a distinct assessable entity and in such a case there is no devolution of the business as a whole.
It is true that under the law of partnership a firm has no legal existence apart from its partners and it is merely a compendious name to describe its partners but it is also equally true that under that law there is no dissolution of the firm by the mere incoming or outgoing of partners.
A partner can retire with the consent of the other partners and a person can be introduced in the partnership by the consent of the other partners.
The reconstituted firm can carry on its business in the same firm 's name till dissolution.
The law with respect to retiring partners as enacted in the Partnership Act is to a certain extent a compromise between the strict doctrine of English common law which refuses to see anything in the firm but a collective name for individuals carrying on business in partnership and the mercantile usage which recognizes the firm as a distinct person or quasi corporation.
But under the Income tax Act the position is somewhat different.
A firm can be charged as a distinct assessable entity as distinct from its 176 partners who can also be assessed individually.
Section 3 which is the charging section is in these terms: Where any Central Act enacts that income tax shall be charged for any year at any rate or rates tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions of, this Act in respect of the total income of the previous year of every individual, Hindu undivided family, company and local authority, and of every firm and other association of persons or the partners of the firm or the members of the association individually.
" The partners of the firm are distinct assessable entities, while the firm as such is a separate and distinct unit for purposes of assessment.
Sections 26, 48 and 55 of the Act fully bear out this position.
These provisions of the Act go to show that the technical view of the nature of a partnership under English law or Indian law cannot be taken in applying the law of incometax.
The true question to decide is one of identity of the unit assessed under the Income tax Act, 1918, which paid double tax in the year 1939, with the unit to whose business the private limited company succeeded in the year 1947.
We have no doubt that the Tribunal and the High Court were right in holding that in spite of the mere changes in the constitution of the firm, the business of the firm as originally constituted continued as tea brokers right from its inception till the time it was succeeded by the limited company and that it was the same unit all through, carrying on the same business, at the same place and there was no cesser of that business or any change in the unit.
Reference was made by Mr. Daphtary to the partnership deed drawn up in 1945.
It was argued that a different firm was then constituted.
The High Court refused to look into this document as it had not been relied upon before the Tribunal and no reference bad been specifically made to it in the order of the Incometax Officer or the Assistant Commissioner.
The Tribunal in spite of this document took the view that under the Partnership Act a firm could be carried on even if there was a change in its constitution.
This 177 document is silent on the question as to what happened to the assets and liabilities of the firm that was, constituted under the deed of 1939.
To all intents and purposes the firm as reconstituted was not a different unit but it remained the same unit in spite of the change in its constitution.
The result is that we see no substantial grounds for disturbing the opinion given by the High Court on the question submitted to it.
The appeal therefore fails and is dismissed with costs.
Appeal dismissed.

summary/full:
For purposes of assessment to income tax, a firm is a different entity distinct from its partners, and a mere change in the constitution of the firm does not bring into existence a new assessable unit or a distinct assessable entity.
(1) 67 I.A. 464,481.
172 A firm consisting of three partners, A, B and C, carried on the business of tea brokers and paid income tax under the Income tax Act of 1918.
There were several changes in the personnel of the partners and in 1939 the firm consisted of C, D and E. C retired and in 1945 a new partnership deed was written up between D, E and F and they carried on the business.
In 1947 the partnership was converted into a limited company.
The Income tax authorities refused to give relief under section 25(4) of the Income tax Act as the partners of the firm in 1939 were different from the partners of the firm in 1947: Held, that in spite of the changes in the constitution of the firm, the business of the firm as originally constituted continued right from its inception to the time it was succeeded by the limited company and the firm was the same unit all through; the reconstitution of the firm in 1945 did not make it a different unit, and the firm was therefore entitled to relief under section 25(4) of the Act.


judgement:
iminal Appeal No. 58 of 1962.
Appeal by special leave from the judgment and order dated June 27, 1961 of the Gujarat High Court in Criminal Appeal No. 656/1960.
B. K. Banerjee, for the appellant.
D. R. Prem, R. H. Dhebar and B. R. G. K. Achar, for the respondent.
March 19, 1964.
The Judgment of the Court was delivered by SUBBA RAO, J.
This appeal raises the question of the defence of insanity for an offence under section 302 of the Indian Penal Code.
The appellant was the husband of the deceased Kalavati.
She was married to the appellant in the year 1958.
On the night of April 9, 1959, as usual, the appellant and his wife slept in their bed room and the doors leading to that room were bolted from inside.
At about 3 or 3.30 a.m. on the next day Kalavati cried that she was being killed.
The neighbours collected in front of the said room and called upon the ac cused to open the door.
When the door was opened they found Kalavati dead with a number of wounds on her body.
The accused was sent up for trial to the sessions on the charge of murder.
Before the Additional Sessions Judge, Kaira, a defence was set up that the accused was insane when the incident was alleged to have taken place and was not capable of understanding the nature of his act.
The learned Additional Sessions Judge considered the entire evidence placed before him, and came to the conclusion that the accused had failed to satisfy him that when he committed the murder of his wife he was not capable to knowing the nature of the act and that what he was doing was either wrong or contrary to law.
Having rejected his plea of insanity, the learned Additional Sessions Judge convicted him under section 302 of the Indian Penal Code and sentenced him to undergo rigorous imprisonment for life.
On appeal 363 the High Court agreed with that finding, though for different reasons, and confirmed the conviction and sentence of the accused.
Hence the present appeal.
Learned counsel for the appellant contended that the High Court, having believed the evidence of the prosecution witnesses, should have held that the accused had discharged the burden placed on him of proving that at the time he killed his wife he was incapable of knowing the nature of his act or what he was doing was either wrong or contrary to law.
He further contended that even if he had failed to establish that fact conclusively, the evidence adduced was such as to raise a reasonable doubt in the mind of the Judge as regards one of the ingredients of the offence, namely, criminal intention, and, therefore, the court should have acquitted him for the reason that the prosecution had not proved the case beyond reasonable doubt.
Before we address ourselves to the facts of the case and the findings arrived at by the High Court, it would be convenient to notice the relevant aspects of the law of the plea of insanity.
At the outset let us consider the material provisions without reference to decided cases.
The said provisions are: INDIAN PENAL CODE Section 299 Whoever causes death by doing an act with the intention of causing death, or with the intention of causing such bodily injury as is likely to cause death, or with the knowledge that he is likely by such act to cause death, commits the offence of culpable homicide.
Section 84 Nothing is an offence which is done by a person who, at the time of doing it, by reason of unsoundness of mind, is incapable of knowing the nature of the act, or that he is doing what is either wrong or contrary to law.
INDIAN EVIDENCE ACT Section 105 When a person is accused of any offence, the burden of proving the existence of circumstances bringing the case within any of the General Exceptions in the Indian Penal Code (XLV of 1860) or within any special exception or proviso contained in any other part of the same Code, or in any law defining the offence, is upon him, and the Court shall presume the absence of such circumstances.
364 Section 4 "Shall presume": Whenever it is directed by this Act that the Court shall presume a fact, it shall regard such facts as proved unless and until it is disproved. "Proved" A fact is said to be "proved" when after considering the matters before it, the Court either believes it to exist, or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it exists.
"Disproved" A fact is said to be disproved when, after considering the matters before it, the Court either believes that it does not exist, or considers its non existence so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that it does not exist.
Section 101 Whoever desires any Court to give judgment as to any legal right or liability dependent on the existence of fact which he asserts, must prove that those facts exist.
When a person is bound to prove the existence of any fact. it is said that the burden of proof lies on that person.
It is a fundamental principle of criminal jurisprudence that an accused is presumed to be innocent and, therefore, the burden lies on the prosecution to prove the guilt of the accused beyond reasonable doubt.
The prosecution, therefore, in a case of homicide shall prove beyond reasonable doubt that the accused caused death with the requisite intention described in section 299 of the Indian Penal Code.
This general burden never shifts and it always rests on the prosecution.
But, as section 84 of the Indian Penal Code provides that nothing is an offence if the accused at the time of doing that act, by reason of unsoundness of mind was incapable of knowing the nature of his act or what he was doing was either wrong or contrary to law.
This being an exception, under section 105 of the Evidence Act the burden of proving the existence of circumstances bringing the case within the said exception lies on the accused; and the court shall presume the absence of such circumstances.
Under section 105 of the Evidence Act, read with the definition of "shall presume" in section 4 thereof, the court shall regard the absence of such circumstances as proved unless, after considering the matters before it, it believes that said circumstances existed or their existence was so probable that a prudent man ought, under the circumstances of the particular case, to act upon the supposition that they did exist.
To put 365 it in other words, the accused will have to rebut the presumption that such circumstances did not exist, by placing material before the court sufficient to make it con sider the existence of the said circumstances so probable that a prudent man would act upon them.
The accused has to satisfy the standard of a "prudent man".
If the material placed before the court.
such as, oral and documentary evidence, presumptions, admissions or even the prosecution evidence, satisfies the test of "prudent man", the accused will have discharged his burden.
The evidence so placed may not be sufficient to ' discharge the burden under section 105 of the Evidence Act, but it may raise a reasonable doubt in the mind of a judge as regards one or other of the necessary ingredients of the offence itself.
It may, for instance, raise a reasonable doubt in the mind of the judge whether the accused had the requisite intention laid down in section 299 of the Indian Penal Code.
If the judge has such reasonable doubt, he has to acquit the accused, for in that event the prosecution will have failed to prove conclusively the guilt of the accused.
There is no conflict between the general burden, which is always on the prosecution and which never shifts, and the special burden that rests on the accused to make out his defence of insanity.
The textbooks placed before us and the decisions cited at the Bar lead to the same conclusion.
In Halsbury 's Laws of England, 3rd edn., Vol. 10, at p. 288, it is stated thus: "The onus of establishing insanity is on the accused.
The burden of proof upon him is no higher than which rests upon a party to civil proceedings.
" Glanville Williams in his book 'Criminal Law", The General Part, 2nd Edn., places the relevant aspect in the correct perspective thus, at p. 516: "As stated before, to find that the accused did not know the nature and quality of his act is, in part, only another way of finding that he was ignorant as to some fact constituting an ingredient of the crime; and if the crime is one requiring intention or recklessness he must, on the view advanced in this book, be innocent of mens rea.
Since the persuasive burden of proof of mens rea is on the prose cution, on question of defence, or of disease of the mind, arises, except in so far as the prisoner is called upon for his own safety to neutralise the evidence of the prosecution.
No persuasive burden of proof rests on him, and if the jury are uncertain whether the allegation of mens rea is made out . . the benefit of the doubt must be given to the prisoner, for, in the words 366 of Lord Reading in another context, "the Crown would then have failed to discharge the burden imposed on it by our law of satisfying the jury beyond reasonable doubt of the guilt of the prisoner.
" This Court in K. M. Nanavati vs State of Maharashtra(1) had to consider the question of burden of proof in the context ofa defence based on the exception embodied in section 80 of the Indian Penal Code.
In that context the law is summarized thus: "The alleged conflict between the general burden which lies on the prosecution and the special burden imposed on the accused under section 105 of the Evidence Act is more imaginary than real.
Indeed, there is no conflict at all.
There may arise three different situations: (1) A statute may throw the burden of proof of all or some of the ingredients of an offence on the accused: (see sections 4 and 5 of the Prevention of Corruption Act).
(2) The special burden may not touch the ingredients of the offence, but only the protection given on the assumption of the proof of the said ingredients: (see sections 77, 78, 79, 81 and 88 of the Indian Penal Code).
(3) It may relate to an exception, some of the many circumstances required to attract the exception, if proved, affecting the proof of all or some of the ingredients of the offence: (see section 80 of the Indian Penal Code). . . .
In the third case, though the burden lies on the accused to bring his case within the exception the facts proved may not discharge the said burden, but may affect the proof of the ingredients of the offence.
" After giving an illustration, this Court proceeded to state: "That evidence may not be sufficient to prove all the ingredients of section 80 of the Indian Penal Code, but may prove that the shooting was by accident or inadvertence, i.e., it was done without any intention or requisite state of mind, which is the essence of the offence, within the meaning of section 300, Indian Penal Code, or at any rate may throw a reasonable doubt on the essential ingredients of the offence of murder. . .
In this view it might be said that the general burden to prove the ingredients of the offence, unless there is a specific statute to the contrary, is always on the prosecution, but the burden to prove the circumstances coming under the exceptions lies upon the accused." (1) [1962] Supp. 1 S.C.R. 567, 597, 598.
367 What is said of section 80 of the Indian Penal Code will equally apply to section 84 thereof.
A Division Bench of the Patna High Court in Kamla Singh vs The State (1) invoked the same principle when the plea of insanity was raised.
A Division Bench of the Nagpur High Court in Ramhitram vs State(1) has struck a different note inasmuch as it held that the benefit of doubt which the law gives on the presumption of innocence is available only where the prosecution had not been able to connect the accused with the occurrence and that it had nothing to do with the mental state of the accused.
With great respect, we cannot agree with this view.
If this view were correct, the court would be helpless and would be legally bound to convict an accused even though there was genuine and reasonable doubt in its mind that the accused had not the requisite intention when he did the act for which he was charged.
This view is also inconsistent with that expressed in Nanavati 's case(3).
A Scottish case, H.M. Advocate vs Fraser(4), noticed in Glanville Williams ' "Criminal Law", The General Part, 2nd Edn., at p. 517, pinpoints the distinction between these two categories of burden of proof.
There, a man killed his baby while he was asleep; he was dreaming that he was struggling with a wild beast.
The learned author elaborates the problem thus: "When the Crown proved that the accused had killed his baby what may be called an evidential presumption or presumption of fact arose that the killing was murder.
Had no evidence been adduced for the defence the jury could have convicted of murder, and their verdict would have been upheld on appeal.
The burden of adducing evidence of the delusion therefore lay on the accused.
Suppose that, when all the evidence was in, the jury did not know what to make of the matter.
They might suspect the accused to be inventing a tale to cover his guilt, and yet not be reasonably certain about it.
In that event the accused would be entitled to an acquittal.
The prosecution must prove beyond reasonable doubt not only the actus reus but the mens rea. " The doctrine of burden of proof in the context of the plea of insanity may be stated in the following propositions: (1) The prosecution must prove beyond reasonable doubt that the accused had committed the offence with the requisite mens rea, and the burden of proving that always rests on the prosecution from the beginning to the end of the trial.
(2) There is a rebuttable presumption that the accused was not insane, when he committed the crime, in the sense laid down by section 84 of the (1)A.I.R. 1955 Pat. 209.
(2) A.I.R. 1956 Nag.
(3)[1962] Supp. 1 S.C.R. 567.
(4) 368 Indian Penal Code: the accused may rebut it by placing be fore the court all the relevant evidence oral, documentary or circumstantial, but the burden of proof upon him is no higher than that rests upon a party to civil proceedings.
(3) Even if the.accused was not able to establish conclusively that he was, insane at the time he committed the offence, the evidence placed before the court by the accused or by the prosecution may raise a reasonable doubt in the mind of the court as regards one or more of the ingredients of the offence, including mens rea of the accused and in that case the court would be entitled to acquit the accused on the ground that the general burden of proof resting on the prosecution was not discharged.
Now we come to the merits of the case.
Ordinarily this, Court in exercise of its jurisdiction under article 1.36 of the Constitution accepts the findings of fact arrived at by the High Court.
But, after having gone through the judgments of the learned Additional Sessions Judge and the High Court, we are satisfied that this is an exceptional case to depart from the said practice.
The learned Additional Sessions Judge rejected the evidence of the prosecution witnesses on the ground that their version was a subsequent development designed to belly the accused.
The learned Judges of the High Court accepted their evidence for two different reasons.
Raju, J., held that a court can permit a party calling a witness to put questions under section 154 of the Evidence Act only in the examination inchief of the witness; for this conclusion, he has given the following two reasons: (1) the wording of sections 137 and 154 of the Evidence Act indicates it, and (2) if he is permitted to put questions in the nature of cross examination at the stage of re examination by the adverse party, the adverse party will have no chance of cross examining the witness with reference to the answers given to the said questions.
Neither of the two reasons, in our view, is tenable.
Section 137 of the Evidence Act gives only the three stages in the examination of a witness, namely, examination in chief, cross examination and re examination.
This is a routine sequence in the examination of a witness.
This has no relevance to the question when a party calling a witness can be permitted to put to him questions under section 154 of the Evidence Act: that is governed by the provisions of section 154 of the said Act, which confers a discretionary power on the court to permit a person who calls a witness to put any questions to him which might be put in cross examination by the adverse party.
Section 154 does not in terms, or by necessary implication confine the exercise of the power by the court before the examination in chief is concluded or to any particular stage of the examination of the witness.
It is wide in scope and the discretion is entirely left to the court to exercise the power when the circumstances demand.
To confine this power to the stage of examination in chief is to make 369 it ineffective in practice.
A clever witness in his examination in chief faithfully conforms to what he stated earlier to the police or in the committing court, but in the cross examination introduces statements in a subtle way contradicting in effect what he stated in the examination in chief.
If his design is obvious, we do not see why the court cannot, during the course of his cross examination, permit the person calling him as a witness to put questions to him which might be put in cross examination by the adverse party.
To confine the operation of section 154 of the Evidence Act to a particular stage in the examination of a witness is to read words in the section which are not there.
We cannot also agree with the High Court that if a party calling a witness is permitted to put such questions to the witness after he has been cross examined by the adverse party, the adverse party will not have any opportunity to further cross examine the witness on the answers elicited by putting such questions.
In such an event the court certainly, in exercise of its discretion, will permit the adverse party to crossexamine the witness on the answers elicited by such questions.
The court, therefore, can permit a person, who calls a witness, to put questions to him which might be put in the crossexamination at any stage of the examination of the witness, provided it takes care to give an opportunity to the accused to cross examine him on the answers elicited which do not find place in the examination in chief.
In the present case what happened was that some of the witnesses faithfully repeated what they had stated before the police in the examination inchief, but in the cross examination they came out with the story of insanity of the accused.
The court, at the request of the Advocate for the prosecution, permitted him to cross examine the said witnesses.
It is not suggested that the Advocate appearing for the accused asked for a further opportunity to cross examine the witnesses and was denied of it by the court.
The procedure followed by the learned Judge does not conflict with the express provisions of section 154 of the Evidence Act.
Mehta, J., accepted the evidence of the witnesses on the ground that the earlier statements made by them before the police did not contradict their evidence in the court, as the non mention of the mental state of the accused in the earlier statements was only an omission.
This reason given by the learned Judge is also not sound.
This Court in Tahsildar Singh vs The State of U.P.(1) laid down the following test for ascertaining under what circumstances an alleged omission can be relied upon to contradict the positive evidence in court: ". . . (3) though a particular statement is not expressly recorded, a statement that can be deemed to be part of that expressly recorded can be used (1)[1959] Supp. 2 S.C.R. 875, 903. 370 for contradiction, not because it is an omission strictly so called but because it is deemed to form part of the recorded statement; (4) such a fiction is permissible by construction only in the following three cases: (i) when a recital is necessarily implied from the recital or recitals found in the statement . . ; (ii) a negative aspect of a positive when the statement before the police and that before the Court cannot stand together ".
Broadly stated, the position in the present case is that the witnesses in their statements before the police attributed a clear intention to the accused to commit murder, but before the court they stated that the accused was insane and, therefore, he committed the murder.
In the circumstances it was necessarily implied in the previous statements of the witnesses before the police that the accused was not insane at the time he committed the murder.
In this view the previous statements of the witnesses before the police can be used to contradict their version in the court.
The judgment of the High Court, therefore, in relying upon some of the important prosecution witnesses was vitiated by the said errors of law.
We would, therefore, proceed to consider the entire evidence for ourselves.
When a plea of legal insanity is set up, the court has to consider whether at the time of commission of the offence the accused, by reason of unsoundness of mind, was incapable of knowing the nature of the act or that he was doing what was either wrong or contrary to law.
The crucial point of time for ascertaining the state of mind of the accused is the time when the offence was committed.
Whether the accused was in such a state of mind as to be entitled to the benefit of section 84 of the Indian Penal Code can only be established from the circumstances which preceded, attended and followed the crime.
The first question is, what is the motive for the appellant to kill his wife in the ghastly manner he did by inflicting 44 knife injuries on her body? Natverlal Atmaram, the father of the deceased Kalavati, was examined as P.W. 13.
He said that about 20 days before his daughter was murdered he received a letter from the accused asking him to take away his daughter on the ground that he did not like her, that he went to Bherai with that letter, showed it to Chhaganbhai, the father of the accused, and had a talk with him about it; that Chhaganbhai took that letter from him and promised to persuade the accused not to discard his wife , that, after a week be again went to Bherai and asked the accused why he did not like the deceased and the accused replied that he did not like her as she was not working properly; and that thereafter he went back to his village and sent a message through someone that he would go 371 to Bherai to take his daughter on Chaitra Sudi 1.
The murder took place on the night before Chaitra Sudi 1.
In the cross examination he admitted that he did not tell the police that he ' had given the letter to the father of the accused, but he told the Sub Inspector that he had shown the letter to him.
Chhaganlal, the father of the accused, as P.W. 7, no doubt denied that Natverlal gave him the letter written by the accused, but he admitted that Natverlal came to his village 10 or 15 days before the incident to take his daughter away.
The evidence of Natverlal that he went to the village of the accused is corroborated by the evidence of P.W. 7.
It is, therefore, likely that the accused wrote a letter to Natverlal to take away Kalavati and it is also likely that Natverlal gave that letter to P.W. 7 to persuade his son not to discard his wife.
P.W.s 2 to 7 said in the cross examination that the accused and his wife were on cordial terms, but, as we will indicate later in our judgment, all these witnesses turned hostile in the sessions court and made a sustained attempt to support the case of insanity.
That apart, their evidence does not disclose what opportunities they had to notice the cordial relation that existed between the accused and the deceased.
The learned Additional Sessions Judge rightly disbelieved their evidence.
The learned Additional Sessions Judge, who had seen Natverlal in the witness box, has accepted his evidence.
We, having gone through his evidence.
see no reason to differ from the opinion of the learned Additional Sessions Judge.
It is also not denied that though the accused was in Ahmedabad for ten months, he did not take his wife with him.
We accept the evidence of Natverlal and hold that the accused did not like his wife and, therefore, wanted his father in law to take her away to his home and that his father in law promised to do so before Chaitra Sudi 1.
The next question is, what was the previous history of the mental condition of the accused? Here again, the prosecu tion witnesses, P.W.s. 2 to 7, deposed for the first time in the sessions court that 4 or 5 years before the incident the accused was getting fits of insanity.
But all these witnesses stated before the police that the accused had committed the murder of his wife, indicating thereby that he was sane at that time.
Further, their evidence is inconsistent with the facts established in the case.
During this period, it was admitted by P.W. 7, the accused was not treated by any doctor.
Prior to the incident he was serving in Ahmedabad in Monogram Mills for about a year and a half.
Though the father of the deceased was staying in a village only a few miles away from the village of the accused and though the betrothal was fixed 5 years before the marriage, he did not know that the accused was insane, for if he had known that such was the mental condition of the accused he would not have given his daughter in marriage to 372 him.
It is impossible to conceive that he would not have known that the accused was insane if he was really so, and particularly when it is the case of the accused that it was not kept secret but was well known to many people and to some of the witnesses, who came to depose for him.
A month and a half prior to the incident Chhaganlal had one to Ahmedabad for medical treatment and during that period the accused came from Ahmedabad to manage his father 's shop in his absence.
The fact that he was recalled from Ahmedabad was not disputed: but, while Natverlal said that the accused was recalled in order to manage Chhaganlal 's shop in his absence, Chhaganlal said that he was recalled because he was getting insane.
The best evidence would have been that of the relative in whose house the accused was residing in Ahmedabad.
But the relative was not examined.
It appears to us that the accused was serving in Ahmedabad in Monogram Mills and he was asked to come to the village of his father to attend to the latter 's business a month and a half before the incident, as the father was leaving for Ahmedabad for medical treatment.
Before the commencement of the trial in the sessions court on June 27, 1959, an application was filed on behalf of the accused, supported by an affidavit field by the father of the accused, praying that, as the accused had become insane, he should be sent for proper medical treatment and observation.
In that affidavit it was not stated that the accused was getting fits of insanity for the last 4 or 5 years and that he had one such fit at that time.
If that was a fact, one would expect the father to allege prominently the said fact in his affidavit.
These facts lead to a reasonable inference that the case of the accused that he had periodical fits of insanity was an afterthought.
The general statements of witnesses, P.W.s 1 to 6 that he had such fits must, therefore, necessarily be false.
therefore, hold that the accused had no antecedent history of insanity.
Now coming to the date when the incident took place, P.W. 7, the father of the accused, said that the accused was insane for 2 or 3 days prior to the incident.
His evidence further discloses that he and his wife had gone to Ahmedabad on the date of the incident and returned in the same evening.
If really the accused had a fit of insanity a day or two before the incident, is it likely that both the parents would have left him and ,,one to Ahmedabad" To get over this incongruity P.W. 7 said that he went to Ahmedabad to see a bridegroom for his daughter and also to get medicine for the accused.
But he did not say which doctor he consulted and wherefrom he purchased the medicines or whether in fact he bought any medicines at all.
If the accused had a fit of insanity.
is it likely that the wife would have slept with him in the same room? We must, therefore, hold that it had not been established that 2 or 3 days before the incident the accused had a fit of insanity.
373 Now we come to the evidence of what happened on the night of the incident.
Nobody except the accused knows what happened in the bed room.
P.W.s 2 to 7 deposed that on the 10th April, 1959, corresponding to Chaitra Sudi 1, between 3 and 4 a.m. they heard shouts of the deceased Kalavati to the effect that she was being killed; that they all went to the room but found it locked from inside; that when the accused was asked to open the door, he said that he would open it only after the Mukhi (P.W. 1) was called; that after the Mukhi came there, the accused opened the door and came out of the room with a blood stained knife in his hand; that the accused began talking irrelevantly and was speaking "why, you killed in ,; mother?" "why, you burnt my father 's house?"; that afterwards the accused sat down and threw dust and mud at the persons gathered there; and that he was also laughing without any cause.
In short, all the witnesses in one voice suggested that the accused was under a hallucination that the deceased had murdered his mother and burnt his father 's house and, therefore, he killed her in that state of mind without knowing what he was doing.
But none of these witnesses had described the condition of the accused immediately when he came out of the room, which they did so graphically in the sessions court, at the time when they made statements before the police.
in effect they stated before the police that the accused came out of the room with a blood stained knife in his hand and admitted that he had murdered his wife; but in the witness box they said that when the accused came out of the room he was behaving like a mad man and giving imaginary reasons for killing his wife.
The statements made in the depositions are really inconsistent with the earlier statements made before the police and they are, therefore, contradictions within the meaning of section 162 of the Code of Criminal Procedure.
We cannot place any reliance on the evidence of these witnesses: it is an obvious development to help the accused.
The subsequent events leading up to the trial make it abundantly clear that the plea of insanity was a belated after thought and a false case.
After the accused came out of the room, he was taken to the chora and was confined in a room in the chora.
P.W. 16, the police sub inspector, reached Bherai at about 9.30 a.m.
He interrogated the accused, recorded his statement and arrested him at about 10.30 a.m.
According to him, as the accused was willing to make a confession, he was sent to the judicial magistrate.
This witness described the condition of the accused when he met him thus: "When I went in the Chora he had saluted me and he was completely sane.
There was absolutely no sign of insanity and he was not behaving as an insane man.
He was not abusing.
He had replied to 374 my questions understanding them and was giving relevant replies.
And therefore I had sent him to the Magistrate for confession as he wanted to confess.
" There is no reason to disbelieve this evidence, particularly when this is consistent with the subsequent conduct of the accused.
But P.W. 9, who attested the panchnama, exhibit 19, recording the condition of the accused 's body and his clothes, deposed that the accused was murmuring and laughing.
But no mention of his condition was described in the panchnama.
Thereafter, the accused was sent to the Medical Officer, Mater, for examination and treatment of his injuries.
The doctor examined the accused at 9.30 p.m. and gave his evidence as P.W. 11.
He proved the certificate issued by him, exhibit 23.
Nothing about the mental condition of the accused was noted in that certificate.
Not a single question was put to this witness in the cross examination about the mental condition of the accused.
On the same day, the accused was sent to the judicial Magistrate, First Class, for making a confession.
On the next day he was produced before the said Magistrate, who asked him the necessary questions and gave him the warning that his confession would be used against him at the trial.
The accused was given time for reflection and was produced before the Magistrate on April 13, 1959.
On that date he refused to make the confession.
His conduct before the Magistrate, as recorded in exhibit 31, indicates that he was in a fit condition to appreciate the questions put to him and finally to make up his mind not to make the confession which he had earlier offered to do.
During the enquiry proceedings under Ch.
XVIII of the Code of Criminal Procedure, no suggestion was made on behalf of the accused that he was insane.
For the first time on June 27, 1959, at the commencement of the trial in the sessions court an application was filed on behalf of the accused alleging that he was suffering from an attack of insanity.
On June 29, 1959, the Sessions Judge sent the accused to the Civil Surgeon, Khaira, for observation.
On receiving his report, the learned Sessions Judge, by his order dated July 13, 1959, found the accused insane and incapable of making his defence.
On August 28, 1959, the court directed the accused to be sent to the Superintendent of Mental Hospital, Baroda, for keeping him under observation with a direction to send his report on or before September 18, 1959.
The said Superintendent sent his report on August 27, 1960, to the effect that the accused was capable of understanding the proceedings of the court and of making his defence in the court.
On enquiry the court held that the accused could understand the proceedings of the case and was capable of making his defence.
At the commencement of the trial, the pleader for the accused stated that the accused could understand the proceedings.
The proceedings before the 375 Sessions Judge only show that for a short time after the case had commenced before him the accused was insane.
But that fact would not establish that the accused was having fits of insanity for 4 or 5 years before the incident and that at the time he killed his wife he had such a fit of insanity as to give him the benefit of section 84 of the Indian Penal Code.
The said entire conduct of the accused from the time he killed his wife upto the time the sessions proceedings commenced is inconsistent with the fact that he had a fit of insanity when he killed his wife.
It is said that the situation in the room supports the ver sion that the accused did not know what he was doing.
It is asked, why the accused should have given so many stabs to kill an unarmed and undefended woman? It is said that it discloses that the accused was doing the act under some hallucination.
On the other hand the existence of the weapons in the room, the closing of the door from inside, his reluctance to come out of the room till the Mukhi came, even if that fact is true, would indicate that it was a premeditated murder and that he knew that if he came out of the room before the Mukhi came he might be manhandled.
Many sane men give more than the necessary stabs to their victims.
The number of blows given might perhaps reflect his vengeful mood or his determination to see that the victim had no escape.
One does not count his strokes when he commits murder.
We, therefore, do not see any indication of insanity from the materials found in the room, on the other hand they support the case of premeditated murder.
To summarize: the accused did not like his wife; even though he was employed in Ahmedabad and stayed there for about 10 months, he did not take his wife with him; he wrote a letter to his father in law to the effect that the accused did not like her and that he should take her away to his house; the father in law promised to come on Chaitra Sudhi 1; the accused obviously expected him to come on April 9, 1959 and tolerated the presence of his wife in his house till then; as his father in law did not come on or before April 9, 1959, the accused in anger or frustration killed his wife.
It has not been established that he was insane; nor the evidence is sufficient even to throw a reasonable doubt in our mind that the act might have been committed when the accused was in a fit of insanity.
We, therefore, though for different reasons, agree with the conclusion arrived at by the High Court and dismiss the appeal.

summary/full:
The appellant was charged with murdering his wife.
Before the Sessions Judge a defence was set up that the appellant was insane when the incident took place and was not capable of understanding the nature of his act.
The Sessions Judge rejected the plea of insanity and convicted him under section 302 of the Indian Penal Code.
On appeal the High Court confirmed the conviction.
Held (i) There is no conflict between the general burden to prove the guilt beyond reasonable doubt, which is always on the prosecution and which never shifts, and the special burden that restson the accused to make out his defence of insanity.
(ii) The doctrine of burden of proof in the context of the plea of insanity may be stated in the following propositions:(1).The prosecution must prove beyond reasonable doubt that the accused had committed the offence with the requisite, mensrea; and the burden of proving that always rests on the prosecution from the beginning to the end of the trial.
(2) There is a rebuttable presumption that the accused was not insane, when he committed the crime, in the sense laid down by section 84 of the Indian Penal Code: the accused may rebut it by placing before the court all the relevant evidence oral, documentary or circumstantial, but the burden of proof upon him is no higher than that which rests upon a party to civil proceedings.
(3) Even if the accused was not able to establish conclusively that he was insane at the time he committed the offence, the evidence placed before the court by the accused or by the prosecution may raise a reasonable doubt in the mind of the court as regards one or more of the ingredients of the offence, including mens rea of the accused and in that case the court would be entitled to acquit the accused on the ground that the general burden of proof resting on the prosecution was not discharged.
K. M. Nanavati vs State of Maharashtra, [1962] Supp. 1 S.C.R.567.
followed.
Ramhitram vs State, A.I.R. 1956 Nag. 187, disapproved.
Kamla Singh vs State, A.I.R. 1955 Pat.
209, approved.
H. M. Advocate vs Fraser, (1878)4 Couper 70, referred to.
(iii)The court can permit a person, who calls a witness, to put questions to him which might be put in cross examination, at any stage of the examination of the witness, provided it takes care to give an opportunity to the accused to cross examine him on the answers elicited which do not find place in the examination in chief.
362 Section 137 of the Evidence Act, gives only the three stages in the examination of a witness, and it has no relevance to the question when a party calling a witness can be permitted to put to him questions under section 154 of the Evidence Act: that is governed by the provisions of section 154 of the said Act, which confers a discretionary power on the court to permit a person who calls a witness to put any questions to him which might be put in cross examination by the adverse party.
Tahsildar Singh vs The State of U.P., [1959] SUPP.
2 S.C.R. 875, followed.