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<s>[INST] Summarize the judgementAppeal No. 3 of 1951.
, Appeal from the Judgment and Order dated March 11, 1949, of the High Court of Judicature at Madras (Satyanarayana Rao and Viswanatha Sastri JJ.) in Original Side Appeal No. 3 of 1947, &rising out of the Judgment and Order dated November 15, 1946, of Clark J. and made in the exercise of the Ordinary Original Civil Jurisdiction of the High Court in Application No. 599 of 1946.
M. C. Setalvad (Attorney General for India) (A. Balasubramanian, with him) for the appellant.
N. Baja Gopala Iyengar for the respondent.
December 9.
The Judgment of Mehr Chand Mahajan, Das and Ghulam Hasan JJ. was delivered by Das J. Vivian Bose J. delivered a separate Judgment.
DAS J.
This appeal arises out of an application made by the Official Receiver representing Sha Mulchand & Company Ltd. (in liquidation) under section 38 of the Indian Companies Act for rectification of the register of the Jawahar Mills Ltd. Sha Mulchand & Company Ltd. (hereinafter referred to as " the Company") was incorporated in 354 1937 as a private limited company.
At all material times it consisted of two members,.
T. V. T. Govindaraju Chettiar and K. N. Sundara Ayyar.
The Jawahar Mills Ltd. (hereinafter called " the Mills") was also incorporated in 1937 with an authorised capital of Rs. 10,00,000 divided into one lac shares of Rs. 10 each.
The Company was the managing agent of the Mills from its inception and applied for and was allotted 5,000 ten rupee shares Nos. 1.5048 to 20047 on which Rs. 5 per share had been paid.
The Company continued to act as the managing agent of the Mills till the 30th June, 1939, on which date it resigned the managing agency.
Prior to the Company 's resignation the two members of the Company had entered into an agreement with one M. A. Palaniappa Chettiar, a partner of the incoming managing agency firm, up on certain terms which need not be referred to in greater detail.
Within two months after the change of managing agents, the Mills made two calls, namely, one on the 22nd August, 1939, for Rs. 2 per share payable on the 1st October, 1939, and the other on the 1st October, 1939, for Rs. 3 payable, on the 1st December, 1939.
The Company did not pay either of the calls.
On the 23rd January, 1940, Govindaraju Chettiar was adjudged insolvent on the application of Sundara Ayyar.
This insolvency of Govindaraju Chettiar was eventually annulled in 1944.
During this period Govindaraju Chettiar, in law ', ceased to be a director of the Company, although it is alleged that he nevertheless continued to take part in the management of the Company.
By a resolution of the Board of Directors of the Mills passed on the 12th August, 1940, the new managing agents were empowered to give notices to such persons as had not paid the allotment money and the call money within the date fixed and to intimate them that in default their shares would be ' forfeited.
A notice was issued on the 16th September, 1940, and two copies thereof are said to have been sent to Sundara Ayyar and Govindaraju Chettiar.
355 No payment having been made, the 5,000 shares held by the Company were forfeited by a resolution of the Board of Directors of the Mills.
The auditor of the Mills having pointed out that the purported forfeiture was irregular and illegal, this forfeiture was cancelled.
By a resolution passed by circulation on the 26th February, 1941, the Board of Directors of the Mills resolved that a notice be sent to the Company informing it that it was in arrears with calls to the extent of Rs. 25,000, that the amount must be paid on or before the 31st March, 1941, and that, in default, its shares would be forfeited.
A notice dated the 15th March, 1941, was accordingly addressed to the Company and sent by registered post with acknow ledgment due.
It appears that the notice was actually posted on the 17th March, 1941, and was received by Govindaraju Chettiar on the 20th March, 1941.
The Company did not pay the arrears of calls.
On the 5th September, 1941, the Board of Directors of the Mills resolved that " the 5,000 shares Nos. 15048 20047 standing in the name of the Company have been forfeited.
" On the 10th September, 1941, the Mills wrote a letter to the Company informing the latter that the Directors of the Mills bad at their meeting held on the 5th September, 1941, forfeited the 5,000 shares.
There is no dispute that this letter which was sent by registered post was returned undelivered.
On the 1st October, 1941, an entry was made in the share ledger of the Mills recording that the 5,000 shares of the Company had been forfeited.
On the 16th November, 1941, these 5,000 shares were reallotted to 14 different persons and on the 17th November, 1941, a letter was sent to the Company intimating that the forfeited shares had been reallotted and calling upon the Company to send back to the Mills all the documents relating to the original allotment of the 5,000 shares to the Company.
In the meantime on the 26th August, 1941, by an order made by the Registrar of Joint Stock Companies the Company was struck off the register of companies under section 247 356 of the Indian Companies Act.
This order of 'the Registrar was published in the Official Gazette on the 9th September, 1941, i.e., four days after the shares were forfeited and one day before the notice intimating the fact of forfeiture was sent in a registered cover which was, however, returned undelivered.
Under section 247 (5) of the Indian Companies Act the Company stood dissolved on and from the date of such publication.
The Mills having come to know of the dissolution of the Company applied to the High Court (O.P. No. 10 of 1942) praying that the name of the Company be restored to the register of companies and that after such restoration was duly advertised the Company be wound up by the Court.
A similar application was made on the 11th December, 1941, by the Income tax authorities (O.P. No. 11 of 1942).
On the 23rd February, 1942, Sundara Ayyar filed an affidavit contending, amongst other things that the Directors of the Mills had no power to forfeit the shares.
On the 2nd April, 1942, however, O.P. No. 10 of 1942 was compromised, and the Mills received Rs. 11,000 from Sundara Ayyar in full satisfaction of their claim against the Company.
On the 25th June, 1942, O.P. No. 11 of 1942 was also compromised and Sundara Ayyar paid up the claim of the Income tax authorities.
The two petitions for restoration of the Company were accordingly dropped.
On the 27th June, 1942, Sundara Ayyar filed a suit against the Mills and others including Palaniappa Chettiar claiming a declaration that the forfeiture by the Mills of the 5,000 shares was illegal and inoperative and directing the Mills to pay to the plaintiff and the third defendant representing the estate of Govindaraju Chettiar the value of the forfeited shares with dividend or interest thereon and directing Palaniappa Chettiar to pay the plaintiff and the third defendant the sum of Rs. 25,000.
This suit was dis missed on the 17th November, 1943, on the ground that Sundara Ayyar, who was only a member of the dissolved Company, had no locus standi and could 357 have no relief personally.
Sundara Ayyar filed an appeal therefrom which was dismissed as against the Mills but the case was remanded to the trial Court for the trial of his claim as against the fourth defendant, Palaniappa Chettiar.
During the pendency of Sundara Ayyar 's appeal he on the 12th August, 1944, filed O.P. No. 199 of 1944 for the restoration of the Company.
On that application an order was made on the 16th February, 1945, that the name of the Company be restored to the register of companies, that the Company be deemed to have continued in existence as if its name had never been struck off, that such restoration be advertised and that the Company be wound up by the Court and the Official Receiver do forthwith take charge of the assets and liabilities of the Company.
It was further ordered that the Official Receiver do recognise that as between the Mills and the Company, the Mills should be regarded as having been duly paid only Rs. 11,000 out of the total debt of Rs. 25,550 due ' to the Mills.
By an order made on the 21st January, 1946, leave was given to the Official Receiver to take appropriate steps regarding the 5,000 shares purported to have been forfeited by the Mills.
Accordingly on the 5th March, 1946, the Official Receiver, in the name of the Company, took out the present summons calling upon all parties concerned to show cause why the share register of the Mills should not be rectified by restoring the name of the Company to the said register in respect of 5,000 shares numbering 15048 20047 and why such other alternative or consequential relief should not be granted to the applicant as might be just and necessary in the circumstances of the case.
The Mills contended, in opposition to that application, that the shares had been properly forfeited, that the Company was, on the principles of estoppel, acquiescence and laches, precluded from challenging the forfeiture, that the application was barred by limitation and that the shares having already been allotted to other persons, who had not been made 358 parties to the application, order for rectification of the register in respect of those shares could be made.
The summons came up for hearing before Mr. Justice Clark.
The learned Judge, by his judgment dated the 15th November, 1946, held that the notice dated the 15th March, 1941, which was posted on the 17th March, 1941, and delivered on the 20th March 1941, and on which the resolution of forfeiture passed on the 5th September, 1941, was founded, was not in conformity with the provisions of articles 29 and 30 of the articles of association of the Company which required 14 clear days ' notice.
The learned judge further held that the plea of estoppel, acquiescence and laches was untenable, that article 49 of the Limitation Act did not apply either expressly or by way of analogy to the present application and that article 120, which prescribed a period of six years from the date when the right to sue accrued, would, by analogy, apply to the present proceedings and that so applied the present proceedings must be held to be within time.
Having disposed of the controversy on the above points it remained to consider the form of the order which could properly be made on the application.
It is quite clear that the specific shares having already been allotted to 14 different persons and those persons not being then before the Court, the Court could not then and there direct rectification of the register by restoring the name of the Company to the share register of the Mills in respect of those identical shares.
There was nevertheless nothing to prevent the Court even at that stage to give notice of the application to the persons to whom the shares had been reallotted and/or those who were holding the shares at the time and after thus adding them as parties thereto to make the appropriate order of rectification and, if thought fit, to also award damages to the Company.
There were, however, 16,000 shares of Rs. 10 each yet unissued.
After discussing the matter with learned advocates on both sides to which, discussion a reference will be made hereafter the 359 learned Judge, in the belief that the advocates for the parties had agreed as to the form of the order, directed that the Mills do rectify their register by inserting the name of the applicant Company as owner of 5,000 shares out of the unissued shares of Rs. 10 each and that on such insertion the Company do on or before the 15th January, 1947, pay to the Mills Rs. 25,000, being the amount of calls in arrears.
Pursuant to further directions given by the learned Judge on the 7th January, 1947, the Mills on the 10th January, 1947, received Rs. 25,000 and allotted 5,000 shares.
Although the Mills thus acted upon the order they, nevertheless, on the 6th February, 1947, filed an appeal against the order.
That appeal came up for hearing before a Bench consisting of Satyanarayana Rao and Viswanatha Sastri JJ.
It was not disputed before the appeal Court that the forfeiture was invalid, but the contentions urged were that by reason of the irregularity the forfeiture was only voidable and not void and that as the forfeiture was only voidable it was open to the Company to waive or abandon its right to dispute the validity of the forfeiture and that in fact, by its conduct, it had done so, that the claim to rectify the register was barred by limitation and that in any event rectification was impossible because the shares were not available in specie, the same having been reallotted to other persons.
The learned Judges by their judgment dated the 11th March 1949, held that the forfeiture was invalid, that the application was not barred by limitation for it was covered by article 120 of the Limitation Act.
The learned Judges recognised that where a period of limitation was prescribed for a suit or a proceeding mere delay was no bar unless it was of such a character as would lead to an inference of abandonment of the right or unless it: was established that the person against whom the action or proceeding was instituted was actually prejudiced by reason of such delay.
The learned Judges agreed with the 47 360 trial Court that no plea of acquiescence, waiver or estoppel had been established in the present case.
The learned Judges, nevertheless, thought that the question of abandonment of the right and prejudice to the appellant by reason of the delay stood on a different footing.
Then after referring to certain conduct on the part of Govindaraju Chettiar and Sundara Ayyar the learned Judges concluded that by reason of the long delay in reviving the Company and in taking proceedings under section 38 of the Indian Companies Act the Mills had been induced to put themselves in a situation in which it became impossible for them to restore the Company to the register in respect of those 5,000 shares and that in view of this conduct, if the applicants were Govindaraju Chettiar and Sundara Ayyar, it would have been a case in which relief would have been refused in the light of the principles which the learned Judges deduced from the judicial decisions referred to by them.
Then referring to the decision in Smith, Stone & Knight vs Birmingham Corporation (1) and certain text books the learned Judges took the view that it was too late in the day to adhere to the strict formalism laid down in Salomon 's case (2) and that as the tendency of modern decisions was to lift the veil of corporate personality and disregard the corporate form, the conduct of its only two members had disentitled the company from claiming the relief of rectification.
The learned Judges further held that there was no legal basis on which the form of the order could be supported.
On reading the judgment of the trial Judge and after hearing the senior advocate appearing for the Mills the learned Judges felt unable to agree that the learned advocate had agreed to the substitution of, the 6,000 out of the unissued shares for the 5,000 forfeited shares.
The resilt was that the appeal was allowed and the order of the trial Judge was set aside.
The Company by its Official Receiver has now come up before this Court with leave granted by the High Court (1) (2) ; 361 under sections 109 and 110 of the Code of Civil Procedure.
The appeal Court, it will be observed, reversed the decision of the trial Judge and decided the appeal against the Company on two grounds only, namely, (1) that the Company had by the conduct of its two members abandoned its right to challenge the forfeiture, and (2) that the form of the order could not be supported as one validly made under section 38 of the Indian Companies Act.
The learned AttorneyGeneral, appearing in support of this appeal, has assailed the soundness of both these grounds.
The learned Attorney General contends, not without considerable force, that having, in agreement with the trial Coury, held that no plea of acquiescence, waiver or estoppel had been established in this case, the appeal Court should not have allowed the Mills to raise the question of abandonment of right by the Company, inasmuch as no such plea of abandon ment had been raised either in the Mills ' affidavit in opposition to the Company 's application or in the Mills grounds of appeal before the High Court.
Apart from this, the appeal Court permitted the Mills to make out a plea of abandonment of right by the Company ,as distinct from the pleas of waiver, acquiescence and estoppel and sought to derive support for this new plea from the well known cases of Prendergast vs Turton(1), Clark & Chapman vs Hart(2) and Jones vs North Vancouver Land and Improvement, Co.(3).
A perusal of the relevant facts set out in the several reports and the respective judgments in the above cases will clearly indicate that apart from the fact that some of them related to collieries which were treated on a special footing, those cases were really cases relating to waiver or acquiescence or estoppel.
Indeed in Clarke 's case (2) while Lord Chelms ford referred to the decision in Prendergast 's case(1) as a case of abandonment of right, Lord Wensleydale read it as an instance of acquiescence and estoppel.
Unilateral act or conduct of a person, (1) ; (3) [1910] A.C. 317.
(2) 6 H.L.C. 632; 10 E.R. I443.
362 that is to sky act or conduct of one person which is not relied upon by another person to his detriment, is nothing more than mere waiver, acquiescence or laches, while act or conduct of a person amounting to an abandonment of his right and inducing another person to change his position to his detriment certainly raises the bar of estoppel.
Therefore, it is not intelligible how, having held that no plea of waiver, acquiescence or estoppel had been established in this case, the appeal Court could, nevertheless, proceed to give relief to the Mills on the plea of abandonment by the Company of its rights.
If the facts on record were not sufficient to sustain the plea of waiver, acquiescence or estoppel, as hold by both the Courts, we are unable to see how a plea of abandonment of right which is an,aggravated, form of waiver, acquiescence or laches and akin to estoppel could be sustained on the self same facts.
Further, whatever be the effect of mere waiver, acquiescence or laches on the part of a person on his claim to equitable remedy to enforce his rights under an executory contract, it is quite clear, on the authorities, that mere waiver, acquiescence or laches which does not amount to an abandon ment of his right or to an estoppel against him cannot disentitle that person from claiming relief in equity in respect of his executed and not merely executory interest.
See per Lord Chelmsford in Clarke 's case (1) at page 657.
Indeed, it has been held in The Garden Gully United Quartz Mining Company vs Hugh McLister(2) that mere laches does not disentitle the holder of shares to equitable relief against an invalid declaration of forfeiture.
Sir BarnesPeacook in delivering the judgment of the Privy Council observed at pages 56 67 as follows: There is no evidence sufficient to induce their Lordships to hold that the conduct of the plaintiff did amount to an abandonment of his shares, or of his interest therein, or estop him from averring that he continued to be the proprietor of them.
There certainly is no evidence to justify such a conclusion (1) ; 6 H.L.C. 632: (2) L. R.1 App.
39. 363 with regard to his conduct subsequent to the advertisement of the 30th of May, 1869.
In this case, as 'In that of Prendergast vs Turton(1), the plaintiff 's interest was executed.
In other words, he had a legal interest in his shares and did not require a declaration of trust or the assistance of a Court of Equity to create in him an interest in them.
Mere laches would not, therefore, disentitle him to equitable relief:, Clarke and Chapman vs Hart(2).
It was upon the ground of abandonment, and not upon that of mare laches, that Prendergast vs Turton(1) was decided.
" Two things are thus clear, namely, (1) that abandonment of right is much more than mere waiver, acquiescence or laches and is something akin to estoppel if not estoppel itself, and (2) that mere waiver, acquiescence or laches which is short of abandonment of right or estoppel does not disentitle the holder of shares who has a vested interest in the shares from challenging the validity of the purported forfeiture of those shares.
In view of the decision of the Courts below that no case of waiver, acquiescence, laches or estoppel has been established in this case it is impossible to hold that the principles deducible from the judicial decisions relied upon by the appeal Court have disentitled the Company to relief in this case.
The matter does not rest even here.
Assuming.
, but not conceding, that the principle of piercing the veil of corporate personality referred to in Smith, Stone & Knight vs The Birmingham Corporation (3) can at all be applied to the facts of the present case so as to enable the Court to impute the acts or conduct of Govindaraju Chettiar and Sundara Ayyar to the Company, we have yet to inquire whether those acts or conduct do establish such abandonment of rights as would, according to the decisions, disentitle the plaintiff from questioning the validity of the purported declaration of forfeiture.
There can be 'no question that the abandonment, if any, must be inferred from acts or conduct of the Company as such ' or, on the above principles, of its two members subsequent to (1) ; (3) (2) 6 H.L.C. 632: 10 E.R. I443.
364 the date of the forfeiture, for it is the right to challenge the forfeiture that is said to have been abandoned. 'In order to give rise to an estoppel against the Company, such acts or conduct amounting to abandonment must be anterior to the Mills ' changing its position to its detriment.
The resolution for forfeiture was passed on the 6th September, 1941.
The five thousand forfeited shares were allotted to 14 persons on the 16th November, 1941, and it is such ,allotment that made it impossible for the Mill& to give them back to the Company.
In order, therefore, to sustain a plea of abandonment of right or estoppel, it must be shown that the Company or either of its two members had done some act and/or had been guilty of some conduct between the 6th September, 1941, and the 16th November, 1941.
No such act or conduct during such period has been or can be pointed out.
On being pressed advocate for the Mills refers us to the conduct of Sundara Ayyar in opposing O.P. No. 10 'of 1942 filed by the Mills and O.P. No. 11 of 1942 by the Income tax authorities for restoring the Company to the register of companies and it is submitted that such conduct indicates that Sundara Ayyar had accepted the validity of the forfeiture.
This was long after the Mills had reallotted the forfeited shares.
Further, a perusal of paragraph 9 of the affidavit in opposition filed by Sundara Ayyar in O.P. No. 10 of 1942 will clearly show that he not only did not accept the forfeiture as valid but actually repudiated such forfeiture as wholly beyond the competence of the Board of Directors of the Mills.
The reason for opposing the restoration of the Company may well have been that Sundara Ayyar desired, at all cost, to avoid his eventual personal liability as a shareholder and director of the Company.
In any case, Sundara Ayyar did make it clear that he challenged the validity of the purported forfeiture of shares by the Mills and in this respect this case falls clearly within the decision in Clarke 's case (1) relied upon by the appeal Court.
The only other conduct of Sundara Ayyar relied on by learned advocate for the Mills in (1) ; 6 H.L.C. 632; 365 support of the appeal Court 's decision on this point is that Sundara Ayyar proceeded with his suit against Palaniappa Chettiar even after his suit as well as his appeal had been dismissed as against the Mills.
In that suit Sundara.
Ayyar sued the Mills as well as Govindaraju Chettiar and the Official Receiver of Salem representing the latter 's estate and Palaniappa Chettiar.
In the plaint itself the validity of the forfeiture was challenged.
The claim against Palani appa Chettiar was in the alternative and it was founded on the agreement of the 30th June, 1939.
The suit was dismissed as against the Mills only on the technical ground that Sundara Ayyar had no locus standi to maintain the suit.
The contention of the Company that the forfeiture was invalid and the claim for rectification of the share register of the Mills by restoring the name of the Company cannot possibly have been affected by this decision.
Sundara Ayyar 's claim against Palaniappa Chettiar was based on the agreement of 1939 and it was formulated as an alternative personal claim.
In view of the clear allegation in the plaint that the forfeiture was invalid and not binding on the Company, the continuation of the suit by Sundara Ayyar to enforce his personal claim against Palaniappa Chettiar cannot be regarded as an abandonment by Sundara Ayyar of the right of the Company.
It must not be overlooked that the Company stood dissolved on that date and Sundara Ayyar had no authority to do anything on behalf of the Company.
In our opinion there is no evidence of abandonment of the Company 's right to challenge the validity of the purported forfeiture.
The second point on which the appeal Court decided the appeal against the Company was that the form of the order made by the trial Court could not be supported as one validly made under section 38 of the Indian Companies Act.
It will be recalled that having disposed of all the points of controversy against the Mills and in favour of the Company the trial Judge had to consider the ' form of the order Which could properly be made in favour of the 366 Company.
In the summons the Company had asked for rectification of the register by restoring the name of the Company to the register in respect of 5,000 shares numbering 15048 to 20047.
It was agreed by learned advocates on both sides before the trial Court that it would, in the circumstances, be impossible to make an order for rectification with respect to those specific shares which, as already stated, had been reallotted to other persons who were not parties to the proceedings.
The Mills had also reduced its capital by having the face value of the 84,000 shares which had been issued reduced by repaying to the shareholders Rs. 5 in respect of each of those shares.
There were, however, 16,000 unissued shares of Rs. 10 each which were not affected by the reduction.
While, therefore, it was clearly impossible for the Court to direct that the Company should be replaced on the register in respect of its original shares, the Court could, under section 38, give notice to the persons to whom the shares had been reallotted or those claiming under them and make them parties to the proceedings and then make an appropriate order for ' rectification and, if necessary, also direct the Mills to pay damages under that section.
This being the situation learned advocate for the Mills had to decide upon his course of action.
What happened in Court will appear from the following extract from the judgment of the trial Court: " It is agreed by both parties that the proper order will be for the applicant Company to be placed on the register in respect of 5,000 of the unissued rupees 10 shares and I order accordingly.
In this case as the parties consent to the matter being disposed of, by allotting to the applicant unissued shares, there can, it seems to me, be no order for payment of the dividends.
Counsel for the respondent Company leaves the solution of this difficulty to me. . . . .
The suggestion of the applicant Company is that it is prepared to forego any claim to the accrued dividends if it is not required to pay interest on the outstanding call money.
This seems to me to be a very 367 reasonable suggestion. . .
I direct accordingly that on insertion of the name of the applicant Company as owner of 6,000of the unissued shares the applicant Company shall pay to the respondent company only Rs. 25,000 being the amount of calls in arrears.
" The appeal Court, however, went behind this record of the proceedings that took place before the trial Court and heard the learned senior advocate as to what had happened in Court and after hearing the senior advocate for the Mills found itself unable to agree with the contention that the learned advocate for the Mills had agreed to the substitution of 5,000 unissued shares for the shares forfeited.
No affidavit of the learned senior advocate was filed before the trial Court for the rectification of what is 'low alleged to have been wrongly recorded by the trial Judge, as suggested by the Privy Council in Madhu Sudan Chowdhri vs Musammat Chandrabati Chowdhrain (1) and other cases referred to in Timmalapalli Virabhadra Rao vs Sokalchand Chunilal & Others (2).
While we do not consider it necessary or desirable to lay down any hard and fast rule, we certainly take the view that the course suggested by the Privy Council should ordinarily be taken.
It. appears that at the time when the application was made for leave to appeal to the Federal Court an affidavit sworn by G. Vasantha Pai, the junior advocate for the Mills, was filed before the Court dealing with that application.
Paragraph 5 of that affidavit runs as follows: "During the trial every question was argued on behalf of the respondent company and no point was given up.
This will be clear from the fact that till we reached the penultimate paragraph of the judgment beginning 'It now remains to consider, etc. ' all the issues are dealt with by the learned Judge.
The agreement was on the specific form of the order on the basis of his Lordship 's judgment and without prejudice to the respondent company 's rights.
What (1) (2) 48 368 was agreed to was "Proper order" on the basis of his Lordship 's judgment which by then had been dictated.
The respondent company no more consented to the order that the appellant consented to have his application dismissed when its counsel agreed that it was impossible to make an order in terms of the Judge 's summons.
" The appeal Court understood the stand taken by the learned senior advocate as follows: " He seems to have &greed only as an alternative that if all his contentions were overruled and the learned Judge thought that notwithstanding the difficulty in the way of granting the relief for rectification the applicant company should be restored to the register, the only shares available being the 16,000 shares of Rs. 10 each unissued, the applicant company could be recognised as a shareholder in respect of 5,000 out of those shares. . . ." It is quite clear from the judgment of the trial Court, paragraph 5 of the junior advocate 's affidavit and the statement of the learned senior advocate as recorded by the appeal Court that the agreement was solely and simply as to the specific form of the order, without prejudice to the Mills ' right to challenge the correctness of the findings of the trial Court on the material issues.
In other words, all that learned advocate for the Mills desired to guard himself against was that the agreement should not preclude the Mills from preferring an appeal against the decision of the learned Judge on the merits.
The reservation was as to the right of appeal challenging the findings on the merits and the agreement was only as to the form of the order.
This limited agreement certainly implied that the Mills agreed to be bound by the order only if the Mills failed in their appeal on the merits ' In short, the consent covered only the form of the order and nothing else so that if the Mills succeeded in their appeal the order would go, although advocate has agreed to its form but that if the Mills failed in their contention as to the correctness of the findings of the learned trial Court on the 369 different questions on merits it would no longer be open to them to challenge the order only on the ground of the form of the order.
In our judgment the Mills cannot attack the form of the order to which their counsel consented.
Learned advocate for the Mills has raised the question of limitation.
He referred us to articles 48 and 49 of the Limitation Act but did not strongly press his objection founded on those articles.
We agree with the trial Court and the Court of appeal that those two articles have no application to this case.
A claim for the rectification of the register simpliciter does not necessarily involve a claim for the return of the share scrips and in this case there was, in fact, no prayer for the return of shares or the scrips and, therefore, these two articles can have no application.
Learned advocate, however, strongly relies on article 181 of the Limitation Act.
That article has, in a long series of decisions of most, if not all, of the High Courts, been held to govern only applications under the Code of Civil Procedure.
It may be that there may be divergence of opinion even within the same High Court but the preponderating view undoubtedly is that the article applies only to applications under the Code.
The following extract from the judgment of the Judicial Committee in Hansraj Gupta vs Official Liquidators, Dehra Dun Mussoorie Electric Tramway Company Limited (1) is apposite: " It is common ground that the only article in that schedule which could apply to such an application is article 181 : but a series of authorities commencing with Rai Manekbai vs Manekji Kavasji (2) have taken 'the view that article 181 only relates to applications under the Code of Civil Procedure, in which case no period of limitation has been prescribed for the application.
But even if article 181 does apply to it, the period of limitation prescribed by that article is three years from the time when the right to apply accrued, which time would be not earlier than the (1) (1933) 60 I.A. 13 at p. 20.
(2) 370 date of the winding up order, March 26, 1926.
The application of the liquidators was made on March 26, 1928, well within the three years.
The result is that from either point of view the application by the liquidators, if otherwise properly made under and within the provisions of section 186 of the Indian Companies Act, is not one which must be dismissed by reason of section 3 of the Indian Limitation Act.
It is either an application made within time, or it is an application made for which no period of limitation is prescribed.
The case may be a casus omissus.
If it be so, then it is for others than their Lordships to remedy the defect.
" Learned advocate for the Mills, however, points out that the reason for holding that article 181 was confined to applications under the Code was that the article should be construed ejusdem generis and that, as all the articles in the third division of the schedule to the Limitation Act related to applications under the Code, article 181, which Was the residuary article, must be limited to applications under the Code.
That reasoning, it is pointed out, is no longer applicable because of the amendment of the Limitation Act by the introduction of the present articles 158 and 178.
These articles are in the third division which governs applications but they do not relate to applications under the Code but to one under the Arbitration Act and, therefore, the old reasoning can no longer hold good.
It is urged that it was precisely in view of this altered circumstance that in Asmatali Sharif vs Mujahar Ali Sardar(1) a Special Bench of the Calcutta High Court expressed the opinion that an application for pre emption by a non notified co sharer should be governed by article 181 of the Limitation Act.
A perusal of that case, however, will show that the Special Bench did not finally decide that question in that case.
In Hurdutrai Jagadish Prasad vs Official Assignee of Calcutta(2) a Division Bench of the Calcutta High Court consisting of Chief Justice Harries and Mr. Justice Mukherjea who had delivered (1) (2) 371 the judgment of the Special Bench clearly expressed the view that article 181 of, the Limitation Act applied only to applications under the Civil Procedure Code and did not apply to an application under section 56 of the Presidency Towns Insolvency Act Mukherjea J. who also delivered the judgment of the Division Bench explained the observations made by him in the Special Bench case by pointing out that the entire procedure for an application under section 26 (F) of the Bengal Tenancy Act was regulated by the Civil Procedure Code and, therefore, an application for pre emption was, as it were, an application made under the Civil Procedure Code.
Subsequently in Sarvamangala Dasi vs Paritosh Kumar Das(1) G.N. Das J. who was also a member of the Special Bench in the first ' mentioned case expressed the opinion, while sitting singly, that article 181 was not confined to applications under the Code.
His Lordship 's attention does not appear to have been drawn to the case of Hurdutrai Tagadish Prasad(2).
It does not appear to us quite convincing, without further argument, that the mere amendment of articles 158 and 178 can ipso facto alter the meaning which, as a result of a long series of judicial decisions of the different High Courts in India, came to be attached to the language used in article 181.
This long catena of decisions may well be said to have, as it were, added the words " under the Code " in the first column of that article.
If those words had actually been used in that column then a subsequent amendment of articles 158 and 178 certainly would not have affected the meaning of that article.
If, however, as a result of judicial construction, those words have come to be read into the first column as if those words actually occurred therein.
we are not of opinion, as at present advised, that the subsequent amendment of articles 158 and 178 must necessarily and automatically have the effect of altering the long acquired meaning of article 181 on the sole and simple ground that after the amendment the reason on which the old construction was founded is no longer available.
We need (1) A.I.R. 1952 Cal. 689.
(2) 372 not, however, on this occasion, pursue the matter further, for we are of the,opinion that even if article 181 does apply to the present application it may still be said to be within time.
The period of limitation prescribed by that article is three years from the time when the right to apply accrues.
" It is true that a further notice after the shares are forfeited, is not necessary to complete the forfeiture of the shares See Knight 's case(1)], but it is difficult to see how a person whose share is forfeited and whose name is struck out from the register can apply for rectification of the register until he comes to know of the forfeiture.
The same terminus a quo is also prescribed in Article 120 of the Limitation Act.
In O.R.M.O. M.SP.
(Firm) vs Nagappa Chettiar(2) which was a suit to recover trust property from a person who had taken it, with notice of the trust, by a transaction which was a breach of trust, the Privy Council approved and applied the principles of the earlier Indian decisions referred to therein to the case before them and held that the time began to run under article 120 after the plaintiff came to know of the transaction which gave him the right to sue.
On the same reasoning we are prepared to extend that principle to the present application under article 181.
If article 181 applies then time began to run after the Company came to know of its right to sue.
It is not alleged that the Company had any knowledge of the forfeiture between the 5th September, 1941, when the resolution of forfeiture was passed and the 9th September, 1941, when the Company became defunct.
After the last mentioned date and up to the 16th February, 1945, the Company stood dissolved and no knowledge or notice can be imputed to the Company during this period.
Therefore, the Company must be deemed to have come to know of its cause of action after it came to life again and the present application was certainly made well within three years after that event happened on the 16th February, 1945.
If article 181 does not apply then the only article that can (1) (2) I.L.R. 373 apply by analogy is article 120 and the application is also within time.
In either view this application cannot be thrown out as barred by limitation.
The result, therefore, is that this appeal must succeed.
We set aside the judgment and decree of the High Court in appeal and restore the order of the trial Court.
The appellant will be entitled to the costs of the appeal in the High Court as well as in this Court.
BOSE J. I agree with the conclusions of my learned brothers and also with their reasoning generally but lest it be inferred that I am assenting to a far wider proposition than is actually the case, I deem it advisable to clarify my position about abandonment and waiver.
Though the usage of these words in cases of the present kind has the sanction of high authority, they are, in my opinion, inapt and mislead ing in this class of case.
In order to appreciate this it will be necessary to hark back to first principles.
In the first place, waiver and abandonment are in their primary context unilateral acts.
Waiver is the intentional relinquishment of a right or privilege.
Abandonment is the voluntary giving up of one 's rights and privileges or interest in property with the intention of never claiming them again.
But except where statutory or other limitations intervene, unilateral acts never in themselves effect a change in legal status because it is fundamental that a man cannot by his unilateral action affect the rights and interests of another except on the basis of statutory or other authority.
Rights and obligations are normally inter twined and a man cannot by abandonment per se of his rights and interests thereby rid himself of his own obligations or impose them on another.
Thus, there can be no abandonment of a tenancy except on statutory grounds (as, for example, in the Central Provinces Tenancy Act, 1920) unless there is acceptance, express or implied, by the other side.
It may, for example in a case of tenancy, be to the landlord 's interest to keep the tenancy alive and so also in the case 374 of shares of a company.
It may be to the interests of the company and the general body of shareholders to refrain from forfeiture if, for example, the value of unpaid calls exceeds the market value of the shares.
Such a position was envisaged in Garden Gully United Quartz Mining Co. vs Hugh McLister(1).
So also with waiver.
A long catena of illustrative cases will be found collected in B. B. Mitra 's Indian Limitation Act, Thirteenth Edition, pages 447 and 448.
This fundamental concept brings about another repercussion.
Unless other circumstances intervene, there is a locus paenitentiae in which a unilateral abandonment or waiver can be recalled.
It would be otherwise if the unilateral act of abandonment in itself, and without the supervention of other matters, effected a change in legal status.
In point of fact, it is otherwise when, as in the statutory example I have quoted, the law intervenes and determines the tenancy.
It is, therefore, in my opinion, fundamental that abandonment and waiver do not in themselves unilaterally bring about a change in legal status.
Something else must intervene, either a statutory mandate or an act of acceptance, express or implied, by another person, or, as Lord Chelmsford put it in Clarke & Chapman vs Hart(1), acts which are equivalent to an agreement or a licence, or an estoppel in cases where an estoppel can be raised.
Next, there is, in my view, a fundamental difference between an executory interest and an executed one.
In the former, it is necessary to resort to equitable reliefs to get enforced a right which is not at the date a vested right: cases of specific performance and declaration of a trust are examples, so also a prayer for relief from forfeiture.
In cases of this kind, conduct which would disentitle a person to equitable relief is relevant.
No hard and fast rule can or should be laid down as to what such conduct should consist of but among the varieties of conduct which Courts have considered sufficient in this class of case is conduct which amounts to laches (1) at 57 (2) (1858) 10 E.R. 1443 at 1452 and 1453.
375 or where there has been a standing by or acquiescence or waiver or abandonment of a right, particularly when this would prejudicially affect third parties.
This sort of distinction is brought out by Lord Chelmsford in Clarke & Chapman vs Hart(1).
The position is different when the interest is executed and the man has a vested interest in the right, that is to say, when he is the legal owner of the shares with the legal title to them residing in him.
This legal title can only be destroyed in certain specified ways.
It is in my view fundamental that the legal title to property, whether moveable or immoveable, cannot pass from one person to another except in legally recognised ways, and normally by the observance of certain recognised forms.
Confining myself to the present case, one of the ways in which the title to shares can pass is by forfeiture; but in that case an exact procedure has to be followed.
A second way is by transfer which imports agreement.
There again there is a regular form of procedure which must be gone through.
A third is by estoppel, though, when the position is analysed, it will be found that it is not the estoppel as such which brings about the change.
The expressions abandonment, waiver and so forth, when used in a case like the present, are only synonyms for estoppel and despite hallowed usage to the contrary, I prefer to call a spade a spade and put the matter in its proper legal pigeon hole and call it by its proper legal name.
These other terms are, in my view, loose and inaccurate and tend to confuse, when applied to cases of the present nature.
A man who has a vested interest and in whom the legal title lies does not, and cannot, lose that title by mere laches, or mere standing by or even by saying that he has abandoned his right, unless there is something more, namely inducing another party by his words or conduct to believe the truth of that statement and to act upon it to his detriment, that is to say, unless there is an estoppel, pure and simple.
It is only in such a case that the right can (1) ; at 1452 and 1453.
376 be lost by what is loosely called abandonment or waiver, but even then it is not the abandonment or waiver as such which deprives him of his title but the estoppel which prevents him from asserting that his interest in the shares has not been legally extinguished, that is to say, which prevents him from asserting that the legal forms which in law bring about the extinguishment of his interest and pass the title which resides in him to another, were not duly observed.
Fazl Ali J. and I endeavoured to explain this in Dhiyan Singh vs Jugal Kishore (1).
What happens is this.
The person estopped is not allowed to deny the existence of facts, namely the actings of the parties and so forth which would in law bring about the change in legal status, namely the extinguishment of his own title and the transfer of it to another, for estoppel is no more than a rule of evidence which prevents a man from challenging the existence or non existence of a fact.
Once the facts are ascertained, or by a fiction of law are deemed to exist, then it is those facts which bring about the alteration in legal status; it is not the estoppel as such nor is it the abandonment or waiver per se.
I prefer therefore to adhere to what I conceive is the proper legal nomenclature.
As I understand it, estoppel was the basis of the decision in Clarke & Chapman vs Hart (2).
See Lord Wensleydale 's judgment at page 1458 and the Lord Chancellor 's at page 1453 ; so also.
in Garden Gully United Quartz Mining Company vs Hugh McLister (3).
That there is no sufficient ground for estoppel in this case is shown by the facts set out in the judgment of my learned brothers.
I agree that the appeal must succeed.
Appeal allowed.
(1) [1952] S.C.R. 478 at 485.
(3) 1 App.
[/INST]In 1948 the Central Government referred a number of cases in which the petitioner was concerned, to the Income tax Inves tigation Commission set up under the relevant provisions of the Taxation on Income (Investigation Commission) Act, 1947.
After the Commission had submitted the report under section 8 A(1) of the Act, in which the total tax payable on the undisclosed income upto March 31, 1947, was estimated, the petitioner applied for a settlement of his case by offering to pay the amount of tax in instalments and by agreeing to pay the whole amount immediately in case of default in payment of any of the instalments in time.
The Central Government accepted the terms suggested by the petitioner and passed an order on November, 21, 1949, under section 8 A(2) of the Act directing the service of a demand notice on the petitioner and recovery of the tax in accordance with the terms and conditions of the settlement.
On December 2, 1949, a notice of demand was issued to the petitioner who, in pursuance thereof, made certain payments.
But as the petitioner was unable to make full payment within the stipulated periods, the whole amount outstanding became immediately payable and certain properties belonging to him and his family were attached by the Collector of the district Concerned for the recovery of the amount.
On June 8, 1959, the petitioner filed a writ petition tinder article 32 of the Constitution of India challenging the legality of the demand notice dated December 2, 1049, and the subsequent proceedings taken in pursuance of that notice on the ground that after the coming into force of the Constitution of India on January 26, 1950, they were violative of the fundamental right of equal protection of the laws guaranteed under article 14, inasmuch as what he had agreed to pay the Government as a result of the settlement was really a debt, and he had been dealt with differently from other debtors who owed money to the State under a contractual liability.
Held, (1) that the proceedings against the petitioner cul minating in the service of the notice of demand against him were all completed before the coming into force of the Constitution and the petitioner cannot challenge those proceedings under 967 article 14 of the Constitution, because it is well settled that the Constitution is prospective and not retrospective; (2) that the true scope and effect of sub section
(2) of section 8 A is to enforce the terms of any settlement arrived at in pursuance of sub section
(1), which was really income tax which had escaped assessment; (3) that the petitioner belonged not to the larger class of debtors of Government but to a special class which had evaded payment of income tax for which the procedure laid down in section 8 A(2) was one and the same, and that the classification being reasonable having a just relation to the object of the provision, the recovery procedure cannot be challenged as discriminatory under article 14.
Suraj Mail Mohta and Co. vs A. V. Visvanatha Sastri and Another, [1955] 1 S.C.R.448, M. CT.
Muthiah & two Others vs The Commissioner of Income tax, Madras & Another, ; and Basheshar Nath vs The Commissioner of Income tax, Delhi & Rajasthan and Another, [1959] Supp. 1 S.C.R. 528, distinguished.
</s> |
<s>[INST] Summarize the judgementAppeals Nos.
1919 1920 of 1966.
Appeals from the judgment and order dated October 12, 13, 1962 of the Bombay High Court in Income tax Reference No. 2! of 1959.
section T. Desai, 0.
P. Malliotra, and 0.
C. Mathur, for the appellant (in C.A. No. 1919 of 1966) and the respondent (in C. A. No. 1920 of 1966).
D. Narsaraju and R. N. Sachthey, for the appellant (in C.A. No. 1920 of 1966) and the respondent (in C.A. No. 1919 of 1966.
The Judgment of the Court was delivered by Shah, J.
These are cross appeals from the order passed by the High Court of Bombay recording answers to questions sub mitted in a reference under section 66 of the Indian Income tax Act, 1922.
Messrs Killick Nixon & Co. hereinafter called "the assessee" was a firm which carried on diverse trading activities in Bombay.
The assessee agreed to sell on November 28, 1947 to a Company called "Killick Industries Ltd.", the benefit of managing agency contracts held by it, shares of limited Company (including 240 shares of the Cement Agencies Ltd.) and debentures, and book and other debts in consideration of 79,993 shares of the face value of Rs. 100/ each or Killick Industries Ltd. and Rs. 700/ in cash.
By another agreement dated January 29, 1948 the assessee agreed to sell to "Killick Nixon & Co. Ltd." goodwill of the business of the.
assessee freehold and leasehold hereditaments, plant and machinery, stock in trade and book debts, Government securities and shares and full benefit of all shipping and general agencies, distributorships etc.
in consideration of 9,996 shares in the Vendee Company of the face value of Rs. 100/each and Rs. 400/ in cash.
The assessee was dissolved and its business was discontinued with effect from February 1, 1948.
In a proceeding for assessment to tax payable by the assessee for the year 1949 50 (the relevant previous year being the year ending June 30, 1948) the Income tax Officer assessed the capital gains made by the assessee, on the transfer of its capital assets to the two Companies, ,it Rs. 32,01,747/ .
In appeal, the Appeal 9 7 3 late Assistant Commissioner modified the order.
He was of the view that the assessee had made capital gains amounting to Rs. 25,40,737/ by sale of shares to the two companies and other assets transferred to Killick Nixon & Co. Ltd. and had suffered a capital loss of Rs. 4,00,530/ , being the difference between the market value of the managing agencies, 240 shares of the Cement Agencies Ltd. and the goodwill on January 1, 1939 estimated at Rs. 51,40,802/ and the market value of those assets on February 1, 1948 estimated at Rs. 47,4Q,272 /.
Debiting the loss against the capital (rains made by sale of shares, the Appellate Assistant Commissioner brought to tax an amount of Rs. 21,06,455/ .
The Appellate Assistant Commissioner rejected the claim of the assessee to the benefit of section 25(3)) & (4) of the Income tax Act, 1922.
The Appellate Tribunal confirmed the, order passed by the Appellate Assistant Commissioner.
The Tribunal drew up a statement of the case and referred two questions numbered (I) & (2) below to the High Court of Judicature at Bombay.
Two more questions numbered (3) & (4) were submitted pursuant to the order made by the High Court under section 66(2) of the Act.
The questions were : "(1) Whether on the facts and circumstances of the case, the assessee firm is entitled to the benefit contained under section 2 5 ( 3 ) in respect of capital gains assessed to tax under section 12B of the Income tax Act ? (2) Whether on the facts and in the circumstances of the case, the assessee firm is liable to pay capital gains in respect of profits and gains arising from the sale of its assets to the limited companies ? (3) Whether section 12B of the Indian Income tax Act, 1922, at all applied to the applicant 's case ? (4) Whether on the facts and in the circumstances of the case, the Tribunal misdirected itself in law and or acted without evidence or in disregard of the most material evidence on record in making the valuation of the applicant 's assets on first day of January one thousand nine hundred and thirtynine ?" The High Court answered the first question in the negative, and the second, the third and the fourth questions in the affirmative.
The assessee has appealed against the answers recorded on the first three questions; against the order recording the answer on the fourth question, the Commissioner has appealed.
The appeal filed by the Commissioner may first be considered.
The assessee contended before the Tribunal, relying upon the evidence on record, that the value of the managing agencies, 240 9 7 4 shares of the Cement Agencies Ltd. and the goodwill on January 1. 1939 considerably exceeded Rs. 51,4O,8O2/ .
The Tribunal observed in paragraph 10 of its judgment "We do not think it is necessary to deal with in detail the evidence produced before the Income tax authorities in respect of the valuation as on 1 1 1939.
The stand taken by the assessee, in our opinion, is in consistent.
A uniform method must be adopted both as on, the date of the transfer and as on 1 1 1939.
It is not open to the assessee to value an asset by applying one method on 1 2 1948 and another on 1 1 1939.
" The Tribunal then observed that since the assets were transferred to a company in which the partners of the assessee were interested, and the transfer was made for a consideration which was less than the market value, it was not open to the assessee to contend that the market value of the assets on January 1, 1939 should be taken into account; that the assessee was not entitled to reduce the capital gain by adopting the valuation of those assets which had a market quotation and in respect of assets which had no market quotation by adopting the sale price,; and that "if the goodwill of the business on January 1, 1939 was worth Rs. 8 lakhs its value on February 1, 1948 should be higher." The Tribunal recorded its conclusion that : "For the purpose of this appeal, it is enough to say that if the value of the assets in question was Rs. 46,40,279/ on 1 2 1948, it could not be higher than Rs. 51,40,802/ as on I. I 1939.
Speaking for ourselves, we think, the Income tax authorities by allowing the loss of Rs. 4 lakhs have taken a liberal view of the whole question.
" The Tribunal also observed "The valuation placed by the Department, in our opinion, is reasonable.
Even if the business was to be valued is a whole, it could not affect the assessment made.
The valuation has to be done on the same basis both on 1 1 1939 and 1 2 1948." .LM0
The High Court in dealing with the questions referred observed that under the third proviso to section 12B(2), of the Income tax Act, 1922 the assessee was entitled to substitute the fair market value ,of the assets as on January 1, 1939, if the capital assets had been held by the assessee before January 1, 1939 in place of the cost ,of the assets for the purpose of determining the capital gain, and that it was common ground that the full value of the consideration for which the assets were transferred was Rs. 1,16,75,108/ .
The High Court then observed : 97 5 .LM15 "it is clear beyond any doubt that the assessee was entitled to take the fair market value of the three assets, viz. the managing agencies, 240 shares of the Cement Agencies Limited and the goodwill of its busi.
ness as on 1 1 1939 for the purpose of the computation of the capital gains and the said capital gains,, if any, had to be determined by deducting the said valuation as on 1 1 1939 from the full value of the consideration.
, which the assessee, had received and which, it was common ground between the parties, was Rs. 1,16,75,108/ .
The Appellate Assistant Commissioner had proceeded to determine the value of its assets as on 1 1 1939.
As against the said valuation arrived at by the Appellate Assistant Commissioner, the assessee has raised o@jections before the Tribunal which objections the Tribunal had to consider on their merits.
In so far as the Tribunal has failed to do so and has proceeded on the erroneous view, which it has taken that it was not necessary to deal in detail with the evidence produced before the Income tax authorities, the Tribunal has clearly misdirected itself and had also not applied its mind properly to the material on record.
" Section 12B which was introduced in the Indian Income tax Act, 1922 with effect from the 31st day of March, 1947, omitting parts not material reads as follows : "(1) The tax shall be payable by an assessee under the bead 'Capital gains ' in respect of any profits or gains arising from the sale, exchange or transfer of a capital asset effected after the 31st day of March 1946; and such profits and gains shall be deemed to be income of the previous year in which the sale, exchange or transfer took place (2) The amount of a capital gain ' shall be computed after making the following deductions from the full value of the consideration for which the sale, exchange or transfer of the capital asset is made, namely; (i) expenditure incurred solely in connection with such sale, exchange or transfer; (ii) the actual cost to the assessee of the capital asset, including any expenditure of a capital nature incurred and home by him in making any additions or alterations thereto, but excluding any expenditure in respect of which any allowance is admissible under any provision of sections 8, 9, 10 and 12.
97 6 Provided that where a person who acquires a capital asset from the assessee, whether by sale, exchange or transfer, is a person with whom the assessee is directly or indirectly connected, and the Income tax Officer has reason to 'believe that the sale, exchange or transfer was effected with the object of avoidance or reduction of the liability of the assessee under this section, the full value of the consideration for which the sale, exchange or transfer is made shall, with the prior approval of the Inspecting Assistant Commissioner of Income tax, be taken to be the fair market value of the capital asset on the date on which the sale, exchange or transfer tookplace : Provided further. .
Provided further that where the capital asset became the property of the assessee before the 1st day of January 1939, he may, on proof of the fair market value thereof on the said date to the satisfaction of the, Income tax Officer, substitute for the actual cost such fair market value which shall be deemed to be the actual cost to him of the asset, and which shall be reduced by the amount of depreciation, if any, allowed to the assessee after the said date and increased or diminished, as the case may be, by any adjustment made under clause (vii) of sub section (2) of section 10;" Computation of the capital gains under section 12B is to be made by deducting from the market value of the consideration of the sale, exchange or transfer, expenditure incurred in connection with such sale, exchange or transfer and the actual cost to the assessee of the capital asset or at his option, where the capital asset became the property of the assessee before January 1, 1939, the fair market value of the asset on January 1, 1939.
It is open to the Income tax Officer, if it appears to him, that with the object of avoidance or reducing of the liability of the assessee to pay tax, the full value of the consideration for which the sale, exchange or transfer is made is understated and the person acquiring the capital asset is a person with whom the assessee is directly or indirectly connected, to determine the fair market value of the capital asset on the date on which the sale, exchange or transfer tool, place.
The difference between proviso one and proviso three may be noticed.
By virtue of the first proviso the Incometax Officer is, in the conditions set out therein, entitled to determine the fair market value of the asset at the date of the sale, exchange or transfer.
Under the third proviso, the assessee when he has exercised the option to adopt the value on January 1, 1939 is, for computation of the ictual cost to him of an asset 97 7 transferred, required to prove the fair market value of the asset on January 1.
1939, when the asset transferred belonged to him before that date.
There was no dispute in the present case about the market value at the date of the, transfer of the assets conveyed.
The first proviso therefore did not come into play.
The dispute related to the value to the assessee on January 1, 1939 of three assets ', the managing agencies, 240 shares of the Cement Agencies Ltd. and the goodwill.
The capital gain or loss had to be determined by deducting from the market value of the asset on February 1. 1948 the fair market value of those assets oil January 1. 1939, proved by the assessee to the satisfaction of the Income tax Officer.
The Appellate Assistant Commissioner estimated the value of the three assets on January 1, 1939 at Rs. 51,40,802/ .
The assessee contended that the evidence on the record showed that the market value exceeded the estimated value.
It is true that the onus lay upon the assessee to prove the fair market value of the assets on January 1, 1939 to the satisfaction of the Income tax Officer and therefore of the Tribunal.
The Tribunal did not consider the evidence and disposed of the claim of the assessee after observing that the value of the assets could not exceed the amount at which it was estimated by the Appellate Assistant Commissioner.
Under the scheme of the Incom tax Act, the Tribunal is the final authority on questions of fact.
The Tribunal in deciding an appeal is bound to consider all the evidence, and the argumerits raised before it by tile parties.
The Tribunal apparently did not consider the evidence : it merely recorded a bare conclu.
,ion without setting out any reasons in support thereof.
It is therefore not possible to say whether the Tribunal considered the evidence and the contentions raised 'by the assessee :it cannot be assumed merely because a conclusion is recorded that the Tribunal considered the evidence.
The High Court was, therefore, right in recording an answer in the affirmative on the fourth question.
It will be the duty of the, Tribunal in disposing of the appeal undeir section 66(5) of the Income tax.
Act to hear the parties and to determine on a consideration of the evidence the value of the three assets on January 1, 1939 in the light of the third proviso to section 12B(2).
In the appeal filed by the assessee, counsel for the assessee has not challenged the finding recorded on questions Nos.
(2) & (3) and nothing more need be said in respect of those questions.
Counsel claimed that by virtue of section 25(3) of the Indian Incometax Act, the assessee is exempted from paying tax in the. year in which the business was closed.
Reliance is placed upon section 25(3)) 978 of the Indian Income tax Act.
It provides, insofar as it is material "Where any business, profession or vocation on which tax was at any time charged under the provisions of the Indian Income tax Act, 1918, (VII of 1918), is discontinued, then, unless there has been a succession by virtue of which the provisions of sub section (4) have been rendered applicable, no tax shall be payable in respect of the income, profits and gains of the period between the end of the previous year and the date of .such discontinuance It is common ground that the assessee was assessed to tax in respect of the income from business under the Indian Income tax Act 7 of 1918 and the case is not one of succession by virtue of which the provisions of sub section
(4) of section 25 are rendered applicable.
Prima facie, the assessee was entitled to the benefit of section 25(3) i.e. it was exempted from payment of tax in respect of the income, profits and gains earned by carrying on business for the period between the end of the previous year and the date of discontinuance of the business.
This Court observed in Commissioner of Income tax Bombay City I vs Chugandas and Co.(1) that 'the exemption under section 25(3) is not restricted only to income on which tax was payable under the head "Profits and gains of business, profession or vocation" under the Act of 1918.
Counsel for the assessee contended that even though under the Act of 1918 capital gain was not charged to tax under the Income tax Act, 1922, as amended in 1947, since capital.
gains earned by the assessee form part of the income of the assessee as defined in section 2(6C) of the Act, and are on that account exigible to tax as income of the business, the assessee is entitled to the benefit of exemption prescribed by section 25 (3) of the Act.
Counsel for the Commissioner contended that on income earned from business which is discontinued, the assessee is en titled to exemption from payment of tax for the period during which the business was carried on in the year in which the business was discontinued.
He conceded that income which qualifies for exemption is income earned by carrying on business and not merely income computed for purposes of tax under section 10 of the Act. ' but he contended that the exemption does not apply to receipts which are not earned by carrying on the business, and are only fictionally deemed income for the purpose of the Incometax Act.
He said that in any event capital gains cannot be said to be income resulting from the activity styled "business", and on that account capital gains are not admissible to exemption under section 25(3) of the Act.
(1) ; 979 Chugandas & Company 's case(1) has, in our judgment, no application to the present case.
In that case the assessee firm was charged to tax on its income from business under the Indian Income tax Act, 1918.
The assessee firm discontinued its business on June 30, 1947, and in respect of interest on securities which formed part of the assessee 's business income, exemption was claimed under section 25(3).
This Court accepted the contention of the assessee.
It was observed at p. 338 : "When, therefore, section 25(3) enacts that tax was charged at any time on any business, it is intended that the tax was at any time charged on the owner or any business.
If that condition be fulfilled in respect of the income of the business under the Act of 1918, the owner or his successor in interest qua the business, will be entitled to get the benefit of the exemption under it if the business is discontinued.
The section in terms refers to tax charged on any business, i.e., tax charged on any person in respect of income earned by carrying on the business.
Undoubtedly, it is not all income earned by a person who conducted any business, which is exempt under sub section (3) of section 25 non business income will certainly not qualify for the privileges.
It is not necessary for the purpose of these appeals to decide whether an assessee is entitled to exemption under section 25(3) in respect of a receipt which was not chargeable as income under the Act of 1918, for, in our view, capital gains though they are income within the meaning of section 2(6C) as incorporated by Act 7 of 1939, and modified by Act XXII of 1947, are not income earned from trading activity carried on by an assessee, and therefore cannot be admitted to exemption under section 25(31).
In Commissioner of Income tax, Madras vs Express Newspapers Ltd.(1) this Court expounded the true nature of capital gains at p. 202 : "Under that section (section 12B) the tax shall be payable by the assessee under the head 'capital gains ' in respect of any profits or gains arising from the sale of a capital asset effected during the prescribed period.
It says further that such profits or gains shall be deemed to be income of the previous year in which the sale etc., took place.
This deeming clause does not lift the capital gains from the sixth head in section 6 and place it under the fourth head.
It only introduces a limited (1) ; (2) 1.
T. R. '50 980 fiction, namely, that capital gains "accrued will be deemed to be income of the previous year in which the sale was effected.
This fiction does not make them the profits or gains of the business.
" Capital gains by the definition under section 2(6C) are income, and they are liable to tax by virtue of section 6 read with section 12B; and if they are not income arising from a trading activity, the benefit of exemption from taxability arising from the discontinuance of the business will not, in our judgment, be available in respect of that head of income.
it is only income which is earned by carrying on business which is entitled to exemption under section 25 (3) and capital gains not being income which arise from trading activity, they are not entitled to exemption.
Both the appeals therefore fail and are dismissed with costs.
V.P.S. Appeals dismissed.
[/INST]The assessee firm sold its assets to two companies and discontinued its business with effect from 1st February 1948.
For the assessment year 1949 50 the income tax department sought to assess, under section 12B of the Indian Income tax Act, 1922, the capital gains made by the asessee.
Capital gains under the section are computed, in a case (a) where there is no dispute about the market value of the asset on the date of transfer and (b) where the assessee has exercised the option under the third proviso to the section to adopt the value of the asset on 1st January 1939 as its actual cost, by deducting from the market value of the asset on the date of transfer the value of the asset on January 1, 1939.
In the present case the department accepted the market value of the assets on February 1, 1948, the date of transfer, and estimated the value of the assets on 1st January 1939, at a certain figure, and brought to tax the difference between the two, rejecting the assessee 's claim under section 25(3) to the benifit of exemption from taxability arising from discontinuance of the business.
The Appellate Tribunal confirmed the order.
It rejected the contention of the assessee that the evidence on the record showed that the market value of some of the assets on 1st January 1939 exceeded the value as estimated by the department and that therefore the capital gains to be taxed would be much less, by merely recording a bare conclusion that the value of the assets on 1st January 1939 could not be more than the estimated value, without considering the evidence.
The High Court, on reference, (1) held against the.assessee that it was not entitled to the benefit under section 25(3), and (2) held aginst the department that the Tribunal misdirected itself in not considering the evidence produced before the Income tax Authorities regarding the valuation on 1st January 1939.
The assessee and the Commissioner of Income tax appealed to this Court.
HELD : (1) It is only income earned by carrying on business that is entitled to exemption under section 25(3).
Capital gains, though by the definition in section 2(6C) are income and liable to tax by virtue of section 6 read with section 12B, not being income which arises from a trading activity, are not entitled to such exemption.
[98OB C] Commissioner of Income tax, Bombay City I vs Chugandas & Co. ; and Commissioner of Income tax, Madras vs Express Newspapers Ltd. , referred to.
[Whether an assessee was entitled to exemption under section 25(3) in respect of a receipt, such as capital gains, which was not chargeable is income under the Income tax Act 7 of 1918, not decided.] [979E] (2) Under the scheme of the Income tax Act, the Appellate Tribunal is the final authority on questions of fact.
While the onus lies upon the 9 7 2 assessee to prove the market value of the assets on January 1, 1939 the Tribunal, in disposing of the appeal under section 33(4) of the Act, is bound to hear the parties and consider the entire evidence produced before the Income tax Authorities.
In the present case, therefore, the Tribunal bad to determine, on a consideration of all the evidence, the value of the assets of the assessee on 1st January 1939.
[977E G]
</s> |
<s>[INST] Summarize the judgementiminal Appeal No. 24 of 1993.
From the Judgment and Order dated 6.8.1991 of the Patna High Court in Criminal Rev. No. 307 of 1991.
Uday Sinha and M.P. Jha for the Appellants.
B.B. Singh Adv.
for the Respondent.
The Judgment of the Court was delivered by AHMADI, J.
Special leave granted.
Whether a Court of Session to which a case is committed for trial by a Magistrate can, without itself recording evidence, summon a person not named in the Police Report presented under Section 173 of the Code of Criminal Procedure, 1973 ( 'The Code ' for short) to stand trial along with those already named therein, in exercise of power conferred by Section 319 of the Code? This neat question of law arises in the backdrop of the following allegations.
On the evening of 27th February, 1990 Umakant Thakur, younger brother of the informant, was attacked by twenty persons including the present two appellants with sticks, etc.
A First Information Report was lodged at about 9.30 p.m. on the same day in which all the twenty persons were named as the assailants.
The injured Umakant Thakur died in the Patna Hospital on the next day.
In the course of investigation statements of the informant as well as others came to be recorded and a charge sheet dated 10th June, 1990 was forwarded to the Court of the learned Magistrate on 17th June, 1990 wherein eighteen persons other than the two appellants were shown as the offenders.
The names of the present two appellants were not included in the said report as in the opinion of the investigating officer their involvement in the commission of the crime was not established.
A final report to that effect was submitted on 4th September, 1990 to the Chief Judicial Magistrate on which no orders were passed.
The concerned Magistrate committed the eighteen persons named in the report to the Court of Session, Dharbanga, under Section 209 of the Code to stand trial.
When the matter came up before the learned Sessions Judge, Dharbanga, an application was presented under Section 319 of the Code praying that the material on record annexed to the report under Section 173 of the Code 37 revealed the involvement of the two appellants also and hence they should be summoned and arraigned before the Court as accused persons along with the eighteen already named in the charge sheet.
Thereupon a show cause notice was issued to the present two appellants in response whereto they contended that though they were not present at the place of occurrence, they were falsely named in the First Information Report and the investigating officer had rightly omitted their names from the charge sheet filed in Court.
The learned Sessions Judge rejected.
the plea put forth by the appellants and exercised the discretion vested in him under Section 319 of the Code by impleading the appellants as co accused along with the eighteen others.
Indisputably this was done before any evidence was recorded i.e. before the commencement of the actual trial.
The appellants thereupon filed a Criminal Revision Application before the High Court of Patna assailing the order passed by the learned Sessions Judge taking cognizance against them.
The High Court after hearing counsel for the parties dismissed the Revision Application relying on the ratio of the Full Bench decision of that Court in S.K Laytfur Rahman & Ors.
vs The State, [(1985) PLJR 640 = (1985)] Criminal Law Journal 12381.
It is against this order passed by the learned Single Judge of the High Court that the appellants have moved this Court by special leave under Article 136 of the Constitution of India.
The learned counsel for the appellants contended that unless evidence was recorded during the course of trial.
The Sessions Judge had no jurisdiction under Section 319 of the Code to take cognizance and implead the appellants as co accused solely on the basis of the material collected in the course of investigation and appended to the report forwarded under Section 173 of the Code in view of the clear mandate of Section 193 of the Code.
The question which arises for consideration in the backdrop of the aforestated facts is whether the learned Sessions Judge was justified in law in invoking Section 319 of the Code at the stage at which the proceedings were pending before him solely on the basis of the documents including statements recorded under Section 161 of the Code during investigation without commencing trial and recording evidence therein? Section 319 corresponds to Section 351 of the repealed Code of Criminal Procedure, 1898 (hereinafter called 'the old Code ').
That Section must be read in juxtaposition with Section 319 of the Code.
Before we do so it is necessary to state that Section 319 of the Code as it presently stands is the recast version of Section 351 of the old Code based on the recommendations 38 made by the Law Commission in its 41st Report as under: "It happens sometimes, though not very often, that a Magistrate hearing a case against certain accused finds from the evidence that some person, other than the accused before him, is also concerned.
in that very offence or in a connected offence.
It is only proper that the Magistrate should "have the power to call and join him in the proceedings '.
Section 351 provides for such a situation, but only if that person happens to be attending the Court.
He can then be detained and proceeded against.
There is no express provision in section 351 for summoning such a person if he is not present in Court.
Such a provision would made section 351 fairly comprehensive, and we think it proper to expressly provide for that situation.
(para 24.80) About the true position under the existing law, there has been difference of opinion, and we think it should be made clear.
It seems to us that the main purpose of this particular provision is, that the whole case against all known suspects should be proceeded with expeditiously, and convenience requires that cognizance against the newly added accused should be taken in the same manner as against the other accused.
We, therefore, propose to recast section 351 making it comprehensive and providing that there will be no difference in the mode of taking cognizance if a new person is added as an accused during the proceedings." (para 24.81) It will be seen from the above paragraphs that the Law Commission suggested that section 351 should be recast with a view to (i) empowering the court to summon a person not present in court to stand trial along with the named accused and (ii) enabling the court to take cognizance against the newly added accused by making it explicit that there will be no difference in the mode of taking cognizance against the added accused.
Pursuant to the said recommendations made by the Law Commission Section 351 of the old Code was replaced by Section 319 in the present Code.
We may now read the two provisions in juxtaposition "Old Code Section 351 (1) Any person attending a Criminal Court, 39 although not under arrest or upon a summons, may be detained by such Court for the purpose of inquiry into or trial of any offence of which such Court can take cognizance and which, from the evidence, may appear to have been committed, and may be proceeded against as though he had been arrested or summoned.
(2) When the detention takes place in the course of an inquiry under Chapter XVIII or after a trial has been begun, the proceedings in respect of such person shall be commenced afresh, and the witnesses re heard.
New Code Section 319 (1) Where, in the course of any inquiry into or trial of an offence, it appears from the evidence that any person not being the accused has committed any offence for which such person should be tried together with the accused, the Court may proceed against such person for the offence which he appears to have committed.
(2) Where such person is not attending the Court, he may be arrested or summoned, as the circumstances of the case may require, for the purpose aforesaid.
(3) Any person attending the Court, although not under arrest, or upon a summons, may be detained by such Court for the purpose of the inquiry into, or trial of, the offence which he appears to have committed.
(4) Where the Court proceeds against any person under subsection (1), then (a) the proceedings in respect of such Person shall be commenced afresh and the witnesses re heard; (b) subject to the provisions of Cl.(a), the case may proceed as if such person had been an accused person when the Court took cognizance of the offence upon which the inquiry or trial was commenced.
" 40 Section 351 of the old Code empowered detention of any person attending a Criminal Court, although not under arrest or upon a summon, for the purpose of inquiry into or trial of any offence of which such Court could take cognizance, if it appeared from the evidence so recorded that he may have committed an offence along with others.
Sub section (2) of section 319 came to be inserted in response to the Law Commission 's recommendation in paragraph 24.80 of its report to enlarge the Court 's power to arrest or summon any person who appears to be involved in the commission of the crime along with others but who is not present in court.
Next, it is significant to note that the words 'of which such Court can take cognizance ' have been omitted by the Legislature.
Instead the newly added sub section 4(b) expressly states that the case against the added accused may proceed as if such person had been an accused person when the court took cognizance of the offence.
This takes care of the Law Commission 's recommendation found in paragraph 24.81 extracted earlier.
It is, therefore, manifest that Section 319 of the Code is an improved version of Section 351 of the old Code; the changes having been introduced therein on the suggestion of the Law Commission to make it comprehensive so that even persons not attending the Court can be arrested or summoned as the circumstances of the case may require and by deleting the words 'of which such Court can take cognizance ' and by adding clause (b) it is clarified that the impleadment of a new person as an accused in the pending proceedings will not make any difference insofar as taking of cognizance is concerned.
In other words it is made clear that cognizance against the added person would be deemed to have been taken as originally against the other co accused.
It is thus clear that the difficulty in regard to taking of cognizance which would have been experienced by the Court has been done away with.
The section comes into operation at the post cognizance stage when it appears to the court from the evidence recorded at the trial that any person other than those named as offenders appears to have com mitted any offence in relation to the incident for which the co accused are on trial.
But counsel for the appellants contended that section 319 being a self contained provision, the power thereunder can be exercised strictly in terms of the section which permits the exercise of power only if 'it appears from the evidence ' in the course of the inquiry or trial of an offence, that any person, besides the accused already put up for trial, has committed any offence arising from the incident in question.
Counsel submitted that the 41 power cannot be exercised before 'evidence ' is led as the involvement of the person must appear from the evidence tendered at the trial because it is at that stage that the court must apply its mind about the complicity of the person not arraigned before it in the commission of the crime.
He, therefore, submitted that in the present case since the trial had not commenced and the prosecution had not led any evidence, the stage for the exercise of the power had not reached.
In order to appreciate the contention urged before us, it is necessary to notice a few provisions.
Section 190 of the Code sets out the different ways in which a Magistrate can take cognizance of an offence, that is to say, take notice of an allegation disclosing commission of a crime with a view to setting the law in motion to bring the offender to book.
Under this provision cognizance can be taken in three ways enumerated in clauses (a), (b) & (c) of the offence alleged to have been committed.
The object is to ensure the safety of a citizen against the vagaries of the police by giving him the right to approach the Magistrate directly if the police does not take action or he has reason to believe that no such action will be taken by the police.
Even though the expression 'take cognizance ' is not defined, it is well settled by a catena of decisions of this Court that when the Magistrate takes notice of the accusations and applies his mind to the allegations made in the complaint or police report or information and on being satisfied that the allegations, if proved, would constitute an offence decides to initiate judicial proceedings against the alleged offender he is said to have taken cognizance of the offence.
It is essential to bear in mind the fact that cognizance is in regard to the offence and not the offender.
Mere application of mind does not amount to taking cognizance unless the magistrate does so for proceeding under Section 200/204 of the Code /See Jamuna Singh & Ors.
vs Bhadai Sah, ; at 40 41.
It is, therefore, obvious that if on receipt of a complaint under Section 154 of the Code in regard to a cognizable offence, an offence is registered and the concerned Police Officer embarks on an investigation and ultimately submits a police report under Section 173 of the Code, the Magistrate may take cognizance and if the offence is exclusively triable by a Court of Sessions, he must follow the procedure set out in Section 209.
That section provides that when in a case instituted on a police report, as defined in section 2(r), or otherwise, the accused appears or is brought before the Magistrate and it appears to the Magistrate that the offence is triable 42 exclusively by the Court of Session, he shall commit the case to the Court of Session and remand the accused to custody.
Section 193 of the Old Code and as it presently stands have a bearing and may be extracted at this stage: "Old Code Section 193 Cognizance of offences by Courts of Session (1) Except as othewise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the accused has been committed to it by a Magistrate duly empowered in that behalf.
New Code Section 193 Cognizance of offences by Court of Sessions Except as otherwise expressly provided by this Code or by any other law for the time being in force, no Court of Session shall take cognizance of any offence as a Court of original jurisdiction unless the case has been committed to it by a Magistrate under this Code.
" It may immediately be noticed that under the old provision a Court of Session could not take cognizance of an offence as a Court of original jurisdiction unless the accused was committed to it whereas under the recast section as it presently stands the expression the accused has been replaced by the words the case.
As has been pointed out earlier.
Under section 190 cognizance has to be taken for the offence and not the offender: so also under section 193 the emphasis now is to the committal of the case and no more on the offender.
So also section 209 speaks of committing the case to the Court of Session.
On a conjoint reading of these provisions it becomes clear that while under the Old Code in view of the language of section 193 unless an accused was committed to the Court of Session the said court not take cognizance of an offence as a court of original jurisdiction; now under section 193 as it presently stands once the case is committed the restriction disappears.
More of it later but first the case law.
Section 193 of the Old Code placed an embargo on the Court of Session from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it by a Magistrate or there 43 was express provision in the Code or any other law to the contrary.
In the context of the said provision this Court in P.C Gulati vs L.R. Kapur, [1966] I SCR 560 at p.568 observed as under; "When a case is committed to the Court of Session, the Court of Session has first to determine whether the commitment of the case is proper.
If it be of opinion that the commitment is bad on a point of law, it has to refer the case to the High Court which is competent to quash the proceeding under section 215 of the Code.
It is only, when the Sessions Court considers the commitment to be good in law that it proceeds with the trial of the case.
It is in this context that the Sessions Court has to I take cognizance of the offence as a Court or original jurisdiction and it is such a cognizance which is referred to in section 193 of the Code.
" In Joginder Singh vs State of Punjab, ; = ; the facts were that a criminal case was registered against Joginder Singh and four others on the allegation that they had committed house tresspass and had caused injuries to two persons.
During the investigation the police found Joginder Singh and Ram Singh (the appellants in the case) to be innocent and submitted a charge sheet against the remaining three persons only.
The learned Magistrate who held a preliminary inquiry committed the three accused to the Court of Session whereupon the Additional Sessions Judge, Ludhiana, framed charges against them.
At the trial evidence of two witnesses came to be recorded during the course of which the complicity of the two appellants came to light.
Thereupon, at the instance of the informant the Public Prosecutor moved an application for summoning and trying the two appellants along with the three accused who were already arraigned before the court.
The application was opposed principally on the ground that the Sessions Judge had no jurisdiction or power to summon the two appellants and direct them to stand their trial along with the three persons already named in the police report.
This objection was negatived and the learned Additional Sessions Judge passed G an order, presumably under section 319 of the Code, directing the attendance of the two appellants and further directing that they stand trial together with the three accused arraigned before the court.
The High Court dismissed the Revision Application whereupon the appellants approached this Court by special leave.
The real question centered round the 44 scope and ambit of section 319 of the Code.
This Court after considering the relevant provisions of the Old Code in juxtaposition with similar provisions in the New Code observed as under : "It will thus appear clear that under Section 193 read with Section 209 of the Code when a case is committed to the Court of Session in respect of an offence the Court of Session takes cognizance of the offence and not of the accused and once the Sessions Court is properly seized of the case as a result of the committal order against some accused the power under Section 319(1) can come into play and such Court can add any person, not an accused before it, as an accused and direct him to be tried along with the other accused for the offence which such added accused appears to have committed from the evidence recorded at the trial. ' This view came to be reiterated in a recent decision of this Court in Sohan Lal & Ors.
vs State of Rajasthan, ; That was a case in which a First Information Report was lodged against the appellants.
On completion of the investigation the police forwarded a charge sheet under section 173 of the Code.
The Judicial Magistrate after taking cognizance ordered discharge of appellants 4 and 5 and directed that the remaining 3 appellants be charged only under section 427 IPC and not under Sections 147, 323, 325 and 336 in respect whereof the charge sheet was forwarded.
The Additional Public Prosecutor, therefore, submitted an application signed by one of the victims praying that on the basis of the entire evidence a prima facie case was made out under sections 147, 325 and 336, IPC and requested that the charge be amended and the accused persons be charged accordingly.
After recording the plea of the accused the prosecution led evidence and examined witnesses.
The learned Magistrate after hearing the Additional Public Prosecutor and counsel for the defence and after discussing the evidence took cognizance of the other offences against the appellants.
The Revision Application preferred to the High Court was dismissed.
This Court after considering the relevant provisions of the Code concluded as under : "Section 319 empowers the court to proceed against persons not being the accused appearing to be guilty of offence.
Sub sections (1) and (2) of this section provide for a situation when 45 a court hearing a case against certain accused person finds from A the evidence that some person or persons, other than the accused before it, is or are also connected in this very offence or any connected offence; and it empowers the court to proceed against such person or persons for the offence which he or they appears or appear to have committed and issue process for the purpose.
It provides that the cognizance against newly added accused is deemed to have been taken in the same manner in which cognizance was first taken of the offence against the earlier accused.
It naturally deals with a matter arising from the course of the proceeding already initiated.
The scope of the section is wide enough to include cases instituted on private complaint. ' The learned counsel for the appellants submitted that once a Court of Session takes cognizance in the limited sense explained in Gulati 's case, the power to summon or arrest a person not named in the police report can be exercised under Section 319 of the Code only if the condition precedent, namely, the commencement of the trial and recording of evidence, is satisfied.
This, he contends, is manifest from the last mentioned two cases in which the power was exercised only after the condition precedent was satisfied and the complicity of a person not shown as an offender in the police report surfaced from the evidence recorded in the course of the trial.
That prima facie appears to be so but it must at the same time be remembered that in both the cases the Court was not called upon to consider whether a Court of Session to which a case is committed for trial under Section 209 of the Code can, while taking cognizance, summon a person to stand trial along with others even though he is not shown as an offender in the police report if the court on a perusal of the case papers prima facie finds his complicity in the commission of the crime and the omission of his name as an offender by the investigating officer not proper.
On a plain reading of sub section (1) of Section 319 there can be no doubt that it must appear from the evidence tendered in the course of any inquiry or trial that any person not being the accused has committed any offence for which he could be tried together with the accused.
This power, it seems clear to us, can be exercised only if it so appears from the evidence at the trial and not otherwise.
Therefore, this sub section contemplates 46 existence of some evidence appearing in the course of trial wherefrom the Court can prima facie conclude that the person not arraigned before it is also involved in the commission of the crime for which he can be tried with those already named by the police.
Even a person who has earlier been discharged would fall within the sweep of the power conferred by Section 319 of the Code.
Therefore, stricto sensu, Section 319 of the Code cannot be invoked in a case like the present one where no evidence has been led at a trial wherefrom it can be said that the appellants appear to have been involved in the commission of the crime along with those already sent up for trial by the prosecution.
But then it must be conceded that Section 319 covers the postcognizance stage where in the course of an inquiry or trial the involvement or complicity of a person or persons not named by the investigating agency has surfaced which necessitates the exercise of the discretionary power conferred by the said provision.
Section 319 can be invoked both by the Court having original jurisdiction as well as the Court to which the case has been committed or transferred for trial.
The sweep of Section 319 is, therefore, limited, in that, it is an enabling provision which can be invoked only if evidence surfaces in the course of an inquiry or a trial disclosing the complicity of a person or persons other than the person or persons already arraigned before it.
If this is the true scope and ambit of Section 319 of the Code, the question is whether there is any other provision in the Code which would entitle the Court to pass a similar order in similar circumstances.
The search for such a provision would be justified only on the premiss that Section 319 is not exhaustive of all post cognizance stituations.
Now as pointed out earlier Section 319 deals with only one situation, namely, the complicity coming to light from the evidence taken and recorded in the course of an inquiry or trial.
This may happen not merely in cases where despite the name of a person figuring in the course of investigation the investigating agency does not send him up for trial but even in cases where the complicity of such a person comes to light for the first time in the course of evidence recorded at the inquiry or trial.
Once the purport of Section 319 is so understood it is obvious that the scope of its operation or the area of its play would also be limited to cases where after cognizance the involvement of any person or persons in the commission of the crime comes to light in the course of evidence recorded at the Inquiry or trial.
Thus the Section does not apply to all situations and cannot be interpreted to be repository of all power for summoning such person or 47 persons to stand trial along with others arraigned before the Court.
The question then is whether dehors Section 319 the Code, can similar power be traced to any other provision in the Code or can such power be implied from the scheme of the Code? We have already pointed out earlier the two alternative modes in which the Criminal Law can be set in motion: by the filing of information with the police under Section 154 of the Code or upon receipt of a complaint or information by a Magistrate.
The former would lead to investigation by the police and may culminate in a police report under Section 173 of the Code on the basis whereof cognizance may be taken by the Magistrate under Section 190(1)(b) of the Code.
In the latter case, the Magistrate may either order investigation by the police under Section 156(3) of the Code or himself hold an inquiry under Section 202 before taking cognizance of the offence under Section 190(1)(a) or (c), as the case may be, read with Section 204 of the Code.
Once the Magistrate takes cognizance of the offence he may proceed to try the offender (except where the case is transferred under Section 191) or commit him for trial under Section 209 of the Code if the offence is triable exclusively by a Court of Session.
As pointed out earlier cognizance is taken of the offence and not the offender.
This Court in Raghubans Dubey vs State of Bihar, ; = ; stated that once cognizance of an offence is taken it becomes the Court 's duty 'to find out who the offenders really are ' and if the Court finds 'that apart from the persons sent up by the police some other person are involved, it is his duty to proceed against those persons ' by summoning them because 'the summoning of the additional accused is part of the proceeding initiated by his taking cognizance of an offence '.
Even after the present Code came into force, the legal position has not undergone a change; on the contrary the ratio of Dubey 's case was affirmed in Hariram Satpathy vs Tikaram Agarwala ; = ; Thus far there is no difficulty.
We have now reached the crucial point in our journey.
After cognizance is taken under section 190(1) of the Code, in warrant cases the Court is required to frame a charge containing particulars as to the time and place of the alleged offence and the person (if any) against whom, or the thing (if any) in respect of which, it was committed.
But before framing the charge section 227 of the Code provides that if, upon a consideration of the record of the case and the documents submitted therewith, the 48 Sessions Judge considers that there is not sufficient ground for proceeding against the accused, he shalt for reasons to be recorded, discharge the accused.
It is only when the Judge is of opinion that there is ground for presuming that the accused has committed an offence that he will proceed to frame a charge and record the plea of the accused (vide, section 228).
It becomes immediately clear that for the limited purpose of deciding whether or not to frame a charge against the accused, the judge would be required to examine the record of the case and the documents submitted therewith, which would comprise the police report, the statements of witnesses recorded under section 161 of the Code, the seizure memoranda, etc., etc.
If, on application of mind for this limited purpose, the Judge finds that besides the accused arraigned before the him the complicity or involvement of others in the commission of the crime prima facie surfaces from the material placed before him, what course of action should he adopt? The learned counsel for the State, therefore, argued that even if two views are possible, this being a matter of procedure not likely to cause prejudice to the person or persons proposed to be summoned, the court should accept the view which would advance the cause of justice, namely, to bring the real offender to book.
If such an approach is not adopted, the matter will slip into the hands of the investigation officer who may or may not send up for trial an offender even if prima facie evidence exists, which may in a given situation cause avoidable difficulties to the trial court.
Take for example a case where two persons A and B attach and kill X and it is found from the material placed before the Judge that the fatal blow was given by A whereas the blow inflicted by B had fallen on a non vital part of the body of x.
If A is not challenge by the police, the Judge may find it difficult to charge B for the murder of X with the aid of section 34, IPC.
If he cannot summon A, how does he frame the charge against B? In such a case he may have to wait till evidence is laid at the trial to enable him to invoke section 319 of the Code.
Then he would have to commence the proceedings afresh in respect of the added accused and recall the witnesses.
This, submitted counsel for the State, would result in avoidable waste of public time.
He, therefore, submitted that this Court should place a construction which would advance the cause of justice rather than stiffle it.
We have already indicated earlier from the ratio of this Court 's decisions in the cases of Raghubans Dubey and Hariram that once the court 49 takes cognizance of the offence (not the offender) it becomes the court 's duty to find out the real offenders and if it comes to the conclusion that besides the persons put up for trial by the police some others are also involved in the commission of the crime, it is the court 's duty to summon them to stand trial along with those already named, since summoning them would only be a part of the process of taking cognizance.
We have also pointed out the difference in the language of section 193 of the two Codes; under the old Code the Court of Session was precluded from taking cognizance of any offence as a Court of original jurisdiction unless the accused was committed to it whereas under the present Code the embargo is diluted by the replacement of the words the accused by the words the case.
Thus, on a plain reading of section 193 as it presently stands once the case is committed to the Court of Session by a magistrate under the Code, the restriction placed on the power of the Court of Session to take cognizance of an offence as a court of original jurisdiction gets lifted.
On the magistrate committing the case under section 209 to the Court of Session the bar of section 193 is lifted thereby investing the Court of Session complete and unfettered jurisdiction of the Court of original jurisdiction to take cognizance of the offence which would include the Summoning of the person or persons whose complicity in the commission of the crime can prima pacic be gathered from the material available on record.
The Full Bench of the High Court of Patna rightly appreciated the shift in section 193 of the Code from that under the old Code in the case of S.K Lutfur Rahman (supra) as under : "Therefore, what the law under section 193 seeks to visualise and provide for now is that the whole of the incident constituting the offence is to be taken cognizance of by the Court of Session on commitment and not that every individual offender must be so committed or that in case it is not so done then the Court of Session would be powerless to proceed against persons regarding whom it may be fully convinced at the very threshold of the trial that they are prima facie guilty of the crime as well.
*** *** *** *** Once the case has been committed, the bar of section 193 is removed or, to put it in other words, the condition therefore 50 stands satisfied vesting the Court of Session with the fullest jurisdiction to summon and individual accused of the crime.
" We are in respectful agreement with the distinction brought out between the old section 193 and the provision as it now stands.
For the reasons stated above while as are in agreement with the submission of the learned counsel for the appellants that the stage for tile exercise of power under section 319 of the Code had not reached, inasmuch as, the trial had not commenced and evidence was not led, since the Court of Session had the power under section 193 of the Code to summon the appellants as their involvement in the commission of the crime prima facie appeared from the record of the case, we see no reason to interfere with the impugned order as it is well settled that once under it is found that the power exists the exercise of power under a wrong provision will not render the order illegal or invalid.
We, therefore, dismiss this appeal.
V.P.R. Appeal dismissed.
[/INST]Aggrieved by an Award of 195, the employees placed before the Company a fresh charter of demands which was mutually settled by a written agreement which provided, inter alia, that the existing rate of dearness allowance should prevail which was adjustable to any future substantial change in the cost of living index of the working class.
As the cost of living increased disputes arose, and in spite of the said Award of 1951, 137 which was not terminated according to law, the dispute arising out of the said written agreement was referred for adjudication by the Government to the Second Industrial Tribunal, Calcutta, in September, 1956.
In April 1957, the Government transferred the dispute from the Second Industrial Tribunal to the Fifth Industrial Tribunal.
The Company, inter alia, contended that the Government had no power to transfer the dispute from one Tribunal to another and that the reference was bad as the 1951 Award had not been duly terminated.
The Industrial Disputes (Amendment and Miscellaneous Provisions) Act (36 of 1956) amending the Industrial Disputes Act (14 Of 1947) came into force on August 28, 1956, giving authority to the Government to transfer a reference from one Tribunal to another, which was followed by a further amending Act, being Industrial Disputes (Amendment) Act (18 of 1957) whereunder among other things a new definition of 'Tribunal ' was given, whereby the Industrial Tribunal constituted prior to March 10, 1957, under section 7A of Act 14 Of 1947 was included.
Held, that as a result of the amendments to the , the Government had authority to transfer a case from one Tribunal to another. 'Tribunal ' as defined by section 2(r) of the , as amended by Act 36 of 1956, read with amending Act 18 of 1957, empowers the Government to transfer a reference from one Tribunal to another.
Where, in spite of a previous award, the employees after raising fresh demands entered into a new agreement with the employer which started a fresh chapter regulating the relationship of the parties, the previous award, though not terminated in accordance with the provisions of law, must be deemed to have been superseded.
Held, further, that though article 136 of the Constitution is couched in the widest terms and confers a discretionary power, (which cannot exhaustively be defined) on the Supreme Court to grant special leave to appeal from the order of a tribunal, but it is necessary for the Supreme Court to exercise its said discretionary jurisdiction only in cases (a) where there is a violation of the principle of natural justice, (b) raises an important principle of industrial law requiring elucidation and final decision by the Supreme Court, or (c) discloses such other exceptional or special circumstances which merit the final decision by the Supreme Court.
Such discretionary reserve power cannot obviously be so construed as to confer a right of appeal to any party from the decision of a Tribunal, where he has none under the law.
is intended to be a self contained one and it seeks to achieve social justice on the basis of collective bargaining, conciliation and arbitration.
Awards are given on circumstances peculiar to each dispute and the Tribunals are to a 18 138 large extent free from restrictions of technical considerations imposed on courts.
A free and liberal exercise of the discretionary powers by the Supreme Court may materially affect the fundamental basis of the decision, namely, quick solution to such disputes to achieve industrial peace.
Where an Industrial Tribunal on the consideration of the entire material placed before it and having regard to the overall picture, came to a conclusion of facts, the Supreme Court will not interfere with such finding of fact nor will it be justified to allow to make a new case for the first time before it.
Pritam Singh vs State of Madras, ; ; Hem Raj vs State of Ajmer, and Sadhu Singh vs State of PEPSU, A.I.R. 1954 S.C. 272, referred to.
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<s>[INST] Summarize the judgementNo. 47 of 1966.
Petition.under article 32 of the Constitution of India for the enforcemont of fundamental rights.
The petitioner appeared in person.
210 Niren De, Additional Solicitor General, N. section Bindra, R. H. Dhebar and B.R.G.K. Achar, for the respondent.
R. V. section Matti, for the intervener.
The Judgment of the Court was delivered by Sarkar, CJ.
The petitioner, Puran Lal Lakhanpal, was arrested and detained under cl.
(b) of sub r.
(1) of Rule 301 of the Defence of India Rules.
1962 by an order passed on December 10, 1965 and directed to be detained in Central Jail, Tehar, New Delhi.
The order stated that: "WHEREAS the Central Government is satisfied that with a view to preventing Shri P.L. Lakhanpal.
son of late Shri Diwan Chand Sharma. . from acting in a manner prejudicial to the Defence of India and Civil Defence, public safety and the maintenance of public order, it is necessary that he should be detained; NOW, THEREFORE. . . the Central Government hereby directs that the said Shri P. L. Lakhanpal be detained.
" He has moved this Court under article 32 of the Constitution by a petition presented on December 24, 1965 for a writ of habeas corpus directing his release.
He challenges the legality of the detention order on various grounds which we now proceed to consider.
The first ground is that r. 30(1)(b) is ultra vires section 3(2)(15)(1) of the Defence of India Act under which the Rules were made.
Sub s.(1) of section 3 contains the general power to make rules for certain purposes.
Sub section (2) states that the rules made may provide for and many empower any authority to make orders providing for all or any of the following matters, namely: "(15) notwithstanding anything in any other law for the time being in force. . . . (i) the apprehension and detention in custody of any person whom the authority empowered. . suspects, on grounds appearing to that authority to be reasonable . . . . acting, being about to act or being likely to act in a manner prejudicial to the defence of India and civil defence, the security of the State, the public safety or interest,the maintenance of public order. . or with respect to whom that authority is satisfied that his apprehension and detention are necessary for the purpose of preventing him from acting in any such prejudicial manner." 211 Rule 30(1)(b) is in these terms: "The Central Government. . . if it is satisfied with respect to any particular person that with a view to preventing him from acting in any manner prejudicial to the defence of India and civil defence, the public safety, the maintenance of public order. . . may make an order (b) directing that he be detained.
" It will be noticed that the rule does not say that the satisfaction mentioned in it shall be on grounds appearing to the authority concerned to be reasonable.
It is said that by omitting these words the rule has gone outside the section which mentions them, and is, therefore, ultra vires.
This contention is untenable.
It overlooks the fact that the latter part of the section states that the rules made under it may also provide for the apprehension and detention of a person "with respect to whom that authority is satisfied that his apprehension and detention are necessary" for certain purposes; this part does not contain any requirement as to satisfaction on reasonable grounds.
This part of the section is independent of the earlier part under which the apprehension and detention can be directed only when the authority suspects on certain grounds appearing to it to be reasonable that a person is about to act in a certain manner.
It is of some significance to point out that the second part of the section is preceded by the word 'or '.
That puts it beyond doubt that the rules made under it may provide for detention in two alternative cases, for the first of which only it is necessary that the authority should entertain a suspicion on grounds appearing to it to be reasonable.
That requirement is absent in the case of a rule made under the second part of the section.
Rule 30(1)(b) cannot be said to be ultra vires the section for the reason that it does not state that the satisfaction of the authority making the order of detention has to be on grounds appearing to it to be reasonable.
The rule requires only that the detaining authority must be satisfied that the detention is necessary for the purposes mentioned and that is what the latter part of the section under which it was made also says.
The rule has clearly been made in terms of the section authorising it.
It was next said that the Proclamation of Emergency made by the President under article 352 of the Constitution which prevented the Act from being illegal, was not in terms of the article as it did not state that the President was satisfied that a grave emergency existed.
It is true that the Proclamation did not do that.
It stated: " In exercise of the powers conferred by clause (1) of article 352 of the Constitution, I Sarvapalli Radhakrishnan, President of India, by this Proclamation declare that a grave emergency exists whereby the security of India is threatened by external aggression.
" 212 We, however, find nothing in the Article which requires the Proclamation to state the satisfaction of the President about the emergency.
Article 352(1) reads, "If the President is satisfied that a grave emergency exists whereby the security of India or of any part of the territory thereof is threatened, whether by war or external aggression or internal disturbance, he may, by Proclamation, make a declaration to that effect.
" The Article requires only a declaration of emergency threatening the security of India by one of the causes mentioned.
The words "to that effect" can have no other meaning.
The power to make the declaration can no doubt be exercised only when the President is satisfied about the emergency, but we do not see that the Article requires the condition precedent for the exercise of the power, that is, the President 's satisfaction, to be stated in the declaration.
The declaration shows that the President must have satisfied himself about the existence of the emergency for in these matters the rule that official acts are presumed to have been properly performed applies and there is nothing proved by the petitioner to displace that presumption.
We were referred to certain other provisions, viz., article 311(2)(c) of the Constitution and r. 30(1)(b) of the Rules and it was contended that these provisions require the satisfaction to be stated.
It is unnecessary to decide whether they so require.
Even if they did, the requirement of the statement of the President 's satisfaction in the present case has to be decided on the terms of article 352 alone.
We have said that this Article does not contain any such requirement.
It is of interest to point out here that the petitioner stated in his petition that he extended his full support to the Government on the Proclamation of Emergency.
Obviously he could not have done so if he had any doubt about the legality of the Proclamation.
Then it was said that the Proclamation should have stated the direction from which the external aggression which it mentioned was apprehended.
We find nothing in the Article to require the Proclamation to state this.
The Proclamation was issued on October 26, 1962 when, it is well known, India 's integrity was threatened by China.
It was also stated that the continuance of Emergency which was declared over three years ago is a fraud on the Constitution.
We were told that the President in his address to the Parliament in February this year did not state that the Emergency continued to exist.
The President 's address has not been produced, and we do not know what it contained.
However that may be, article 352 itself by cl.
(2) provides that a Proclamation issued under cl.
(1) may be revoked by a subsequent Proclamation and shall cease to operate at the expiration of two months unless before the expiration of that period it has been approved by resolutions of both Houses of Parliament.
This clause also states that the Proclamation shall be laid before each House of Parliament.
It has not 213 been stated that the Houses of Parliament did not approve of the Proclamation within the period of two months.
It would appear, therefore, that the only way a Proclamation ceases to have effect is by one of the events mentioned in this clause.
None of them has happened.
Nothing contained in an address by the President to the Houses of Parliament can operate to terminate the Proclamation.
In this connection it was also said that 'external aggression ' means armed aggression and as for some time past there was no armed, aggression against the territory of India, the continuance of the Proclamation was unjustified.
This contention must also fail, on the ground which we have just mentioned.
Another challenge to the legality of the detention was that the petitioner had not been allowed to make any representation against his detention.
Our attention was drawn in this connection to section 3(2) (15)(iv) of the Act and r. 30 A of the Rules and also to r. 23, of the Defence of India (Delhi Detenues) Rules, 1964.
The two first mentioned provisions do not, in our opinion, give a right to make a representation.
Their effect is to provide a review of the detention order by the authorities and in the manner mentioned.
The last one states that a detenue will be allowed to interview a legal practitioner for the purpose of drafting his representation against his detention.
It has not been stated in the petition that the petitioner was pre vented from making any representation or denied the opportunity to consult a legal practitioner.
All hat is said is that he had not been furnished particulars of his writing s and materials on which the satisfaction of the Central Government mentioned in the order was based and that had prevented him from making a representation to the Government against his detention.
This contention seems to us unwarranted.
There is nothing to show that the detention order had been based on petitioner 's writings, nor has our attention been drawn to any provision which requires the detaining authority to supply the materials on which they had formed their satisfaction about the necessity of the detention.
Then it was said that the order of detention violated section 44 of the Act and section 3(2)(4)(b), (6), (7)(a)(b)(c) and (d) and rr. 41, 42, 44, 45 and 46 of the Rules.
The substance of the contention is that the petitioner was the editor of and ran a newspaper and that action against him could only be taken under the sections and rules earlier mentioned and not under r. 30(1)(b).
This contention seems to us to be entirely groundless.
The provisions referred to no doubt deal with newspapers and the manner of controlling them but they in no way lead to the conclusion that a newspaper editor may not, if the occasion arises, be detained under r. 30(1)(b).
The fact that newspapers and men connected with them may be dealt with in a certain manner does not prevent detention of such persons under r. 30(1)(b).
It was also said that r. 30(1)(b) requires that the part of India which is to be prejudicially affected by the acts of the detenue has to be mentioned in the order.
This is an idle contention.
The 214 rule no doubt says that the detention may be ordered to prevent a person from acting in a manner prejudicial to the maintenance of peaceful conditions in any part of India, but it also says that the detention can be ordered for preventing a person from acting in a manner prejudicial to the defence of India, civil defence and public safety and maintenance of public order with regard to which there is no requirement provided that they should be confined to any part of India or that part should be mentioned in the order of detention.
The order in this case was made on these grounds.
The petition furnishes no material for saying that the terms of section 44 have been violated.
There is nothing to show that the detention interfered with the petitioner 's avocation in life in a manner not justified by that section.
The last ground taken was that the detention order was mala fide because the Home Minister had not sworn an affidavit to say that he was satisfied about the necessity for the detention.
There is a bald allegation in the petition that the detaining authority had not applied its mind to the matter before making the order of detention.
This part of the petition was verified as true to the petitioner 's knowledge.
This verification was plainly false and, therefore, the allegation in the petition required no answer.
However, that may be, a Deputy Secretary to the Home Ministry of the Government of India has sworn an affidavit stating as true to his knowledge that the materials in connection with the activities of the petitioner were placed before the Union Home Minister and, on a consideration of those materials, the Minister was satisfied that the detention order was necessary.
The result is that this petition fails and it is accordingly dismissed.
Petition dismissed.
[/INST]The father of the first respondent sold his lands to the second respondent but continued to be in possession.
The second respondent sold them to the appellants who were put in possession in 1934.
In August 1945, the first respondent filed a petition against the second respondent, before the Debt Adjustment Board, under Ss. 17, 18 and 45 of the Bombay Agricultural Debtors Relief Act, 1939, within the time prescribed by section 17, alleging that the transaction with the second respondent was a mortgage and that the debt was liable to be adjusted under the Act.
The first appellant was impleaded as a party to the petition in December 1945, beyond the time specified in section 17.
No appeal was filed against that order, and in 1947, the Board disposed of the petition for adjustment of debt by directing the second respondent to render accounts.
He appealed and, pending the appeal, the 1939 Art was repealed by the Bombay Agricultural Debtors Relief Act of 1947.
In 1949, the appellate Court set aside the Board 's order and remanded the case to the Civil Judge, for deciding the nature of the transaction, because, under the 1947 Act, the Board was dissolved and its jurisdiction was vested in the Civil Judge.
In 1950, the first respondent 's application to the Civil Judge for impleading the second respondent also as a party to the petition for adjustment of the debt, was allowed, and thereafter, the matter was disposed of on merits.
On the questions: (i) Whether the orders impleading the appellants were without jurisdiction.
and (ii) whether the appellants had acquired title to the lands by adverse possession, HELD: (i) The orders were not without jurisdiction.
Under the repealed Act, if a party was added beyond the period prescribed under section 17 of the Act, if he was added as a necessary party to a petition filed in time, the said order might be improper but not without jurisdiction.
[151 C D] Under section 56 of the 1947 Act, original and appellate proceedings initiated under the repealed Act but pending at the time the 1947 Act came into force will have to be disposed of in accordance with the substantive and procedural sections of the 1947 Act.
Under section 46 of the 1947 Act, the court is empowered.
in a suitable case, to add Parties under 0.1, r. 10, Civil Procedure Code, and they may be added irrespective of the time limit prescribed under the repealed Act, or the time specified in Ss. 4 and 24 of the 1947 Act.
[152 A C] Case law referred to.
(ii) The appellants had not acquired any title by adverse Possession, as the petition for adjustment of debt was filed within 12 years from the date of their occupation of the suit lands.
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<s>[INST] Summarize the judgementCivil Appeal No. 104 of 1975 Appeal by special leave from the judgment and order dated the 12th December, 1974 of the Allahabad High Court in Application Paper No. A 53 in Election Petition No. 30 of 1974.
Yogeshwar Prasad and Rani Arora, for the appellant K C. Agarwala and K. M. L. Srivastava, for respondent No. 1.
The Judgment of the Court was delivered by FAZAL ALI, J.
This appeal by special leave involves an interpretation of the scope and ambit of section 87 of the Representation of the People Act, 1951, as amended by Act 47 of 1966.
The short point that fails for determination in this appeal is as to whether or not the provision of O. XI of the Code of Civil Procedure can be applied to the trial of election petitions in the High Court by force section 87 of the said Act.
For the purpose of brevity, the Representation of the People Act, 1951 shall be referred to as the Act of 1951 shall the Representation of the People Act as amended by Act 47 of 1966 as 'the Act '.
The circumstances under which this appeal arises may be succinctly stated as follows.
An election for the U.P. Legislative Assembly for 275 Allahabad North Assembly Constituency was held on February 6, 1974 In this election the appellant was a candidate put up by the Congress Ruling party and his election was contested by the first respondent Ram Adhar Yadav who was set up by the Samukta Socialist party.
The appellant was declared duly elected in the said election and the respondent No. 1 was defeated.
The respondent No. 1 filed an election petition being Election Petition No. 30 of 1974 in the High Court of Allahabad some time in April 1974 challenging the election of the appellant on various grounds.
The appellant filed a detailed written statement denying all the allegations made by the first respondent in his petition.
The election petition was assigned to J. M. L,.
Sinha, J. who framed a number of issues on October 4, 1974.
In October 1974 respondent No. 1 filed all application being Paper No. A/53 under O. XI, r. 1 of the Code of Civil Procedure for grant of leave to respondent No. 1 to deliver interrogatories in writing for the examination of the appellant and filed certain interrogatories along with his application.
The appellant filed her objections being Paper No. A/54 to the said application contending, inter alia, that the procedure prescribed under O.XI relating to interrogatories was not applicable to the trial of election petitions in the High Court and was not covered by section 87 of the Act.
The application filed by the first respondent and the objections of the appellant came up for consideration before the learned Single Judge who by his order dated December 12, 1974, held that the provisions of O.XI fully applied to the election petitions and accordingly rejected the objections filed by the appellant.
Hence this appeal by special leave.
257 It appeals that under the Act of 1951 the power to try election petitions was conferred on the Tribunal and section 92 of that Act expressly conferred powers under O.XI of the Code of Civil Procedure on the Tribunal.
The relevant portions of section 92 of the Act of 1951 may be extracted thus: The Tribunal shall have the powers which are vested in a court under the Code of Civil Procedure, 1908 (Act V of 1908), when trying a suit in respect of the following matters: (a) discovery and inspection; x x x x (g) issuing commissions for the examination or witnesses, and may summon and examine suo motu any person whose evidence appears to it to be material; and shall be deemed to be a civil court within the meaning of sections 480 and 482 of the Code of Criminal Procedure, 1898 (Act V of 1898).
" By the Amendment Act 47 of 1966 this section was, however, deleted and section 90 of the Act of 1951 was replaced by section 87 of the Act which was the same as section 90 of the Act of 1951.
Mr. Yogeshwar Prasad counsel appearing for the appellant has submitted two points before us.
In the first place he contended that the provisions regarding inspection and discovery and interrogatories as contained in O.XI of the Code of Civil Procedure are not an integral part of the procedure in a civil suit but are special powers contained in the Code and cannot, therefore, be made applicable to election petitions which are proceedings of a special nature.
In simplification of this argument it was argued that the history of the English Law as also the Election Law of our country before independence would show that the procedure contained in O.XI of the Code of Civil Procedure was not made applicable to the trial of election petitions.
It is, however, not necessary for us to examine the history of this matter because the Act of 1951 settles the issue.
When the Parliament expressly conferred powers contained in O.XI on the Tribunal under the statutory provision of section 92 of the Act of 1951, it must he presumed to have made a drastic departure from the old law on the subject and particularly the English Law.
In view of this enactment, therefore, it cannot be said that the provisions of our Election Law, particularly in regard to section 92 of the Act of 1951 were in pari materia with the provisions of the English Law on the subject.
In fact section 92 incorporating the entire provisions of O.XI of the Code of Civil Procedure was expressly enacted so that the elected representatives also may be subjected to the same law of the land such as the Code of Civil Procedure as any other citizen.
In these circumstances, we are unable to apply the English Law to the Act in order to hold that the principles contained in O. XI of the Code of Civil Procedure are excluded from the trial of election petitions.
The first contention put forward by counsel for the appellant must, therefore, fail.
258 It was then contended that even though express powers for inspection and discovery were conferred on the Tribunal under section 92 of the Act of 1951, yet by virtue of the amendment under Act 47 of 1956 this express provision was deliberately deleted, which shows that the Parliament intended to give special protection to the elected representatives so as not to compel them to answer interrogatories.
This is no doubt an attractive argument, but on closer scrutiny it does not appear to be tenable.
The argument completely overlooks the object of the Amendment Act 47 of 1966.
By virtue of this enactment a basic change in the trial of election petitions was sought to be introduced.
Before 1966 the power to try election petitions was conferred on the Tribunal which was not a civil court and, therefore, special powers had to be conferred on it.
fact clause (g) of section 92 of the Act of 1951 extracted above clearly shows that the Tribunal was deemed to be a civil court hence there was the necessity of conferring special powers contained in O.XI of the Code of Civil Procedure on the Tribunal to avoid further doubts.
After the amendment of 1966 as the election petitions were to be tried by the High Court, section 87 of the Act which is based on section 90 of the Act of 1951 was considered sufficient to contain the entire procedure to be adopted by the High Court in trying the election petitions which were to be in accordance with the Code of Civil Procedure as far as applicable.
Since the High Court is a court of record and a civil court is not, it was not at all necessary for the Parliament to have enacted a separate section like section 92 of the Act of 1951 and that is why section 92 was considered to be unnecessary in view of the change of forum and was deleted under the amended Act.
From this it cannot be contended that the Parliament intended that the provisions of O. XI of the Code of Civil Procedure 1 should not apply to the election petitions tried by the High Court under the Act.
Counsel for the appellant was unable to cite any authority directly in point.
On the other hand, the view which we have taken in this case, is amply supported by number of authorities of this Court as well as other High Courts.
To begin with, this Court as far back as 1951, while considering sections 90 and 92 of the Act of 1951 observed in Harish Chandra Bajpai vs Triloki Singh(1) thus: "The second contention urged on behalf of the appellants is that if the provisions of the Civil Procedure Code are held to be applicable in their entirely to the trial of election petitions, then there was no need to provide under section 92 that the Tribunal was to have the powers of courts under the Code of Civil Procedure in respect of the matters mentioned therein, as those powers would pass to it under section 90(2).
But this argument overlooks that the scope of section 90(2) is in a material particular different from that of section 92.
While under section 90(2) the provisions of the Civil Procedure Code are applicable only subject to the provisions of the Act and the rules made thereunder, there is no such limitation as regards the powers conferred by section 92.
It was obviously the intention of the legislature to put the powers of the Tribunal in respect of 259 the matters mentioned in section 92 as distinguished from the other provisions of the Code on a higher pedestal, and as observed in Sitaram vs Yograjsingh (A.I.R. , they are the irreducible minimum which the Tribunal is to possess.
(3) It is then argued that section 92 confers powers on the Tribunal in respect of certain matters, while section 90(2) applies the Civil Procedure Code in respect of matters relating to procedure, that there is a distinction between power and procedure, and that the granting of amendment being a power and not a matter of procedure, it can be claimed only under section 92 and not under section 90(2).
We do not see any antithesis between 'procedure ' in section 90(2) and 'powers ' under section 92.
When the respondent applied to the Tribunal for amendment, he took a procedural step, and that, he was clearly entitled to do under section 90(2).
The question of power arises only with reference to the order to be passed on the petition by the Tribunal.
Is it to be held that the presentation of a petition is competent, but the passing of any order thereon is not ? We are of opinion that there is no substance in this contention either.
" The Court pointed out that the object of section 92 was merely to secure powers of the Court in respect of the matters mentioned therein and that there was no antithesis between sections 90(2) and section 92 of the Act of 1951.
Similarly in Sitaram Hirachand Birla vs Yograjsingh Shankarsingh Parihar and others,(1) Chagla, C.J., clearly pointed out that the distinction between the power and procedure was completely artificial and a distinction without any difference.
The learned Chief Justice speaking for the Court observed as follows: "In our opinion, Mr. Kotwal is right, because on principle it is difficult to make a distinction between procedure and the powers of a Court as suggested by Mr. Patwardhan.
The whole of the Civil Procedure Code, as its very name implies, deals with procedure.
In the course of procedure the Court always exercises powers and when the Court is exercising its powers, it is exercising them in order to carry out the procedure laid down in the Code.
Therefore procedure and powers in this sense are really interchangeable terms and it is difficult to draw a line between procedure and powers.
The powers conferred under section 92 is not any substantive power, it is procedural power, a power Intended for the purposes of carrying out the procedure before the Tribunal.
" In a recent decision of the Full Bench of the Allahabad High Court in Duryodhan vs Sitaram and others(2) the Court held that the matters mentioned in section 92 appertain to the procedure for trial, and are also attracted by virtue of section 90(l).
The Court observed as follows: 260 "In my opinion, the matters mentioned in Section 92 appertain to the procedure for trial, and are also attracted by virtue of Section 90(1).
They were separately stated in Section 92 to make them operate inspite of any provision to the contrary in the Act or the Rules, and not with a view to curtail the amplitude of Sec.
90(1).
The provisions of O.9, Rr. 8 and 9, Civil P.C. even if they deal with powers, would be procedural powers and be attracted by virtue of Section 90( 1 ) .
" While dealing with the scope and ambit of s.90 of the Act 1951 this Court in Dr. Jagjit Singh vs Giani Kartar Singh and others(1) observed as follows .
"The true legal position in this matter is no longer in doubt.
Section 92 of the Act which defines the powers of the Tribunal, in terms, confers on it, by Cl.
(a), the powers which are vested in a Court under the Code of Civil Procedure when trying a suit, inter alia, in respect of discovery and inspection.
" A Full in Bench of the Punjab High Court in Jugal Kishore vs Dr. Baldev Prakash,(2) while construing the provisions of section 87 of the Act clearly pointed out that the High Court was a Court of record and possessed all inherent powers of a Court while trying election petitions.
In this connection, Grover, J., observed as follows: "It is quite clear that there is no distinct provision in the Act laying down any particular or special procedure which is to be followed when the petitioner chooses to commit default either in appearance or in production of evidence or generally in prosecuting the petition.
The provisions of the Code of Civil Procedure would, therefore, be applicable under Section 87 of the Act.
I am further of the opinion that any argument which could be pressed and adopted for saying that the inherent powers of the Court could not be exercised in such circumstances would be of no avail now as the High Court is a Court of record and possesses all inherent powers of a Court while trying election petitions.
" We fuly approve of the line of reasoning adopted by the High Court in that case.
The Rajasthan High Court in Keshari Lal Kavi and another vs Narain Prakash and others(3) followed the Punjab case and has taken the same view.
Some reliance was placed by the learned counsel for the appellant on the decision in Inamati Mallappa Basappa vs Desai Basavarai Ayyappa and others,(4) where this Court held that the procedure contained in O. 23, r. 1 of the Code of Civil Procedure did not apply to election petitions and, therefore, on a parity of reasoning O. C.P.C. also could not be applicable to the trial of election petitions.
261 We are, however, unable to agree with this argument.
The provision contained in O. 23 r. 1 cannot be equated with the provisions of o. XI because the election petition being a matter of moment and concerning the entire costituency there could be no question of the election petition being withdrawn by the petitioner who had filed the same.
This was highlighted by this Court in that case when the Court observed as follows: "Order 23, r.1, sub rule (2), provides for liberty being given by the Court to a party withdrawing or abandoning a part of his claim to file a fresh suit on the same cause of action, if so advised.
in the very nature of things such liberty could not be reserved to a petitioner in an election petition.
x x x x x x On a due consideration of all these provisions, we are opinion that the provisions of o. 23, r. 1, do not apply to the election petitions and it would not be open to a petitioner to withdraw or abandon a part of his claim once an election petition was presented to the Election Commission.
" Having regard to the nature of the election Petition, the notion of abandonment of the claim or withdrawal is absolutely foreign to the scope of such proceedings and must, therefore, be held to be excluded by necessary intendment of section 87 of the Act itself.
This authority therefor, does not appear to be of any assistance to counsel for the appellant.
The matter, however, seams to be concluded by a recent decision of this Court in Virendra Kumar Saklecha vs Jagjivan and others(1) where the Chief Justice speaking for the Court interpreted section 87 of the Act and observed as follows: "Under Section 87 of the Act every election petition should be tried by the High Court as nearly as may be in accordance with the procedure applicable under the Code of Civil Procedure to the trial of suits.
Under Section 102 of the Code the High Court may make rules regulating their own procedure and the procedure of the Civil Courts subject to their super vision and may by such rules vary, alter or add to any of the rules in the First Schedule to the Code.
" The relevant part of section 87 runs thus : "(1) Subject to the provisions of this Act and of any rules made thereunder, every election petition shall be tried by the High Court, as nearly as may be, in accordance with the procedure applicable under the Code of Civil Procedure, 1908 to the trial of suits :" A bare perusal of this section leads to the irresistible conclusion that election petitions shall have to be tried in accordance with the proce 262 dure applicable under the code of Civil Procedure to the trial of suits.
In other words, election petitions would be tried like ordinary civil suits.
We are unable to agree with counsel for the appellant that O. XI does not form part of the trial of suits but is a special procedure.
This is repelled by a oreference to O. XI of the Code of Civil Procedure itself.
It will appear that O. X relates to the procedure for examination of parties by the Court and O. XI is a part of that procedure, because it provides that where witnesses are not able to appear before the Court personally they are examined through interrogatories.
In these circumstances, therefore, O. XI is as much a part of the procedure as O. X relating to trial of suits in matters regarding summoning of witnesses, documents etc.
In these circumstances it cannot be said that section 87 of the Act either expressly or impliedly excludes the application of O. XI of the Code of Civil Procedure.
In fact we are clearly of opinion that section 87 of the Act is of the widest amplitude so as to cover the entire procedure mentioned in the Code of Civil Procedure with only two exceptions (i) where the Act contains express provision for certain matters which are inconsistent with the procedure prescribed by the Code; and (ii) where a particular provision of the Code of Civil Procedure is either expressly or any necessary intendment excluded by the Act.
Subject to these two exceptions, section 87 is very wide in its connotation We, therefore, agree with the learned Single Judge who was trying the election petition that the application for interrogatories was one of the logical steps in aid of the prosecution of the petition and was fully covered by section 87 of the Act.
The second contention raised by counsel for the appellant thus fails.
For the reasons given above, there is no merit in this appeal which fails and is accordingly dismissed with costs.
V.P.S. Appeal Dismissed.
[/INST]An application for delivery of interrogatories is one of the logical steps in aid of the prosecution of an election petition and is fully covered by section 87 of the Representation of the People Act, 1951.
C(1) (1) Order XI, C.P.C., forms part of the trial of suits and is not a special procedure.
Order X relates to the procedure for examination of parties by the Court and o. XI, is a part of it, because, it provides for examination through interrogatories, when personal appearance is not possible.
[262A B] (2) Before Act 47 of 1966 amended the Representation of the People Act, 1951, the power to try election petitions was conferred on the Erection Tribunal.
That Tribunal was not a Civil Court but was deemed to be a Civil Court.
Though section 90, as it then stood, provided that every election petition shall be tried, as nearly as may be, in accordance with the procedure under the C.P.C., in order to avoid doubts, the special powers under O. Xl, C.P.C., were conferred on the Tribunal by section 92.
When Parliament has expressly conferred the powers contained in O.XI on the Tribunal, it could not be contended that the principles contained therein are excluded from the trial of election petitions, on the basis of English Law.
[257F H] (3) After the amendment of 1966, as election petitions are to be tried by the High Court, a Court of Record, section 87, which is based on the repealed section 90, is sufficient to contain the entire procedure to be adopted by the High Court in trying election petitions.
Section 87 is of widest amplitude so as to cover the entire procedure mentioned in the Code of Civil Procedure with only two exceptions, (a) when the Act contains express provision for certain matters which are inconsistent with the procedure prescribed by the Code; and (b) when a particular provision of the Code is either expressly or by necessary intendment excluded by the Act.
That is why a provision like the repealed section 92 is unnecessary; and it cannot be contended that since Parliament repealed that section, Parliament intended that the provisions of O. XI, C.P.C., should not apply to election petitions tried by the High Court.
[258A E; 269C D] Sitaram Hirachand Birla vs Yograisingh Shankarsingh Parihar and others, AIR 1953 Bom.
293, Durvodhan vs Sitaram and others AIR 1970 All. 1; Jugal Kishore vs Dr. Baldev Prakash AIR 1968 Punj. 152 (F.B.) and Keshari Lal Kavi and another vs Narain Prakash and others, AIR 1969 Raj. 75, referred to.
Dr. Jagjit Singh vs Giani Kartar Singh and others A.I.R. 1966 S.C. 773, and V. K. Sakleha vs Jagjiwan ; , followed.
(4) Merely because in Inamati Mallappa Basappa vs Desai Basavaraj Ayyappu and others ; it was held that the procedure contained in O. 23, r. 1 C.P.C. does not apply to election petitions it could not be contended that O. XI: C.P.C., would not also be applicable to election petitions.
Order 23, r. 1 cannot be equated with the provisions of O. XI.
Having regard to the nature of an election petition which is a matter of moment and concern to the entire constituency the notion of abandonment of the claim or withdrawal is absolutely foreign to the scope of such proceedings and must, therefore, be held to be excluded by the necessary intendment of section 87 itself.
[260H 261 B, D E] 256 ^
</s> |
<s>[INST] Summarize the judgement(Civil) No.219 of 1988.
WITH C.M.P. No. 8572 of 1989.
(Under Article 139(A)(1) of the Constitution).
AND TRANSFER PETITION NOS.
376 40 of 1985.
Rajinder Sachar and R. Vasudevan for the Petitioners in Transfer Case No. 219/88 and C.M.P. No. 8572 of 1989. ' M.K. Ramamurthy, D.S. Chauhan, Pinaki Misra, M.A. Krish namoorthy, H.S. Parihar, R.P. Kapoor, O.C. Mathur, Ms. Madhu Khatri, Ms. Bina Gupta, D.N. Misra and Harish N. Salve for the Respondents in Transfer Case No. 2 19/88 and C.M.P. 8572 of 1989.
G. Ramaswamy, Additional Solicitor General, Anil Dev Singh (NP), R.P. Srivastava, Ms. A. Subhashini and C.V.S. Rao for the Petitioners in Transfer Petition No. 376 40 1 of 1985.
S.R. Seita and P.K. Manohar for the Respondent in Trans fer Petition Nos. 386 and 376 of 1985.
The Judgment of the Court was delivered by THOMMEN, J.
The first petitioner is a registered Central Trade Union claiming to represent about 85 per cent of the officers working in the various nationalised banks.
Peti tioners 2 to 4 are principal office bearers of the first petitioner and are officers of different nationalised banks.
They are aggrieved by Circular dated 23.8.1982 (Annexure A) issued by the Joint Secretary to the Government of India, Ministry of Finance, Department of Economic Affairs, (Bank ing Division), New Delhi.
They contend that the circular is contrary to the mandate of the Banking Companies (Acquisi tion and Transfer of Undertakings) Act, 1970 (Act No. 5 of 1970) (hereinafter referred to as the 'Act ') and the Natio nalised Banks (Management and Miscellaneous Provisions) Scheme, 1980 (hereinafter referred to as the 'Scheme ').
They further contend that Clause 3 of the Scheme in terms of which the circular is purported to have been issued is ultra vires Section 9 of the Act unless the said clause is so read as to be in harmony with the Section, and when so read the said clause does not justify or support the impugned circu lar.
The petitioners, therefore, 854 seek a writ of mandamus to direct the Central Government to appoint a nominee of the majority association of each of the nationalised banks as a member of its Board of Directors.
The circular in question reads: "As you are aware, in terms of sub clause (c) of Clause 3 of Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1970/1980, one Director from among the employ ees of the nationalised banks who are not workmen, is to be appointed by the Central Government in consultation with the Reserve Bank of India on the Board of each of the Nationalised Banks.
Unlike in the case of workman, the Scheme does not lay down any procedure for selection of the non workman Director.
The intention clearly was that in the case of Officer Director, Government should have ample scope and freedom in select ing any officer of the Bank to be the non workman Director.
However, hitherto panel of names sent by the banks for selection of the non workman Director has been confined to office bearers of the Association of Officers.
Government has recently reviewed this matter in the light of the relevant provisions of the Scheme and come to a conclusion that there is no justification for restricting the choice to the office bearers of the Associations.
" The object of the circular is to clarify that the Cen tral Government no longer regards itself bound by its earli er practice of appointing a person from out of the panel of three names submitted by the respective Association repre senting the majority of the non workmenemployees of each nationalised bank.
The circular makes it clear that the Government wishes to appoint any officer of proven ability and character to the Board of Directors of a nationalised bank irrespective of his affiliation with any Association.
The petitioners contend that the circular is undemocratic and contrary to the letter and spirit of the Act and the Scheme insofar as it cuts at the root of the representative form of selection for appointment to the Board of Directors as contemplated by the statute.
The stand of the Central Government and other respond ents, as stated in their counter affidavits, appears to be that the object of the circular is to neutralise and dis courage trade unionism amongst the officers and to keep the directorship above union affiliation, and thus 855 encourage the growth of a "management culture".
Mr. Rajinder Sachar, supported by Mr. Ramamurthi, contends that there is no justification whatsoever to issue any such circular for the very object of the Act is to encourage democratic selec tion of the Directors who will truly represent the interests of the various categories of persons mentioned in the Act.
To discourage trade unionism is contrary to the very spirit of the statute and repugnant to constitutional principles enshrined in Article 19(1)(c) and Article 43A of the Consti tution of India.
The Additional Solicitor General, representing the Central Government and Mr. Harish N. Salve, counsel for the Reserve Bank of India, contend that the Act postulates both election and nomination of members of the Board of Directors and the choice between the two modes of appointment is left to the Central Government.
The election or nomination has to be conducted in a manner as specified in the Scheme.
The Scheme in effect postulates all appointments to be by nomi nation.
In the case of workmen employees, the Director is appointed by the Central Government from amongst the names of three employees furnished by the representative Union.
Such appointment, though made out of, and restricted to, the panel furnished by the Union, is in effect a nomination of the one preferred by the Central Government.
In the case of non workmen employees, the choice is not restricted to any panel and the only condition postulated is consultation with the Reserve Bank of India.
Unionisation, though desirable among workmen, is not a matter to be encouraged in the case of other employees for selection to the Board of Directors, for the Directors must represent the interest of the bank as a whole and not of any special class of persons.
The Addi tional Solicitor General also submits that appointment by election is not the only mode of representative appointment, but nomination is perfectly valid and more effective from the point of view of the true institutional interest, par ticularly with reference to management efficiency.
In the light of these rival contentions, we shall exam ine the relevant provisions of the Act and the Scheme.
Section 9 of the Act provides: "9.
Power of Central Government to make scheme (1) The Central Government may, after consul tation with the Reserve Bank, make a scheme for carrying out the provisions of this Act.
856 (2) In particular,and without preju dice to the generality of the foregoing power, the said scheme may provide for all or any of the following matters, namely: (a) . . . . . (b) the constitution of the Board of Direc tors, by whatever name called, of the corre sponding new bank and all such matters in connection therewith or incidental thereto as the Central Government may consider to be necessary or expedient; (c) . . . . . . (d) such incidental, consequential and supplemental matters as may be necessary to carry out the provisions of this Act.
(3) Every Board of Directors of a correspond ing new bank, constituted under any scheme made under subsection (1), shall include (a) representative of the employees, and of depositors, of such bank, and (b) such other persons as may represent the interests of each of the following categories, namely, farmers, workers and artisans, to be elected or nominated in such manner as may be specified in the scheme.
" The object of Section 9 of the Act, insofar as it is material, is to empower the Central Government to make a scheme for the constitution of the Board of Directors so as to include representatives of the employees and other speci fied categories.
"Employees" include workmen and non work men.
The categories specified, apart from the employees, are depositors, farmers, workers and artisans.
The representa tives of these classes of people are to be either elected or nominated in the manner specified by the Scheme.
The legis lature has left it to the Central Government to make a scheme providing for appointment to the Board from amongst the specified categories either by election or by nomina tion.
The discretion as to the mode of 857 appointment is, of course, left to the Central Government, but it is not an unrestrained or unrestricted discretion, but a discretion which must be reasonably exercised so as to give effect to the true intent of the legislature as to the composition of the Board of Directors.
The object of the legislature is to give the Board a truly representative character so as to reflect the genuine interests of the various persons manning or dealing with the bank as an industry and a commercial enterprise.
The object of the Act is to nationalise the banks in order to, as stated in the preamble to the Act, "control the heights of the economy and to meet progressively, and serve better, the needs of development of the economy in conformi ty with the national policy and objectives".
The very pur pose of that legislative exercise is to render the largest good to the largest number of people of this "sovereign, socialist, secular, democratic republic".
(See the preamble to the Constitution enshrining the national policy and objectives.) It is with this object in view that the Act has envisaged a truly representative Board of Directors chosen by election where election is feasible or by nomination where that mode is more appropriate.
But the legislature has left it to the Central Government to specify by a scheme the manner in which the election or nomination is to be conduct ed, bearing in mind the true character and objective of the banking industry and its distinguishing features as a highly sensitive commercial enterprise.
Neither the election nor the nomination should be conducted in a manner unmindful of the distinctiveness of the banking industry.
What is postu lated is such election or nomination as would lend to the Board of Directors its truly representative character in consonance and harmony with the extremely delicate, vital and significant role of the banking industry in the context of the national policy and objectives and economic develop ment.
The mode of election or nomination must, therefore, be such as would be ideally suitable and appropriate to the banking industry and the choice of the mode is generally a matter for decision by the Central Government.
The Central Government must in this regard act in consultation with the Reserve Bank of India, for it is the latter that has the necessary expertise and intimate knowledge in the field of banking, finance and other connected matters.
The Act, therefore, requires the Central Government to make the Scheme in consultation with the Reserve Bank of India.
Any amendment or variation of the Scheme also requires consulta tion with the Reserve Bank of India.
[See Section 9(4)].
The Additional Solicitor General is right when he submits that it 858 is generally within the discretion of the Central Government to choose the special mode of appointment.
The Government may choose election or nomination as the appropriate mode of appointment in respect of various categories.
But we do not agree with him when he submits that the Central Government has a discretion to avoid election even where election is appropriate and feasible in respect of a particular category of persons.
The very object of leaving the choice to the Central Government as to the mode, which is election or nomination, is to enable it to reasonably exercise its discretion in such a way as to give the best form of repre sentation to every category of persons mentioned in the Act.
It may be possible to appoint a representative of the depos itors by election instead of nomination.
It would be per fectly within the discretion of the Central Government to choose that mode.
On the other hand, the depositors being not an organised body of persons, although easily identifia ble, selection of their representative by nomination may be easier, more feasible and perhaps more appropriate for the purpose of appointment to the Board.
Farmers, workers other than employees, and artisans mentioned under subsection 3(b) of Section 9 are best represented by nomination, they being difficult of identification and their connection with the bank being more remote than in the case of employees or even depositors.
For these classes of people, the discretion is entirely that of the Central Government to choose the mode of representation.
In the case of employees, on the other hand, election is indeed the most logical, the most appro priate, the most democratic and certainly the most advanta geous form of representation.
They are well identified, well organised, well motivated and interested associates and participants in the banking industry.
They are as much a part of the bank as the management is.
There can be no legitimate management culture foreign to their vital inter ests.
There can be no valid management policy contrary to their genuine needs.
The Act does not contemplate a manage ment unmindful of the true and legitimate interest of the employees.
In a nationalised bank, everyone is as much an employee as he is an employer.
There is no antithesis be tween the management and the employees.
The distinction that traditionally existed prior to nationalisation is no longer applicable.
The true management culture is indeed the cul ture that represents the various interests of all persons specified under Section 9 as well as the larger and wider interests of national economy as postulated in the preamble to the Act.
We will now examine the Scheme.
Clause 3 of Chapter II of the Scheme provides: 859 "3.
Constitution of the Board.
As soon as may be after the commencement of this Scheme, the Central Government shall, by notification in the official Gazette, constitute the Board of a nationalised bank, consisting of ( a ) . . . . . . . . (b)(i) one Director, from among the employees of the nationalised bank, who are workmen, to be appointed by the Central Government from out of a panel of three such employees fur nished to it by the representative Union, within a date to be specified by the Central Government; . . . . . . . . . . ( i i ) . . . . . . . . . . . . . . . . . . . . . . . . . . . . ( i i i ) . . . . . . . . (c) one Director, from among the employees of the nationalised bank, who are not workmen, to be appointed by the Central Government after consultation with the Reserve Bank; ( d ) . . . . . . . . . ( e ) . . . . . . . . . ( f ) . . . . . . . . . ( g ) . . . . . . . . . ( h ) . . . . . . . . .
The scheme making authority appears to us to have exercised the legislative power delegated to it in making the Scheme in consonance with the Act, although in a certain respect concerning the non workmen employees the intention of the delegate of the legislature could have been articu lated a little more explicitly.
We say so in 560 the light of the contemporaneous construction placed on the statute by the delegate, namely, the Central Government, as evinced by its own practice prior to the circular dated 23.8.1982.
Until the date of the circular, the consistent practice of the Central Government was to appoint a non workmen Director from out of a panel of three names fur nished to it by the majority association of non workmen employees.
The Central Government understood the Act and the Scheme to warrant such mode of appointment in the case of all employees.
In other words, the Central Government under stood sub clause (c) of Clause 3 regarding non workmen employees to warrant the same type of representation as in the case of workmen employees mentioned under sub clause (b) of Clause 3.
The field of choice was thus understood by the Government to be limited to the panel of names furnished by the representative Union of workmen or Association of non workmen as the case may be.
But, as stated earlier, sub clause (c) of Clause 3 is vaguely drafted and when read without regard to the legislative intent, as disclosed by the Act, is capable of a contrary interpretation, as is now sought to be put upon it by the Central Government, and that interpretation is, in our view, wrong, and, in any case, out of harmony with the principle enshrined in Articles 19(1)(c) and 43(A) of the Constitution The Additional Solicitor General poses the question whether the Scheme would not be even more defective if sub clause (c) were to receive the same construction as sub clause (b) so as to restrict the choice of appointment to the three persons specified on the panel furnished by the representative Association.
The Act, he says, speaks of election or nomination, and if election were to be construed to be the appropriate mode of choosing the representatives of the employees, appointment by nomination of one person out of the panel furnished by the representative Union of workmen or Association of non workmen, as the case may be, would not be a perfect representation in keeping with the principle of election.
That may or may not be so, and there is always room for improvements; but the petitioners have no complaint on that score.
If the Central Government were to provide for election in the manner chosen by it so as to appoint the true representatives of the concerned employees, Mr. Sachat submits, the petitioners would have no complaint, provided the provisions laid down in that behalf are valid and reasonable.
While, in our view, it is open to the Central Govern ment to amend the Scheme to improve on the machinery for the conduct of an appropriate election, it is incumbent upon it, until any such amend 561 ment is made, to work the present Scheme in such a way as to give the maximum scope for the concerned employees to exer cise their choice in the selection of their representatives.
That means, it would be perfectly in order for the Central Government to continue the: practice followed by it prior to the circular in question or to hold election of the repre sentatives of the concerned employees, and, if necessary, to amend the Scheme suitably for that purpose.
In the circumstances, we declare that the circular dated 23.8.1982 (Annexure A) is ultra vires the Act and the Scheme and it is, therefore, null and void and of no effect.
The Transfer Case is accordingly disposed of.
Civil Miscellane ous Petition No. 8572 of 1988 and Transfer Petitions Nos. 376 401 of 1985 are allowed.
Parties shall bear their re spective costs.
T.N.A. Petitions allowed.
[/INST]The Central Govt.
in exercise of its power under Section 9 of the enacted the Nationalised Banks (Management and Miscellaneous Provisions) Scheme, 1980.
Clause 3(b) of the said scheme deals with the appointment of workmen Directors and it provides that the Central Govt.
shall constitute the Board of a Nationalised Bank consisting of one Director from among the employees of the nationalised bank, who are workmen, to be appointed from out of a panel of 3 such employees furnished to it by the Representative Union.
Clause 3(c) of the Scheme deals with appointment of non workmen Directors and it provides that the Central Government shall constitute the Board of a nationalised bank consisting of one director, from among the employees of the nationalised bank, who are not workmen, to be appointed after consultation with the Reserve Bank.
The consistent practice of the Central Govt.
was to appoint a non workman Director from out of a penal of 3 names furnished to it by the majority association of non workmen employees.
By a circular dated 23.8.82, it was clarified that as far as appointment of non workmen Director is concerned, there is no justification for restricting the choice to the office bearers of the Association.
This was to enable the Central Govt.
to appoint any officer of proven 851 ability and character to the Board of Directors of a natio nalised Bank irrespective of his affiliation with any asso ciation.
The petitioners in these petitions to this Court, chal lenged this circular as contrary to the mandate of the Act and the Scheme, and also contended that clause 3 of the Scheme was ultra vires Section 9 of the Act.
Allowing the petitions, HELD: 1.
The Circular is ultra vires the Act and the Scheme and it is, therefore, null and void and of no effect.
[861C] 2.
The object of the is to render the largest good to the largest number of people.
The object of Section 9 of the Act is to empower the Central Govt.
to make a Scheme for the constitution of the Board of Directors so as to include representatives of the employees i.e. workmen and non workmen and other specified categories viz. depositors, farmers, workers and artisans.
The representatives of these classes of people are to be either elected or nominated in the manner specified by the Scheme.
The legislature has left it to the Central Government to make a scheme providing for appointment to the Board from amongst the specified catego ries either by election or by nomination.
The discretion as to the mode of appointment is left to the Central Govern ment, but it is not an unrestrained or unrestricted discre tion, but a discretion which must be reasonably exercised so as to give effect to the true intent of the legislature i.e. to give the Board a truly representative character so as to reflect the genuine interests of the various persons manning or dealing with the bank as an industry and a commercial enterprise.
What is postulated is such election or nomina tion as would lend to the Board of Directors its truly representative character in consonance and harmony with the extremely delicate, vital and significant role of the bank ing industry in the context of the national policy and objectives and economic development.
The mode of election or nomination must, therefore, be such as would be ideally suitable and appropriate to the banking industry.
Neither the election nor the nomination should be conducted in a manner unmindful of the distinctiveness of the banking industry.
The Central Govt.
must in this regard act in consultation with the Reserve Bank of India which has the necessary expertise and intimate knowledge in the field of banking, finance and other connected matters.
[856F H; 857A B, C G] 852 2.1 But the Central Government has no discretion to avoid election even where election is appropriate and feasi ble in respect of a particular category of persons.
For the appointment of representatives of depositors, farmers, workers other than employees and Artisans, the discretion is entirely that of the Central Govt.
to choose the mode of representation.
On the other hand, in the case of employees, election is indeed the most logical, the most appropriate, the most democratic and certainly the most advantageous form of representation.
They are well identified, well organised, well motivated and interested associates and participants in the banking industry.
They are as such a part of the bank as the management is.
There can be no legitimate management culture foreign to their vital interests.
There can be no valid management policy contrary to their genuine needs.
The Act does not contemplate a management unmindful of the true and legitimate interests of the employees.
In a nationalised bank, everyone is as much an employee as he is an employer.
There is no antithesis between the management and the em ployees.
The distinction that traditionally existed prior to nationalisation is no longer applicable.
The true management culture is indeed the culture that represents the various interests of all persons specified under Section 9 as well as the larger and wider interests of national economy as postulated in the preamble to the Act.
[858B G] 3.
The Central Govt.
understood sub clause (c) of Clause 3 regarding non workmen employees to warrant the same type of representation as in the case of workmen employees men tioned under subclause (b) of Clause 3.
The field of choice was thus understood by the Government to be limited to the panel of names furnished by the representative Union of workmen or Association of non workmen as the case may be.
But sub clause (c) of Clause 3 is vaguely drafted and when read without regard to the legislative intent, as disclosed by the Act, is capable of a contrary interpretation viz. there is no justification for restricting the choice of non workmen Directors to the office bearers of the Associa tion.
That interpretation is wrong and, in any case, out of harmony with the principle enshrined in Articles 19(1)(c) and 43(A) of the Constitution.
[860B D] 4.
It is open to the Central Government to amend the Scheme to improve on the machinery for the conduct of an appropriate election, it is incumbent upon it, until any such amendment is made, to work the present Scheme in such a way as to give the maximum scope for the concerned employees to exercise their choice in the selection of their represen tatives.
[860H; 861A] 853
</s> |
<s>[INST] Summarize the judgementivil Appeal No. 1314 of 1980.
From the Judgment and Order dated 28.9.1978 of the Madras High Court in Civil Revision Petition No. 782 of 1977.
A.T.M. Sampath for the Appellant.
section Padmanabhan and M. Raghuraman for the Respondents.
The Judgment of the Court was delivered by NATARAJAN, J.
This appeal by special leave is by a tenant against whom an order of eviction passed under Sec tion 10(3)(c) of the Tamil Nadu Buildings (Lease and Rent Control) Act, 1960, hereinafter referred to as the "Act", by the Rent Controller was restored by the High Court of Madras after setting aside the dismissal of the eviction petition by the Appellate Authority.
The facts are not in controversy and may briefly be set out as under.
A one storeyed building in Wall Tax Road, Madras was originally owned by one Unnamalai Ammal.
She was using the first floor for her residence and had leased out the ground floor to the appellant herein to be used as a godown for storing his business ware.
It is common ground the appellant 's shop is situate in an adjoining building.
The tease was for a period of 10 years with an option for renewal for a further period of 5 years.
Unnamalai Ammal however refused to renew the lease and filed a suit against the appellant for eviction on the ground she bona fide.
required the ground floor also for her residential use.
The suit did not meet with success.
Unnamalai Ammal bequeathed the property to her son in law and grand son who are the respondents herein.
As legatees of the premises the respond ents filed a petition under Section 10(3)(c) of the Act praying for eviction of the appellant on the ground they bona fide required additional accommodation for their resi dential needs.
The Rent Controller upheld their claim, after finding the relevant factors of bona fide need and com 1178 parative hardship in their favour and ordered eviction.
On appeal by the appellant, the Appellant Authority reversed the findings of the Rent Controller and further held that the respondent were not entitled to recover possession of non residential premises for their residential requirements and dismissed the petition for eviction.
On further revision to the High Court by the respondents Remaprasada Rao, C.J. set aside the order of the Appellant Authority and resorted the order of eviction passed by the Rent Controller.
The aggrieved tenant has preferred this appeal.
The judgment under appeal is assailed by the appellant on four grounds viz. (1) Since the ground floor constitutes a building by itself within the meaning of Section 2(2) of the Act, the respondents can seek eviction of the appellant only under Section 10(3)(a)(i) of the Act and not under Section 10(3)(c); (2) Even if the respondents are entitled to invoke Section 10(3)(c) they can seek eviction only if they require the ground floor for non residential purposes and not for residential purposes; (3) In any event the factors of relative hardship be tween the parties weigh more in favour of the appellant than the respondent; and (4) The High Court was in error in interfering with the findings of fact rendered by the Appellate Authority while exercising its revisional powers under Section 25 of the Act.
Before proceeding to examine the merits of the conten tions, it will be relevant to state a few facts.
The ground floor, though used as a godown, is of a residential pattern and consists of two rooms and a hall besides a kitchen and toilet rooms.
The first floor is being used as their resi dence by the respondents, the other members of the family being the wife and daughter of the second respondent.
The first floor consists of only two rooms and it is the case of the respondents that the accommodation in the first floor has become inadequate for their growing residential needs.
It is also their case that the first respondent who is over 65 years of age finds it difficult to climb the stairs on account of his old age and frail health.
Their further plea is that the water supply to the first floor is inadequate in spite of the electric motor and pump set installed in the ground floor to pump up water.
In contrast the appellant is said to have a spacious three storeyed building in Door No. 39 adjoining the leased premises and also to have another godown close by.
1179 One of the contentions of the appellant was that the eviction proceedings were a continuation of the unsuccessful attempt by Unnamalai Ammal herself to get the tenant evicted and, therefore, the eviction petition lacked bona fides.
The High Court has rejected his contention and in our opinion, rightly too, because the respondents who are the legatees of the building cannot be attributed mala fides because of the earlier eviction suit filed by their predecessor in title.
We may also dispose of another contention of the appellant at this juncture itself which had found favour with the Appellate Authority.
The contention was that with the death of Unnamalai Ammal the family had become smaller and hence there was no need for additional accommodation.
This argu ment overlooks the fact that additional accommodation is sought for because of the difficulty experienced by the first respondent in climbing the stairs in his old age and the need for the second respondent 's daughter, growing in years, to have a room all for herself for keeping her books and reading at home.
We will now proceed to consider the legal contentions of the appellant in seriatim.
The first and foremost contention was that under the Act the ground floor constitutes a sepa rate building and as such the respondents can seek recovery of possession of the ground floor only under Section 10(3)(a)(i) and not under Section 10(3)(c).
For dealing with this contention, the relevant provisions of the Act need setting out.
Section 2 which is the definition Section reads as under: "Definitions: In this Act, unless the context otherwise requires (2) "building" means any building or hut or part of a building or hut, let or to be let separately for residential or non residen tial purpose and includes (a) . . (b) . .
Section 10 sets out the grounds on which the eviction of a tenant can be ordered.
For our purpose it is enough to refer to the following provisions alone: "Section 10(3)(a): A landlord may, subject to the 1180 provisions of clause (d), apply to the Con troller for an order directing the tenant to put the landlord in possession of the build ing (i) in case it is a residential building, if the landlord requires it for his own occupation or for the occupation of any member of his family and if he or any member of his family is not occupying a residential building of his own in the city, town or village concerned; (ii) ommitted (iii) in case it is any other non residential building if the landlord or any member of his family is not occupying for purposes of a business which he or any member of his family is carrying on, non residential building in the city, town or village concerned which is his own: (b) ommitted.
(c) A landlord who is occupying only a part of a building, whether residential or non resi dential, may, notwithstanding anything con tained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in posses sion thereof, it he requires additional accom modation for residential purposes or for purposes of a business which he is carrying on, as the case may be.
Provided that, in the case of an application under clause (c), the Controller, shall reject the application if he is satisfied that the hardship which may be caused to the tenant by granting it will outweigh the advantage to the landlord: Provided further that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building and may extend such time so as not to exceed three months in the aggregate.
" It is no doubt true that under Section 2(2) a building has been.
defined as not building or hut but also part of a building or hut let separately for residential or non resi dential purpose.
That would, however, only mean that a part of a building which has been let out or which is to be let out separately can also be construed as a separate and 1181 independent building without reference to the other portion or portions of the building where it is not necessary to treat the entire building as one Whole and inseparable unit.
A limitation on the definition has been placed by the Legis lature itself by providing that the application of the definition is subject to the contextual position.
Therefore, it follows that where the context warrants the entire build ing being construed as one integral unit, it would be inap propriate to view the building as consisting of several disintegerated units and not as one integerated structure.
Secondly there is vast difference between the words "resi dential building" and "non residential building" used in Section 10(3)(a)(i) and (iii) on the one hand and Section 10(3)(c) on the other.
While Section 10(3)(a)(i) and (iii) refer to a building only as residential or non residential Section 10(3)(c) refers to a landlord occupying a pan of a building, 'whether residential or non residential.
(Emphasis supplied).
Further more, Section 10(3)(c) states that a landlord may apply to the Controller for an order of evic tion being passed against the tenant "occupying the whole or any portion of the remaining pan of the building" (Emphasis supplied).
If as contended by the appellant each portion of a building let out separately should always be construed as an independent unit by itself then there is no scope for a landlord occupying "a part of a building" seeking eviction of a tenant "occupying the whole or any portion of the remaining part of the building".
It is, therefore, obvious that in so far as Section 10(3)(c) is concerned the Legisla ture has intended that the entire building, irrespective of one portion being occupied by the landlord and the other portion or portions being occupied by a tenant or tenants should be viewed as one whole and integrated unit and not as different entities.
To import the expansive definition of the word "building" in Section 2(2) into section 10(3)(c) would result in rendering meaningless the words "part of a building" occupied by the landlord and a tenant "occupying the whole or any portion of the remaining part of the build ing".
The third factor militating against the contention of the appellant is that if a portion of a building let out to a tenant is to be treated in all situations as a separate and independent building then Section 10(3)(c) will be rendered otiose because the landlord can never then ask for additional accommodation since Section 10(3)(a) does not provide for eviction of tenants on the ground of additional accommodation for the landlord either for residential or non residential purposes.
It is a well settled rule of interpretation of statutes that the provisions of the Act should be interpreted in such a manner as not to render any of its provisions otiose unless there are compelling reasons for the Court to resort to that extreme contingency.
1182 Yet another noteworthy feature to be borne in mind is that Section 10(3)(c) is governed by two provisos which is not the case when eviction orders are made under any of the sub clauses of Section 10(3)(a).
The first proviso enjoins the Controller to reject the application of a landlord under Section.
10(3)(c) for additional accommodation, even where the need of the landlord is found to be genuine, if the hardship caused to the tenant by an order of eviction will outweigh the advantage to the landlord by the said order.
The second proviso empowers the Controller to give the tenant a reasonable time not exceeding three months in the aggregate to vacate the portion in his occupation and put the landlord in possession thereof.
Obviously the second proviso has been made to facilitate the tenant to find alternate residential or non residential accommodation elsewhere, since the landlord who is already in possession of a portion of the building can put up with the hardship of inadequate accommodation for a period of three months at the most.
The above analytical consideration of the relevant provisions bring out clearly the fallacy contained in and the untenability of the contention that the ground floor occupied by the appellant is a distinct and separate unit and as such the respondents cannot seek his eviction under Section 10(3)(c) of the Act.
This aspect of the matter has been considered in varying degrees in the following decisions and interpreted in ac cordance with our conclusion; vide Saraswathi Sriraman vs
P.C.R. Chetty 's Charities, ; Mohammed Jarfar vs Palaniappa Chettiar, and Chellammal vs Accommodation Controller, Even the Division Bench ruling relied on by Mr. Sampath concedes this position and has observed as follows: "Therefore, if the context in a particular provision requires that the word building should not be understood as defined in Section 22, certainly it is open to the Court to give the normal, natural and ordinary meaning which it is capable of and for that purpose, it is not necessary to rely upon any decision.
(vide page 153 of the report).
" Taking up now for consideration the second contention, there were conflicting decisions in the Madras High Court and this led to a reference of the case in Thirupathi vs Kanta Rao, [1981] Vol.
1 ILR Madras 128 to a Division Bench.
While the Division Bench has taken one view.
a Division Bench of the Andhra Pradesh High Court has 1183 taken a contrary view on the identical issue.
It is perti nent to state here that the provisions of the Andhra Pradesh Buildings (Lease, Rent and Eviction Control) Act are in pari tnetria with the provisions of the Madras Act in so far as Sections 10(3)(a) and (c) are concerned.
The conflict was with reference to the interpretation of Section 10(3)(c) viz. whether a landlord occupying a part of a building for residential purposes is entitled to seek eviction of a tenant occupying the whole or any portion of the remaining part of the building for non residential purposes for his (landlord 's) residential use and vice versa.
While it was held in Govindan vs Rajagopal Nadar, that a landlord can seek eviction of a tenant under Section 10(3)(c) for additional residential purposes only if the tenant also is putting the building to residential use and likewise a landlord can seek additional accommodation for business purposes only if the tenant is also putting the building to non residential use, it was held to the contrary in Premchand Motichand vs Hatneed Sultan, ; P.I. Kurian vs Government of Tamil Nadu, 85 L.W. 364 and Saraswathi Sriraman vs P.C.R. Chetty 's Charities (supra).
The latter view was taken by Ismail, J., also, as he then was, in an unreported case viz. Rangaswami Reddiar vs Minor N. Jayaraj (C.R.P. No. 2380 of 1977).
Subsequently in the referred case, the Division Bench consisting of Ismail, C.J. and Rathnam J. rendered judgment in Thirupathi vs Kanta Rao, (supra).
(Ismail, C.J., changing his earlier view) holding that a landlord will be entitled under Section 10(3)(c) to seek additional accommodation for residential purposes only if it is a residential building in the occupa tion Of a tenant and likewise a landlord can seek additional accommodation for non residential purposes only if the building is a non residential one.
The Division Bench has further taken the view that the non obstante clause is only to entitle a landlord to seek eviction even when he is in possession of a portion of a building .belonging to him and nothing more.
In a later decision G.N. Rajaram vs Mukunthu N. Venkata rama Iyer.
MLJ 1985(2) 173 the Division Bench ruling has been followed and eviction was ordered of a tenant occupying a room in the ground floor of a residential building for his business purposes.
On the other hand a Division Bench of the Andhra Pradesh High Court in K. Parasuramaiah vs Lakshmamma, AIR 1965 220 has held that if a landlord satisfies the Controller that he wants additional accommodation in the same building for his residential or non residential re quirements then notwithstanding the user to which the tenant was putting the 1184 leased portion.
the landord is entitled to an order of eviction so that he can re adjust the additional accommoda tion in the manner convenient to him and it is not necessary that the additional accommodation sought for should be used by the landlord for the same purpose for which the tenant sought to be evicted was using it.
In the words of the Division Bench: "Clause (c) makes it twice clear that a land lord who occupies a part of a building, wheth er residential or nonresidential can ask for eviction of a tenant occupying another portion whatever may be his requirements, whether residential or non residential".
For holding so, the Andhra Pradesh High Court has taken the words "notwithstanding anything in clause (a)" as having over riding effect over both the conditions laid down in Section 10(3)(a) and (iii) viz. a landlord (1) not having a building of his own for residential or nonresidential pur poses; and (2) seeking the eviction of a tenant from resi dential premises only for residential purposes; and (3) seeking eviction of a tenant from non residential premises only for nonresidential purposes.
We will now examine for ourselves the interpretation to be given to Section 10(3)(c).
In so doing we will first see the legislative intent behind Section 10(3)(c) before con sidering the thrust given by nonobstante clause in it.
Since Section 10(3)(c) provides for both situations viz. a land lord occupying a part of a building which is residential or non residential, the sub clause can be read separately so as to have reference exclusively to a residential building or a non residential building.
In Thirupathy vs Kanta Rao, (supra) the learned Judges have noticed this position and set out Section 10(3)(c) distinctively.
But in so doing they have restricted the relief of additional accommodation to the landlord for residential purposes to residential build ings alone and the relief of additional accommodation for business purposes to nonresidential buildings alone and therein the error has crept in.
In our view.
this restric tion is not envisaged by Section 10(3)(c).
The proper way of distinctively viewing the Section should be as under: "A landlord who is occupying only a part of a residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession 1185 thereof.
if he requires additional accommoda tion for residential purposes or for purposes of a business which he is carrying on, as the case may be." "A landlord who is occupying only a part of a non residential building may notwithstanding anything contained in clause (a), apply to the Controller for an order directing any tenant occupying the whole or any portion of the remaining part of the building to put the landlord in possession thereof, if he requires additional accommodation for residential purposes or for purposes of a business which he is carrying on, as the case may be.
" If clause (3) is construed in this manner there can be no scope for a contention that a landlord cab seek addition al accommodation for residence only if the building is a residential one and likewise he can seek additional accommo dation for business purposes only if the building is a non residential one.
There are several reasons which persuade us to take this view.
In the first place it has to be noted that Section 10(3)(c) stands on a different footing from Section 10(3)(a)(i) and Section 10(3)(a)(iii).
It is not a case of a landlord not occupying a residential or non residential building of his own but a case of a landlord occupying a part of a residential or non residential building of his own and putting it to such user as deemed fit by him.
Since the requirement of additional accommodation by the landlord is with reference to the manner of his user of that part of the building which is in his occupation it is the nature of that requirement that should prevail over the manner of user of the tenant of the portion leased out to him.
In other words, the additional accommodation is for extending the user of the building by the landlord to the leased portion for the same purpose for which the portion not leased out is being put to.
Such being the case which the landlord is genuinely in need of additional accommodation for residential or non residential requirements, as the case may be, he can be given relief only it the tenant occupying the other portion of the building is asked to vacate.
If it is to be held that Section 10(3)(c) can be invoked only if the nature of the requirement of the landlord and the nature of user of the leased portion by the tenant coalesce then the landlord will be left without any remedy when the nature of his need and the nature of the user of the leased portion by the tenant do not tally.
Take for example, a case where a landlord has got grown up sons and daughters or there is a married son and growing daughters or there 1186 are old parents who cannot climb stairs etc.
If the landlord is to be refused additional accommodation for residential purposes merely because the tenant is making use of the leased portion for nonresidential purposes the landlord would be placed in an awful predicament.
Similarly.
if a landlord bona fide requires additional accommodation for his business and his business would suffer serious detriment if he cannot secure additional accommodation, it would cause great hardship and gave injustice to the landlord if he is to be denied accommodation merely because the tenant is making use of the leased portion for residential purposes.
It is, therefore, that the Legislature has provided Section 10(3)(c) in its present form so that a landlord bona fide requiring additional accommodation is not confronted with a permanently irremediable situation.
In its anxiety that Section 10(3)(c) should fully serve the purpose for which it has been enacted the Legislature has also added the non obstante clause.
Having regard to the object of Section 10(3)(c) and the terms in which it is worded there is war rant and justification for holding that the non obstante clause has been provided to have overriding effect over both the restrictions placed by Section 10(3)(a)(i) and (iii) viz. landlord seeking eviction of a tenant should not be occupying a building of his own and secondly the nature of user of the leased property by the tenant must correspond to the nature of the requirement of the landlord.
In construing Section 10(3)(c) it is pertinent to note that the words used are "any tenant" and not "a tenant" who can be called upon to vacate the portion in his occupation.
The word "any" has the following meaning: "Some; one out of many; an indefinite number.
One indiscriminately of whatever kind or quantity.
" Word "any" has a diversity of mean ing and may be employed to indicate "all" or "every" as well as "some" or "one" and its meaning in a given statute depends upon the context and the subject matter of the statute.
It is often synonymous with "either", "every" or "all".
Its generality may be restricted by context; (Black 's Law Dic tionary; Fifth Edition).
Unless the legislature had intended that both classes of tenants can be asked to vacate by the Rent Controller for providing the.
landlord additional accommodation.
be it for residential or non residential 1187 purposes.
it would not have used the word "any" instead of using the letter "a" to denote a tenant.
Thirdly it is significant to note that there is no reference in clause (c) to the nature of the user of the tenant occupying the leased portion of the building viz. whether he is using it for residential or nonresidential purposes.
If it was the intention of the legislature that only a tenant occupying a residential portion of a building can be asked to vacate for providing additional residential accommodation to the landlord and correspondingly a tenant occupying a portion of a building for non residential pur poses alone being asked to vacate for the nonresidential requirements of the landlord, the legislature would have provided specific stipulations to that effect in clause (c).
On that ground also it must be construed that clause (c) has been provided.
in order to enable a landlord to seek the eviction of any tenant occupying the whole or any portion of the remaining part of the building for residential or non residential purposes for satisfying the additional needs of the landlord irrespective of whether the need is for resi dential or business purposes.
The words "as the case may be" in sub clause (c) have been construed by the Division Bench of the Madras High Court to mean that they restrict the landlord 's right to secure additional accommodation for residential purposes only in respect of a residential building and in the case of additional accommodation for business purpose only to a non residential building.
We are of the view that in the context of sub clause (c).
the words "as the case may be" would only mean "whichever the case may be" i.e. either residential or non residential.
To sum up, the requirement of additional accommodation pertains to the need of the landlord and the manner of user of the portion of the building already in his occupation and consequently the bona fides of his requirement will outweigh all the restrictions imposed by Section 10(3)(a) i.e. nature of the building.
nature of user of the leased portion by the tenant etc.
Even so, the Legislature has taken care to safeguard the interests of the tenant by means of the provi sos to the sub clause.
The first proviso enjoins the Con troller to balance the interests of the landlord and the tenant and to refuse eviction if the hardship caused to the tenant will outweight the advantage to the landlord by reason of the evicton.
The second proviso empowers the Controller to grant adequate time to the tenant upto a maximum of three months to vacate the building and secure accommodation elsewhere.
there.fore.
follows that once a landlord is able to satisfy the 1188 Controller that he is bona fide in need of additional accom modation for residential or non residential purposes and that the advantage derived by him by an order of eviction will outweigh the hardship caused to the tenant, then he is entitled to an order of eviction irrespective of any other consideration.
In the light of our conclusion we approve the ratio in K. Prasuramaiah vs Lakshmamma, (supra) and disapprove the ratio in Thirupathy vs Kanta Rao.
(supra).
The third and fourth question posed for consideration do not present any difficulty.
The Rent Controller has gone into the question of comparative hardship and rendered a finding in favour of the respondents.
The High Court has observed that the Appellate Authority.
while reversing the order.
has failed to take due note of relevant materials placed by the respondents.
The High Court has, therefore, held that the Appellate Authority 's findings have been vitiated because of its non advertance to the evidence and the apparent errors noticed in its assessment of the compar ative hardship between the parties.
In so far as the High Court interfering with the findings of the Appellate Author ity is concerned, the High Court has justified its action by pointing out that Appellate Authority had applied wrong tests and had also failed to give effect to unchallenged findings of the Rent Controller and hence the order of the Appellate Authority suffered from manifest errors in the exercise of its jurisdiction.
The High Court was, therefore.
entitled to allow the revision and consequently the third and fourth contentions also fail.
In the result we find no merit in the appeal and accord ingly it will stand dismissed.
Mr. Sampath, learned counsel for the appellant made a request that in the event of the appeal being dismissed, the appellant should be given suffi ciently long time to secure another godown and shift his stock of goods to that place.
Mr. Padmanabhan learned coun sel for the respondents very fairly stated that the respond ents are agreeable to give time to the appellant till 31.12.87 to vacate the leased portion.
Accordingly we order that in spite of the dismissal of the appeal the appellant will have time till 31.12.87 to vacate the ground floor premises in his occupation and deliver peaceful and vacant possession to the respondents subject however to the appel lant filing an under taking in the usual terms in this behalf within 4 weeks from today failing which the respond ents will be entitled to recover possession of the building forthwith.
The parties will bear their respective costs.
P.S. S Appeal dis missed.
[/INST]The respondent was assessed to income tax for assessment year 1960 61 under section 23(3) of the, Income Tax Act, 1922 and for the assessment years 1961 62 and 1962 63 under section 143(3) of the income Tax Act, 1961.
The validity of the notices issued under section 147(a) read with section 148 of the Act of 1961 in respect of these three assessment years was challenged by the respondent under Act 226.
Though the notices did not disclose any material to justify their issue, the Income Tax Officer in his return before the High Court stated that during the course of assessment for the year 1963 64 of the wife of the respondent, she contended having received valu able assets from the respondent between 11th December 1955 and 28th October, 1960 without adequate consideration in money or money 's worth.
The income from the said assets which should have been included in the return of the re spondent was not so included by him and that the capital gains arisen therefrom was also not included or disclosed by the respondent In his returns.
A Learned Single Judge relying upon the decision of the Supreme Court in V.D.M. RM.
M. RM.
Mathiah Chettiar vs Commissioner of Income tax, Madras quashed the notices.
The appeal of the Revenue failed before the Divi sion Bench. ' Dismissing the appeal, HELD: By failure of the assessee to include the share income of his wife and minor child in his return, it cannot be deemed that he has failed to disclose fully and truly all material facts necessary for the assessment within the meaning of section 34(1)(a) of the Indian Income Tax Act.
[1107B] V.D.M. RM.
M. RM.
Muthiah Chettiar vs Commissioner of Income tax, Madras, ; Malegaon Electricity Co. (P) Ltd. vs 1103 Commissioner of Income tax, Bombay, and Commis sioner of Income tax, Kerala vs Smt.
P.K. Kochammu Amma, Peroke, , followed.
</s> |
<s>[INST] Summarize the judgementCivil Appeal Nos.
1742 1743 of 1969.
Appeals by Special Leave from the Judgment and order dated 12 12 1968 of the Allahabad High Court in R.S.A. No. 2777 of 1972.
section N. Andley, Uma Datta and T. C. Sharma for the Appellant in CA 1742/69.
A. P. section Chauhan and N. N. Sharma for Respondent No. 1 in CA 1742/69 and for the Appellant in CA 1743/69.
1000 The Judgment of the Court was delivered by KOSHAL, J.
The facts giving rise to these two cross appeals by special leave may, with advantage, be stated with reference to the following pedigree table: CHHITAR MAL | ___________________________________________________________ | | | | Salag Ram Banshi Dhar Narain Dass Bhagwan Dass | (died | | | issueless) | | | | | | | | | Balu Ram Ram Chander | | | | | | | Tirlok Chand | | | (plaintiff) | | | | | | | | | Rag Vir Ram Nath Bhagirath | | Saran (defendant) (Defendant | | No. 3) No. 4) No. 5) | | | | | | | | | Devi Sahai Piarye Lal Gopi Nath | (died in (Defendent | | 1943) No. 2) | | | | | | | | | | | Damodar Dass Smt Barfi | (defendant (daughter) | No. 6 | ____________________________________________________ | | | | Murli Kewal Ram Govind Jagananth =Smt.
Chhoti Dhar (dies Ram (died (died (died issueless (died issueless issueless in 1925) in 1952) issue in 1940 in 1955) in 1952) ____________________________________________________________ The litigation between the parties started with suit No. 1912 of 1958 instituted by Tirlok Chand for partition of properties detailed in schedules A,B and C forming part of the plaint.
His case was that 1001 the property described in schedule A had been acquired by his great grand father Chhitar Mal, that the property detailed in schedule B was jointly acquired by Salag Ram 's sons Jagannath and Govind Ram, the two of whom constituted a joint Hindu family, and that the property specified in schedule C had once belonged exclusively to Jagannath, son of Salag Ram and that it was from him that it had descended to his widow Smt.
Chhoti.
Apart from defendants Nos. 2 to 6 whose names appear in the pedigree table, Banwari Lal [who is the appellant before us in Civil Appeal No. 1742(N) of 1969] was arrayed as defendant No. 1 and he has been the real contesting defendant whose claim was based on his adoption by Govind Ram, grandson of Chhitar Mal and on two registered wills, both dated the 25th of September, 1950, purporting to have been executed by Govind Ram and Smt.
Chhoti respectively.
He claimed that the two testators had bequeathed their entire property to him, that the property covered by schedule A was acquired not by Chhitar Mal but by Salag Ram and that the one embraced by schedule C had been purchased by Smt.
Chhoti with her stridhana and was never the property of her husband Jagannath.
He therefore claimed to be entitled to all the properties in suit exclusively for himself, it being common ground between the parties that those properties were the subject matter of the two wills.
The plaintiff denied the adoption set up by defendant No. 1 and challenged the two wills as forgeries.
The trial court and the first appellate court found that the property covered by schedule A had been acquired not by Chhitar Mal but by his son Salag Ram.
There was no contest in relation to the property embraced by schedule B which was therefore treated to have been acquired jointly by Govind Ram and Jagannath as part of their joint Hindu family assets.
In relation to the property detailed in schedule C, the trial Court held that it had been acquired by Jagannath but the finding was reversed by the first appellate court which found that the acquisition was made by Smt.
Chhoti with funds of her own, her husband Jagannath having no interest therein.
On behalf of defendant No. 1 no evidence was led to prove that he had been given or taken in adoption.
The trial court therefore held that the adoption had not been proved.
In the will of Govind Ram however, there was a recital that defendant No. 1 was his adopted son and this recital was considered by the first appellate court to be sufficient to prove the adoption.
Both the wills were held to be genuine 1002 and legally valid and the suit was therefore dismissed by the trial court and the first appellate court in toto.
In second appeal the High Court upheld all the findings of fact arrived it by the first appellate court except the one relating to adoption.
The High Court was of the opinion that the recital in the will of Govind Ram about defendant No. 1 being his adopted son was not sufficient to prove the adoption which therefore was held not to have been established.
It was further held by the High Court that a half share in the property specified in schedules A and B having descended from Jagannath to Smt.
Chhoti as a life tenant only, she was not competent to will it away and that the plaintiff, along with other members of the family, was entitled to succeed to that half share.
It was vehemently contended before the High Court that even if the wills be taken to be genuine, they would operate only if defendant No. 1 was shown to have been validly adopted by Govind Ram because both Govind Ram and Smt.
Chhoti had described him as Govind Ram 's adopted son and must therefore be presumed to have executed the wills in favour of defendant No. 1 by reason of his being the adopted son of Govind Ram.
The contention was repelled by the High Court (as it had also been by the trial court) on the ground that the mention of defendant No. 1 as the adopted son of Govind Ram in each of the two wills had been made merely as a description of the devisee and not as a motivation for the execution of either will.
Support was found for this view from Ranganathan Chattiar and Another vs Periskaruppan and Another.
In the result the High Court accepted the appeal of the plaintiff in part, set aside the dismissal of the suit and remitted the case to the trial court for declaring the shares of the parties in the property which descended to Smt.
Chhoti from her husband, in the light of its (the High Court 's) judgment and for partition of the property accordingly thereafter.
Both the contesting parties feel aggrieved by the judgment of the High Court.
While defendant No. 1 claims in Civil Appeal No. 1742 of 1969 the entire property covered by schedules A, B and C, the plaintiff has filed a cross appeal (Civil Appeal No. 1743 of 1969) seeking to defeat in toto the claim of defendant No. 1. 3.
We have heard learned counsel for the parties at length.
In so before as the findings of fact are concerned they are not open to challenge before us.
The first question which learned counsel for the plaintiffs 1003 has re opened before us is whether the two wills were rightly held to be operative in favour of defendant No. 1 inspite of the fact that he was found not to have established his character as an adopted son which was the description given to him in both the wills.
To this question also we think the High Court gave the correct answer.
In this connection reference may be made to the relevant part of Govind Ram 's will and the same is extracted below : "Shri Banwarilal is the adopted son and heir of the executant.
Shrimati Chhoti is the widow of Jagannath Prasad, resident of Pilkhuwa, Pargana Dasna, Tahsil Ghaziabad.
Both the persons live along with the executant and render all due service to the executant.
Therefore, I make the following will: That after the death of the executant all my estate movable and immovable, with all other goods and household property along with Dharamshala No. 1/60 and one storeyed shop No. 1/57 bounded as given below shall be owned by Shrimati Chhoti widow of Jagannath Prasad, occupation shopkeeper, resident of Pilkhuwa, who shall have no right to sell the estate.
She shall have the right to spend for the Dharamshala the income of shop No. 1/57 connected with the Dharamshala.
After the death of Smt.
Chhoti, Banwarilal, adopted son and heir of the executant, shall be the owner .
Interpreting this document and considering the surrounding circumstances of the case, the trial court found that the motive for the execution of the will was not merely the recognition by the testator of his relationship through adoption with the devisee but mainly the existence of feelings of love and affection for him.
It was found as a fact that Banwari Lal was living with Govind Ram and Smt.
Chhoti, that he had served them during their illness and that he was affectionately attached to them so that at the time when the wills were executed there was no one nearer or dearer to Govind Ram and Smt.
Chhoti than Banwari Lal.
In this view of the matter, the failure to establish the stated relationship is not decisive of the point under consideration, and as remarked by the High Court, it appears that the testator made the will not for the reason that he had in fact and lawfully adopted Banwari Lal but for the reason that he treated Banwari Lal as an adopted son and was moved really by the service which the latter had rendered to him.
The relationship mentioned in the will was merely a description of the devisee as understood by the testator who executed the will in favour of the devisee not because of the relationship 1004 brought about by the adoption but by reason of feelings of affection which the devisee had earned by his association and assistance.
The only other noticeable point raised on behalf of the plaintiff was that the will executed by Smt.
Chhoti must be held to be wholly inoperative in so far as properties detained in schedules A and B are concerned.
There is no force in that contention either.
One half of the properties mentioned in those two schedules had vested in Smt.
Chhoti under the will of Govind Ram which itself declared that Smt.
Chhoti would hold them merely as a life tenant and that thereafter they would devolve on defendant No. 1.
In devising those properties to defendant No. 1 Smt.
Chhoti did nothing more than carry out the behest of her own testator, which behest was good in law and would have been effective even if Smt.
Chhoti had made no will in favour of defendant No. 1 in respect of the properties acquired by her under Govind Ram 's will.
On behalf of defendant No. 1 the only submission made was that the two wills must be given effect to not only with regard to the properties received by Smt.
Chhoti from Govind Ram but also in respect of those which devolved on her as a successor to her husband Jagannath.
This submission is also without substance.
Jagannath died in 1940 when Smt.
Chhoti came into his property on the usual life tenure without any right of a alienation (except for necessity) or of devise.
To the extent that she overstepped her rights in devising Jagannath 's property the will transgressed the law and has been rightly held to be inoperative, the result being that her reversioners and not her devisee would succeed to Jagannath 's share in the properties covered by schedules A and B. The situation would certainly have been different if the adoption had been proved; for, in that case, defendant No. 1 would have succeeded as the sole reversioner to the estate left by Smt.
Chhoti, being her husband 's brother 's son and therefore his nearest and sole heir.
And that is why a contention was raised on behalf of defendant No. 1 that a valid adoption had been proved and that the finding to the contrary arrived at by two of the courts below was unsupportable.
Reference in this connection was made to the recital in the will executed by Govind Ram about defendant No. 1 being the adopted son of the devisor and to the oral evidence of Raj Pal, DW 2 who attested that will and deposed that defendant No. 1 had been adopted by the testator.
These two pieces of evidence were considered by the trial court as well as the High Court, both of whom regarded the material as insufficient to hold that a valid adoption was proved.
The finding in relation to the adoption is a finding of fact which we see no reason to interfere with in the circumstances of the case.
The 1005 adoption is alleged to have taken place within about a decade immediately preceding the suit between the parties so that evidence of witnesses who were present at the actual adoption and had seen the 'giving and taking ' would normally have been available.
However, no attempt was made to produce any such witness nor to explain why no such witness was forthcoming.
Different considerations may have prevailed if proof of adoption was required to be submitted to court after a very long period of its having taken place, which is not the case here.
The statement made by the testator in the will about the adoption is certainly a piece of admissible evidence as observed in Chandreshwar Prasad Narain Singh vs Bisheshwar Pratap Narain Singh cited by learned counsel for defendant No. 1 but there is no rule of law or prudence laying down the principle that such a statement must be regarded as conclusive, and this was also the view taken in that case.
And the burden of proof of adoption was heavy on the defendant.
In this connection we may refer to the following passage in Article 512 of Mulla 's Hindu Law (14th edition): ".
But the evidence in support of an adoption must be sufficient to satisfy the very grave and serious onus that rests upon any person who seeks to displace the natural succession by alleging an adoption.
That onus is particularly heavy where the adoption is made a long time after the date of the alleged authority to adopt. " It is true, as pointed out by Mulla in a later passage occurring in the same article that when there is a lapse of a very long period between the adoption and its being questioned, every allowance for the absence of evidence to prove the factum of adoption must be favourably entertained; but then that is not the situation here as we have already pointed out.
We are therefore one with the High Court in holding that on the evidence adduced, defendant No. 1 has not been successful in establishing the alleged adoption.
In the result both the appeals fail and are dismissed with no order as to costs.
P.B.R. Appeals dismissed.
[/INST]In 1962, a site was chosen for a grain market and the foundation stone for it was laid.
This spot belonged to a cousin of Respondent No. 22, an ex Minister and an influential politician.
This spot was eventually abandoned in favour of the lands of Respondents Nos. 1 to 21, which were notified in 1971.
The landowners resisted and successfully impeached the acquisition on the ground of mala fides before the High Court.
After a long interval, the State initiated acquisition proceedings in respect of the same land a second time, invoking the emergency powers under Section 17 of the Land Acquisition Act.
The Respondents Nos. 1 to 21 assailed the acquisition before the High Court on the ground that the statutory power to acquire land had been misused to satisfy the personal ends of Respondent No. 22 and that the acquisition was not for a legitimate statutory purpose.
The High Court struck down the 'declaration ', and invalidated the acquisition.
Dismissing the Special Leave Petition of the State, ^ HELD: Krishna Iyer, J.) 1.
It is fundamental that compulsory taking of a man 's property is a serious matter and the smaller the man the more serious the matter.
Hearing him before depriving him is both reasonable and preemptive of arbitrariness, and denial of this administrative fairness is constitutional anathema except for good reasons.
Save in real urgency where public interest does not brook even the minimum time needed to give a hearing, land acquisition authorities should not, having regard to Articles 14 (and 19), burke an enquiry under section 17 of the Land Acquisition Act.
[1078H 1079B] In the instant case a slumbering process, pending for years and suddenly exciting itself into immediate forcible taking, makes a travesty of emergency power.
[1079B] 1072 2.
The power to select land for acquisition proceedings is left to the responsible discretion of Government under the Act, subject to Articles 14, 19 and 31 (then).
The Court is handcuffed in this jurisdiction and cannot raise its hand against what it thinks is a foolish choice.
Wisdom in administrative action is the property of the Executive and judicial circumspection keeps the court lock jawed save where power has been polluted by oblique ends or is otherwise void on well established grounds.
[1075 F G] 3.
Legal malice is gibberish unless juristic clarity keeps it separate from the popular concept of personal vice.
Bad faith which invalidates the exercise of power sometimes called colourable exercise or fraud on power and often times overlaps motives, passions, and satisfactions is the attainment of ends beyond the sanctioned purposes of power by simulation or pretension of gaining a legitimate goal.
If the use of the power is for the fulfillment of a legal object the actuation or catalysation by malice is not legicidal.
The action is bad where the true object is to reach an end different from the one for which the power is entrusted, goaded by extraneous considerations, good or bad, but irrelevant to the entrustment.
When the custodian of power is influenced in its exercise by considerations outside those for promotion of which the power is vested, the court calls it a colourable exercise and is undeceived by illusion.
[1075H 1076C] 4.
Fraud on power voids the order if it is not exercised bona fide for the end designed.
Fraud in this context is not equal to moral turpitude and embraces all cases in which the action impugned is to effect some object which is beyond the purpose and intent of the power, whether this be malice laden or even benign.
If the purpose is corrupt the resultant act is bad.
If considerations, foreign to the scope of the power or extraneous to the statute, enter the verdict or impel the action, mala fides or fraud on power vitiates the acquisition or other official act.
[1076 D E] In the instant case the moving consideration was not that this land was needed for the mandi, in the judgment of Government, but that the mandi need was hijacked to reach the private destination of depriving an enemy of his land through back seat driving of the statutory engine.
Respondent No. 22 when he became State Minister of Panchayat and Development constituted a Selection Board and appointed himself as President thereof.
The choice was made of the site belonging to Respondents 1 to 21 and lest the take over delayed, even the S5A enquiry was scuttled by invoking the emergency power S17.
At times, natural justice is the natural enemy of intolerant authority.
The judicial process under Article 226 therefore, rightly invalidated the acquisition on the ground of mala fide.
[1076F, 1078 C E] 5.
This court does not upset a factual finding unless it is upset by perverse assessment, absence of evidence and the like.
[1077A] 6.
Counsel in court are 'robed ' representatives, within the parameters of the adversary system, geared to the higher cause of justice, not amoral attorneys paid to ventriloquize the case of the principal.
Every 'lawless ' cause brought recklessly before the Court, is a dubious gamble which blocks the better ones from getting speedy remedy.
[1074E, 1073F] 1073 (Per Pathak J. concurring) 1.
On a conspectus of the material on the record it does seem that the impugned acquisition proceeding cannot be sustained.
There is reason to believe that the statutory power to acquire land has been misued to satisfy the personal ends of the Respondent No. 22, an individual who appears to be not without considerable political influence.
Despite an opportunity afforded to controvert the allegations made by the Respondents Nos. 1 to 21, no attempt has been made by him to contradict the allegations.
[1079 E F] 2.
Whether or not the deliberations which were said to have led to the selection of the land belonging to Respondent Nos.
1 21, were affected by the influence or pressure of the Respondent No. 22 is a matter to which the officials or members selecting the land could alone be privy.
In the absence of any denial of the allegations made by the Respondents Nos. 1 to 21 in the writ petition by a person having personal and direct knowledge in the matter, and having regard to the entire history of the case, it is difficult to resist the conclusion that the averments in the writ petition alleging mala fides must be accepted.
[1079H 1080B]
</s> |
<s>[INST] Summarize the judgementWrit Petition (Crl) No. 163 of 1988.
(Under Article 32 of the Constitution of India).
Petitioner in person.
K. Parsaran, Attorney General, Kuldip Singh, Additional Solicitor General and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was deliver by VENKATARAMIAH, J.
On the basis of the allegations made in the above Writ Petition at the time of the preliminary hearing the Court felt that notice should be issued to the Union of India regarding two matters and accordingly the court made an order that the Union Government shall show PG NO 226 cause (i) why it should not be directed to implement faithfully the decision of this Court in Prem Shankar Shukla vs Delhi Administration, ; as regards the handcuffing of the accused arrested under the provisions of the Criminal Law; and (ii) why it should not be directed to consider the question of issuing a Notification bringing section 30 of the (hereinafter referred to as 'the Act ') into force since already more than 25 years had elapsed from the date of the passing of the Act.
The first question referred to above arose on account of the allegations relating to the alleged handcuffing of an advocate practising in Delhi contrary to law while he was being taken to the Court of the Metropolitan Magistrate at Delhi after he had been arrested on the charge of a criminal offence.
It is urged that the Union Government and the Delhi Administration had not issued necessary instructions to the police authorities with regard to the circumstances in which an accused, arrested in a criminal case, could be handcuffed or fettered in accordance with the judgment of this Court in Prem Shankar Shukla vs Delhi Administration, (supra).
The learned Attorney General of India very fairly conceded that it was for the Union of India to issue necessary instructions in this behalf to all the States Governments and the Governments of Union Territories.
We accordingly direct the Union of India to frame rules or guidelines as regards the circumstances in which handcuffing of the accused should be resorted to in conformity with the judgment of this Court referred to above and to circulate them amongst all the State Governments and the Governments of Union Territories.
This part of the order shall be complied with within three months.
We shall now take up for consideration the second question referred to above.
The received the assent of the President of lndia on the 19th of May, 1961.
Sub section (3) of section 1 of the Act provides that it shall in relation to the territories other than those referred to in sub section (4) come into force as the Central Government may by notification in the Official Gazette appoint and different dates may be appointed for different provisions of the Act.
Chapters I, II and VII of the Act were brought into force on 16.8.1961, Chapter III and section 50(2) on 1.12.1961, section 50(1) on 15.12.1961, sections 51 and 52 on 24.1.1962, section 46 on 29.3.1962, section 32 and Chapter VI (except sections 50(1) and (2), 51, 52 and 46 which had already come into force) on 4.1.1963, Chapter V on 1.9.1963 and sections 29, 31, 33 and 34 of Chapter IV of the Act on 1.6.1969.
Section 30 of the Act, with which we are concerned, has not yet been brought into force.
Section 30 of the Act reads thus: PG NO 227 "30.
Right of advocates to practise Subject to the provisions of this Act, every Advocate whose name is entered in the State roll shall be entitled as of right to practise throughout the territories to which this Act extends (i) in all courts including the Supreme Court, (ii) before any tribunal or person legally authorised to take evidence; and (iii) before any other authority or person before whom such advocate is by or under any law for the time being in force entitled to practise.
" When section 30 of the Act is brought into force every advocate whose name is entered in the State roll will be entitled as of right to practise throughout the territories to which the Act extends, before the Courts, Tribunals and other authorities or persons referred to therein.
Even today there are laws in force in the country which impose restrictions on the right of an advocate to appear before certain Courts, Tribunals and authorities.
Section 36(4) of the provides that in any proceeding before a Labour Court, Tribunal or National Tribunal a party to a dispute may be represented by a legal practitioner with the consent of the other parties to the proceeding and with the leave of the Labour Court, Tribunal or National Tribunal, as the case may be.
Section 13 of the Family Courts Act, 1984 provides that no party to a suit or proceeding before a Family Court shall be entitled, as of right, to be represented by a legal practitioner.
There is a proviso to the said scction whereunder if the Family Court considers it necessary in the interests of justice it may seek the assistance of a legal expert as amicus curiae.
There are certain land tribunals constituted under some of the Acts which are in force in certain States before which advocates cannot appear at all.
In many of the cases which come up before the Courts or Tribunals before which advocates cannot appear as of right complicated questions of law affecting the rights of individuals arise for consideration and they need the assistance of advocates.
We have travelled a long distance from the days when it was considered that the appearance of a lawyer on one side would adversely affect the interests of the parties on the other side.
The Legal Aid and Advice Boards, which are functioning in different States, can now be approached by people PG NO 228 belonging to weaker sections, such as, Scheduled Castes, Scheduled Tribes, women, labourers etc.
for legal assistance and for providing the services of competent lawyers to appear on their behalf before the Courts and Tribunals in which they have cases.
In these circumstances prima facie there appears to be now no justification for not bringing into force section 30 of the Act.
It is no doubt true that the Central Government has been given the power by Parliament to appoint the date on which any of the provisions of the Act shall come into force by sub section (3) of section 1 of the Act and the said provision does not lay down any objective standards for the determination of the date on which any of the specific provisions of the Act should be brought into force.
The question for consideration is whether this Court can issue a writ in the nature of mandamus to the Central Government to bring section 30 of the Act into force.
Dealing with a similar question a Constitution Bench of this Court in A.K. Roy, etc.
vs Union of India & Another, ; has taken the view that a writ in the nature of mandamus directing the Central Government to bring a statute or a provision in a statute into force in exercise of powers conferred by Parliament in that statute cannot be issued.
Chandrachud, C.J., who spoke for the majority of the Constitution Bench has observed at pages 314 to 316 of the Report thus: "But we find ourselves unable to intervene in a matter of this nature by issuing a mandamus to the Central Government obligating it to bring the provisions of section 3 into force.
The Parliament having left to the unfettered judgment of the Central Government the question as regards the time for bringing the provisions of the 44th Amendment into force, it is not for the Court to compel the Government to do that which, according to the mandate of the Parliament, lies in its discretion to do when it considers it opportune to do it.
The executive is responsible to the Parliament and if the Parliament considers that the executive has betrayed its trust by not bringing any provision of the Amendment into force, it can censure the executive.
It would be quite anomalous that the inaction of the executive should have the approval of the Parliament and yet we should show our disapproval of it by issuing a mandamus . . . .
But, the Parliament has left the matter to the judgment of the Central Government without PG NO 229 prescribing any objective norms.
That makes it difficult for us to substitute our own judgment for that of the Government on the question whether section 3 of the Amendment Act should be brought into force . .
It is for these reasons that we are unable to accept the submission that by issuing a mandamus, the Central Government must be compelled to bring the provisions of section 3 of the 44th Amendment into force . .
If only the Parliament were to lay down an objective standard to guide and control the discretion of the Central Government in the matter of bringing the various provisions of the Act into force, it would have been possible to compel the Central Government by an appropriate writ to discharge the function assigned to it by the Parliament.
" The effect of the above observations of the Constitution Bench is that it is not open to this Court to issue a writ in the nature of mandamus to the Central Government to bring a statute or a statutory provision into force when according to the said statute the date on which it should be brought into force is left to the discretion of the Central Government.
As long as the majority view expressed in the above decision holds the field it is not open to this Court to issue a writ in the nature of mandamus directing the Central Government to bring section 30 of the Act into force.
But, we are of the view that this decision does not come in the way of this Court issuing a writ in the nature of mandamus to the Central Government to consider whether the time for bringing section 30 of the Act into force has arrived or not.
Every discretionary power vested in the Executive should be exercised in a just, reasonable and fair way.
That is the essence of the rule of law.
The Act was passed in 1961 and nearly 27 years have elapsed since it received the assent of the President of India.
In several conferences and meetings of lawyers resolutions have been passed in the past requesting the Central Government to bring into force section 30 of the Act.
It is not clear whether the Central Government has applied its mind at all to the question whether section 30 of the Act should be brought into force.
In these circumstances, we are of the view that the Central Government should be directed to consider within a reasonable time the question whether it should bring section 30 of the Act into force of not.
If on such consideration the Central Government feels that the prevailing circumstances are such that section 30 of the Act should not be brought into force immediately it is a different matter.
But it cannot be allowed to leave the matter to lie over without applying its mind to the said PG NO 230 question.
Even though the power under section 30 of the Act is discretionary, the Central Government should be called upon in this case to consider the question whether it should exercise the discretion one way or the other having regard to the fact that more than a quarter of century has elapsed from the date on which the Act received the assent of the President of India.
The learned Attorney General of India did not seriously dispute the jurisdiction of this Court to issue the writ in the manner indicated above.
We, therefore, issue a writ in the nature of mandamus to the Central Government to consider within a period of six months whether section 30 of the Act should be brought into force or not.
The Writ Petition is accordingly disposed of.
N.P.V. Petition disposed of.
[/INST]The Kothari Commission appointed by the Government of India to examine the conditions of service of teachers with the object of improving the standards of education in the country recommended inter alia that the scales of pay of school teachers belonging to the same category but working under different managements such as Government, local bodies or private organisations should be the same, and, falling in line with other States, the State of Haryana decided to implement the same with effect from 1 December, 1967.
As the deficit between the original grades and the revised grades was found too burdensome for the managements of the aided schools to bear, the State decided to meet the increased expenditure entirely in regard to Pay and Dearness Allowance.
The State Government followed the principle of parity between the teachers working in aided schools and Government schools until 1979.
In 1979, the pay scale of teachers in Government schools was revised by the State after the report of the Pay Commission, but in the case of the teachers of aided schools the revision was effected two years later.
The appellants and the writ petitioners, who were teachers employed in various recognised aided private schools, alleged that the salary and other emoluments such as Dearness Allowance, House Rent Allowance, City Compensatory Allowance, Medical Reimbursement, Gratuity, etc., paid to them had fallen far behind the emoluments paid to the teachers in Government schools and this Court should interfere in order to remove such discrimination since the constitutional responsibility of providing education in schools devolved on the Government and it exercised deep and pervasive control over the running of aided schools.
Disposing of the appeal and petitions, ^ HELD: There is general agreement between the parties that there is no reason for discrimination between the teachers employed in aided 683 schools and those employed in Government schools far as the salaries and Additional Dearness Allowances are concerned.
The State Government has expressed its readiness to reimburse the payment of ten instalments of the Additional Dearness Allowance, but not the twenty five Additional Dearness Allowance instalments released after 1 April, 1981.
In our opinion, the teachers of aided schools must be paid the same pay scale and Dearness Allowance as teachers in Government schools for the entire period claimed by the petitioners, and that the expenditure on that account should be apportioned between the State and the Management in the same proportion in which they share the burden of the existing emoluments of the teachers.
[685B C, E G] The State Government will also take up with the managements of the aided schools the question of bringing about Party between the teachers of aided schools and the teachers of Government schools so that 9 scheme for payment may be evolved after having regard to the different allowances claimed by the petitioners.
[686C]
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<s>[INST] Summarize the judgementN: Criminal Appeal No. 451 of 1978.
Appeal by Special leave from the Judgment AND order dated S G 78 of the Bombay High Court in Criminal Application No. 15 of 1978.
Ram Jethmalani Ashok Desai, section J. Thakore, K. R. Krishnamurthy, Sri Narain for M/s J. B. Dadachanji and Co. for the Appellants.
H. R. Khanna and M. N. Shroff for the State of Maharashtra.
P. N. Lekhi, Girish Chandra and Miss A. Subhashini for Union of India.
The judgment of the Court was delivered by SEN, J.
This appeal by special leave directed against a judgment of the Bombay High Court dated 5th June, 1978, dismissing a petition filed by the appellant under Article 226 of the Constitution, by which he prayed for the issue of a writ of habeas corpus, and the connected petition under Article 32 of the Constitution by his wife for the issuance of a writ of habeas corpus for his release raise a common question and therefore they are disposed of by this common judgment.
A vessel known as 'Jamnaprasad ' BLS 61 valued at one lac of rupees was found grounded in a creek off the coast near village KimKhadi on the 20th August, 1977.
On receipt of information regarding the grounding of the vessel the Customs officers, Hansot, visited the spot and examined the contents of the cargo aboard the aforesaid grounded vessel.
It was laden with 12 rolls of stainless steel sheets each weighing one tonne, valued at Rs. 15,44,400/ .
The aforesaid vessel and the contraband goods found aboard it were seized by the 318 Customs officers for action under the .
They made inquiries about the whereabouts of the crew members of the aforesaid vessel 'Jamnaprasad ' and were successful in apprehending them and the others involved.
Intelligence gathered by the Customs officers clearly indicate that the appellant was the main person connected with the smuggling of the aforesaid cargo of contraband goods, namely 12 stainless steel sheets recovered from vessel 'Jamnaprasad ' BLS 61.
The appellant, who ostensibly carries on the business of manufacturing, sale and export of Umrao brand wick stoves, spray pumps, cash and jewellery metal boxes, in the name and style of "Umrao Industries" and has his factory for the manufacture of the aforesaid items at village Kim, has been detained by an order of the Addl.
Secretary to the Government of India, Ministry of Finance (Department of Revenue), New Delhi, dated the 1st of February, 1978 under sub section (1) of section 3 of the , with a view to prevent him from smuggling goods.
He was arrested and placed under detention on the 5th of February, 1978, and is at present detained in the Central Prison, Bombay.
At the time of his arrest, the appellant was served with the order of detention together with the grounds of detention with full particulars on which the order of detention was based.
On 15th February, 1978 the case was referred by the Government to the Advisory Board as required under section 8(b) of the Act to enable the Board to make its report under sub cl.
(a) of cl.
(4) of Article 22 of the.
Constitution.
The appellant made two representations against his detention to the Government, one dated the 4th and the other dated the 6th of March, 1978, which were received by the Government on the 7th and 8th March, 1978, respectively.
The Advisory Board had, in the meanwhile addressed a letter dated 21st of February, 1978, to the Government intimating that the case would be taken up on the 13th March, asking that the detenu be produced at the hearing and the Government should also forward the representation, if any, made by the appellant, together with the comments/decision of the Government, if any.
On the 13th of March, the appellant was accordingly produced before the Advisory Board.
The Government placed before the Board the two representations made by the appellant together with its comments.
The appellant was heard in person; the Government 's point of view was placed before the Advisory Board by the Deputy Secretary to the Government, Ministry of Finance, Department of Revenue, who was accompanied by the Assistant Collector.
Customs, 319 Bulsar.
On the 16th of March, 1978, the appellant sent a telegram to the Advisory Board supplementing his oral submissions.
The detaining authority rejected the representations made by the appellant on 1 8th of March, 1978.
On 10th of April, 1978 the Advisory Board submitted its report giving its opinion that there was sufficient cause for the detention.
The Government accordingly confirmed the order B, of detention.
In the light of the circumstances appearing, it was conceded that the grounds for detention set out the facts with sufficient degree of particularity and that it did furnish sufficient nexus for forming the subjective satisfaction of the detaining authority.
The order of detention was, therefore, not challenged on the ground that the grounds furnished were vague or indefinite or lacking in particulars or were not adequate or sufficient for the satisfaction of the detaining authority, or for the making of any effective representation.
It is argued that the detention of the appellant was, however, bad for two reasons namely, (1) the detention was in violation of the constitutional right guaranteed under Article 22(5), inasmuch as the Government withheld consideration of the representations made by the appellant till after the hearing before the Advisory Board, and (2) the impugned order of detention is bad due to non application of mind inasmuch as the facts alleged clearly and distinctly show that the appellant did not himself smuggle the contraband goods.
Both the contentions are, in our opinion, wholly devoid of substance.
It is urged that the Government was under a constitutional obligation to consider the representations before the hearing before the Advisory Board.
There is no quarrel with the principle but the difficulty is about the application of the principle on the facts and circumstances of the present case.
In fact, the Government has to reach its decision uninfluenced by the opinion of the Advisory Board.
It is, however, urged that the Government; in This particular case, had not made up its mind till the hearing before the Advisory Board on 13th March, 1978, and therefore, its decision reached on the 18th March was not that independent application of mind that the law requires, because by then the proceedings had: begun before the Board and the Government must have been influenced in its decision.
There is no warrant for the submission that the disposal of the 1 representations made by the Government, in the instant case, was not in conformity with Article 22(5) of the Constitution.
First, we shall 320 deal with the law on the subject before dealing with the factual aspect.
Article 22(5) of the Constitution enacts: "When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order." In Abdul Karim & ors.
vs State of West Bengal(t) this Court interpreted the language of Article 22(5) and observed: "Article 22(5) does not expressly say to whom the representation is to be made and how the detaining authority is to deal with the representation.
But it is necessarily implicit in the language of article 22(5) that the State Government to whom the representation is made should properly consider the representation as expeditiously as possible.
The constitution of an Advisory Board under section 8 of the Act does not relieve the State Government from the legal obligation to consider the representation of the detenu as soon as it is received by it.
" It was further observed: "In our opinion, the constitutional right to make a representation guaranteed by article 22(5) must be taken to in elude by necessary implication the constitutional right to a proper consideration of the representation by the authority to whom it is made.
The right of representation under article 22(5) is a valuable constitutional right and is not a mere formality.
It is, therefore, not possible to accept the argument of the respondent that the State Government is not under a legal obligation to consider the representation of the detenu or that the representation must be kept in cold storage in the archives! of the Secretariat till the time or occasion for sending it to the Advisory Board is reached.
If the view point contended for by the respondent is correct, the constitutional right under article 22(5) would be rendered illusory.
" Thus the two obligations of the Government to refer the case of the detenu to the Advisory Board and to obtain its report on the one hand and to give an earliest opportunity to him to make a representation and consider the representation on the other, are two distinct obligations independent of each other.
(1) ; , 321 In Pankaj Kumar Chakrabarty & ors.
vs State of West Bengal(1), this Court again considered cl.
(5) of article 22 and enunciate the Following principle: "In our view, it is clear from cls.
4 and S of article 22 that there is a dual obligation on the appropriate Government and a dual right in favour of the detenu, namely, (1) to have his representation irrespective of the length of detention considered by the appropriate Government and (2) to have once again that representation in the light of the circumstances of the case considered by the board before it gives its opinion.
If in the light of that representation the board finds that there is no sufficient cause for detention the Government has to revoke the order of detention and set at liberty the detenu.
Thus, whereas the Government considers the re presentation to ascertain whether the order is in conformity with its power under the relevant law, the board considers such representation from the point of view of arriving at its opinion whether there is sufficient cause for detention.
" It is, therefore, well settled that in case of preventive detention of a citizen, the Constitution by article 22(5) as interpreted by this Court, enjoins that the obligation of the appropriate Government to afford the detenu the opportunity to make a representation and to consider that representation is distinct from the Government 's obligation to constitute a Board and to communicate the representation, amongst other materials, to the Board to enable it to form its opinion and to obtain such opinion.
The nature of the dual obligation of the Government and the corresponding dual right in favour of the detenu under article 22(5) was reiterated by this Court in Khairul Haque vs The State of West Bengal(2) in these words: "It is implicit in the language of article 22 that the appropriate Government, while discharging its duty to consider the representation, cannot depend upon the views of the Board on such representation.
It has to consider the representation on its own without being influenced by any such view of the Board.
There was, therefore, no reason for the Government to wait for considering the petitioner 's representation until it had received the report of the Advisory Board.
As laid down in Sk.
Abdul Karim & ors.
vs State of West Bengal (supra), the obligation of the appropriate (1) [1970] I SCR 543.
(2) W.P. No. 246 of 1969, decided on September 10, 1969.
322 Government under article 22(5) is to consider the representation made by the detenu as expeditiously as possible.
The consideration by the Government of such representation has to be, as aforesaid, independent of any opinion which may be expressed by the Advisory Board.
The fact that article 22(5) enjoins upon the detaining authority to afford to the detenu the earliest opportunity to make a representation must implicitly mean That such representation must, when made, be considered and disposed of as expeditiously as possible, otherwise, it is obvious that the obligation to furnish the earliest opportunity to make a representation loses both its purpose and meaning.
" The same procedural safeguards were reaffirmed by this Court in Jayanarayan Sukul vs State of West Bengal (1) and Dhurus Kanu vs State of West Bengal.(2) The High Court in this case, and the Delhi High Court in Thaneshwar Singh vs The Union of India & ors.(3) appear to be labouring under misconception that merely because there is no express provision in s.8(b) of the placing an obligation to forward the representation made by the detenu along with the reference to the Advisory Board, unlike those contained in s.9 of the and s.10 of the Maintenance of Intemal Security Act, 1971 there is no obligation cast on the Government to consider the representation made by the detenu before forwarding it to the Advisory Board.
We have no doubt in our mind that when liberty of the subject is involved, whether be it under the or the or the , it is the bounden duty of the court to satisfy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is not deprived of his personal liberty otherwise than in accordance with law.
The relevant Articles of the Constitution having a bearing on this question is article 22.
Two of these safeguards, which relate to the observance of the principle of natural justice and which a fortiori are intended to act as a check on the arbitrary exercise of power, are tor be found in article 22(5) of the Constitution.
(1) ; (2) AIR 1975 SC 571.
(3) Cr W. No 6 of 1978 decided on September 25, 1978 (Delhi High Court) 323 When any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the 'grounds ' on which the order has been made and shall afford him the earliest opportunity of making representation against the order, These procedural safeguards are ingrained in our system by judicial interpretation.
The power of preventive detention by the Government under the , is necessarily subject to the limitations enjoined on the exercise of such power by Art 22(5) of the Constitution.
as constructed by this Court.
Thus, this Court in Khudiram Das vs The State of West Bengal & ors (1) observed: "The constitutional imperatives enacted in this article are two fold: (1) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order of detention has been made, and (2) the detaining authority must afford the detenu the earliest opportunity of making a representation against the order of detention.
These are the barest minimum safeguards which must be abserved before an executive authority can be permitted to preventively detain a person and thereby drown his right of personal liberty in the name of public good and social security.
" This has always been the view consistently taken by this Court in a series of decision.
It is not necessary to burden this judgment with citations of these decisions.
The view to the contrary taken by the Bombay and the Delhi High Courts that these procedural safe guards are not available to a person detained under the is clearly wrong.
The Constitution is all pervasive.
All laws made by a State must, therefore, yield to constitutional limitations and restrictions.
The citizen 's right to personal liberty is guaranteed by Article 22 irrespective of his political beliefs, class, creed or religion.
This Court has forged certain procedural safeguards in the case of preventive detention of citizens.
These safeguards might be designated as a regulative 'Postulate of Respect ', that is, respect for the intrinsic dignity of the human person.
(1) ; 324 In pursuit of the idealistic considerations as to the inherent worth and dignity of men, the Parliament, in the light of the experience gained recently, repealed the .
The repeal of that Act is necessitated to promote the citizen 's right to personal liberty, which is a fundamental and pervasive theme of the Constitution, to guard against the preventive detention of a person for political beliefs.
This was also in accord with the recommendation of the Law Commission in its Forty seventh Report, p. 2, para 1.4, that preventive detention should be retained only for preventing anti social and economic offences.
The repeal of the and the retention of the , however, does not imply that preventive detention, which is an anachronism in a democratic society like ours, can be freely used, without any power of judicial review and without any checks and balances, against persons engaged in anti social and economic offences.
This assumption by the two High Courts ignores centuries of judicial lawmaking when it denies the competence of courts to weigh competing social interests.
The courts have always viewed with disfavour the detention without trial whatever be the nature of offence.
The detention of individuals without trial for any length of time, howsoever short, is wholly inconsistent with the basic ideas of our Government.
To put it less euphemistically, the alternative is the renunciation of judicial review itself, and acceptance of the intolerable principle that the Government is the judge of its own powers.
So, this Court observed in Prabhu Dayal Deorah vs District Magistrate, Kamrup: "We say and we think it is necessary to repeat, that the gravity of the evil to the community resulting from antisocial activities can never furnish an adequate reason for invading, the personal liberty of a citizen, except in accordance with the procedure established by the constitution and the laws.
The history of personal liberty is largely the history of insistence on observance of procedure.
Observance of procedure has been the bastion against wanton assaults on personal liberty over the years.
Under our Constitution, the only guarantee of personal liberty for person is that he shall not be deprived of it except in accordance with the procedure established by law.
The need today for maintenance of supplies and services essential to the community cannot be over emphasized.
There will be no social security without maintenance of adequate supplies (1) ; at 22 23. 325 and services essential to the community.
But social security is not the only goal of a good society.
There are other values in a society.
Our country is taking singular pride in the democratic ideals enshrined in its Constitution and the most cherished of these ideals is personal liberty.
It would indeed be ironic if, in the name of social security, we would sanction the subversion of this liberty.
" The constitutional safeguards embodied in article 22(5) of the Constitution, as construed by this Court, must, therefore, be read into the provisions of section 8(b) of to prevent any arbitrary executive action.
In the instant case, however, there was no infraction or the constitutional safeguards enshrined in article 22(5).
We are satisfied that there was no failure on the part of the Government to discharge its obligation under article 22(5).
The records of the Government as well as of Advisory Board have been placed before us It clearly shows that the Government had forwarded the two representations made by the appellant on the 4th and 6th of March, 1978, alongwith its comments in writing together with a forwarding letter on the 9th of March, 1978.
From a bare perusal of the forwarding letter and the accompanying para wise comments in writing, it is amply clear that the Government had already formed an opinion that the order of detention was in conformity with its powers under the law.
It cannot, therefore, be said that the Government in rejecting the representations made by the appellant by its order dated 18th March, 1978 was, in any way, influenced by the views expressed by the Board.
Though, the Government was represented at the hearing by the Deputy Secretary, Ministry of Finance, Revenue Department, and the Assistant Collector, Customs, Bulsar, it is nobody 's case that the Advisory Board had at the hearing indicated its mind as to whether there was sufficient cause for detention.
On the contrary, the telegram sent by the appellant on the 16th March, 1978 ex facie shows that the Board had not expressed its mind at the hearing.
It is, therefore, irrefutable that the Government had taken a decision uninfluenced by what transpired at the hearing before the Board.
The matter was dealt with by the Government at all levels, and the detaining authority had come to an independent conclusion of his own by applying his mind to the facts and circumstances of the case.
Here, similarly the Board by its report dated the 10th April, 1978 independently arrived at its opinion that there was sufficient cause for detention .
326 Learned counsel for the appellant next strenuously contends that there was non application of mind on the part of the detaining authority.
It was submitted that though the order for detention was made with a view to preventing the appellant from smuggling goods, i.e., under cl.
(i) of sub section (1) of section 3 of the Act, his case on the facts revealed in the grounds for detention clearly fell under cl.(ii) of sub s.(1) of section 3, as he could not, by any stretch of imagination, be treated to be a smuggler but he was only an abettor.
May be, he instigated, organised and facilitated the act of smuggling, but it is said, the actual smuggling of the contraband goods, was by others.
His act, there fore, constituted abetment of smuggling for which there is a separate clause under section 3(i)(ii).
The order of detention cannot, therefore, be justified under s.3(1) (i).
Applying a wrong clause, it is urged, shows non application of mind.
We are afraid, the learned counsel is stretching the argument too fine.
Section 3(1) of the Act, so far material reads: The Central Government or the State Government or any officer of the Central Government, not below the rank of a Joint Secretary to that Government, specially em powered for the purposes of this section by that Government, or any officer of a State Government, not below the rank of a Secretary to that Government, specially em powered for the purposes of this section by that Government, may, if satisfied, with respect to any person (including a foreigner), that, with a view to preventing him from acting in any manner prejudicial to the conservation or augmentation of foreign exchange or with a view to preventing him from (i) smuggling goods, or (ii) abetting the smuggling of goods, or;" There is, no doubt, a distinction between an act of smuggling and abetting the smuggling of goods for purposes of preventive detention under section 3 (1) of the Act.
Nonetheless, the term "smuggling ' as defined in section 2(e) of the Act has the same meaning as in section 2(39) the , which, when read with section 111 of that Act, is wide enough to include and make liable not only the actual smuggler but also persons abetting the smuggling or contraband goods as well as all persons dealing in such goods, etc.
Though the provisions of cls.
(i) and (ii) of sub s(1) of section 3 of the Act may operate on different fields, which may sometimes, as here, overlap, still a wider meaning is given 327 to the term 'smuggling in section 2(e) of the Act, with a view to broaden the scope of preventive detention.
Sub section (1) of section 3 of the Act provides for the different grounds of detention.
Clause (i) relates lo smuggling of goods, clause (ii) relates to abetting the smuggling of goods, clause (iii) relates to engaging in transporting or concealing or keeping smuggled goods, clause (v) relates to harbouring persons engaged in smuggling goods or in abetting the smuggling of goods.
It must, therefore, be assumed that the intention of the legislature was to treat the smuggling of goods and abetting the smuggling of goods as grounds separate and distinct, and both are separate grounds for detention i.e., to take in all such activities which result in accomplishment of smuggling of contraband goods.
In a case like the present, where there is a widespread network employed by a person, it cannot be said that he is not engaged in the act of smuggling.
It is accepted before us that the appellant.
instigated, organised and facilitated the smuggling of the contraband goods in question.
Not only that but he is really the person to whom the goods belonged.
The appellant went to the extent of going to Dubai for purchasing the contraband goods, had thereafter taken delivery of the same at Dubai and had them loaded into the vessel; the vessel actually belonged to the appellant and the crew members were engaged by his agent Siddiq Hussain, who was sent from Bombay to Dubai to bring the vessel.
He took charge of the vessel as a tindel and but for the fact that the rudder of the vessel failed, the contraband stainless steel rolls would have landed in the creek near The factory of the appellant.
It is clear that Kunji Mohmed, in whose name the vessel 'Jamnaprasad ' BLS 61 was registered, was merely a dummy but the vessel actually belonged to the appellant, who had purchased it from one Kasam Jamal for a sum of Rs. 40,000/ .
It was he who got the vessel repaired at Bombay and an oil engine fitted; and, he, through his agent Siddiq Hussain Sup, engaged the members of the crew.
It appears that the appellant left for Dubai on the 18th of May, 1977 by air and returned to Bombay on the 2nd June, 1977.
He prolonged this stay at Dubai/Abu Dhabi for seven days and had to pay a fine of 100 Dirhams per day for his over stay.
During his period of stay at Dubai, he purchased 20 rolls of stainless steel sheets worth rupees 20 lacs.
It also appears that the appellant and Kunji Mohmed wanted to load the whole of the contraband good into the vessel but the driver Ali and Amad Mamad, the tindel, refused to carry such a heavy cargo.
The appellant told them that 328 he would go to Bombay and send Siddiq Hussain Sup.
It further appears that the oil engine in the vessel was replaced, with his concurrence, with a new diesel engine.
After his departure, only 12 rolls of stainless steel sheets could be loaded in the vessel by Kunji Mohmed and Amad Mamad.
There after, while the vessel was on its voyage to India it developed engine trouble and had to remain at sea for about ten days whereafter, it returned to Sarjah port in Dubai.
In the meanwhile, Siddiq Hussain Sup had reached there from Bombay, on instructions from the appellant, and took charge of the vessel as tindel.
The vessel again left Sarjah port but had W remain in the sea near Khodgam for about 8 to 10 days due to stormy weather.
After a voyage of about 6 to 7 days, the vessel reached near the coast of India outside the creek where it was found grounded.
It had to be anchored at a place known to Siddiq Hussain Sup, that is, near about the factory of Umrao Industries belonging to the appellant in village Kim, but the crew members lost the track and had to move around the creek for about 4 days because the rudder had failed.
Then lt entered the aforesaid creek, some 20 kms.
away from the factory, where it ran aground due to damage to the rudder.
During a search of the house of Kunji Mohmed, certain documents relating to the repairs of vessel No. BLS 61 and a dairy containing telephone Nos.
395279, 375943 and 361973 and also one postal receipt No. 55955 issued by Jamnagar Post office showing looking of a trunk call to telephone No. 395279 or 375943 were found.
The first two telephone numbers have been installed at the Bombay office of the appellant, while the third is at his residence at Bombay.
The postal receipt No. 55955 showed that this trunk call from Jamnagar was booked for Bombay in the name of the appellant.
Two more trunk call ticket Nos.
L. 0285 and 158, dated 18th June, 1977 showed that the former trunk call was booked by him to Okha telephone No. 91 with Siddiq Hussain Sup as P.P., while the latter was in respect of the return call (lightening) made by the appellant to the aforesaid okha telephone.
The trunk call booked from telephone No. 91 okha was to the appellant 's office telephone No. 395279 in Bombay with P. P. Babubhai.
Obviously, the over stay of the appellant at Dubai was in connection with the loading of the contraband stainless steel sheet rolls, which have been valued at Rs. 15,44,400/ .
The synchronising of the visit with the taking of the vessel to Dubai, and then loading of the stainless steel rolls for the purpose of transportation to India, are very significant and unimpeachable circumstances to show the smuggling pro pensities of the appellant.
329 It is quite clear from the facts set out in the grounds of detention, that the appellant was the person who was actually engaged in the act of smuggling of the contraband stainless steel rolls into the Indian customs waters.
It is, therefore, clear that for all intents and purposes the appellant was the actual smuggler and not a mere abettor.
Furthermore, the activities of the appellant were such that his case would be covered by both clauses (i) and (ii) of section 3(1) of the Act.
Thus, there was due application of mind.
It is manifest that the appellant could in the instant case be detained under sub s.(1) of section 3 of the both under clauses (i) and (ii) thereof.
In any case, even assuming that the appellant was merely an abettor of the smuggling of 12 rolls of stainless steel sheets on this occasion, still his activities in this transaction afforded sufficient grounds for the prognosis that he would have himself indulged in actual smuggling of the balance lot of 8 rolls of stainless steel sheets remaining behind at Dubai, if not detained, and as such cl.
(i) section 3(1) of the Act was properly invoked.
In the result, both the appeal as well as the writ petition must fail and are dismissed.
There shall be no order as to cost P.B.R. Appeal and Petition dismissed.
[/INST]The appellant was detained under section 3(1) of the Conservation of Foreign Exchange an(1) Prevention of Smuggling Activities Act, 1974 with a view to prevent him from smuggling goods.
Two representations made by him against his detention were forwarded by the Government to the Advisory Board with its comments.
He was later produced before the Advisory Board.
On receipt of the Advisory Board 's report that there was sufficient cause for detention, the order of detention was confirmed by the Government.
The High Court dismissed his petition under article 226 of the Constitution.
In appeal the appellant challenged the order of detention on the ground that (1) it was in violation of the right guaranteed under article 22(5) inasmuch as the Government withheld consideration of the representations made by him till after the hearing by the Advisory Board, and (2) the impugned order of detention was bad due to non application of mind of the detaining authority inasmuch as the facts alleged clearly and distinctly showed that the appellant did not himself smuggle the goods.
Dismissing the appeal, ^ HELD: (1)(a) There was no warrant for the submission that the disposal of the representations made by the Government was not in conformity with article 22(5) of the Constitution.
[319H] (b) It is well settled that in case of preventive detention of a citizen, Art 22(5) of the Constitution enjoins that the obligation of the appropriate Government to afford the detenu an opportunity to make a representation and to consider that representation is distinct from the Government s obligation to constitute a Board and to communicate the representation, amongst other material, to the Board to.
enable it to form its opinion and to obtain such opinion.
[321E] Abdul Karim & ors.
vs State of West Bengal; , ; Pankaj Kumar Cluakrabarly & ors.
vs State of West Bengal; , , Khuairul Haque vs The State of West Bengal W. P. No. 246 of 1969, decided on September 10, 1969, Jayanarayan sukul vs State of West Bengal; , Dhurus Kanu vs State of West Bengal, AIR 1975 SC 571; referred to.
(c) The constitutional safeguards embodied in article 22(5) must be read into the provisions of section 8(b) of the Conservation of Foreign Exchange and Preventional of Smuggling Activities Act, 1974 to prevent any arbitrary executive action.
Merely because there is no express provision in section 8(b) of the Act placing an obligation to forward the representation made by the detenu along 316 with the reference to the Advisory Board unlike the provisions contained in section 9 of the and section 10 of the , it cannot be said that there is no obligation cast on the Government to consider the representation made by the detenu before forwarding it to the Advisory Board.
[325C; 322D E] Thaneshwar Singh vs The Union of India & ors.
, Cr. W. No. 6 of 197 decided on September 25, 1978 (Delhi High Court); over ruled.
(d) When the liberty of the subject is involved, whether it is under the or the or the , it is the bounden duty of the Court to satisfy itself that all the safeguards provided by the law had been scrupulously observed and that the subject was not deprived of his personal liberty otherwise than in accordance with his.
[322 G] (e) When any person is detained in pursuance of an order made under any law providing for preventive detention the authority making the order shall, as soon as may be, communicate to such person the ground on which the order had been made and shall afford him the earliest opportunity of making representations against the order.
These procedural safeguards are ingrained in our system of judicial interpretation.
The power of preventive detention by the Government under the Act is necessarily subject to the limitations enjoined on the exercise of such power by article 22(5) of the Constitution.
[323A] Khudiram Das vs The State of West Bengal & ors. ; referred to.
In the instant case there was no infraction of constitutional safeguards enshrined under article 22(5) and there was no failure on the part of the Government to discharge its obligations under that article.
Quite clearly the Government had forwarded the appellant 's two representations alongwith its comments to the Advisory Board.
A perusal of the comments of the Government make it clear that the Government had already formed an opinion that the order of detention was in conformity with its powers under the law.
It cannot be said that in rejecting the appellant 's representations the Government was influenced by the views expressed by the Board.
At the hearing the Board had not indicated its mind as to whether there was sufficient cause for detention.
It is, therefore, irrefutable that the Government had taken a decision uninfluenced by what transpired at the hearing before the Board.
The matter was dealt with by the Government all: all levels, and the detaining authority had come to an independent conclusion of its own by applying its mind to the facts and circumstances of the case.
[325D H] (2)(a) The intention of the legislature in enacting section 3(1) was to treat the smuggling of goods and abetting the smuggling of goods as grounds separate and distinct and both are separate grounds for detention i.e. to take in all such activities which result in accomplishment of smuggling of contraband goods. 'the term 'smuggling ' as defined in section 2(e) of the Act read with section 2(39) and s 111 of the Customs Act, is wide enough to include and make liable not only the actual smugglers but also persons abetting the smugglers, of contraband goods as well as all persons dealing with any such goods.
A wider meaning is given to the term 'smuggling ' in section 2(e) of the Act with a view to broaden the scope of Preventive detention.
In a case like the present where a wide 317 spread network is employed by a person, it cannot be said that he was not Engaged in the act of smuggling.
The appellant was not only the person who instigated, organised and facilitated the smuggling of the contraband goods but he was really a person to whom the goods belonged.
The facts set out in the ground of detention make it clear that the appellant was the person who was actually engaged in the act of smuggling of contraband goods into the Indian Customs waters For all intents and purposes the appellant was the actual smuggler and not a mere abettor His " activities were such that his case would be covered by both clauses (i) and (ii) of section 3(1) of the Act.
[326G H; 327A B] (b) Assuming that the appellant was merely an abettor in the smuggling of contraband goods on this occasion, still his activities in this transaction afforded sufficient grounds for the prognosis that he would have himself included in actual smuggling of the balance of contraband goods by remaining behind in the foreign country.
[329D]
</s> |
<s>[INST] Summarize the judgementAppeal No. 582 of 1969.
Appeal from the Judgment and Decree dated the 19th March, 1968 of the Bombay High Court at Nagpur in First Appeal No. 72 of 1959.
M. N. Phadke, R. A. Gupta and K. B. Rohatgi for the Appellant.
B. N. Lokur, Arun Kumar Sanghi and A. G. Ratnaparkhi for the The Judgment of the Court was delivered by CHANDRACHUD, J.
This is a plaintiff 's appeal on a certificate granted by the High Court of Bombay, Nagpur Bench, under Article 133(1)(a) of the Constitution On March 24, 1953 defendant 1 executed on behalf of himself and 'his minor son defendant 2, a deed of mortgage in favour of the plaintiff.
Defendant 3 is also a son of defendant 1 but he was born, after the mortgage deed, on September 30, 1955.
On January 11, 1956 a registered deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defendants 2 and 3. 884 On September 1, 1956 the mortgagee filed Civil Suit No. 3A of 1956 to enforce the mortgage.
On September 20, 1958 the trial court passed a preliminary decree for sale of defendant 1 's interest in the mortgaged property.
It held that part of the consideration for the mortgage was not supported by legal necessity and the, balance of the debt incurred on the mortgage was tainted with immorality.
Though, therefore, defendant 1 had executed the mortgage as a manager of the joint Hindu family consisting of himself and defendant 2, the debt was held not binding on the one half share of defendant 2 in the mortgaged property.
On the issue relating to the genuineness of the partition effected by defendant 1 between himself and his suits, the trial court recorded a finding that it wag a sham and colourable transaction and its object was to delay or 1 defeat the creditors.
Being aggrieved by.
the decree directing the sale of half the mortgaged property only, the plaintiff filed First Appeal No. 40 of 1959 in the High Court of Bombay.
Though the suit was dismissed as against defendants 2 and 3, they also filed an appeal in the High Court to challenge the finding of the trial court that the deed of partition was a sham and colourable transaction.
That was First Appeal No. 72 of 1959.
During the pendency of these two appeals, the preliminary decree was made final by the trial court on October 23, 1958.
On March 2, 1960 the plaintiff purchased, with the permission of tile court, a joint half share in the mortgaged property in full satisfaction of his decree.
On September 21, 1960 the auction sale was confirmed and on November 25, 1960 the plaintiff was put in joint possession of the property.
On March 15, 1966 the appeals filed by the plaintiff and by defendants 2 and 3 came up for hearing before a.
Division Bench consisting of Abhyankar and Deshmukh JJ.
The hearing of the appeals was adjourned from time to time and while the appeals were part heard, defendants 2 and 3 applied on August 2, 1966 for amendment of their Memorandum of Appeal in First Appeal No, 72 of 1959.
By the proposed amendment they sought leave of the High Court to challenge the preliminary decree passed by the trial court.
The plaintiff opposed that amendment and applied that she did not desire to prosecute First Appeal No. 40 of 1959 filed by her.
The High Court did not pass any orders either on the application for amendment made by defendants 2 and 3 or on the application of the plaintiff asking that her appeal be dismissed for non prosecution.
On August 24, 1966 the High Court adjourned the hearing of the appeals for three months to enable defendants to pay the amount due under the preliminary decree.
On November 24, 1966 defendants 2 and 3 deposited Rs. 12,500 and applied for an extension of two months for paying the balance.
The extension was granted by the High Court and on fabruary 25, 1967 defendants 2 and 3 deposited a further sum of Rs. 25,000 towards the satisfaction of the preliminary decree.
On February 14, 1968 another Division Bench of the High Court (Tambe and Badkas, JJ.) allowed the application of defendants 2 and 3 for amendment of their Memorandum of Appeal in First 885 Appeal No. 72 of 1959.
On an application made by their counsel, the High Court granted to those defendants time till February 23, 1968 to pay the deficit court fees, which they did.
The High Court then took up the two First Appeals.
for hearing in March, 1968.
As the plaintiff had applied that she did not desire to proceed with First Appeal No. 40 of 1959 filed by her, the High Court dismissed that appeal for non prosecution.
As a consequence of this order the High Court observed that the findings recorded by the trial court in favour of the defendants and adverse to the plaintiff would stand confirmed.
In First Appeal No. 72 of 1959 filed by defendants 2 and 3 it was urged by the plaintiff that as the appeal was originally filed to challenge the finding of the trial court on the question of genuineness of the partition.
defendants 2 and 3 were not entitled to include now grounds in the Memorandum of Appeal and that the Memorandum should not have been permitted to be amended.
The High Court hold that in view of the Provisions of Order 41, Rule 2, Civil Procedure Code.
it was oven to defendants 2 and 3.
with leave of the court, to urge additional grounds in their appeal without amending the Memo randum of appeal and therefore the objection raised by the plaintiff as against the amendment was futile.
The High Court further held that the appeal filed by defendants 2 and 3 was competent even though the suit, was wholly dismissed as against them.
According to the High Court, defendants 2 and 3 were aggrieved by the adverse finding on the question of partition and further they were denied under the preliminary decree the right to pay the decretal amount and to redeem the mortgage.
It was there fore open to them to file an appeal against that decree.
On the merits of the appeal the High Court set aside the finding of the trial court and held that the partition was "real and genuine" and that it was not effected in order to defeat :lie creditors.
Defendants 2 and 3 bad therefore become owners of the, equity of redemption and they could not be deprived of the right to redeem the mortgage.
In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction sale in favour of the plaintiff.
The High Court passed a fresh preliminary decree under Order 34, Rule 4, Civil Procedure Code declaring that the plaintiff was entitled to recover Rs. 34, 386 and odd and directing the defendants to pay the entire decretal amount within six months of the date of decree.
The plaintiff questions the correctness of that decree in this appeal.
It is necessary first to understand the nature of the appeal filed by ,defendants 2 and 3 in the High Court and the relief they sought therein.
That appeal was in terms filed only against the finding recorded by the trial court that the partition between defendant 1 and his sons was a sham and colourable transaction intended to defeat or delay the creditors.
The Memorandum of Appeal as filed originally contained 886 seven grounds, each of which was directed against the finding given by the trial court on the question of partition.
The Memorandum contained a note that as the subject matter in dispute was not capable of being estimated in terms of a money value, a fixed court fee of Rs. 20 was paid thereon.
Only one prayer was originally made in the Memorandum of Appeal that the partition deed be declared as genuine.
Counsel for defendants 2 and 3, furnished to the registry of the High Court a written explanation as required by Rule 171 of the High Court Rules that as defendants 2 and 3 were only challenging the finding recorded by the trial court on the question of partition and as they were merely seeking a declaration that the partition was genuine, the fixed court fee of Rs. 20 was properly paid.
It is thus clear that the appeal filed by defendants 2 and 3 in the High Court was directed originally not against any part of the preliminary decree but against mere finding recorded by the trial court that the partition was not genuine.
The main controversy before us centers round the question whether that appeal was maintainable on this question the position seems to us well established.
There is a basic distinction between the right of suit and the right of appeal.
There is an inherent right in every person to bring suit of a civil nature and unless the suit is barred by statute one may, at one 's peril,_bring a suit of one 's choice.
It is no answer to a suit howsoever frivolous the claim, that the law confers no such right to sue.
A suit for its maintainability requires no authority of law and it is enough that no statute bars the suit.
But the position in regard to appeals is quite the opposite.
The right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law.
That explains why the right of appeal is described as a creature of statute.
Under section 96(1) of the Code of Civil Procedure, save where otherwise expressly provided by the Code or by any other law for the time being in force, an appeal lies from every decree passed by any court exercising original jurisdiction, to the court authorised to hear appeals from the decisions of such court.
Section 100 provides for a second appeal to the High Court from an appellate decree passed by a court subordinate to the High Court.
Section 104(1) provides for appeals against orders of the kind therein mentioned and ordains that save as otherwise expressly provided by the Code or by any law for the time being in force an appeal shall lie "from no other orders".
Clause (i) of this section provides for an appeal against "any orders made under Rules from which an appeal is expressly allowed by rules". 'Order 43, Rule 1 of the Code, which by reason of clause (i) of section 104(1) forms a part of that section, provides for appeals against orders passed under various rules referred to in clauses (a) to (w) thereof, Finally, section 105(1) of the Code lays down that save as otherwise expressly provided, no appeal shall lie from any order made by a court in exercise of its original or appellate jurisdiction.
These provisions show that under the Code of Civil Procedure, an appeal lies only as against a decree or as against an order passed under, rules from which an appeal is expressly allowed by Order 43, Rule 1. 887 No appeal can lie against a mere finding for the simple reason that the Code does not provide for any such appeal.
It must follow that First Appeal No. 72 of 1959 filed by defendants 2 and 3 was not maintainable as it was directed against a mere finding recorded by the trial court.
The High Court mixed up two distinct issues : one, whether it was competent to defendants 2 and 3, if they were aggrieved by the preliminary decree of file an appeal against that decree; and two, whether the appeal such as was filed by them was maintainable.
If it be correct that defendants 2 and 3 could be said to have been aggrieved by the preliminary decree, it was certainly competent for them to challenge that decree in appeal.
But they did not file an appeal against the preliminary decree and therefore the question whether they were aggrieved by that decree and could file an appeal therefrom was irrelevant.
While deciding whether the appeal filed by defendants 2 and 3 was maintainable ' , the High Court digressed into the question of the competence of defendants 2 and 3 to file an appeal against the preliminary decree and taking the view that it was open to them to challenge that decree even though the suit was wholly dismissed against them, the High Court held that the appeal, which in fact Was directed against a find ing given by the trial court, was maintainable.
It the High Court had appreciated that the two questions were distinct and separate, it would not have fallen into the error of deciding the latter question by considering the former.
Adverting to the question which the High Court did consider, namely, whether defendants 2 and 3 could be said to be aggrieved by the preliminary decree, there is nothing in the terms of that decree which precluded those defendants from depositing the decretal amount to be able to redeem the mortgage.
The trial court had passed the usual preliminary decree for sale in Form No. 5A, under Order 34, Rule 4, Civil Procedure Code.
If the amount found due to the appellant under the decree was paid into the court within the stipulated or extended period, the appellant would have been obliged to deliver to the mortgagors all the documents in her possession or power relating to the mortgaged property and to deliver up to the defendants quiet and peaceable possession of the property free from the mortgage.
The amount declared to be due to the appellant by the preliminary decree was not paid by the defendants, from which it would appear that they were not interested in paying the amount.
It is significant that defendants 2 and 3 were served with the notice of final decree proceedings and they appeared therein.
The Code is merciful to mortgagors and perhaps 'rightly, because the mortgagee ought to have no grievance if the loan advanced by him is repaid with permissible interest, costs and expenses.
Under Order 21, Rule 89, it was open to defendants 2 and 3 as late as after the appellant purchased the property in the auction sale, to pay the amount due to her.
These defendants had interest in the mortgaged property by virtue of a title acquired before the sale, that is, under the registered partition dated January 11, 1956.
Under Order 21, Rule 89, where immovable property is sold in execution of a decree, any person owing the property or holding an interest there 888 in by virtue of a title acquired before the sale, can apply to have the sale set aside on his depositing in Court, for payment to the purchaser a sum equal to five per cent of the purchase money and for payment to the decree holder, the amount specified in the proclamation of sale as that for the recovery of which the sale was ordered.
Nothing of the kind was done and even the last significant opportunity was not availed of by the defendants.
Counsel for the appellant seems right that the defendants were content that only half the mortgaged property was directed to be sold and that it was only because of the later appreciation in prices of real property that defendants 2 and 3 awoke to the exigency of challenging the preliminary decree.
That was much too late.
So late indeed, that not having any plausible reason to assign for the inordinate delay caused in applying for an amendment of the appeal, they preferred not to file an application for condonation of delay at all.
The appeal was filed on January 4, 1959 while, the application for amendment was made on August 2, 1966.
Event though no explanation was offered for the long delay of over 7 1/2 years, the High Court allowed the amendment with a laconic order "Application for amendment allowed".
Thus, the appeal filed by defendants 2 and 3 being directed against a mere finding given by the trial court was not maintainable; defendants 2 and 3 were not denied by the preliminary decree the right to pay the decretal amount; and the two defendants could even have applied under Order 21, Rule 89, for setting aside the sale in favour of the appellant but they failed to do so as, presumably, they were not interested in paying the amount.
The High Court was therefore wholly in error in allowing the amendment of the Memorandum of Appeal, particularly when defendants 2 and 3 had neither explained the long delay nor sought its condonation.
The preliminary decree had remained unchallenged since Sep tember 1958 and by lapse of time a valuable right had accrued in favour of the decree holder.
The power to allow an amendment is undoubtedly wide and may at any stage be appropriately exercised in the interest of justice, the law of limitation notwithstanding.
But the exercise of such far reaching discretionary powers is governed by judicial considerations and wider the discretion, greater ought to be the care and circumspection on the part of the court.
The appeal in terms was originally directed against the finding given by the trial court that the partition was sham and colourable. "Being aggrieved by the finding given in the Judgment and the Decree. . . it is humbly prayed that findings given by the learned Judge in Para 34 of his Judgment may kindly be set aside, and instead the partition deed dated 11 1 56 may kindly be declared as genuine" So ran the Memorandum of Appeal.
Defendants 2 and 3 reiterated through their counsel by Ming a note to explain the payment of fixed court fees of Rs. 20 that they were "seeking the relief of declaration only" and therefore the court fee paid was proper and sufficient.
Long years thereafter, the High Court allowed the Memorandum to be amended not a reason was cited to, explain the delay and not a reason was given to condone it.
And it was not appreciated that in granting time to defendants 2 and 3 to 889 make up the deficit of the court fees 71 years after the appeal was filed, an amendment was being allowed which had its impact not only on the preliminary decree but on the final decree which was passed in the meanwhile, the auction sale which was held in pursuance of the final decree and the sale certificate which was granted to _the appellant who, with the leave of the court and in full satisfaction of her decree, had purchased a joint 1/3 share in the mortgaged property.
With the striking down of the preliminary decree, these proceedings had to fall but the error really lay in allowing the amendment so as to permit, without good cause shown, a belated challenge to the preliminary decree.
One other aspect of the question relating to the maintainability of the appeal yet remains to be examined.
Counsel for the respondents.
argues that the finding of the trial court on the issue of partition would have operated as res judicata against them and they were therefore entitled to appeal therefrom.
In Harchandra Das vs Bholanath Day on which the learned counsel for the respondents relies in support of this submission, a suit for preemption was dismissed by the trial court on the ground of limitation.
In an appeal filed by the plaintiff, the District Court reversed that finding but confirmed the decree dismissing the suit on the ground that the sale effected by defendants 4 and 5 in favour of defendants 1, 2 and 3 was not validly registered and there being no "sale", there can be no right of preemption.
Defendants 1 to 3 preferred an appeal to the High Court against the finding recorded by the District Court that the sale effected in their favour by defendants 4 and 5 was not valid as it was not lawfully registered.
On a preliminary objection raised by the plaintiffs to the maintainability of the appeal, the High Court of Calcutta, held that though under the Code of Civil Procedure there can be no appeal as against a mere finding, "it may be taken to be the view of courts in India generally, that a party to the suit adver sely affected by a finding contained in a judgment, on which a decree, is based, may appeal; and the test applied in some of the, cases for the purpose of determining whether a party has been aggrieved or not was whether the finding would be res judicata in other proceedings".
The High Court, however, upheld the preliminary objection on the ground that the issue regarding validity of the sale which was decided against defendants 1 to 3 would not operate as res judicata in any subsequent proceeding and therefore the appeal which was solely directed against the finding on that issue was not maintainable.
The position here is similar to that in the Calcutta case.
The trial court decreed the mortgagee"s suit only as against defendant 1, the father, and directed the sale of his one half interest in the mortgaged property on the ground that part of the consideration for the mortgage was not supported by legal necessity, the remaining part of the consideration was tainted with immorality and therefore the mortgage was not binding on the interest of the sons, defendants 2 and 3.
Whether the partition between the father and sons was sham or real had no (1) I.L.R. 890 impact on the judgment of the trial court and made no material difference to the decree passed by it.
The finding recorded by the trial court that the partition was a colourable transaction was unnecessary for the decision of the suit because even if the court were to find that the partition was genuine, the mortgage would only have bound the interest, of the father as the debt was not of a character which, under the .Hindu law, would bind the interest of the sons.
There is no substance .in the submission made on behalf of the sons that if the partition was held to be genuine, the property would have been wholly freed from .the mortgage encumbrance.
The validity or the binding nature of an .alienation cannot depend on a partition effected after the alienation; or else, a sale or a mortgage effected by the Karta of a joint Hindu family ,can easily be avoided by effecting a partition amongst the members of .the joint family.
As the matter relating to the partition was not directly and substantially in issue 'in the suit, the finding that the partition was sham cannot operate as res judicata.
Therefore, the appeal filed by defendants 2 and 3 against that finding was not maintainable, even on ,,the assumption that the High Court of Calcutta is right in its vie", that though under the Code there could be no appeal against a finding, ,yet "On grounds of justice" an appeal may lie against a finding provided that it would operate as res judicata so as to preclude a party aggrieved by the finding from agitating the question covered by the .finding in any other proceeding.
It is not necessary here to determine ,whether the view of the Calcutta High Court is correct.
For these reasons we allow the appeal with costs, set aside the judgment of the High Court and restore that of the trial court.
section C. Appeal allowed.
[/INST]In 1953, defendant 1 executed on behalf of himself and his minor son, defendant 2, a deed of mortgage in favour of the plaintiff.
Deft. 3 is also a son of deft.
I who was born after the mortgage deed.
In 1956, a regd.
deed of partition was executed amongst the defendants under which the mortgaged property was allotted to the share of defts 2 & 3.
Thereafter, the mortgagee filed a civil.
suit to enforce the mortgage and the trial court passed a preliminary decree for sale of deft.
1 's interest in the mortgaged property.
It held that part of the consideration for the mortgage was not supported by legal necessity and the balance of the debt incurred was tainted with immorality.
Therefore, the debt was held not binding on the one half share of deft.
2 in the mortgaged property.
As regards the partition, the trial court held that it was a colourable transaction effected to delay or defeat the creditors.
Being aggrieved, pltf.
filed an appeal (40/59) in the High Court.
Deft. 1 & 2 against whom the suit was dismissed, also filed an appeal (72/59) against the finding of the trial court that the partition was a colourable transaction.
During the pendency of these 2 appeals, the preliminary decree was made final by the trial court and in 1960, the plaintiff purchased with the permission of the court, a joint half share of the mortgaged property in full satisfaction of his decree.
Thereafter, the auction sale was confirmed and the plaintiff was put in joint possession of the property.
Thereafter, the appeals filed by the) plaintiff and defendants 2 and 3 came up for hearing and while the appeals were part hard, defts 2 & 3 applied on August 2, 1966 (nearly 7 1/2 years after filing the appeals), applied for amendment of their Memorandum of appeal in first appeal No. 72/59 and sought permission of the High Court to challenge the preliminary decree passed by the trial Court.
The plaintiff opposed that amendment and applied that she did not desire to prosecute first appeal No. 40/59 filed by her.
The High Court did not pass any orders either on the application for amendment or the plaintiff 's appeal, but adjourned the hearing of the appeals for 3 months to enable defendants to pay the amount due under the preliminary decree.
Accordingly the defendants deposited the money towards the satisfaction of the preliminary decree.
After about 2 years, another division bench of the High Court, allowed the amendments of the defendants Memo of Appeal in Appeal No. 72/59 and allowed time to the defendants to pay the deficit Court fee, which they paid.
The High Court, then took the 2 appeals for hearing and dismissed appeal No. 40/59 for non prosecution and confirmed the findings of the trial court in favour of the defendants.
As regards appeal No. 72/59, the High Court held that in view of Order 41, Rule 2 C.P.C., it was open to the defendants.
with the leave of the court, to urge additional grounds without amending the Memo of Appeal and therefore, the objection raised.
by the plaintiff that amendment should not be allowed, cannot be upheld.
The High Court further held that the defendants ' appeal was competent and they had the right to redeem the mortgage.
On the merits, the High Court held that the partition was real and genuine.
In the result, the High Court set aside the preliminary decree as also the final decree and with it the auction 883 sale in favour of the plaintiff.
The High Court passed a fresh preliminary decree under order 34, Rule 4 C.P.C., directing that that the plaintiff was to recover Rs. 34,386/ and 'odd and directed the defendants to pay the entire decretal amount within 6 months of the date of decree.
The plaintiff questions the correctness of the decree before this Court.
The appeal filed by defendants 2 & 3 Was against the finding recorded by the trial court that the partition between deft. 1 and his sons was a colourable transaction.
Therefore, it was clear that the appeal filed by defts.
2 & 3 was directed originally not against any part of the preliminary decree but against a mere finding recorded by the trial court that the partition was not genuine.
Before this Court, the main question was whether that appeal was maintainable and secondly, whether it was proper for the High Court to allow the amendment of the Memo of appeal after 7 1/2 years without good cause shown and Without any application for condonation of delay.
Allowing the appeal, HELD : (i) There is a basic distinction between the right of suit and the right of appeal.
There is an inherent right in every person to bring a suit of at civil nature, but the right of appeal inheres in no one and therefore an appeal for its maintainability must have the clear authority of law.
The various provisions in the C.P.C. show that under the Code, an appeal lies only as against a decree or as against an order passed under rates from which an appeal is expressly allowed by Order 43, Rule 1.
No appeal can lie against a mere finding for the simple reason that the Codes does not provide for any such appeal.
Therefore, the first appeal filed by.
defendants 2 and 3 in the High Court was not maintainable as it was directed against a mere finding recorded by the trial court.
[886 D H] (ii) The High Court should not have allowed the amendment of the Menlo of Appeal particularly when defendants 2 & 3 had neither explained the long delay nor sought its condonation.
Defendants 2 & 3 were not denied by the preliminary decree the right to pay the decretal amount and the two defendants could even have applied under order 21, Rule 89 for setting aside the sale in favour of the appellant; but they failed to do so.
The preliminary decree had remained unchallenged since September, 1958 and by lapse of time a valuable right had accrued in favour of the decree holder.
Therefore, to allow the amendment after such a long time without a good cause was not a proper exercise of judicial discretion in the circumstances of the case.
[888 D E]
</s> |
<s>[INST] Summarize the judgementCivil Appeal Nos.
6092 & 6093 of 1983 Appeals by Special leave from the Judgment and order dated the 4th February, 1983 of the Bombay High Court in W.P. No. 173 of 1983 M.K Ramamurthi and Urmila Sirur for the Appellant.
Gobind Das, P.H. Parekh and Indu Malhotra for the Respondent The Judgment of the Court was delivered by DESAI, J.
General Labour Union (Red Flag) Bombay filed two complaints, one against M/s. Delta Wires Pvt. Ltd. and second against M/s. Delta Spokes Manufacturing Company, two sisters concerns ( 'employers ' for short) under Sec.
28 read with Items l(a), l(b), 2, 4(a), 4(f) and 6 of Schedule II of the Maharashtra Recognition of Trade Unions and Prevention of Unfair Labour Practices Act, 1971 ( 'Act ' for short).
Broadly stated the complaints were that the employers were guilty of imposing and continuing a lock out and had thus committed unfair labour practice.
The employers contended that they had finally and irrevocably closed the industrial undertaking and were not guilty of any unfair labour practice.
The complaints were filed in the Industrial Court, Maharashtra, Bombay.
The learned Judge framed an issue whether the employers had committed an unfair labour practice by imposing and continuing a lock out as provided in Item 6 of Schedule II of the Act.
After hearing the parties, the learned Judge answered the issue in negative and dismissed the complaints.
The appellant Union filed two special civil applications in Bombay High Court under article 226 of the Constitution questioning the correctness of the decision of the Industrial Court.
Both the applications were dismissed in limine.
The Union thereupon filed these two appeals by special leave.
66 At the hearing of the appeals, Mr. Govind Dass, learned counsel for the employers stated that the employers have re opened the industrial units and there is partial resumption of manufacturing process.
He further stated that the employers are willing to take back all the old workmen and in order to satisfy the court about the bonafides of the employers he pointed out that nearly 16 old workmen, who responded to the advertisement in a local newspaper, have already been re employed.
Mr. Govind Dass stated that the employer will put on record an unconditional undertaking as affidavit in these appeals that no new workman will be recruited in afore mentioned two industrial undertakings who had not been in previous employment with them without giving first preference to the workmen who were in employment of the two concerns on April 8, 1980 when they were closed down.
Mr. M. K. Ramamurthy learned counsel for the appellant union, on the other hand, contended that the industrial undertakings of the employers had never been closed or at any rate have resumed working in full and that the old workmen are not being re employcd and new hands arc being recruited.
We record the unequivocal undertaking given on behalf of the employers by the learned counsel Shri Govind Dass that all the old workmen who were in service of the employers at the time of the alleged closure, that is upto and inclusive of April 8, 1980, will be re inducted in service as resumption of work is gradually expanding and that till all the old workmen are re inducted in service no new hand will be recruited.
An undertaking to that effect by Dr. P. D. Meghani s/o Dharam Chand Meghani has been placed on record and is treated as an integral part of this judgment.
In order to be assured that the undertaking is carried out in letter and spirit we direct the Industrial Court Maharashtra Bombay to depute its senior ministerial officer to visit the industrial undertakings of the employers and to satisfy itself that the old workmen are being re inducted in service and that as resumption of production is gradually expanded, the old workmen will be re inducted in service.
There will be a continuous watch by the ministerial officer to be appointed by the Industrial Court till all the old workmen who are willing to be re inducted in service are taken back in service.
In fact this undertaking should have concluded the matter.
But there is a statement of law made by the Industrial Court while rejecting the complaints filed by the appellant union which does not command to us and to avoid any such error being repeated in future, we, with a view to set right the matter proceed to examine the same in this judgment.
67 The complaints of the union were that the employers were guilty of imposing and continuing a lock out which under the law was illegal.
On the other hand, the submission on behalf of the employers was that there was a closure of the industrial undertaking and it was not a case of lock out.
In such a situation there the parties are at variance whether the employers have imposed a lockout or have closed the establishment it is necessary to find out what was the intention of the employer at the time when it resorts to lock out or claims to have closed down the industrial undertaking.
It is to be determined with accuracy whether the closing down of the industrial activity was a consequence of imposing lock out or the owner employer had decided to close down the industrial activity.
Lock out is generally an employer 's response to some direct action taken by the workmen.
Closure may be on account of various reasons which may have necessitated closing down of the industrial undertaking.
In this case the issue was whether the employer had imposed a lock out or has closed down the business.
In examining this aspect, the Industrial Court observed as under: D "It is not necessary to refer to each and every decision pointed out by Mr. Bhatt on the point of lock out and closure, since now it is well established that in case of a lockout there is only closure of the place of business where as in case of a closure there is a closure of the business itself permanent and irrevocable.
Whether the closure is brought about malafide and whether it could have been avoided are matters irrelevant and what is to be seen is whether in fact and in effect there is a closure or not.
" We fail to appreciate both the approach and the reasons in support of the approach.
Lock out has been defined in Sec.
2(L) of the Industrial Disputes Act, 1974 ( 'lD Act ' for short) to mean the closing of a place of business, or the suspension of work or the refusal by an employer to continue to employ any number of persons employed by him.
In lockout the employer refuses to continue.
to employ the workmen employed by him even though the business activity was not closed down.
The essence of lock out is the refusal of the employer to continue to employ workman.
There is no intention to close the industrial activity.
Even if the suspension of work is ordered it would constitute lock out.
On the other hand closure implies closing of industrial activity as a 68 consequence of which workmen are rendered jobless.
22(2) of the ID Act prohibits an employer in a public utility service from locking out any of his workmen without giving notice as provided therein.
23 prohibits an employer from declaring a lock out in any of the eventualities mentioned therein.
Lockout in contravention of Sec.
23 is declared illegal.
Section 26 of the ID Act provides that any of the practices listed in Schedule 11, III and IV would be an unfair labour practice.
Imposing and continuing a lock out deemed to be illegal under the Act is an unfair labour practice.
While examining whether the employer has imposed a lock out or has closed the industrial establishment, it is not necessary to approach the matter from this angle that the closure has to be irrevocable, final and permanent and that lockout is necessarily temporary or for a period.
The employer may close down industrial activity bonafide on such eventualities as suffering continuous loss, no possibility of revival of business or inability for various other reasons to continue the industrial activity.
There may be a closure for any of these reasons though these reasons are not exhaustive but are merely illustrative.
To say that the closure must always be permanent and irrevocable is to ignore the causes which may have necessitated closure.
Change of circumstances may encourage an employer to revive the industrial activity which was really intended to be closed.
Therefore the true test is that when it is claimed that the employer has resorted to closure of industrial activity, the industrial court in order to determine whether the employer is guilty of unfair labour practice must ascertain on evidence produced before it whether the closure was a device or pretence to terminate services of workmen or whether it is bonafide and for reasons beyond the control of the employer.
The duration of the closure may be a significant fact to determine the intention and bonafides of the employer at the time of closure but is not decisive of the matter.
To accept the view taken by the Industrial Court would lead to a startling result in that an employer who has resorted to closure, bonafide wants to re open, revive and re start the industrial activity he can not do so on the pain that the closure would be adjudged a device or pretence.
Therefore the correct approach ought to be that when it is claimed that the employer is not guilty of imposing a lockout but has closed the industrial activity, the Industrial Court before which the action of the employer is questioned must keeping in view all the relevant circumstances at the time of closure decide and determine whether the closure was a bonafide one or was a device or a pretence to determine 69 the services of the workmen.
Answer to this question would permit A the Industrial Court to come to the conclusion one way or the other.
Having clarified the position in law, we dispose of the appeals in terms of the undertaking of Dr. P.D. Meghani as recorded in this judgment.
Both the appeals are disposed of accordingly.
[/INST]An Ambassador car No. MHX 3771 was purchased by M/s. Karamchand Thapar & Bros. (Coal Sales) Ltd, Delhi in the year 1966 and was transferred to respondent No. I United Collieries Ltd., the owners in relation to the North Chirimiri Collieries, and it was, therefore, the owner of the said vehicle.
On and from the appointed day i.e. May 1, 1973, the right, title and interest of the owners in relation to the coal mines specified in the schedule stood transferred to and became vested in the Central Government free from all encumbrances, under sub section (1) of section 3 of the .
Immediately after the nationalisation of the coal mines, the Deputy Custodian General, Coal Mines Authority Limited, Nagpur addressed a letter dated May 9, 1973 to the Technical Advisor to the North Chirimiri Collieries using the said staff car to hand over if to the custodian.
Since the car was not handed over on the plea that it was not used by the Technical Advisor exclusively for the North Chirimiri Collieries but used by him for looking after the multifarious activities of the Thapar Group of industries which was a composite concern With the businesses other than coal mining, and therefore although the car belonged to respondent No. 1, the owners of the North Chirimiri Collieries, it was not a staff car 'belonging to the mine '.
The Managing Director, Western Division, Coal Mines '.
Authority by an order dated August 9, 1983 directed the respondents to hand over possession of the car failing which they would be liable to prosecution under the Act.
Thereupon, respondent No. 1 and the Technical Advisor assailed his order by a petition under article 226 of the Constitution before the Nagpur Bench of the Bombay High Court.
The High Court purporting to rely on the decision of this Court in New Satgram Engineering Works & Anr.
vs Union of India ; held that the question as to whether the staff car should be treated as belonging to the owner of a mine as part of the 210 mine itself raised disputed questions of fact relating to its user which would A have to be determined on the basis of evidence.
lt accordingly discharged the rule and left the parties to have their rights adjudicated in a civil suit.
Feeding aggrieved.
Union of India preferred the appeal by special leave as the question involved affected a large number of cases.
Allowing the appeal, the Court ^ HELD: Parliament by an enlarged definition of 'mine ' in section 2(h) of the Act has indicated the nature of the properties that vest and the question whether a particular asset is taken within the sweep of section 2(h) depends on whether it answers the description given therein.
The staff car in question was undoubtedly a fixed asset of the North Chirimiri Collieries Ltd., the owners in relation to the said mine, being the staff car of the Technical Advisor, was a fixed asset ' belonging to the mine. 'Fixed assets ' in general comprise house assets Which are held for the purpose of conducting a business, in contradistinction to those assets which proprietor they include real estate, building, machinery etc.
The staff car, therefore, fell within the definition of 'mine ' as contained in section 2(h)(xii) and vested in the Central Government under subsection (1) of section 3 of the .
Merely because the Technical Advisor was putting the staff car to his personal use or for multifarious activities of the Thapar Group of Industries would not alter the true legal position since the subsequent user for a different purpose was not really germane.
[214D G] There is a difference in the language used in section 2(h)(xi) and (xii) Sub clause (xi) uses the words if solely used ' in relation to lands and buildings for the location of the management, sale or liaison offices, or for the residence of officers and staff, of the mine, while sub clause (xii) uses the words belonging to the owner of mine, wherever situated '.
The difference in language between the two expressions 'if solely used ' and 'belonging to the owner of a mine ' is obvious.
The observations of this Court in New Satgram Engineering Works case that "where there is a dispute as to whether a particular property vest in the Central Government or not under sub s.(i) or section 3 of the Act, the dispute undoubtedly is a civil dispute and must therefore be resolved by a suit" where made in the context of section 2(h)(xi) of the Act.
In that case it was observed that was therefore possible to contend that lands and buildings appurtenant to a coal mine, if not exclusively used for the purpose of the colliery business, would not come within the definition of mine ' in section 2(h) i.e it would depend upon the nature of user, and that the crucial date is the date of vesting.
The present case is clearly covered by section 2(h)(xii) and not by section 2(h)(xi).
[213G H; 214A B ; 213A B] New Satgram Works & Anr.
vs Union of India ; distinguished
</s> |
<s>[INST] Summarize the judgementCivil Appeals Nos.
781 783 of 1962.
Appeals by special leave from the judgment and order January 6, 1961, of the Andhra Pradesh High Court in Civil Miscellaneous Petition Nos. 4672 to 4674 of 1960.
A. V. Viswanatha Sastri, M.S.K. Sastri and M.S. Narasimhan, for the appellant (in all the appeals).
Ranganadham Chetty and R.N. Sachthey, for the respondent (in all the appeals).
October 22, 1963.
The Judgment of the Court was delivered by AYYANGAR J.
The points raised in these three appeals which come before us by virtue of special leave under article 136 of the Constitution are somewhat 176 out of the ordinary and raise for consideration whether the common order passed by the High Court of Andhra Pradesh rejecting applications to review an earlier order by that court, is correct on the facts which we shall state presently.
The appellant M/s Thungabhadra Industries Ltd. are ' manufacturers of groundnut oil, part of which they convert for sale into hydrogenated oil while the rest is sold as ordinary oil.
Under the Madras General Sales Tax Act, hereinafter referred to as the Act, which has application to the State of Andhra Pradesh, while in regard to groundnuts the tax is levied at the point of purchase, groundnut oil is taxed at the point of sale.
The result of this feature naturally is that when a person purchases groundnut and converts the same into oil and sells the oil extracted he has to pay tax at both the points.
Rules have been framed in order to alleviate what might be considered a hardship by reason of this double levy.
Rule 5(k) of the Turnover & Assessment Rules provides: "5.
(k) in the case of a registered manufacturer of groundnut oil and cake, the amount which he is entitled to deduct from his gross turnover under rule 18 subject to the conditions specified in that rule".
and Rule 18 referred to reads: "18.
(1) Any dealer who manufactures groundnut oil and cake from groundnut and/or kernel purchased by him may, on application to the assessing authority having jurisdiction over the area in which he carries on his business, be registered as a manufacturer of ground nut oil and cake.
(2) Every such registered manufacturer of groundnut oil will be entitled to a deduction under clause (k) of sub rule (1) of rule 5 equal to the value of the groundnut and/or kernel, purchased by him and converted into 'oil and cake if he has paid the tax to the State on such purchases: 177 Provided that the amount for which the oil is sold is included in his net turnover: Provided further that the amount of the turn over in respect of which deduction is allowed shall not exceed the amount of the turnover attributable to the groundnut and/or kernel used in the manufacture of oil and included in the net turnover.
" The appellant is admittedly a manufacturer who is registered for the purposes of that rule.
In respect of the year 1949 50 the appellant while submitting his return disclosing his turnover of the sale of oil, included therein the value of the hydrogenated oil that he sold and claimed a deduction under the rule in respect of the value of the groundnuts which had been utilised for conversion into hydrogenated oil on which he had paid tax at the point of their purchase.
This claim was negatived by the Sales Tax authorities on the ground that "hydrogenated groundnut oil" was not "groundnut oil" within r. 18(2).
Having failed before the departmental authorities in getting its claim to deduction allowed, the appellant approached the High Court with a Tax Revision Case numbered 120 of 1953 on its file but the High Court, by its judgment dated February 11, 1955, upheld the view of the department.
An application was thereafter made to the High Court to grant a certificate of fitness under article 133(1) on the ground that substantial questions of law as to the interpretation of the General Sales Tax Act.
and the Rules made thereunder, as well as of certain other enactments which were relied upon in support of their claim by the appellants, arose for decision in the case.
The learned Judges by their order dated February 21, 1956 granted the certificate.
In view of the points arising in this appeal we consider it would be convenient to set out the text of this order: "This petition raises a question of general importance namely whether hydrogenated groundnut oil popularly known as Vanaspathi is ground 1 SCI/64 12 178 nut oil so as to enable the assessee to claim exemption under Rules 18(2) and 5(1) (g) of the Turnover and Assessment Rules framed by the Government in exercise of the powers conferred by Section 3 and sub rules 4 and 5 of the Madras General Sales Tax Act, 1939.
The answer to the question arising in this matter turns upon whether the chief characteristics of groundnut oil remain the same in spite of the chemical processes it undergoes, It also involves the interpretation of the notifications issued by the Government of India under the Essential Supplies (Temporary Powers) Act and certain provisions of the Vegetable Oils Products Control Order.
In these circumstances we think it a fit case for appeal to the Supreme Court.
Leave is therefore granted.
" Thereafter the appeal was entertained in this Court and numbered as Civil Appeal 498 of 1958, was finally disposed of on October 18, 1960 and is now reported as M/s Thungabhadra Industries Ltd. vs The Commercial lax Officer, Kumool(1).
Meanwhile in regard to the assessment of the three succeeding years 1950 51, 1951 52 and 1952 53, the same question as to whether "hydrogenated groundnut oil" was "groundnut oil" entitled to the deduction of the purchase turnover under r. 18(2) of the Turnover and Assessment Rules was raised and was decided against the appellant by the Sates Tax Officer.
This order was taken up in appeal to the Deputy Commissioner of Commercial Taxes by the appellant and as apparently the identical question was pending in the High Court in regard to the year 1949 50, the appellate authority awaited the decision of the High Court and when T.R.C. 120 of 1953 was decided against the appellant on February 11, 1955, disposed of the appeal against the appellant by its order dated April 5, 1955.
Thereafter the appellant approached the Sales Tax Appellate Tribunal but this was obviously a formality (1) ; 179 because the Tribunal were bound by the judgment of the High Court and the appeals were dismissed by order dated October 20, 1955.
Against the orders of the Sales Tax Appellate Tribunal the appellant preferred three Tax Revision Cases T.R.C. 75,76 and 77 of 1956 in regard to the three assessment years.
The learned Judges of the High Court dismissed the three Revision Cases on October 7, 1958 following their earlier decision in T.R.C. 120 of 1953 in regard to the assessment for the year 1949 50.
At this date, it would be noticed, the correctness of the decision of the High Court in T.R.C. 120 of 1953 was pending adjudication in this Court by virtue of the Certificate of fitness granted by the High Court under article 133(1).
Desiring to file an appeal to this Court against the judgment of the High Court in these three Tax Revision Cases as well, the appellant filed, on February 16, 1959, three miscellaneous petitions under article 133(1) of the Constitution praying for a certificate of fitness that the case involved substantial questions of law as to the interpretation of the Sales Tax Act and the Rules made thereunder etc.
The learned Judges, however, by their order dated September 4.
1959 dismissed the petition stating: "The judgment sought to be appealed against is one of affirmance.
We do not think that it involves any substantial question of law as to the interpretation of the Constitution; nor do we regard this as a fit case for appeal to the Supreme Court.
" The question that arises for consideration in these appeals is primarily whether this order dated September 4, 1959, is vitiated by error apparent on the face of the record.
How that matter becomes relevant is because the appellant filed three applications for review of this order under O. XLVII r. 1 of the Civil Procedure Code specifying this as the ground for relief.
These applications for review were filed on November 23, 1959, and apparently notice was issued to the respondent State Government and the petition for review came on for hearing on January 6, 1961.
180 On that date the learned Judges dismissed the said applications and assigned the following as the reasons for their order: "The only ground argued in support of these review petitions is that leave to appeal to the Supreme Court was granted in similar circumstances in regard to previous year and there was no reason why leave should have been refused in these cases.
We do not think that would furnish a sufficient ground for reviewing the order dismissing the petitions for leave to file an appeal t 0 the Supreme Court.
That apart, the Supreme Court was moved under Article 136 of the Constitution for special leave and that was dismissed may be on the ground that it was not flied in time.
In the circumstances, we think that our order dated 4.9.1959 dismissing S.C.C.M.Ps No. 4823, 4825 and 4827 of 1959 cannot be reviewed.
" The appellants thereupon made applications for special leave from this Court to challenge the correctness of this last order and the leave having been granted after notice to the respondent, the appeals are now before us.
Before dealing with the arguments addressed to us on behalf of the appellant it is necessary to advert to an objection raised by learned Counsel for the respondent urging that the special leave granted to the appellant should be revoked.
We declined to permit the respondent to urge any such argument in this case primarily for two reasons.
In the first place, the special leave was granted after notice to the respondent and therefore after hearing the respondent as to any objection to the maintainability of the appeal or to the granting of special leave.
In the circumstances, any ground in relation to these matters should have been urged at that stage and except possibly in some extraordinary cases where the ground urged happens to arise subsequent to the grant of the special leave or where it could not be ascertained by the respondent at that date notwithstanding, the exercise of due care; except in such 181 circumstances this Court will not permit the respondent to urge any argument regarding the correctness of the order of the Court granting special leave.
Indeed, the very object of issuing notice to the respondent before the grant of leave is to ensure that the latter is afforded an opportunity to bring to the notice of the Court any grounds upon which leave should be refused and the purpose of the rule would be frustrated if the respondent were permitted to urge at a later stage at the stage of the hearing of the appeal and long after the appellant has incurred all the costs that the leave granted after notice to him should be revoked on a ground which was available to him when the application for special leave was heard.
This apart, even the statement of the case filed on behalf of the respondent does not disclose any ground upon which the leave granted should be revoked: nor, of course, does it make any prayer seeking such relief.
One of the objects which the statement of the case is designed to achieve is manifestly that no party shall be taken by surprise at the hearing and this is ensured by the provision in O. XIX r. 4 of the Supreme Court Rules reading: "No party shall, without the leave of the Court, rely at the hearing on any grounds not specified in the Statement of the Case filed by him.
" Nor, of course, was there any contention that the ground that he proposed to submit came into existence after the filing of the statement of case.
It was in these circumstances that we declined to permit the respondent to develop an argument to persuade us to hold that the leave granted by this Court should be revoked, though we might add that the matter mentioned by learned Counsel for the respondent in this respect would not, even if urged at the hearing of the special leave petition, have materially assisted him in resisting the grant of special leave.
The point he desired to urge was that in the petition for special leave the appellant had averred that the decision of this Court reversing the judgment of the High Court in T.R.C. 120 of 1953 had been 182 brought to the notice of the High Court, but that this statement must be erroneous or untrue for two reasons: (1) This is not referred to in the order now under appeal, and (2) the decision of this Court was not reported in any of the law reports official or unofficial till long after January 1961 when the petition for review was heard.
It is manifest that neither of the two circumstances would by itself prove the untruth of the averment in the special leave petition.
The learned Judges might well have thought that the decision had no material bearing on the only point that arose for consideration before them, viz., whether their order of September 1959 was or was not vitiated by error of the sort which brought it within O. XLVII.
r. 1 of Civil Procedure Code.
It is obvious that so viewed, it would not have any relevance.
As regards the other point, the appellant did not have need to wait for a report of the case in the law reports but might very well have produced a copy of the judgment of this Court and being a party to the proceeding here it is improbable that it had not a copy, so, that its statement that it drew the attention of the Court to the decision is not proved to be false by the decision not being reported till long after January, 1961.
The oral application for revoking the leave granted is therefore rejected as entirely devoid of substance.
We shall next proceed to deal with the merits of the appeals.
Before doing so however, it is necessary to advert to a circumstance which the learned Judges considered a proper reason for rejecting the petition for review.
This arises out of the second of the grounds assigned by the learned Judges in their order dated January 6, 1961, refusing to grant the review.
This may be quoted in their own words: "That apart, the Supreme Court was moved under article 136 of the Constitution for special leave and that was dismissed, may be on the ground that it was not filed in time.
" 183 The facts in relation to this matter might now be stated.
As already seen, the applications for reviewing the order dated September 4, 1959, refusing the certificates were filed on November 23, 1959.
During the pendency of those review applications the appellant filed, on November 30, 1959, petitions seeking special leave of this Court under article 136 of the Constitution but those petitions were filed beyond the period of limitation prescribed by the Rules.
An application was therefore filed along with the special leave petitions seeking condonation of delay in the filing of the petitions.
The petitions and the applications for condonation of delay came on together for hearing and this Court refused to condone the delay, so that the petitions for special leave never legally came on the file of this Court.
O. XLVII r. 1(1) of the Civil Procedure Code permits an application for review being filed "from a decree or order from which an appeal is allowed but from which no appeal has been preferred.
" In the present case, it would be seen, on the date when the application for review was filed the appellant had not filed an appeal to this Court and therefore the terms of O. XLVII r. 1(1) did not stand in the way of the petition for review being entertained.
Learned Counsel for the respondent did not contest this position.
Nor could we read the judgment of the High Court as rejecting the petition for review on that ground.
The crucial date for determining whether or not the 'terms of O. XLVII.
r.1 (1) are satisfied is the date when the application for review is filed.
If on that date no appeal has been filed it is competent for the Court hearing the petition for review to dispose of the application on the merits notwithstanding the pendency of the appeal, subject only to this, that if before the application for review is finally decided the appeal itself has been disposed of, the jurisdiction of the Court hearing the review petition would come to an end.
The next question is as regards the effect of the refusal of this court to condone the delay in filing the petition for special leave.
Here again, it 184 was not contended that the refusal of this Court to entertain the petition for special leave on the grounds just now stated was a bar to the jurisdiction or powers of the Court hearing the review petition.
This position was not contested by the learned Advocate for the respondent either.
In these circumstances, we are unable to agree with the learned Judges of the High Court that the refusal by this Court to condone the delay in filing the petition for special leave was a circumstance which could either bar the jurisdiction of the High Court to decide the petition for review or even could be a relevant matter to be taken into account in deciding it.
If therefore their original order dated September 4, 1959, was vitiated by an error apparent on the face of the record, the failure of the special leave petition to be entertained in this Court in the circumstances in which it occurred, could not be any ground either of itself or taken along with others to reject the application for review.
We consider it would be convenient to consider the first part of the order of the High Court now under appeal after examining the principal question whether the order of September, 1959, rejecting the appellant 's petition for a certificate is vitiated by error apparent on the record.
If one analysed that order only one reason was given for the rejection of the certificate of fitness.
No doubt, in the first sentence of their order they stated that the judgment was one of affirmance, but that was merely preliminary to what followed where they recorded that the certificate was refused for the reason that the case did not involve any substantial question of law regarding the interpretation of the Constitution.
The preliminary statement that their judgment was one of affirmance would, however, seem to show that what the learned Judges had in mind were the terms of article 133 of the Constitution where alone as distinct from article 132 there is reference to a judgment of affirmance, though per incuriam they reproduced the terms of article 132(1).
As it was the case of no 185 party that any question of interpretation of the Constitution was involved, the reference to "the substantial question of law relating to the interpretation of the Constitution" must obviously have been a mistake for a substantial question of law arising in the appeal.
Though learned Counsel for the appellant stressed this ground in the order of September, 1959 as itself disclosing an error apparent on the face of the record or was at least, ,indicative that the learned Judges did not apply their minds to the consideration of the question arising in the application for a certificate of fitness, we shall proceed on the basis that this was merely a clerical error in their order and that the learned Judges had really in mind the terms of article 133(1) which had been invoked by the appellants in their application for the certificate.
On the basis that the words in the order of September, 1959 referring to a substantial question of law as to the interpretation of the Constitution were really meant to say that no substantial question of law was involved in the appeal sought to be filed in this Court how does the matter stand ? There was practically no question of fact that fell to be decided in T.R.Cs. 75 to 77 of 1956 and the sole question related to the claim to deduct the value of the groundnut on which purchase tax had been paid and which had been converted into hydrogenated oil which had been sold and which had been included in the appellant 's turnover.
In fact, these T.R.Cs. were decided by the High Court not independently on a consideration of any particular facts which arose in them, but by following the decision of the High Court in T.R.C. 120 of 1953 which had accepted the construction which the departmental authorities had placed on r. 18(2) of the Turnover & Assessment Rules.
The substantial points of law which were claimed to arise in the appeal had been set out in extension the petition seeking the certificate and, in fact, they were practically a reproduction of the contents of the earlier petition seeking a certificate against the decision in T.R.C. 120 of 1953.
The learned Judges and the learned C.J. was a party 186 to the earlier decision and to the grant of the certificate of fitness on that occasion considered these points and had stated as their opinion that substantial questions of law of general importance were involved in the case and they had given expression to these views in a judgment which we have reproduced earlier.
What, however, we are now concerned with is whether the statement in the order of September 1959 that the case did not involve any substantial question of law is an "error apparent on the face of the record".
The fact that on the earlier occasion the court held on an 'identical state of facts that a substantial question of law arose would not per se be conclusive, for the earlier order itself might be erroneous.
Similarly, even if the statement was wrong, it would not follow that it was an "error apparent on the face of the record", for there is a distinction which is real, though it might not always be capable of exposition, between a mere erroneous decision and a decision which could be characterised as vitiated by "error apparent".
A review is by no means an appeal in disguise whereby an erroneous decision is reheard and corrected.
but lies only for patent error.
We do not consider that this furnishes a suitable occasion for dealing with this difference exhaustively or in any great detail, but it would suffice for us to say that where without any elaborate argument one could point to the error and say here is a substantial point of law which stares one in the face, and there could reasonably be no two opinions entertained about it, a clear case of error apparent on the face of the record would be made out.
No questions of fact were involved in the decision of the High Court in T.R.Cs. 75 to 77 of 1956.
The entire controversy turned on the proper interpretation of r. 18(1) of the turnover & Assessment Rules and the other pieces of legislation which are referred to by the High Court in its order of February 1956 nor could it be doubted or disputed that these were substantial questions of law.
In the circumstances therefore, the submission of the appellant that the 187 order of September 1959 was vitiated by "error apparent ' ' of the kind envisaged by O. XLVII r. 1, Civil Procedure Code when it stated that "no substantial question of law arose" appears to us to be clearly well founded.
Indeed, learned Counsel for the respondent did not seek to argue that the earlier order of September 1959 was not vitiated by such error.
He, however, submitted that this Court should have regard not to whether the earlier order was so vitiated or not but to the grounds which were urged by the appellant at the hearing of the application for review and that if at that stage the point in the form in which we have just now expressed was not urged, this Court would not interfere with the order rejecting the application for review.
He pointed out that at the stage of the arguments on the application for review the only ground which was urged before the Court, as shown by the judgment of the Court, was that the order of September, 1959 was erroneous for the reason that a certificate had been granted on a previous occasion.
We have extracted the text of this order of January, 1961 in which this argument is noticed and it is stated that it was the only point urged before the Court.
The question then arises as to what is meant by "in similar circumstances in regard to a previous year".
Learned Counsel for the respondent submits that we should understand these words to mean that the appellant relied on the order dated February 21, 1956, granting the certificate of fitness in regard to the decision of the High Court in T.R.C. 120 of 1953 solely as some sort of precedent and no more.
On that basis learned Counsel strenuously contended that the mere fact that in regard to an earlier year a certificate was granted would not by itself render an order refusing a certificate in a later year erroneous on the ground of patent error.
We have already dealt with this aspect of the matter.
We do not, however, agree that this is the proper construction of the argument that they rejected.
The order dated February 21, 1956, in relation to the previous year 188 was placed before the court and was relied on not as a binding precedent to be followed but as setting out the particular substantial questions of law that arose for decision in the appeals, and the attention of the Court was drawn to the terms of the previous order with a view to point out the failure to appreciate the existence of these questions and to make out that the statement in the order of September, 1959 that no substantial question of law was involved in the appeals was erroneous on the face of it.
This is made perfectly clear by the contents of the petition for review where the aspect we have just now set out is enunciated.
The earlier order being of the same Court and of a Bench composed in part of the same Judges, the earlier order was referred to as a convenient summary of the various points of law that arose for the purpose of bringing to the notice of the Court the error which it committed in stating that no substantial question of law arose in the appeals.
If by the first sentence the learned Judges meant that the contention which they were called upon to consider was directed to claim the previous order of 1956 as a binding precedent, they failed to appreciate the substance of the appellant 's argument.
If, however, they meant that the matters set out by them in their order granting a certificate in relation to their decision in T.R.C. 120 of 1953 were not also involved in their judgment in T.R.Cs. 75 to 77 they were in error, for it is the case of no one that the questions of law involved were not identical.
If, besides, they meant to say that these were not substantial questions of law within article 133(1), they were again guilty of error.
The reasoning, therefore, of the learned Judges in the order now under appeal, is no ground for rejecting the applications to review their orders of September, 1959.
We therefore consider that the learned Judges were in error in rejecting the application for review and we hold that the petitions for review should have been allowed.
We only desire to add that in so holding we have not in any manner taken into account or been influenced by the view expressed by this Court in Tungabhadra 189 Industries Ltd. vs The Commercial Tax Officer, Kurnool(1) regarding the construction of Rule 18(2) of the Turnover & Assessment Rules, since that decision is wholly irrelevant for considering the correctness of the order rejecting the applications for review which is the only question for decision in these appeals.
Before concluding we desire to make an observation arising out of an appeal made to us by learned Counsel for the respondent that even if the appeal were allowed we should make no direction as regards costs against his client.
The right of the appellant to the benefit of the exemption which he claimed and which was disallowed to him by the judgment of the High Court in T.R.Cs 75, 76 and 77 really depended on the correct construction of r. 18(2) of the Turnover & Assessment Rules and in particular on the meaning of the expression "groundnut oil" occurring there whether it included "hydrogenated oil".
This Court in its judgment in M/s Tungabhadra Industries Ltd. vs The Commercial Tax Officer, Kurnool(1) pronounced on the proper construction of the word 'groundnut oil ' occurring in r. 1 8 of the Turnover & Assessment Rules as they then stood.
The assessment proceedings for 1950 51, 1951 52 and 1952 53 had not attained finality against the assessee by the termination of all proceedings, because there were still applications for review pending before the High Court.
In the circumstances, it would have been reasonable to expect that the Sales Tax authorities should have afforded the appellant the benefit of the decision of this Court in regard to these later years also unless there was some insuperable difficulty or other circumstance in the way of their doing so, and learned Counsel for the respondent has brought none to our notice.
That is so far as regards the merits of the controversy in the tax revision cases in which certificates were sought.
Of course, if on any technical or similar points the State is entitled to succeed indisputably they would not be prevented from doing so and they would be entitled (1) ; 190 to collect the tax as assessed and as decided in its favour by the High Court.
But when the respondent fails in the objections raised to prevent the matter coming to this Court, we do not see any justification for the plea that costs should not follow the event but that the appellant should be deprived of it bright to costs.
In the result the appeal is allowed and the common judgment of the High Court in the three appeals is reversed and the petitions for review C.M.Ps 4672, 4673 and 4674 of 1959 on the file of the High Court are allowed with costs here and in the High Court one set of hearing fees.
Appeal allowed.
[/INST]The Appellant was the tenant of the respondent occupying of the latter premises at a monthly rental of Rs. 70.
The appellant appealed to the Civil Judge for fixing standard rent under section 11(1) and for specifying interim rent under section 11(3) of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 and deposited a certain amount to the credit of the respondent.
Subsequently the respondent filed a suit before the Civil Judge for evicting the appellant on the ground of non payment of rent.
The Civil 158 Judge ordered the appellant to deposit the arrears of rent at the rate of Rs. 51 per month within 15 days.
He substantially complied with his order.
The two proceedings were amalgamated.
The Civil Judge fixed the standard rent at the rate of Rs. 50 per month and dismissed the suit for eviction on the ground that the appellant was willing to pay the standard rent within the meaning of section 12 of the Act.
In appeal the District Court fixed the standard rent Rs. 70 per mensem and found that since the appellant had complied with the order to deposit arrears and since he was ready and willing and ready to pay standard rent he confirmed order of the lower court order of dismissing of the suit.
The respondent took the matter in revision before the High Court under section 115 Code of Civil Procedure, 1908.
The High Court reversed the order of the District Court and directed eviction on the grounds that appellant was not ready and willing to pay the standard rent, that he had not deposited the standard rent at the rate enhanced by the District Court and that he had not paid the interim rent at the rate fixed by the trial Court.
Held: (i) Section 12 (1) of the Act applies to a tenant who continues to remain in occupation even after the determination of the contractual tenancy.
Such a tenant is entitled to claim protection from eviction against eviction so long as he is willing and ready to pay the standard rent and permitted increases and observe other conditions under the Act.
This protection is subject to the provisions of section 13 and to the limitations contained in section 12(2) and section 12(3) (a).
The expression "may" in section 12(3) (a) has a mandatory content: if the conditions of this clause are fulfilled the court is bound to pass a decree in ejectment against the tenant.
Bhaiya Punyalal Bhagwandin vs Bhagwat prasad; , (ii) The power to fix standard rent is exercisable under section 11(1) alone.
To bring his claim within section 12(3) (b) the tenant must pay or tender the standard rent fixed by the court and permitted increases on or before the first day of hearing or on before such other date fixed by the court.
The amount of costs has to be paid or deposited only if the court so directs.
If in appeal the standard rent is enhanced the appeal court may fix a date for payment of the difference and if the tenant pays the difference on or before the day so fixed he will be entitled to get the protection of section 12(3) (h).
(iii) Explanation to section 12 erects a rule of evidence.
If the tenant pays or tenders regularly the interim rent specified by the court till the disposal of the suit the court is bound to presume that the tenant is at the date of the decree ready and willing to pay the standard rent and permitted increase.
The expression "standard rent" in section 12(3) (b) shall not however to be equated with "interim rent" in section 11 (3).
There is nothing in section 12 to support the contention that the dispute concerning standard rent contemplated by cl.
(b) of sub section
(3) is one which must be raised before service of notice under section 12(3).
159 (iv) The District Court ought to have before disposing of the appeal fixed a date for payment of the difference between the standard rent due and the amount actually deposited in court.
The error committed by the District Court was however only technical.
Held, further the High Court in exercise of its power under section 115 Code of Civil Procedure had no authority to set aside the order of the District Court merely because it was of opinion that the judgment of the District Court was assailable on the ground of error of fact or even of law.
The High Court may exercise its power under that section only if the subordinate court has acted without jurisdiction or has failed to exercise its jurisdiction or has acted with material illegality or irregularity.
Balakrishna Udayar vs Vasudeva Aiyar, L.R. 44 I.A. 261, Rajah Amir Hassan Khan vs Sheo Baksh Singh, L.R. 11 I.A. 237, Joy Chand Lal Babu vs Laksha Chaudhury, L.R. 76 I.A. 131, distinguished.
Manindra Land and Building Corporation vs Bhutnath Bannerjee, ;
</s> |
<s>[INST] Summarize the judgementivil Appeal No. 1065 of 1987.
From the Judgment and Order dated 21.10.1986 of the Kerala High Court in S.A. No. 491 of 1980.
G. Vishwanatha Iyer, section Balakrishnan and M.K.D. Namboo dri for the Appellants.
T.S. Krishnamoorthy Iyer, A.K. Srivastava and S.C. Birla for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by leave is from the judgment and order of the High Court of Kerala, dated 21st October, 1986.
It arises in the following circumstances: The building in question which is a shop building No. T.C. 887, M.G. Road, Pazhavangadi, Trivandrum, is part of a pucca three storeyed building belonging to one M.P. Philip and as per his settlement the disputed shop building and two other rooms devolved on one of his sons M.M. Philip.
While this disputed shop building was in the possession of a tenant under the owner, the owner mortgaged the disputed building and the remaining portions to the first defendant with a direction to receive the rent from the tenant.
The mortgagor directed the tenant also to attorn to this mortga gee.
The first defendant subsequently in the course of his management of the mortgaged property, gave the building on lease to the appellants for a higher rent when the former tenant vacated the same.
Subsequently, the owner executed a subsequent mortgage with a direction to redeem the mortgage in favour of the first defendant and before the subsequent mortgagee took steps to redeem the mortgage, the owner assigned his equity of redemption to the respondent.
The respondent and the subsequent mortgagee together as plain tiffs 1 and 2 filed a suit to redeem the mortgage of the first defendant impleading the appel 977 lants as well as respondents and claimed recovery of the khas possession of the building.
The appellants contended that they are tenants of the building inducted into posses sion by the mortgagee as a mode of enjoyment that the mort gage deed authorised the mortgagee to enjoy the building by letting it out and they were not liable to be evicted through a decree of court in a redemption suit without an order under the Kerala Building (Lease & Rent Control) Act, 1965 (hereinafter referred to as 'the Act ').
The trial court decreed the suit and directed recovery of possession of the shop building on the ground that the mortgagee could not induct a tenant and give him any right to continue in pos session even after the redemption of the mortgage.
On appeal by the appellants, the first appellate court held that the disputed building was a shop building which was never in the enjoyment of the owner and the mode of enjoyment of the owner of the property was by letting it out and when the mortgagee enjoyed the property in that manner, by letting it out, the person put in possession as a tenant was entitled to continue in possession even after redemption, until evicted under the Rent Control Act.
The first appellate court further found that the mortgage deed impliedly autho rised the mortgagee to let out the building.
In that view the decree for khas possession of the shop building in possession of the appellants was denied to the respondent.
The respondent filed a second appeal before the High Court, raising the following three contentions: (1) Whether under section 76(a) of the Trans fer of Property Act, 1882, a tenancy created by the mortgagee in possession of an urban immovable property would be binding on the mortgagor after redemption of the mortgage, assuming that the tenancy was such as a pru dent owner of property would have granted in the usual course of management.
(2) Whether a tenancy created in exercise of a general power to grant a lease expressly or impliedly conferred on the mort gagee would survive the redemption of the mortgage in view of Sec.
111(c) of the Trans fer of Property Act, 1882; and (3) Whether a tenant inducted on the property by a mortgagee with possession, would after redemption of the mortgage be protected under the provisions of section 11(1) of the Act.
The High Court was of the view that as the appellants had not pleaded that they were inducted into possession by the mortgagee as 978 prudent act of management, it was not open to the appellants to contend that they could continue in possession even after redemption.
Further, the High Court was of the view that it was not open to the mortgagee to induct a person into pos session which conferred any right on the tenant to continue in possession even after redemption.
The High Court categorically came to the conclusion that protection under section 76(a) of the was never claimed in the written statement.
On the other hand, it was contended by the appellants that this was a pure question of law unconnected with the question of fact and, therefore, no pleadings were necessary and even without pleading such contention could be raised and considered by the Court at the time of argument.
Whether a particular lease is bona fide or prudent act of management, is primari ly a question of fact, though whether on account of the bona fide or prudent act of the mortgagor his lessee was entitled to continue even after the mortgage was determined, is a question of law.
The High Court was of the view that the decision on the question of law is dependent on the question of fact whether the lease was bona fide or a prudent act of a person of ordinary prudence, who would manage it as if it were his own.
On that question of fact, there should be definite pleading so that the plaintiff must have an oppor tunity of meeting the claim and adduce evidence in rebuttal.
The High Court therefore could not sustain the right of the tenant under section 76(a) of the , as a matter of prudent management.
There was no issue in this respect and the judgment of the trial court did not show, according to the High Court, that such a contention was raised.
The only contention that was raised was that the lease was with the knowledge or consent of the mortgagor.
The High Court further came to the conclusion that there was no evidence in support of that contention.
The finding of the District Judge that the mortgagee had implied authority of the mortgagor to let out, was not only lacking in plead ings or issue, but it was also not warranted by the provi sion of the mortgage deed or the evidence.
The High Court relied on several decisions and came to the conclusion that the provision of Sec.
76(a) of the , which was an exception to the general rule embodied in Sec.
111(c) applies in appro priate cases ordinarily only to the management of agricul tural lands and had seldom been extended to urban property so as to tie up in the hands of lessee or to confer on him rights under special statutes.
The High Court further came to the conclusion that the general 979 proposition of law is that no man can convey a better fight than he himself has.
Therefore, a mortgagee in possession cannot create tenancy with a right to continue in possession beyond the period of redemption.
Normally, lease by the mortgagee is determined when the mortgage is redeemed since there is no privity between the mortgagor and the lessee.
The question of prudent management under Sec.
76(a) of the by granting of lease or otherwise normally arises only in rural agricultural lands and not in urban immovable property.
The High Court further came to the conclusion that a mere authorisation to the mortgagee to lease the property itself does not amount to any intention to allow expressly the creation of a tenancy beyond the term of the mortgage.
Only where the words of the mortgage deed clearly and expressly allowed creation of tenancy beyond the term of the mortgage that the lease would be binding on the mortgagor.
In that view of the matter, the High Court held that the learned District Judge was wrong in holding that the defendants Nos. 2 & 3 were not liable to be evicted in this suit and that they could be evicted only through an order of a competent Rent Controller.
In the premises, the second appeal was allowed and a decree for eviction was passed.
Aggrieved thereby, the appellants have come up before this Court.
The question is was the High Court right.
The first contention of Sri Vishwanatha Iyer, learned counsel for the appellants, was that in view of the terms of the mortgage in the instant case, the appellants were enti tled to be in possession after redemption of mortgage as against the mortgagor.
He drew our attention to the mortgage deed dated 4th July, 1960.
The mortgagor in that mortgage deed stated that he was the absolute owner of the property and therefore he was mortgaging the property.
Thereafter, the deed proceeded to state as follows: "This property is hereby secured to you on otti for a term of 2 years for Rs.7,000 which I have received as recited hereunder.
There fore, you may possess and enjoy the property by collecting the rent from the tenants and after the expiry of two years I shall pay you the sum of Rs.7,000 and get a release of the otti ands the expenses for the release should be shared by us.
" The mortgagee was to enjoy the property by collecting the rent from the tenants.
This mortgage was renewed for the second time on 980 17th August, 1977.
The second mortgage deed recited that the shop in Item I which was in possession of Carona Shoe Compa ny, was given for enjoyment.
Therefore, the fact that the tenant was there, is accepted.
It was contended that as no amount was being paid as interest, the mortgagee was entitled to the benefit, that is to say, the rent from the premises in question.
It was contended that the High Court was wrong in holding that it was not an act of prudent management.
Sri Iyer referred to the document dated 3rd June, 1977 which recited as follows: "But the portion where the Ringal shop was situate alone was given possession to you and the remaining portion forming upstairs to the shop previously Ringal Shop, now Carona Shoe Mart, and the shed portion behind it was let out to Chellamma Pillai by the mortgagor and she is occupying it while so the mortgagor has executed a subsequent mortgage and an agree ment for sale to Chellamma Pillai and she is entitled to redeem you and recover posses sion of the building." These contentions, in our opinion, are concluded by the decision of this Court in PomaI, Kanji Gvoindji & Ors.
vs Vrajlal Karsandas Purohit & Ors., [1988] 4 Jmt.
Today SC 307, wherein it was held that except in cases where the leases specifically and categorically make exceptions in favour of the tenants that they would continue to be in possession even after the expiry or termination of the mortgage, and those leases are acts of prudent management, the tenants inducted by the mortgage would be entitled to the protection under the Rent Act after the redemption of mortgage .and in no other cases.
Sri Iyer, in our opinion, is wrong in contending that in the instant case the mortgage deed specifically empowered the mortgagor to induct tenant who would continue to be in possession even after the redemption or end of the mortgage.
It is true that the mortgage deed recited that the tenants were there.
It is also true that the mortgage deed also enjoined that the method of realisation of the rent as the method of having the usufruct of the mortgage by the mortga gee.
But it must be understood that so long as the mortgage subsisted, there was relationship of tenant and landlord.
It could not be so after the mortgage was redeemed.
There is nothing in the mortgage deed in the instant case which warranted the conclusion that the mortgagee could 981 induct tenants who Would continue beyond the term of the existence of the mortgage or who would be given rights even after the expiry of the mortgage.
Sri Iyer then submitted that this Court in the aforesaid decision had referred to another decision of this Court, namely, Jadavji Purshottam vs Dhami Navnitbhai Amaratlal & Ors., where it was held that if the lease granted to the tenant by the mortgagee had the approval or concurrence of the mortgagor, the same would entitle the tenant to claim tenancy rights even as against the mortgagor after he had redeemed the mortgage, then in such a case, such tenants would continue to be in possession.
Sri Iyer drew our attention to the observations of this Court in the aforesaid decision at para 13 of page 236 of the report.
With reference to the term of the mortgage in the instant case and the communications between the parties, Sri Iyer tried to contend that the lease granted in favour of the appellants by the mortgagee had the approval or concurrence of the mortgagor.
We are, however, unable to accept or find in the correspondence any such approval or concurrence.
We have referred to the mort gage deed and the sale deed as mentioned hereinbefore.
Sri Iyer drew our attention to a letter dated 7th October, 1977 addressed to the Rent Controller with a copy to the General Manager, Carona Shoe Co. Ltd. Therein, the respondent had negotiated or made an offer and expressed preference for the appellant company.
The letter contained the following state ments: "Under the circumstances, I have now finally decided to settle all the issues and start the construction of the rear portion as early as possible as I have two more offers (other than yours) for renting out the entire ground floor (about 1,500 sq.
ft.) which includes the space now occupied by you and a portion of the first floor.
I am writing this letter to you because my first preference is for your company.
The main reason is that you are conducting the business in the same shop for some years.
Second thing is that I have already agreed to you at the discussion even though there was no written consent.
In the light of the above, I give below my terms and conditions for renting out the shop with additional space annexed, if you are interested to continue the business in my building.
Of course, the expenses (portion) for the same will have to be borne by you.
But I will provide you with a very good show room considering your requirements.
Necessary bathroom, lavatory, office cabin etc.
will also be provided in consulta 982 tion with your representative.
I had a discus sion with Mr L.W. Baaker, A.R.I.B.A. (The British Architect who is doing so many artis tic modern buildings and show room etc.
throughout India including the Chitralekha Film Studio) and the article Director and Interi or Decorator of our Studio regarding the subject.
" Thereafter, certain terms and conditions of the proposed lease were suggested.
Ultimately, however, no such lease was executed.
This communication strictly, in our opinion, negates the submission that there was any concurrence or approval of the mortgagor of the continuance of the appel lant 's as tenants after the expiry or redemption of the mortgage.
It was then submitted by Sri Iyer that in view of the provisions of the Act, it was not possible for the respond ents to execute the decree.
After an exhaustive discussion of the relevant authorities, it has been held by this Court in Pomal Kanji Govindji 's case (supra) that in respect of the urban immovable properties, the tenants do not get any protection after the redemption of mortgage.
Sri Iyer, however drew our attention to Sec. 11 of the Act, to contend that notwithstanding anything contained in any other law or contract, a tenant shall not be evicted, whether in execu tion of a decree or otherwise, except in accordance with the provisions of the Act.
He drew our attention to the defini tion of 'tenant ' under sec.
2(6) of the Act which defines a tenant as a person by whom or on whose account rent is payable for a building and includes the heir or heirs of a deceased tenant and a person continuing in possession after the termination of the tenancy m his favour.
Similarly, landlord is defined under section 2(3) of the Act as follows: "(3) "landlord" includes the person who is receiving or is entitled to receive the rent of a building, whether on his own account or on behalf of another or on behalf of himself and other or as an agent, trustee, executor, administrator, receiver or guardian or who would so receive the rent or be entitled to receive the rent, if the building were let to a tenant.
" But in view of the said definitions, we are of the opinion that between the appellants and the respondent, there was never any landlord or tenant relationship.
The appellants were never the tenants of the respondent.
Sri Iyer drew our attention to the observations of this 983 Court in Raj Brij Krishna & Anr.
S.K. Shaw & Bros., , where it was held that the non obstante clause would be applicable.
Our attention was drawn to the observa tions of Fazal Ali, J. at page 150 of the report.
There, the Court observed that Section 11 of the Bihar Buildings (Lease, Rent & Eviction) Control Act, 1947 was a self con tained section, and it was wholly unnecessary to go outside the Act for determining whether a tenant was liable to be evicted or not, and under what conditions he could be evict ed.
But in the instant case, the appellants were not the tenants.
The respondent, the original mortgagor, would never after the redemption of the mortgage have treated the appel lants to be tenants.
There was no relationship ever between the appellants and the respondent.
The mortgagor had a separate and distinct interest which was wiped out on the redemption of the mortgage or expiry of the period of mort gage.
The mortgagor on redemption of mortgage gets back his own right, he is not the successor in interest of the mort gagee.
Interest, if any, created by the mortgagee on the mortgagor 's right, must disappear on ceasing of interest of the mortgagee.
In that view of the matter, in our opinion, thus the said observations would not be of any relevance to the present case.
Similarly, reliance was placed on the observations of this Court by Sri Iyer in M/s Raval & Co. vs
K.G. Ramachandran & Ors., ; The observa tions that the definitions of 'landlord ' and 'tenant ' might apply even if the contractual tenancy has come to an end.
But that is not the situation here in the instant case.
In the said case, Bhagwati, J. as the Chief Justice then was, in his judgment at page 439 of the report observed that sub section (1) of section 4 of the Act in question i.e., Tamil Nadu Buildings (Lease & Rent Control) Act, 1960 con templated that an application for fixation of fair rent of a building might be made by the tenant or the landlord.
The definition of 'tenant ', it was observed, included contractu al tenant as well as tenant remaining in possession of the building after determination of the contractual tenancy, i.e. statutory tenant, and both contractual tenant and statutory tenant could, therefore, apply.
It was, therefore, submitted in this case that on the analogy of the contractu al tenant, the appellants were entitled to the protection of the Act.
We are unable to agree.
It is not a question of a contractual tenancy coming to an end.
The limited estate created in favour of the mortgagee having disappeared, all rights emanating from that limited estate disappear and the superior fight of the mortgagor comes not in place of the mortgagee but as a result of an independent title, and as such the mortgagor cannot be bound by any act created or any relationship contracted between the mortgagee and the ten ant, unless it is permitted by the mortgage deed Reliance was also placed on certain observations of 984 this Court in V. Dhanpal Chettiar vs Yesodai Ammal, 14.
Therein, it was held that under the State Rent Acts, the concept of contractual tenancy has lost much of its significance and force.
Therefore, giving of the notice was a mere surplusage and unlike the law under the , it does not entitle the landlord to evict the tenant.
In our opinion, the observations of the said decision cannot have any assistance or significance for the purpose of the issues involved in the present controver sy.
Our attention was also drawn to the observations of this Court in Pomal Kanji Govindji 's case (supra) at para 42 of page 326 and it was contended that in this case impliedly the mortgage deed specifically and categorically made an exception in favour of the tenants that they would continue in possession even after the termination or redemption of the mortgage and that these leases were acts of prudent management.
In this connection, reference may be made to Section 60 of the .
It is this which gives the mortgagor right to redeem after the date fixed for payment.
The mortgagor 's right of redemption and the mortga gee 's right of foreclosure or sale are co extensive.
Simi larly, Section 76(a) of the which determines the liabilities of the mortgagee and imposes the obligation to manage the property as a person of ordinary prudence.
In the instant case, it has been held by the High Court that the induction of the appellants as tenant was not an act of prudent management.
Our attention was also drawn by Sri Iyer to the observa tion of this Court in Gian Devi Anand vs Jeevan Kumar & Ors., ; in support of his submission that in the emerging jurisprudence of tenancy legislation the dis tinction between statutory tenant and contractual tenant has disappeared.
The said view, in our opinion, would be of no avail as the respondent is not the successor in interest and does not come in place of the mortgagee but by virtue of its independent title.
Reliance was also placed on the observations of this Court in G. Ponniah Thevar vs Nalleyam Perumal Pillai & Ors., ; That decision, in our opinion, has no application.
The person inducting the tenant appellant was a co widow who had a life interest in the lands.
It was observed that the terms of the statutory protection applied clearly to all tenancies governed by the Madras Cultivating Tenants Protection Act irrespective of the nature of fights of the person who leased the land so long as the lessor was entitled to create a tenancy.
In our opinion, the said observations would not be applic 985 able.
The said decision deals with the right of the co widow in the land.
Reference may be made to the facts of that case at page 504, para 10.
In our opinion, in view of the said facts, the decision would not apply to the facts of the instant case.
On the other hand, in view of the facts and ratio of the principle of the decisions in Jadavji Purshot tam, (supra) and PomaIii Govindji, (supra) we are of the opinion that the contentions of Sri Iyer cannot be sus tained.
The non obstante clause in Section 11(a) of the Act is applicable only to a decree for eviction obtained by a landlord against a tenant.
The appellants were never the tenants of the respondent.
In the aforesaid view of the matter, we are unable to accept the submissions urged in this case and, therefore, the appeal must fail.
But in view of the fact that the appellants have been carrying on the business for some time in the premises in question in order to enable them to adjust their business, we direct that the order for eviction of the appellants should not be executed upon 31st October, 1989 if the appellants give an undertaking within a period of four weeks from this date to give vacant possession in a peaceful manner on 3 1st October, 1989; and also containing the usual terms of undertaking.
In default of such undertak ing being given within the time aforesaid, the decree will be forthwith executed.
The appeal is accordingly dismissed with costs.
Y.L. Appeal dis missed.
[/INST]The appellants are tenants.
The premises in dispute is a shop building bearing No. T.C. 887, M.G. Road, Pazhavangadi, Trivandrum, part of a Pucca three storeyed building owned by one M.P. Phillip.
As per the settlement the shop in dispute devolved on one of his sons, while the shop was in the possession of the tenant.
During the tenancy owner mortgaged the premises in dispute and the remaining portions to the first defendant with a direction to receive the rent from the tenant.
The tenant was asked to attorn to the mortgagee.
The first defendant in course of management of the property gave the building on lease to the appellants for a higher rent; the earlier tenant having vacated the same.
The owner thereafter executed the second mortgage with a direction to redeem the mortgage in favour of the first defendant and before the subsequent mortgagee took steps to redeem the mortgage, the owner assigned his equity of redemption to the respondent.
The Respondent and the subsequent mortgagee together as plaintiffs 1 & 2 filed a suit to redeem the mortgage of the first defendant impleading the appellants as parties and claimed recovery of the Khas possession of the building.
The appellants contended (i) that they are tenants of the build ing inducted into possession by the mortgagee as a mode of enjoyment; (ii) that the mortgage deed authorised the mort gagee to enjoy the building by letting it out and that they were not liable to be evicted through a decree of Court in redemption Suit without an order under the Kerala Building (Lease and Rent Control) Act 1965.
The trial Court decreed the suit and directed recovery of possession of the Shop building.
It took the view that the mortgagee could not induct a tenant and give him any right to continue in possession even after the redemption of the mortgage.
975 On appeal, the first appellate Court held that the disputed building was a shop building which was never in the enjoyment of the owner; mode of enjoyment of the owner being by letting it out and when the mortgagee enjoyed the proper ty in that manner by letting it out, the person put in possession as a tenant was entitled to continue in posses sion even after redemption, until evicted under the Rent Control Act.
It also found that the mortgage deed impliedly authorised the mortgagee to let out the building.
In that view of the matter, the trial Court 's order was set aside.
The Respondent thereupon filed a second appeal before the High Court The High Court took the view that it was not open to the mortgagee to induct a person into possession which conferred any right on the tenant to continue in possession even after redemption.
Accordingly it allowed the appeal and a decree for eviction was passed.
Hence this appeal by the appellants tenant.
Dismissing the appeal, but directing that the decree for eviction should not be executed till the 31st October, 1989 if the appellants give usual undertaking to deliver vacant possession on 31st October, 1989, this Court, HELD: That the mortgagor on redemption of mortgage gets back his own right; he is not the successor in interest of the mortgagee.
Interest, if any, created by the mortgagee on the mortgagor 's right, must disappear on ceasing of the interest of the mortgagee.
[983C D] The limited estate created in favour of the mortgagee having disappeared, all rights emanating from that limited estate disappear and the superior right of the mortgagor comes not in place of the mortgagee but as a result of an independent title, and as such the mortgagor cannot be bound by any act created or any relationship contracted between the mortgagee and the tenant, unless it is permitted by the mortgage deed [983G H] The mortgagor 's right of redemption and the mortga gee 's right of foreclosure or sale are co extensive.
[984D] Jadavji purshottam vs Dhani Navnitbhai Amaratlal & Ors., and Pornal Kanji Govindji & Ors.
vs Vrajlal Karsandas Purohit & Ors., [1988] 4 Judgment Today SC 307, followed.
976 Raj Brij Raj Krishna & Anr.
S.K. Shaw & Bros., ; M/s. Raval & Co. vs
K.G. Ram Chandran & Ors., ; ; V. Dhanpal Chettiar vs Yesodai Ammal, ; ; Gian Devi Anand vs Jeevan Kumar & Ors., ; and G. Ponnial Thevar vs Nalleyam Perumal Pillai & Ors., ; not applicable.
</s> |
<s>[INST] Summarize the judgementivil Appeal No. 4779 of 1989.
From the Judgment and Order dated 3.8.1987 of the Delhi High Court in S.A.O. No. 393 of 1986.
Ashok Sen, Ms. section Janani and Mrs. Urmila Kapoor for the Appellant.
G.C. Lalwani and P.N. Misra for the Respondent.
The Judgment of the Court was delivered by VERMA, J.
Leave granted.
The landlord Shri Shiv Chander Kapoor has preferred this appeal by special leave against the judgment dated August 3, 1987 passed by the Delhi High Court in S.A.O. No. 393 of 1986 whereby the High Court dismissed the landlord 's appeal against the Order dated October 14, 1986 of the Rent Control Tribunal affirming in appeal the order dated August 9, 1985 of the Rent Controller dismissing the landlord 's application dated October 12, 1983 for restoration of possession of the premises let out for residence to the tenant Amar Bose for the limited period of three years w.e.f. June 8, 1980 under section 21 of the Delhi Rent Control Act, 1958 (hereinafter referred as the 'Act ').
The true scope of the enquiry con templated when the tenant assails validity of the Rent Controller 's permission granted under section 21 of the Act for creation of a tenancy for limited period arises for determination in the present case.
The premises is the second floor of the building beating No. 19/10, Old Rajinder Nagar, New Delhi comprising of two rooms, a kitchen, bathroom and lavatory let out for resi dence on a monthly rent of Rs.800 apart from electricity and water charges.
The landlord offered to let out the premises for three years only w.e.f. June 8, 1980 for the reason that it would be needed by his family thereafter when his son got married, to which the tenant consented.
Accordingly, by an agreement in writing between the parties the premises was so let out for the limited period of three years w.e.f June 8, 1980 with the 302 permission of the Rent Controller obtained under section 21 of the Act.
The order of the Rent Controller is as under: "In view of the statements of the parties made above, I am satisfied that there is no collu sion or fraud.
I am also satisfied that the petitioner does not require the suit premises for a limited period of three years.
Permis sion, therefore, is hereby granted to the petitioner Sh.
Shiv Chander Kapoor to let out his premises No. 19/10, situated at Old Ra jinder Nagar, New Delhi, the details of which are given in the site plan Ext.
AI to the respondent for residential purpose for a limited period of three years with effect from 8.6.1980".
On failure of the tenant Amar Bose to restore possession of the premises to the landlord on expiry of the period of limited tenancy, an application dated October 12, 1983 was filed by the landlord before the Rent Controller praying for execution of the aforesaid order by delivery of vacant possession of the premises to the landlord.
The tenant filed his objection to the execution application which was replied by the landlord.
The Rent Controller by order dated August 9, 1985 rejected the landlord 's application taking the view that the permission granted under section 21 of the Act was invalid so that the tenant could not be evicted on expiry of the period of three years.
The landlord 's further appeal to the Rent Control Tribunal and then to the Delhi High Court failed.
Hence this further appeal.
The Rent Controller upheld the tenant 's objection that the landlord 's son being aged only about 19 or 20 years on the date of expiry of the period of limited tenancy while the minimum age prescribed by law for marriage being 21 years the ground that the premises would be needed on the son 's marriage after three years was untenable.
On this basis it was held that creation of tenancy for the limited period of three years amounted to fraud and misrepresenta tion by the landlord rendering invalid the permission grant ed under section 21 of the Act.
This view has been upheld by the Rent Control Tribunal and then the Delhi High Court, treating the grant of permission by Controller to be mechan ical and without application of mind.
The tenant also con tended that the landlord was in possession of the remaining building which comprises of sufficient accommodation to meet the bona fide need of the landlord 's family; and that the premises were constructed in 1972 and the second floor of the building was never occupied by the landlord being let out to other tenants from time to time.
In substance 303 the grounds taken by the tenant were two, namely (1) the landlord 's son was below the prescribed minimum age for marriage of 21 years on the date of the expiry of the period of three years of the limited tenancy which showed that the reason given was false, and (2) absence of bona fide need of the landlord for occupying the premises, namely, the second floor of the building.
The High Court 's order is based only on the first ground.
The scope of enquiry contemplated under section 21 of the Act when the tenant assails validity of the Controller 's permission to create a limited tenancy thereunder was seri ously debated at the heating of this appeal.
On behalf of the appellant/landlord it was urged that the scope is limit ed to examining only the existence of jurisdictional facts which permit grant of permission to creat a tenancy for limited period and no more.
On this basis, learned counsel for the appellant contended that the above first ground alone was within the scope of enquiry which too has been wrongly decided by the High Court on a misconstruction of Section 21.
On the other hand it was contended on behalf of the respondent tenant that the enquiry extends also to examining the other ground viz. existence of landlord 's bona fide need to occupy the premises on expiry of the period of limited tenancy.
The same earlier decisions of this Court on the point were relied on by both sides with equal vehemence in support of the rival contentions.
Section 21 is as under: "Recovery of possession in case of tenancies for limited period. (1) Where a landlord does not require the whole or any part of any premises for a particular period, and the landlord, after obtaining the permission of the Controller in the prescribed mannner, lets the whole of the premises or part thereof as a residence for such period as may be agreed to in writing between the landlord and the tenant and the tenant does not, on the expiry of the said period, vacate such premises, then, not withstanding anything contained in Section 14 or in any other law, the Controller may, On an application made to him in this behalf by the landlord within such time as may be pre scribed, place the landlord in vacant posses sion of the premises or part thereof by evict ing the tenant and every other person who may be in occupation of such premises.
(2) While making an order under sub section (1), the Con 304 troller may award to the landlord such damages for the use or occupation of the premises at such rates as he considers proper in the circumstances of the case for the period from the date of such order till the date of actual vacation by the tenant".
Chapter III of the Delhi Rent Control Act, 1958 compris ing of Sections 14 to 25 contains provisions relating to control of eviction of tenants.
The object of enacting the Rent Control laws is well known and it does not need an elaborate enunciation.
Suffice it ' to say that in view of acute shortage of housing accommodation, more particularly in the bigger cities, these laws have been enacted to regu late the letting of the available premises and an attempt has been made to reconcile the conflicting interests of landlords and the need for the protection of tenants.
Sec tion 14 of the Delhi Rent Control Act gives protection to the tenants against eviction and specifies the grounds on which alone the landlord can obtain an order of the compe tent authority to recover possession of any premises let out to a tenant.
Apparently, it was realised that some premises may be available for being let only for a limited period where the landlord did not require the same during that period alone provided the landlord was assured of restora tion of possession on expiry of the limited period.
However, while enacting a provision permitting the creation of a tenancy for limited period to utilise such premises and alleviate to some extent the suffering of persons needing residential accommodation, it was necessary also to ensure that the provision was not misused by capricious landlords to circumvent Section 14 of the Act.
It was to achieve this dual purpose that Section 21 was enacted in the Delhi Act to encourage landlords who did not need any premises for a limited period only, to let it out for such period with the assurance of restoration of possession at the end of that period without being required to satisfy Section 14 of the Act.
The provision also contains an internal check upon an unscrupulous landlord by requiting the Rent Controller 's permission to be granted in the given circumstances only.
The conditions on which permission can be granted by the Rent Controller under Section 21 are specified in Section 21 itself.
A fortiori when the question arises about the valid ity of the Rent Controller 's permission it can be tested only with reference to the specified conditions subject to which alone permission can be granted by the Controller.
No outside factor can be imported either for grant of the permission thereunder or for adjudicating its validity at a subsequent stage.
Section 21 being in the nature of an exception to the ordinary mode of 305 eviction of tenants prescribed under section 14 of the Act, it must be strictly construed and the scope thereof limited to its contents.
Section 1 of the Act is by itself the complete provision relating to the creation of a tenancy for limited period and recovery of possession on expiry of that period.
Thus, Section 21 is a self contained code in this behalf.
Section 21 permits the creation of a tenancy for limited period "Where the landlord does not require the whole or any part of premises for a particular period"; and it is to be let for 'residence '.
These words of the provision specify the jurisdictional facts which alone permit creation of a tenancy for limited period.
The remaining provision provides the machinery for doing so by an agreement in writing be tween the landlord and the tenant on the basis of which permission of the Controller is obtained.
The provision further says that if On expiry of the said period the tenant does not vacate such premises, then 'notwithstanding any thing contained in Section 14 or in any other law ' the Con troller may on an application by the landlord place the landlord in vacant possession of the premises by evicting the tenant and every other person who may be in occupation of such premises.
The enquiry contemplated at the stage of grant of permission by the Controller under this provision requires the Controller to be satisfied that the landlord does not require such premises for a limited period only; and the said premises is to be let as a residence in terms of an agreement in writing between the landlord and tenant.
On satisfaction of the existence of these facts, the Con troller grants permission for creation of tenancy for a limited period under this provision.
When recovery of pos session of the premises is sought thereafter by the landlord under this provision then the Controller is to restore possession to the landlord "notwithstanding anything con tained in Section 14 or in any other law" subject only to the requirements of this provision.
Obviously it is the existence of a valid permission of the Controller for creation of a tenancy for limited period under this provision which brings into existence a valid limited tenancy and, therefore, such valid permission is a sine qua non of Controller 's jurisdiction to order restora tion of possession on expiry of that period under the second part of Section 21.
It is, therefore, the obligation of the Controller to examine the question of validity of his earli er permission, if such an objection is raised before he orders restoration of possesion to the landlord on expiry of the limited term.
However, that enquiry must be limited only to the existence of the aforesaid jurisdictional facts at the time of grant of permission and no more.
This is quite evident from the expression 'notwithstanding anything con tained in Section 14 or in any 306 other law '.
in the second part of Section 21 itself.
This is the inbuilt safeguard in the provision against its misuse.
We have no doubt that the language of Section 21 of the Act clearly forbids the Controller from embarking on an enquiry beyond the ambit of Section 21 itself which may impinge into the sphere of Section 14 of the Act or any other law.
We have no hesitation in holding that it is the existence of the aforesaid jurisdictional facts at the time of grant of permission to create a limited tenancy which alone is required to be determined by the Controller, if and when, validity of his permission is assailed at a subsequent stage.
This being the scope of his enquiry while granting permission, the scope of enquiry at the subsequent stage cannot be wider.
For this reason any objection to the valid ity of the permission on a ground other than non existence of the jurisdictional facts at the time of grant of permis sion is untenable and beyond the scope of the Controller 's power to examine validity of his earlier permission before directing restoration of possession to the landlord under section 21 of the Act.
In short, the scope of enquiry before the Controller when validity of the permission granted by him is assailed is to determine: whether, the permission accorded by him earlier was not really to the creation of a genuine tenancy for limited period but to a mere pretence of the landlord for circumventing the provisions of Section 147 If so, such an act being a fraud on the statute, it does not bind the tenant whose consent to the sham transaction is obtained taking advantage of his unequal bargaining power, and he can assail the permission.
It is equally plain that the object of enacting Section 21 to permit creation of tenancies for limited period should not be frustrated by unduly enlarging the scope of that enquiry at the behest of a tenant who having given his free consent to the creation of a genuine limited tenancy thereafter attempts to thwart restoration of possession to the landlord by raising untenable pleas in spite of the clear prohibition made by the words "notwith standing anything contained in Section 14 or in any other law" This delicate balance between the two conflicting interests has to be borne in mind, in order to give true effect to Section 21 and thereby to promote the object of its enactment.
We may now refer to the decisions of this Court.
S.B. Naronah vs Prem Kurnari Khanna, ; is the first decision on the point which deals comprehensively with the scope of Section 21 of the Act.
Krishna lyer, J. speak ing for the Bench said as follows: 307 "Parliament was presumably keen on maximising accommodation available for letting, realising the scarcity crises.
One source of such spare accommodation which is usually shy is poten tially vacant building or part thereof which the landlord is able to let out for a strictly limited period provided he has some credible assurance that when he needs he will get it back . .
The problem is felt most for residential uses.
So the law has to make itself credit worthy.
Section 21 is the answer".
"Section 21 overrides Section 14 precisely because it is otherwise hedged in with drastic limitations and safeguards itself against landlords ' abuses . .
What, then, are those conditions and safe guards? The first condition is that the land lord does not require the demised premises "for a particular period" only . .
The Controller must be satisfied that the landlord means what he says and it is not a case of his not requiring the property indefinitely as distinguished from a specific or particular limited period of say one year, two years or five years.
If a man has a house available for letting for an indefinite period and he so lets it, even if he specifies as a pretence, a period or term in the lease, Section 21 cannot be attracted.
On the other hand, if he gives a special reason why he can let out only for a limited period and requires the building at the end of that period . . it is good compliance.
The second condition is that the letting must be made for a resi dential purpose.
The house must be made over 'as a residence ' ." "The fact that a landlord and a potential tenant together apply, setting out the formal ingredients of Section 21, does not relieve the Controller from being vigilant to inquire and satisfy himself about the requisites of the landlord 's non requirement "for a particu lar period" and the letting itself being 'as a residence '.
A fraud on the statute cannot be permitted . . " "If he makes a mindless order the Court, when challenged 308 at the time of execution, will go into the question as to whether the twin conditions for sanction have really been fulfilled.
Of course, there will be a presumption in favour of the sanction being regular, but it will still be open to a party to make out his case that in fact and in truth the conditions which make for a valid sanction were not present . . " " . . the sanction granted under Section 21, if it has been procured by fraud or collu sion, cannot withstand invalidity because, otherwise, high public policy will be given and hostage to successful collusion . .
Collusion between the strong and the weak cannot confer validity where the mandatory prescriptions of the law are breached or betrayed".
(emphasis supplied) S.B. Naronah 's case has thereafter been consistently followed by this Court and treated as the correct analysis of Section 21.
With respect, we concur and reiterate that the scope of Section 21 is succinctly summarised in the above extracts.
There is nothing in this decision to support the respondent tenant 's contention in this appeal that the scope of enquiry is wider permitting determination of the landlord 's bona fide need of the pemises as if such a ground for eviction specified in Section 14 of the Act has to be proved.
Extending the enquiry to that extent will indeed be against the express prohibition enacted in Section 21 it self.
The next decision in V. section Rahi and Anr.
vs Smt.
Ram Chambeli, ; Venkataramiah, J. (as he then was) speaking for the Bench applied the decision in S.B. Naronah 's case and pointed out that even though the initial presumption was that the permission granted by the Control ler under section 21 of the Act was regular yet the material produced should be examined in order to be satisfied that there has not been any misuse of the said provision by the landlord taking advantage of the helpless situation of the tenant due to house scarcity.
Facts of that case show that the scope of enquiry was limited only to examining existence of the jurisdictional facts at the time of grant of permis sion by the Controller.
In Smt.
Dhanwanti vs D.D. Gupta, [1986] 3 SCC 1, it was held on the facts of that case that permissions for letting out to the same tenant for limited period obtained more than once after expiry of each said 309 period was by itself not sufficient to establish that the premises was available for being let out for an indefinite period; without showing absence of landlord 's intention to occupy the premises.
Notice was taken of the common knowl edge that it is not possible for a man to plan his future life with any degree of definiteness and changing circum stances may justify such a course.
The principle applied was the same and the ultimate conclusion was reached on the particular facts of that case.
In Inder Mohan Lal vs Ramesh Khanna, ; , it was held that the presumption of validity of the permission given by the Controller was not rebutted by the tenant since there was no evidence to show non existence of any of the essential conditions which enable the permission to be granted.
The earlier decisions of this Court starting with Naronah 's case were referred and the test indicated therein was applied.
In S.K. Lata vs R.C. Chhiba and Another, ; , the permission given by the Controller for creation of tenancy for a limited period was held to be vitiated on the ground of fraud on statute because the permission was ob tained without disclosing that the tenant had already been inducted under an oral lease and was in possession of the premises prior to the application made before the Control ler.
It was, therefore, held applying the same test that an essential condition for grant of sanction under section 21 by the Rent Controller did not exist.
Now the only remaining point is the requirement of notice during enquiry into validity of the Controller 's permission before ordering restoration of possession to the landlord.
A decision of this Court on this point isJ. R. Vohra vs India Export House (P) Ltd. & Anr.
, ; In J.R. Vohra 's case it was reiterated that the condi tions specified for grant of permission by the Controller under section 21 must be 'truely fulfilled and not by way of any make belief before the Controller grants his permission for the creation of such limited tenancy '.
After reiterating this position the Court proceeded to consider the require ment of a notice to the tenant before issuing warrant of possession in favour of landlord.
It was held that the competing claims of the landlord and the tenant can be harmonised not by insisting upon service of a prior notice on the tenant before the issuance of the warrant of posses sion to evict him but by insisting upon his approaching the Rent Controller during the currency of the limited tenancy for adjudication of his pleas no sooner he discovers facts and 310 circumstances that tend to vitiate ab initio the initial grant of permission.
It was observed that there is no reason for the tenant to wait till the landlord makes his applica tion for recovery of possession to raise his plea.
It was further observed that in case the tenant comes to know, aliunde, of the landlord 's application for recovery of possession even without notice to him, he may raise his plea at that stage and the Controller would enquire into the same but in that situation the tenant may run the risk of getting his plea rejected as an after thought.
It was expressly held in this decision that there is no obligation on the part of the Rent Controller to serve a notice on the tenant before issuing the warrant of possession on the landlord 's applica tion made after expiry of the period of limited tenancy for recovery of possession.
It is obvious from the decision in J.R. Vohra 's case that the tenant is expected to raise such a plea during currency of the limited tenancy and on such a plea being raised by the tenant enquiry into it is contemplated.
Even though it is not expressly said in Vohra 's case, it is implicit that on such an application being made by the tenant requiring adjudication by the Controller, it is the Controller 's obligation to issue notice of the same to the landlord and then to make the adjudication with opportunity to both sides to prove their respective contentions.
As for the requirement of notice to the tenant before issuing the warrant of possession in favour of the landlord on his application for recovery of possession on expiry of the limited tenancy, it appears to us also that no notice to the tenant at that stage is either contemplated or expedi ent.
This appears to be the reasonable view which is in accord with the scheme of Section 21.
Obviously notice is to be given of a fact which may otherwise be not known to the notice.
The period of limited tenancy and the date of its expiry are known to the tenant from the very inception.
The tenant is equally aware of his own default in restoring vacant possession of such premises to the landlord on expiry of that period.
It is only these facts, well known to the tenant, which compel the landlord to apply for recovery of possession pursuant to the tenant 's default.
The plea of invalidity, if any, of Controller 's earlier permission must equally be known to the tenant at least by then coupled with his knowledge that unless a declaration is made at his instance that the Controller 's permission is invalid, he must vacate, the limited tenancy having expired.
Why then should a notice to him at that stage be necessary and for what useful purpose? We cannot think of any good reason to require a notice to the tenant at that stage.
The object of enquiring into the validity of the Controller 's permission under section 21 is only to ensure that essentials of a limited tenancy 311 existed and the same was genuine; and it is not meant to permit raising of frivolous pleas which would frustrate the very object of its enactment.
This view protects the honest tenants and only curbs the frivolous and vexatious pleas.
There is another aspect of the matter.
The Controller 's permission when granted to create a limited tenancy under section 21 of the Act is presumed to be valid unless de clared otherwise.
It is, therefore, for the person assailing its validity to get such a declaration from a proper forum in a proper proceeding.
Unless this is done, the order remains enforceable.
The duty is clearly on the tenant himself to raise the plea of invalidity and unless the order is declared invalid at his instance, it is enforceability cannot be doubted.
In Wade 's Administrative Law, 6th Edn.
at pp 35 1 353, there is an illuminating discussion of this topic.
It has been pointed out that 'void ' is meaningless in an absolute sense; and 'unless the necessary proceedings are taken at law to establish the cause of invalidity and to get it quashed or otherwise upset, it will remain as effective for its ostensible purpose as the most impeccable of orders '.
In the words of Lord Diplock, "the order would be presumed to be valid unless the presumption was rebutted in competent legal proceedings by a party entitled to sue".
For the above reasons, we are in respectful agreement with the view taken in J.R. Vohra 's case (supra) that there is no obligation on the Controller to issue notice to the tenant of the landlord 's application for recovery of posses sion made on expiry of the period of tenancy for a limited period under section 21 of the Act, but an enquiry on the tenant 's plea has to be made to the extent indicated, if the tenant assails validity of the Controller 's permission even at that stage.
We shall now consider the merits of this case on the basis indicated above.
The High Court has upheld rejection of the landlord 's application for recovery of possession under section 21 of the Act on the ground that the land lord 's son would be about 19 or 20 years old on expiry of three years period of limited lease but he could not be married till he attained the prescribed minimum age of 21 years which showed that the Controller 's order granting permission was mindless and was obtained by fraud.
The permission has, therefore, been held invalid.
In our opin ion, the High Court as well as the authorities below it misconstrued the requirements of Section 21 of the Act.
It is not a case where the landlord did not have a son who was expected to be 312 married some time after three years.
In substance the reason for availability of the accommodation for the limited period of three years only given by the landlord was that the premises was not needed by the landlord till his son got married some time after three years.
The reason was not to be construed as a statement that the son was to be married exactly on the date on which three years expired.
The date of son 's marriage could not be foreseen or estimated with such precision as to coincide with the date of expiry of the limited lease.
All that has to be seen is whether the period of limited tenancy was indicated by the landlord with refer ence to a foreseeable future event and the estimate of time of its occurrence was not unreasonable.
When the period of limited tenancy is stated on the basis of a future event, the happening of which is reasonably certain at that time though the precise date of the future event cannot be pre dicted with precision, the landlord 's estimate of the period after which the event is expected to happen, unless unrea sonable must be accepted for this purpose as genuine.
This would satisfy the test of a genuine limited tenancy if there be no other factor indicating it to be a mere pretence adopted by the landlord.
This test is fully satisfied in the present case.
Merely because the son 's age then was about one year below the prescribed minimum age for marriage the estimate of landlord that he would not need the premises for three years only till his son 's marriage cannot be treated as a pretence.
One year 's period for settling and arranging performance of the marriage is nothing unusual since exist ence of the basic facts is undisputed.
Existence of this jurisdictional fact to justify the permission has not been negatived and no material has been produced by the tenant to substantiate his plea.
The other ground taken by the respondent tenant is that the existing accommodation available with the landlord is sufficient for the needs of his family.
It is sufficient to state that the enquiry contemplated under section 21 in this behalf is not the same as that for determining existence of the ground of bona fide need of the landlord for an order of eviction under section 14 of the Act, and Section 14 is expressly superceded by Section 21.
This question is, there fore, beyond the scope of the present enquiry.
The respondent tenant also contended that the premises was constructed in 1972 and the landlord had never occupied this premises viz., the second floor of the building for his personal use and had even let out the first floor prior to 1980.
In the present case the respondenttenant did not produce any material to prove letting out of any part of the building much less this premises i.e. second floor of the building.
313 After the arguments were concluded before us and the judg ment was reserved, the respondent has filed an application under order 41 Rule 27 read with Section 15 1 C.P.C. for admitting additional evidence to show letting out of the second floor of the building.
It has been stated that the evidence could not be produced in the Courts below since the objections were not listed for investigation by the Courts.
No cogent ground is shown to permit any additional evidence when no attempt to produce any evidence was made in any of the Courts below upto the High Court or even here till conclusion of the hearing before us.
The application is rejected.
The lease for limited period of three years ex pired in 1983 and more than six years have been spent since then in this litigation at the stage of recovery of posses sion.
The facts of the case indicate that the respondent 's plea is a clear after thought and is baseless.
The absence of existence of any jurisdictional fact not having been proved by the respondent tenant even after objecting to recovery of possession on expiry of the period of limited tenancy there was no ground to refuse restoration of possession to the landlord.
More than twice the period of the limited lease has expired even after the date of expiry of the lease.
We see no reason to delay any more the relief due to the landlord.
Consequently, the appeal is allowed.
The impugned orders passed by the Rent Controller, Rent Control Tribunal and the High Court are set aside and the landlord 's application for recovery of possession is allowed.
The respondent tenant shall also pay Rs.2,000 as costs to the appellant landlord in addition to an amount equal to that calculated on the basis of the monthly rent for the entire period till the date of restoration of possession.
Y. Lal Appeal allowed.
[/INST]The Respondent firm made an application to the appel lantElectricity Board for the supply of 60 KVA electricity and the Board entered into an agreement with the Respondent firm in that behalf and gave electricity connec tion on 13.4.1981.
Thereafter the Respondent firm applied for reduction of electricity from 60 KVA to 45 KVA and a fresh agreement was executed on May 2, 1981 and fresh con nection of 45 KVA was given on 29.5.1981.
It is respondent 's case that it had requested the Electricity Board on 19.6.1981 to cut off the Electricity.
The firm received Bills for minimum guaranteed charges for four months i.e. from June to September 1981.
The firm refuted its liability to pay the bill on the ground that it consumed no electrici ty during the aforesaid period of 4 months.
Consequent upon the firm 's failure to pay the Bill, the Board disconnected the electricity connection on 28.9.1981.
The firm ultimately received a bill for Rs.22,951.50p for the period commencing from June to August 1981.
On the firm 's failure to pay the Bill, the Board sent a requisition to the Certificate Offi cer who sent a notice to the firm on 6.7.1981.
The Certifi cate Officer rejected the plea of the firm that it was not liable to pay the Bill and proceeded to attach the property of the firm.
Being dissatisfied with the action, the re spondent firm filed a Writ Petition in the High Court for quashing the bills as also the certificate proceedings.
The High Court took the view that the Board itself having disconnected the connection, it was not entitled to any charges for the period after September 1981 and it was not open to the Board to contend that under clause 9 of the agreement it was not open to either party to terminate the agreement of minimum guaranteed charges before the expiry of two years from the date of the agreement.
The High Court accordingly quashed, the bills as well as the certificate proceedings but allowed the charges for July, August and September 1981 to be adjusted against the security money.
276 The Electricity Board has therefore filed this appeal after obtaining Special Leave.
Allowing the appeal, this Court, HELD: A supply.agreement to a consumer makes his rela tion with the Board mainly contractual, where the basis of supply is held to be statutory rather than contractual.
In cases where such agreements are made, the terms are supposed to have been negotiated between the consumer and the Board, and unless specifically assigned, the agreement normally would have affected the consumer with whom it is made.
[286D E] The agreement was reasonable and valid and it was not determined with the disconnection of supply to the respond ent firm.
The liability to pay the minimum guaranteed charges, therefore, continued till the determination of the contract.
The Board was therefore entitled to submit the bills and make the demand on that account and recover the same according to law.
[285F G]
</s> |
<s>[INST] Summarize the judgementivil Appeal Nos.
2635 38 of 1985.
From the Judgment and Order dated 30.10.1984 of the Andhra Pradesh High Court in R.P. Nos.
1998, 2065, 2085 of 1980 and 624 of 1982.
S.N. Kacker, A. Subba Rao, B. Sudharshan Reddy, Ramesh M. Keshwani and K. Ram Kumar for the Appellants.
Chella Seetharamiah, M.K. Ramamurthy, Ms. C.K. Sucharita, K. Rajendra Choudhary and K. Shivraj Chowdhary for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
The appeals are by special leave and are directed against the judgment of the Andhra Pradesh Administrative Tribunal in a group of representation petitions while the writ petitions are under Article 32 of the Constitution, Writ Petition 72 of 1121 1987 being by promotee Deputy Tehsildars and Writ Petition 241 of 1987 being by another group of Deputy Tehsildars promoted by transfer.
The background of the litigations may now be indicated.
A set of rules regarding recruitment of Deputy Tehsildars was in force in the erstwhile State of Madras which continued to apply to Andhra Pradesh until in 1961 the Andhra Pradesh Revenue Subordinate Service Rules (hereinafter referred to as the 'Special Rules ') were brought into force.
The cadre under the Special Rules consisted of Deputy Tehsildars only.
Rule 3 provided: "3.
Appointment: (a) Appointment to the category of Deputy Tehsildars in this service shall be made: i) by direct recruitment, or ii) by transfer from members of the Andhra Pradesh Ministerial Service employed in the Revenue Department including the Office of the Commissioner of Land Revenue, Revenue Settlement parties and the office of the Director of Settlements Survey and Land Records.
(b) Substantive vacancies in the category of Deputy Tehsildars shall be filled or reserved to be filled by direct recruitment and recruitment by transfer in the porportion of 1:1".
Some directly recruited Deputy Tehsildars during the years 1962 and 1963 moved the Andhra Pradesh High Court in Writ Petition No. 1502 of 1971 disputing the seniority over them assigned to a group of promotees.
They alleged that though they had completed their probation long prior to the Upper Division Clerks who were appointed by transfer as Deputy Tehsildars and had become full members of the service upon confirmation in their posts while none of the Upper Division Clerks appointed by transfer had become full members, yet the directly recruited Deputy Tehsildars had been treated as junior and their claim to promotion as Tehsildars was being overlooked.
A learned Single Judge of the High Court dismissed the writ petition by holding that there was no foundation for the grievance of the directly recruited Deputy Tehsildars and that they had no cause of action within the frame of the rules.
The decision of the learned Single Judge was upheld in appeal by a Division Bench.
Support for that position 1122 was derived from Rule 33(a) of the Andhra Pradesh State and Subordinate Services Rules, 1962 (hereinafter referred to as the 'General Rules ').
A special leave petition was filed before this Court against the appellate decision of the High Court.
On 9th October, 1980, the State Government amended Rule 4(e) of the Special Rules with retrospective effect from 12th of October, 1961 in the manner indicated below: "In sub rule (e) of Rule 4 of the said Rules, for the words 'The seniority of the Deputy Tehsildar shall be determined with reference to the date of allotment maintained and the ranking assigned to him by the Andhra Pradesh Public Service Commission in the merit list of that selection ', the following shall be substituted, namely, 'the inter se seniority between the direct recruits to the category of Deputy Tehsildars and the promotees to the category of Deputy Tehsildars shall be determined from the date of their confirmation in the substantive vacancy in that category in the proportion of 1:1 as provided in sub rule (b) of Rule 3.
" A group of promotees who are appellants in the civil appeals went before the Andhra Pradesh Administrative Tribunal questioning the validity of the aforesaid amendment with particular emphasis on its retrospective application.
The Tribunal referred the matter to a three Judge Bench thereof.
Before the Tribunal, it was canvassed on behalf of the appellants that the prevailing rule regarding seniority was in Rule 33 of the General Rules and in the absence of any provision in the special Rules, the principle in Rule 33 was applicable for determining inter se seniority in the cadre of Deputy Tehsildars.
The claim of the direct recruits had been negatived by the High Court and the dispute was pending decision of this Court.
There was no scope for the State Government to amend the Rules in 1980 to the prejudice of the promotees.
Even if Government wanted to change their policy regarding determination of inter se seniority, it should have been made applicable prospectively and that the seniority already determined on the basis of Rule 33 of the General Rules should not have been disturbed.
The determination of seniority on the basis of the date of confirmation worked out prejudice for the promotees.
The Tribunal examined the matter at length and came to the following conclusion: "As a quota rule has been provided in the Special 1123 Rules relating to the recruitment of Deputy Tehsildars from two sources, after recruitment there is an imperative need to integrate the aforesaid two sources.
After integration necessity arises for fixing inter se seniority of persons who have come from the two different sources for facilitating promotions to the next higher posts.
There being no rule of relative seniority between direct recruits and rank promotees, and the General Rule 33(a) being incapable to bring integration, Government have rightly felt to enact a rule for integration of the two sources in one cadre and fixation of inter se seniority among members drawn from the said two sources.
Confirmation adopted as the formula for determination of inter se seniority is constitutionally valid.
There is no question of any discrimination in laying down a rule of seniority based on the principle of confirmation.
The promotee Deputy Tehsildars not having been recruited against the substantive vacancies have not acquired any vested interest so as to be protected against the impugned rule of seniority.
Their inter se seniority in the class of temporary Duputy Tehsildars against the nonsubstantive posts, evidently, determined under General Rule 33(a) remains unaffected by the impugned seniority rule.
Thus, the said rule does not offend Articles 14 and 16 of the Constitution.
It is free from any vice what so ever and cannot therefore be assailed.
The General Rule 33(a) is incapable of determination of inter se seniority between direct recruits and promotee Deputy Tehsildars despite the fact that the promotees belonging to the latter class are approved probationers and their recruitments are regular to the category of Deputy Tehsildars.
Since their posts are outside the permanent cadre, they cannot bring their seniority in the category of Deputy Tehsildars into the permanent cadre and press it against the direct recruits who are members of the permanent cadre from the beginning.
The seniority between them (after judgment) and the direct recruits shall be determined on the basis of the impugned rule of seniority, which, according to us is a valid enactment.
The Government shall now proceed to determine the seniority accordingly.
" These directions of the Tribunal are assailed in appeal before this Court.
1124 Writ Petition No. 72 of 1987 is by 17 promotees during the period 1966 to 1971 while Writ Petition No. 241 of 1987 is by 21 Deputy Tehsildars promoted by transfer from the posts of Upper Division Clerks also during the same period.
The cadre does not have a prescribed strength and temporary appointments seem to have become the rule as the history of the service shows.
Even though the ratio of 1:1 is prescribed in regard to the substantive vacancies, direct recruitments were made only in the years 1963, 1964, 1965 and 1966 and for a decade to follow there was no direct recruitment.
When demand for more hands in the category of Deputy Tehsildars became pressing supernumerary posts were created from time to time and such posts were filled up by promotion.
Rule 33(a) of the General Rules dealing with seniority, as far as relevant, provides: "The seniority of a person in service, class, category or grade shall, unless he has been reduced to a lower rank as a punishment, be determined by the date of his first appointment to such service, class, category or grade . . . " Relying upon this provision, seniority was being determined of promotees without taking into account the fact that there had been intervening reversions to the lower posts from which promotion to the post of deputy Tehsildar had been granted.
The legal position is well settled that the State is entitled to prescribe the manner of computing inter se seniority and in the absence of such prescription length of service is the basis.
A series of recent decision of this Court has made that position certain.
Rule 33 of the General Rules contains prescription regarding seniority and has different provisions to meet varying situations.
Sub rule (a) which provides that seniority of a person is to be determined "by the date of his first appointment to such service" has obviously been mis interpreted on account of the presence of the words 'unless he has been reduced to a lower rank as a punishment '.
It could not be the intention of Rule 33(a) to compute seniority from the date of first appointment even though it was not a continuous one.
For instance, a person is appointed to the post of Deputy Tehsildar on promotion on 1st of January, 1970 and is reverted to the lower post, not by way of punishment but on account of exigencies of service or otherwise, on 31st of March, 1970.
He is again promoted to that post on 1st January, 1980 and continues 1125 to hold that promotional post.
Another person is promoted to the post of Deputy Tehsildar on 1st April, 1970 and continues to hold that post without break.
If the interpretation adopted by the State Government of Rule 33(a) is accepted, it would mean that the first person on account of having been first appointed on an earlier date to the promotional post would rank senior to the second person.
This obviously could not have been the intention of the rule.
It is appropriate to interpret that rule to mean that the date of first appointment is intended to refer to continuous appointment only and the words 'unless he has been reduced to a lower rank by way of punishment ' are really redundant.
We are aware of the fact that this rule has been widely applied for determining inter se seniority and in case challenge to fixation of inter se seniority is permitted to be raised on what we have stated above, limitless litigation would crop up.
We would, therefore, make it clear that the interpretation which we now give of this rule shall have prospective application and unless there be any litigation already pending challenging the interpretation of this rule no new litigation would be permitted on that score.
We have already pointed out that the law is that it is open to the State to provide a rule for determining inter se seniority.
Rule 4(e) of the Special Rules before amendment in 1980 had provided that the seniority of Deputy Tehsildars would be determined with reference to the date of allotment maintained and ranking assigned by the Andhra Pradesh Public Service Commmission in the merit list of the particular selection.
That obviously was confined to inter se seniority of direct recruits and did not cover inter se seniority between recruits of the two sources.
Therefore, the General Rules had been relied upon.
In 1980, by the impugned amendment to Rule 4(e) of the Special Rules, the State Government prescribed the manner of providing inter se seniority among the recruits of the two categories.
The amended rule provided the date of confirmation in the substantive vacancy as the basis.
Rule 3(b) fixed the reservation of direct recruits with reference to substantive vacancies at 50% and Rule 4(e), therefore, made provision with reference to the seniority in the substantive vacancies with reference to the date of confirmation.
The amendment in terms is within the competency of the State Government and is not open to challenge.
This is a rule made under the proviso to Article 309 of the Constitution and as settled by this Court in exercise of that power the rule can be given retrospective operation.
The impugned amendment has been given retrospective operation from 12th October, 1961.
From the judgment of the Tribunal we find that the authority of the State Government to make a rule for future application was not seriously 1126 disputed but what was assailed was the retrospectivity given to the amendment.
Indisputably many of the promotees on the basis of seniority already assigned to them have been holding posts of Tehsildars, Deputy Collectors and Special Grade Deputy Collectors.
Many have retired from service having enjoyed those promotional benefits.
Promotions between 1961 and 1971 on the basis of the seniority assigned under Rule 33(a) of the General Rules is under challenge.
That period is a distant one from now varying between 17 to 27 years.
To allow the amendment to have retrospective operation is bound to create problems.
The State Government while amending the rule should have taken into consideration the practical problems which would arise as a consequence of retrospectivity.
It should have taken into account the far reaching adverse effect which the rule, if given such retrospective effect, would bring about in regard to services of scores of employees and the disquiet it would result in by disturbing settled situations.
We are, therefore, not of the view that the rules should be given retrospective effect from 1961.
It would, however, be wholly justified and appropriate to give the rules prospective operation by fixing 9th October, 1980 as the date from which it should take effect.
We accordingly direct that Rule 4(e) as amended on 9th October, 1980, shall not have any retrospective effect and would operate prospectively.
Though Rule 3(b) fixes the ratio as 1:1 in respect of substantive vacancies, the recruitment has not been regular and systematic.
We have come across several instances where the State Government do not take steps to give effect to their own rules and, therefore, though there is one mode of prescription, in action a different situation is brought about.
Rules have binding effect and they bind the State and the citizens alike once they are in force.
In order that law may regulate conduct, the State has to feel bound by its own laws and by willingly abiding by the law exhibit an ideal situation for the citizens to emulate.
We disapprove of the callous conduct of the State and direct that the rule shall henceforth be followed scrupulously by effecting recruitment at regular intervals according to the scheme of the rule.
The State shall within four months from today compute the substantive vacancies in the cadre and determine the quota of direct recruits to the rank of Deputy Tehsildars and after working out the vacancies available to be filled by the direct recruitment on the basis of 50 per cent of the total number, fill up the same by making direct recruitment within a period of four months thereafter.
Once that is done and regular recruitment is effected, the impasse which has now been created would not continue.
1127 The State is directed to draw up the seniority list on the basis of rule 4(e) on or before 31st December, 1988.
We have given a long time to eliminate the scope for making for an application for extension.
The Civil Appeals are dismissed.
The Writ Petitions shall have also the same fate except to the extent that Rule 4(e) as amended shall have prospective application.
In the Civil Appeals we leave the parties to bear their own costs throughout.
There would be no order for costs in the Writ Petitions.
G.N. Appeals and Petitions dismissed.
[/INST]% In 1961 the Andhra Pradesh Revenue Subordinate Services Rules were brought into force, the cadre under the rules being Deputy Tehsildars.
Till then the rules in force in the erstwhile State of Madras were applicable to Andhra Pradesh.
Rule 3 of the 1961 Rules provides for appointment of Deputy Tehsildars by direct recruitment or by transfer from members of the Andhra Pradesh Ministerial Service employed in the Revenue Department.
It also provides that the substantive vacancies in the category of Deputy Tehsildars shall be filled or reserved to be filled by direct recruitment and recruitment by transfer in the proportion of 1:1 A writ petition was filed before the Andhra Pradesh High Court by some direct recruit Deputy Tehsildars disputing the seniority over them assigned to a group of promotees.
The Single Judge dismissed the same holding that the petitioners had no casuse of action within the frame of the rules.
This was upheld by the Division Bench, deriving support from Rule 33(a) of the Andhra Pradesh State and Subordinate Services Rules 1962.
Against this a Special Leave Petition was filed before this Court.
Meanwhile, the State Government amended Rule 4(e) of the Andhra Pradesh Revenue Subordinate Service Rules to the effect that the inter se seniority between direct recruits to the category of Deputy Tehsildars and promotees to the category of Deputy Tehsildars shall be 1119 determined from the date of confirmation in the substantive vancancies in that category in the proportion of 1:1 as provided in sub rule (b) of Rule 3.
The validity of the amendment was questioned by a number of promotees (the appellants herein) before the State Administrative Tribunal with particular emphasis on its retrospective application.
The Tribunal examined the matter at length and upheld the validity of the enactment.
It also directed the State Government to proceed to determine the seniority accordingly.
The said directions of the Tribunal are assailed in the appeals by Special Leave and the Writ Petition filed in this Court.
Dismissing the appeals, and the writ petitions, this Court, ^ HELD: 1.1 The State is entitled to prescribe the manner of computing inter se seniority and in the absence of such prescription, length of service is the basis.
Rule 33 of the Andhra Pradesh State and Subordinate Services Rules, 1962 contained prescription regarding seniority and has different provisions to meet varying situations.
Sub rule (a) thereof which provides that seniority of a person is to be determined "by the date of his first appointment to such service" has obviously been misinterpreted on account of the presence of the words "unless he has been reduced to a lower rank as a punishment".
It is appropriate to interpret that rule to mean that the date of first appointment is intended to refer to continuous appointment only and the words "unless he has been reduced to a lower rank by way of punishment" are really redundant.
This interpretation will have prospective application, as otherwise limitless litigation would crop up.
[1124F G; 1125C] 1.2 Rule 4(e) before amendment in 1980 provided that the seniority of Deputy Tehsildars would be determined with reference to the date of allotment maintained and ranking assigned by the Andhra Pradesh Public Service Commission in the merit list of the particular selection.
That was confined to inter se seniority of direct recruits and did not cover inter se seniority between recruits of the two sources.
In 1980, Rule 4(e) was amended and the State Government prescribed the manner of providing inter se seniority among the recruits of the two categories.
The amended rule provided the date of confirmation in the substantive vacancy as the basis.
Rule 3(b) thereof fixed the reservation of direct recruits with reference to substantive vancancies at 50% and Rule 4(e) made provision with reference to seniority in the substantive vancancies, with reference to the date of confirmation.
The amendment is within the competency of the State Government and is not open to challenge.
This is a rule made under the proviso to Article 309 of the 1120 Constitution and the rule can be given retrospective operation.
But the State Government, while amending the rule, should have taken into consideration the practical problems which would arise as a consequence of retrospectivity.
To allow the amendment to have retrospective operation is bound to create problems.
Hence Rule 4(e) as amended on 9th October, 1980, shall not have retrospective effect and would operate prospectively.
[1125D G; 1126A, E] 2.
Though Rule 3(b) fixes the ratio as 1:1 in respect of substantive vacancies, the recruitment has not been regular and systematic.
Rules have binding effect and they bind the State and the citizens alike once they are in force.
In order that law may regulate conduct, the State has to feel bound by its own laws and by willingly abiding by the law, exhibit an ideal situation for the citizens to emulate.
The rule shall henceforth be followed scrupulously by effecting recruitment at regular intervals according to the scheme of the rule.[1126E G] [The State Government has been directed to determine the vancancies available to be filled by direct recruitment within four months and to fill up the same within four months thereafter and to draw a seniority list on the basis of rule 4(e) on or before 31.12.88.]
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 440 (N) of 1970.
Appeal by special leave from the judgment and order dated the 18th June 1969 of the Bombay High Court in Misc.
Civil Appln.
No. 139 of 1968.
290 Naunit Lal, for the Appellant.
A.G. Ratnaparkhi for Respondents Nos.
M.N. Shroff, for Respondents Nos.
17 19.
The Judgment of the Court was delivered by PATHAK, J.
This appeal by special leave is directed against the judgment of the Nagpur Bench of the Bombay High Court quashing the grant of Nazul land to the appellants on a writ petition filed by the respondents Nos. 1 to 16.
The respondents Nos. 1 to 16 applied on March 15, 1963 for the grant of sixteen plots of land included in Government Nazul Plot No. 31/1 (Sheet No. 49 D) in Yeotmal Town for the purpose of constructing shops thereon.
They alleged that they had not been allotted any land yet for carrying on business at Yeotmal, and inasmuch as land sites were being released to refugees or displaced persons they claimed that having been compelled to migrate from West Pakistan to India during the partition of 1947 they were entitled to the grant of such plots.
The appellants made a similar application on May 16, 1964 and it is their case that they had also applied earlier in the same behalf on February 27, 1962.
There were applications from other claimants also.
The State Government, acting on the report of the Commissioner, Nagpur Division, rejected all the applications.
The appellants say that they sought a review of the order of the Government, and on June 28, 1965 the Government reversed its order and decided to grant plots on permanent lease to the appellants.
The Collector, Yeotmal submitted a report to the Government pointing out that each plot would be 192 sq.
in area and having regard to its market value each allottee should be required to pay a premium of Rs. 960.
The State Government granted the plots to the appellants as shop sites in Bhumidhari right without auction on payment of premium, and the decision was conveyed in a Memorandum dated March 3, 1966.
The allotment was assailed by the respondents, and they represented to the State Government that after further inquiry the land should be reserved for deserving claimants.
The respondents filed a writ petition before the Nagpur Bench of the Bombay High Court challenging allotment made by the Government in favour of the appellants.
They urged that no reason 291 able opportunity had been given to them to press their claims for grant of plots after the Government had reversed its earlier decision not to grant land, that the appellants had been unduly favoured and that the order was bad in law because the plots had been granted without holding an auction.
It was also contended that the power to grant the plots was vested in the Collector and not the State Government.
During the pendency of the writ petition a statement was made on behalf of the State Government that it was prepared to consider the claims of the respondents.
The appellants, however, maintained that they had acquired a right to the land in terms of the order dated March 3, 1966 and that they could not be divested of those rights.
By its judgment dated March 14, 1968 the High Court allowed the writ petition, quashed the order granting plots to the appellants and directed the State Government and its officers to take appropriate action on the several claims for allotment of land.
The High Court held that in view of sub section
(2) section 149 read with sub section
(3) of section 164 of the Madhya Pradesh land Revenue Code, 1954, as applied to the Vidharba region of Maharashtra, and rules 22 and 26 framed under the Code, it was not open to the State Government to dispose of the plots without holding a public auction unless there were reasons recorded in writing for doing so, and that after initially deciding not to grant the plots the subsequent decision to allot them to the appellants was contrary to law inasmuch as the claims of others had not been considered.
In this appeal, it is urged by the appellants that the High Court erred in applying sub section
(3) of section 164 and rule 26, and therefore in holding that the lease of the plots without auction and without recording any reasons was invalid.
When the Government decided to grant land to the appellants, it thought that the grant should take the form of a permanent lease in their favour.
The Collector was requested to frame suitable proposals and to submit them to the Government.
The Collector submitted a report dated November 23, 1965 suggesting the allotment of plots for the construction of shops on the footing that each plot would measure 192 sq.
and its market value, worked out on the basis of recorded sale transactions, and taking into regard the commercial purpose for which the land was intended, indicated a premium of Rs. 960.
He recommended further that the plots may 292 be granted without auction and in Bhumidhari right on payment of premium for constructing shops thereon for carrying on business.
On March 3, 1966 the State Government made an order accordingly.
Now section 149 of the Madhya Pradesh Land Revenue Code 1954 provides: "149.
(1) Subject to rules made under this Code, land belonging to the State Government, not being land herein after mentioned in sub section (2), shall be disposed of in Bhumidhari or Bhumiswami rights by the Deputy Commissioner who may require payment of a premium for such right or sell the same by auction.
(2) The land referred to in sub section (1) shall be the following, namely: (a) land situate in the bed of a river of a tank; (b) land reserved for communal purposes such as common grazing ground and cremation grounds; (c) land given out on favourable terms for the promotion of religious, charitable, educational, public or social purposes; (d) land given out to persons on the condition that it shall be used only for grazing cattle; (e) land given out for temporary purposes or for limited periods or for mining and purposes subsidiary thereto or for industrial or commercial purposes; (f) land given out to persons on favourable terms for rendering service as a kotwar; (g) any other land which the State Government may, by notification issued in this behalf, specify.
" Section 164 of the Code may also be set forth: 293 "164.
(1) Every person who holds land from the State Government or to whom a right to occupy land is granted by the State Government or the Deputy Commissioner and who is not entitled to hold land as a tenure holder shall be called a Government lessee in respect of such land.
(2) The Government lessee shall, subject to any express provision in this Code, hold his land in accordance with the terms and conditions of the grant which shall be deemed to be a grant within the meaning of the .
(3) The State Government or the Deputy Commissioner may, subject to rules made under this Code, dispose of the right to occupy the land specified in sub section (2) of section 149 on payment of a premium or by auction or on such terms and conditions as may be prescribed.
" It is apparent that the grant cannot be attributed to clause (c) of sub section
(2) of section 149.
The land was disposed of in Bhumidhari right.
Moreover, it was not given on favourable terms to the appellants; the market value of the plots was taken for fixing the premium.
From the nature of the grant, it is clear that action under sub section
(1) of section 149 was intended.
Now Part III of the Notification No. 1118 1832 55 XXVIII dated May 22, 1956 sets forth the rules framed with reference to sub section (1) of section 149.
These rules provide for the grant of Bhumiswami and Bhumidhari rights in nazul land for dwelling houses and ancillary purposes.
Rule 24 defines the expression "Nazul Land" to mean land belonging to the State Government which is used for building on, or for roads, markets and other public purposes.
Rule 26 applies the provisions of rules 18 to 36 contained in Part V of the Notification No. 1119 1832 55 XXVIII dated May 22, 1956 to the disposal of nazul land under Part III.
The provise to rule 26 declares that where nazul land is put to auction it should normally be granted in Bhumiswami right, and where it is disposed of without auction it should normally be granted in Bhumidhari right.
Rule 22 of Part V defines the power of the State Government and of the Collector to dispose of nazul plots with or without auction.
Rule 22 provides: 294 "22.
Power to dispose of nazul plots with or without auction shall be exercised in accordance with these Rules (1) by the State Government in the case of (i) plots of which the freehold market value is not less than Rs. 5,000; (ii) plots within the limits of the Municipal Corporation of the City of Nagpur, whether or not included in the Schemes of Nagur Improvement Trust; (iii) plots reserved for specific purposes under rule 20; (iv) strips of land not being independent plots to be settled with the occupants of adjoining land where the freehold value of the strip is not less than Rs. 5,000; (v) small strips of land adjacent to occupied plot, which cannot be disposed of as a separate site and in respect of which there is a difference of opinion between the Collector and the Officer in charge, Town Planning and Valuation: (vi) independent plots not included in the approved lists where there is a difference of opinion between the Collector and the Officer in charge, Town Planning and Valuation; (vii) plots granted without auction.
(2) by the Collector, in case of the other plots.
" Sub rule (1) of rule 26 in Part V declares: "26. (1) Leasehold rights in nazul land shall be disposed of by public auction except when in any particular case the State Government or as the case may be, the Collector thinks for reasons to be recorded in writing that there is good reason for granting the land without auction." 295 It seems indisputable that under the Rules as a general principle leasehold rights in nazul land are to be disposed of by public auction.
If in any particular case the State Government or, as the case may be, the Collector considers that there is good reason for granting the land without auction the reasons must be recorded in writing.
The existence of good reason for departing from the general principle, and the recording of the reason in writing are essential prerequisites which must be satisfied before leasehold rights are granted without auction.
It is pointed out that under clause (vii) of sub rule (1) of rule 22 the State Government is empowered to dispose of nazul plots without auction.
We have no doubt it can do so, but only after full compliance with sub rule (1) of rule 26.
The sub rule (1) controls the power of the State Government conferred by clause (vii) of sub rule (1) of rule 22.
To hold otherwise would be to confer an arbitrary power on the State Government to dispose of nazul plots.
It would be in the absolute discretion of the State Government to decide whether nazul plots should be granted with auction or without auction.
If that construction is accepted, it is clear that sub rule (1) of rule 26 would be negatived.
The only reasonable construction, it seems to us, is to read the two provisions together.
In the present case there is no evidence that the State Government has recorded any reasons in writing for preferring the mode of disposing of the land without auction and we are not satisfied that it had good reason for favouring that mode.
In the circumstances the grant of land to the appellants has been rightly quashed by the High Court.
There is also sufficient justification in the grievance of the respondents that the State Government did not consider the claims of other persons, including the respondents, when making an allotment of the plots.
The State Government had decided earlier, as a matter of policy, not to allot nazul land to displaced persons, and pursuant to that decision all the applications for allotment were rejected.
The applications were not rejected on the merits of the respective claims set out therein.
Subsequently when the State Government made an allotment of the plots to the appellants, it was consequent to a decision which analytically must be regarded as a composite of two decisions, one, a policy decision to throw open 296 the land to allotment in reversal of the earlier policy and, two, to allot the land to the appellants.
It will be remembered that the applications of the respondents for allotment of plots were rejected on the ground that the land was not available for allotment.
That was a policy decision.
When it was reversed, it was incumbent on the State Government to reconsider those applications or to notify that the land was available for allotment and to invite fresh applications in that behalf.
It was not open to the State Government to allot the plots to the appellants in disregard of the claims of others who had also applied for allotment.
In quashing the order granting plots to the appellants and directing the State Government or its appropriate officers to consider the several claims for allotment the High Court, in our opinion, did that which was plainly right.
The appellants say that the respondents must be taken to have accepted the rejection of their applications for allotment, and it was only the appellants who pursued the matter and obtained a reversal of the order of the Government and therefore the appellants alone were entitled to the allotment of plots.
The submission would have had force but for the circumstance that the State Government effected what was a change of general policy.
The change of policy altered the situation completely, and all the claimants were entitled to the benefit of that change.
By adopting the new policy, the State Government must be taken to have declared that the land was now open to allotment to the claimants who were found most deserving.
There were several applicants for allotment, and a selection had to be made.
It cannot be contended, as indeed it is urged before us, that the appellants constitute a distinct and separate class from the respondents only because the appellants agitated against the rejection of their applications while the respondents did not.
The controversy which remains is whether it is the State Government or the Collector who has power to dispose of the plots in view of their market value.
That is a matter on which we need express no opinion, having regard to the quashing of the entire allotment proceeding from its inception.
It will be for the Govern 297 ment or the appropriate authority to decide what should be the nature of the rights to be conferred on the allottees and, therefore, what should be the premium to be fixed.
In the result, the appeal is dismissed with costs.
N.V.K. Appeal dismissed.
[/INST]Respondents Nos. 1 to 16 applied for the grant of plots of land for purposes of constructing shops, alleging that they were displaced persons and entitled to the grant of plots.
The appellants also made a similar application.
There were applications from other claimants.
The State Government acting on the report of the Commissioner rejected all the applications.
Subsequently the Government at the instance of the appellants who had sought a review, reversed its earlier order and decided to grant plots on permanent lease to the appellants.
The decision was conveyed in a memorandum by the State Government, who granted the plots to the appellants as shop sites in Bhumidhari rights without auction on payment of premium.
The allotment was assailed by the respondents and they represented to the State Government that only after further inquiry should the land be reserved for deserving claimants.
The respondents filed a writ petition in the High Court challenging the allotment made by the Government in favour of the appellants contending that no reasonable opportunity had been given to them to press their claim for grant of plots, after reversal of the earlier decision not to grant land, that the appellants had been unduly favoured, and that the power to grant plots was vested in the Collector and not in the State Government.
The appellants contested alleging that they had acquired a right to the land that they could not be divested of those rights.
The High Court quashed the order granting plots to the appellants and directed the State Government to take appropriate action on the several claims for allotment of land.
It held that under sub section (2) of section 149 read with sub section (3) of section 164 of the Madhya Pradesh Land Revenue Code, 1954, and rules 22 and 26 framed under the Code it was not open to the State Government to dispose of the plots without holding a public auction unless there were reasons recorded in writing for doing so and that after initially deciding not to 289 grant the plots, the subsequent decision to allot them was contrary to law as the claims of others had not been considered.
Dismissing the appeal, ^ HELD :1.
The High Court was right in quashing the order granting plots to the appellants and directing the State Government to consider the several claims for allotment.
[296 C D] 2.
The grant cannot be attributed to clause (c) of sub section (2) of section 149.
The land was disposed of in Bhumidhari right.
It was not given on favourable terms to the appellants, the market value of the plots was taken for fixing the premium.
From the nature of the grant, it was clear that action under subsection (1) of section 149 was intended.
[293 E] 3.
Under Rules 24 to 26 of the Land Revenue Code, lease hold rights in nazul land are to be disposed of by public auction.
If in any particular case the State Government or the Collector considers that there is good reason for granting the land without auction the reasons must be recorded in writing.
The existence of good reason for departing from the general principle and the recording of the reason in writing are essential prerequisites which must be satisfied before lease hold rights are granted without auction.
[295 A C] In the instant case there is no evidence that the State Government has recorded any reasons in writing for preferring the mode of disposing of the land without auction.
It had also no good reason for favouring that mode.
In these circumstances the grant of land to the appellants was rightly quashed by the High Court.
[295 E F] 4.
The State Government had decided earlier, as a matter of policy, not to allot nazul land to displaced persons, and pursuant to the decision all the applications for allotment were rejected.
The applications were not rejected on the merits of their respective claims.
Subsequently, when the State Government made an allotment of the plots to the appellants, it was consequent to a decision, which must be regarded as a composite of two decisions, one a policy decision to throw open the land to allotment in reversal of the earlier policy and, two, to allot the land to the appellants.
The applications of the respondents for allotment of plots were rejected on the ground that the land was not available for allotment.
That was a policy decision.
When it was reversed it was incumbent on the State Government to reconsider those applications or to notify that the land was available for allotment and to invite fresh applications in that behalf.
It was not open to the State Government to allot the plots to the appellants in disregard of the claims of others who had also applied for allotment.[295 G H; 296 A B]
</s> |
<s>[INST] Summarize the judgementAppeal No. 800 of 1967.
Appeal from the judgment and decree dated January 15, 1964 of the Patna High Court in Appeal from Original Decree No. 321 of 1959.
D. Goburdhun and R. Goburdhun, for the appellant.
R. C. Prasad, for respondent No. 1.
The Judgment of the Court was delivered by Hidayatullah, C.J.
This is an appeal against the judgment of the High Court at Patna, dated January 15, 1964, affirming the decision of the court of first instance.
The case arose in the,following circumstances One Chaudhary Lal Behari Sinha, who was the uncle of the two plaintiffs (respondents in this appeal), made an endowment by a will executed by him on December2, 1908, by which certain properties were endowed in favour of an Idol called 'Ram Janakiji ' also known as Shri Thakurji, installed in the family house of the testator.
The testator said that his parents had installed this idol inside their house and they used to perform the puja and he had also been performing the puja since the time he had attained the age of discretion.
The testator went on to say that he had married two wives but no son had been born to him from either of them, al though he had a daughter and there was also a daughter 's daughter.
When he made the will, he had his two wives living, two sister 's sons, Babu Uma Kant Prasad and Babu Gauri Kant Prasad, and a daughter 's daughter Giriraj Nandini Kuari.
By the will, he ar 6 5 2 ranged for the seba puja, ragbhog, samaiya, utsava of Thakurji, and for the festivals and expenses of the sadabart of the visitors, to be carried on, just as he had been doing.
He nominated his two wives and his sister Ram Sakhi Kuari widow of Babu Gudar Sahai, as 'mutwallie, managers and executives ' so long as they remained alive.
He ordained that they should look after the management of the estate of Shri Thakurji with unanimous opinion, as had been done since long, that after their death, a son of a Srivastava Kayastha and Visnu upasak (worshipper of Lord Visnu) should be appointed 'Mutawalli, manager and executive ' of the estate of Shri Thakurji, and that his wives and sister should appoint him during their life time with the advice of and in consultation with a certain Shri Jawharikh, resident of Baikunthpur, who was his guru.
He divided the house into two parts.
The inner apartment of the house was to remain in the possession of his wives and sister during their life time and the entire outer house together with the house situated at Sitamarhi, was to belong to the estate of Shri Thakurji.
All money in cash and the movable properties belonging to him would remain in the custody of his wives.
To the will was appended a schedule which showed the details of the properties.
That included four villages in sixteen annas share, three villages in eight annas share, and one village in twelve annas share.
The will also made certain bequests in favour of some of his other relations, but with, them we are not concerned.
They are minor as compared with the properties dedicated for the upkeep, of Shri Thakurji.
When the Bihar Hindu Religious Trusts Act, 1950, came to be passed, a notice was sent to the plaintiffs by the Board constituted under that Act, calling upon them to file certain particulars on the basis of the Act, in view, as the notice said, of the properties constituting a public Hindu Religious trust.
The present suit out of which this appeal arises was thereupon filed by the plaintiffs after serving a notice under section 78 of the Act upon the Board, for a de claration that the suit properties were not subject to the Bihar Religious Trusts Act, and were private endowments.
Vast oral evidence was tendered in the case on behalf of the plaintiffs, and certain documents were filed.
On the basis of the evidence in the case, which was accepted by the learned trial judge, it was decided that the endowment was private to which the Act was not applicable.
Before the learned trial judge, reference was made to a decision of this Court, reported in Deoki Nandan vs Murlidhar(1).
To that case, we shall come presently.
The learned trial judge distinguished that case and held that endowment in the present case could not be held to be a public trust, because it was in favour of a family deity.
1[1961] 3 section C. R. 220.
653 An appeal was unsuccessful in the High Court.
The High Court agreed with the learned trial judge that the endowment created a private and not a public trust.
The High Court did not consider the evidence in the case, which, according to the leamed Judges, had been adequately summed up by the trial judge and whose conclusion was accepted.
Before the High Court also, the same case of this court was cited.
But it was also again distinguished on the grounds.
that this idol was a family idol and had not changed its character since the endowment or at the time of the endowment.
In this appeal, the only question that has been raised is whether the trust is a public trust, to which the Bihar Hindu Religious Trusts Act attaches, or is a private trust which does not come within the purview of that Act.
Mr. Goburdhun, who argued the case, pointed out a number of circumstances from which, he said, it could be easily inferred that the endowment was a public one and that the Act applied. 'According to him, the testator was childless and, therefore, there was no need for him to preserve the property for his family, that he had dedicated large properties for the upkeep of the idol, and the largeness of the properties indicated that it must have been for the benefit of the worshippers drawn from the public and not from the family, that on the extinction of the line of shebaits consisting of the two wives and the sister of the testator, the shebaitship was to go to a person of a different community on the advice of a stranger and that there was no mention in any of the deeds that the public were not to be admitted to the worship of Thakurji.
He also relied upon the same case to which we have referred, and also upon a decision of this Court in Swami Saligramacharya vs Raghavacharya and others(1).
As early as (Babu Bhagwan Din and others vs Gir Har Saroop and others) (2), the Privy Council distinguished between public and private endowments of religious institutions, particularly, temples and idols, and Sir George Rankin laid down certain principles to which attention may be drawn, because they were referred to in that Supreme Court ruling on which Mr. Goburdhun strongly relies.
Sir George Rankin said that the dedication to the public was not to be readily inferred when it was known that a temple property was acquired by grant to an individual or family.
He also observed that the fact that the worshippers from the public were admitted to the temple was not a decisive fact, because worshippers would not be turned away as they brought in offerings, and the popularity of the idol among the public was not indicative of the fact that the dedication of the properties was for public.
This ruling was referred to in the case on which Mr. Goburdhunrelies.
(1) CA.
No. 645 of 1964 decided on 4 11 15.
(2) 67 I.A 1.
654 In that case, emphasis was laid on two matters and they are decis ive of the case we have here.
The first no doubt was that the dedicator in that case had no male issue, and that it would be unusual for a person to tie up the property for the use of a diety with.out creating a public trust, but the second was that a ceremony or pratishtha (installation of the idol), which was equivalent to utsarg (dedication), was performed and, therefore, the idol itself became; a _public idol after the ceremonies.
This is not the case here where an idol had existed from before as a family idol.
In the earlier case ,of this Court the installation of the idol and the dedication were ,both done at the same time, and the installation was public.
This, in our opinion, was a very cardinal fact in that case.
This) was emphasized not, only by the trial judge but also by the learned Judges of the High Court.
The facts here are that the idol had been in the family for a number of *ears and only the family was doing the seba puja in the Thakur Dwara, and there is no mention anywhere that the public ever looked after this idol and were allowed a share in the worship as of right.
Further, by the will also the author of the dedication did not make it clear that the public were ,to be admitted as of right thereafter.
The whole of the arrangement shows that the further looking after of the Thakurji was to be the concern of the family, and it was only under the nomination of the family that a particular person of the Vaishavanava belief was to be in charge after the demise of the members of the family who were to become the mutawalls after the death of the testator.
It is obvious that in this family there was no male issue and, there fore, there was nobody to carry on worship and make arrangements for the seba puja of the Thakurji, as had been done in the family. 'Some other kind of arrangement had to be made and this arrangement was made by the will.
No more can be read into it than what is said there.
Now, if it was intended that this should have been a public endowment, it is quite obvious that when the testator died, the testator would have thought of somebody from the public instead of the ladies who could not carry on the puja except through others.
It was after his own death and his wives and sister were not available that a particular person was to be chosen for the seba puja.
There is no arrangement here that public were to look after or manage the Thakurji.
At no stage any intervention of the public is either intended or allowed by the will in question.
Two other documents were brought to our notice, but they may be disposed of summarily.
The first is a mortgage deed, exh.
B, in which there is a recital about the property which was the subject of the endowment.
But that document is silent about the nature of the endowment and is of no significance.
The other document is a judgment of the Assistant Commissioner of Agricultural 655 Income tax, exh.
C, in which exemption was claimed in regard to income as was set apart for charitable and religious trusts in terms of the trust deed.
This is an attempt to show that the family regarded it as a public trust.
What a person does with a view to claiming exemption from income tax or for that matter, agricultural income tax, is not decisive of the nature of the endowment.
The nature of the endowment is to be discovered only from the tenor of the document by which the endowment is created, the dealings of the public and the conduct and habits of the people who visit such a temple or Thakur Dwara.
The claim to exemption was with a view to saving some income of the endowed property.
It might have been motivated from other considerations and not that it was a public endowment.
This brings us to the second case which was cited before us.
But even in that case, a reference was made by the learned Judges to the earlier case and they have extracted a passage from the earlier judgment, in which it was observed that "when property is dedicated for the worship of a family idol, it is a private and not a public endowment, as the persons who are entitled to worship at the shrine of the deity can only be the members of the family, and that is an ascertained group of individuals.
But where the bene ficiaries are not members of a family or a specified individual, then the endowment can only be regarded as public, intended to benefit the general body of worsh ippers".
In the present case, the idol was a family idol and the worshippers had all along.
been the members of the family.
Indeed, the evidence is overwhelming on that score.
The learned trial judge mentions that very important and leading persons gave evidence in that behalf.
In the judgment of the trial judge, a list is given which includes P.Ws.
3,7,12,14,15 and 16 of village Kusmari.
In addition there are P.W. 17, who is an advocate of Sitamarhi, P.W. 6 who is a respectable witness, being a chemist, P.W. 8 who is also a pleader, and P.Ws II and 13 who are mokhtears and acquainted with Somari Kuer.
These respectable persons had occasion to know the family of Chaudhury Lal, Behari Singh, and, therefore, were competent to speak on the fact that Shri Ram Janakiji were the family deities of Chaudhury Lal Behari Singh.
In the case to which we were presently referring, the circumstances connected with the establishment of the temple were such that they could be only consonant with a public endowment.
It was no doubt at private temple of which the sole proprietor was one Madrasi Swamiji, but he, however, by the execution of the deed, decided to open the temple to the public.
He was a man with no family and could not have installed the deity for the members of his family.
It was pointed out in that case that the deed was of such a recent date that evidence of subsequent conduct would not alter nature of the endowment as determined from the deed and that the decision was on a 6 56 question of fact.
Even if we were to treat it as a question of law, because whether the trust is public or private, partakes of both fact and law, and we are satisfied in the present case the evidence is entirely one sided.
There is not one circumstance to show that the endowment was public endowment, and this being the case, we do not see any reasons to differ from the decision already arrived at.
On the whole, we have not been able to discover any reason why we should depart from the unanimous opinion of the High Court and the court below.
Both the courts are agreed that the oral evidence as well as the documents indicate only a private trust and that there is nothing to show that the endowment enjoyed a public character at any time.
The cases before this Court, which were cited earlier are easily distinguishable.
The result is that the appeal fails.
The High Court in its order did not award costs to the plaintiffs.
The reasons given by the High Court for denying costs to the Plaintiffs apply here also.
We, accordingly, order that the costs shall be borne as incurred.
R.K.P.S. Appeal dismissed.
[/INST]The appellant was owner of immovable property situate within the limits of the municipal corporation, Ahmedabad City.
Under the power reserved to it by section 127 of the Act the Corporation served on the appellant as also on the other rate payers, bills and demand notices for payment ,of property tax in respect of the assessment year 1962 63.
These were challenged by the appellant and also certain other rate payers in writ petitions before the High Court.
The High Court inter alia held (i) that section 129 of the Act did not suffer from the vice of excessive delegation by reason ,of the fact that no maximum rate of tax was laid down; (ii) that it was permissible under r. 10 to maintain only one assessment book and the levy could not be held invalid on the ground that ward wise assessment books as contemplated by rr. 13, 15 and 19 were not maintained.
In appeal to this Court by certificate, HELD : The High Court rightly held that the charging sections of the Act were not without guidelines.
The assessment and levy of the property taxes have to be in conformity with the Act and the rules.
These rules contain inter alia Taxation Rules which are part of the Act.
Section 454, no doubt, empowers the corporation to amend, alter and add to those rules but such power is made under section 455 subject to sanction of the State Government.
Under section 456 the State Government can at any time require the Corporation to make rules under section 454 in respect of any purpose or matter specified in section 457 which includes item "Municipal Taxes The assessment and recovery of Municipal Taxes.
" Although the Act did not during the relevant period prescribe the maximum rate at which the property taxes could be raised, the ultimate control for raising them was with the councillors responsible to the people, It was difficult therefore to sustain the plea that the power to levy the property tax was so unbridled as to make it possible for the Corporation to levy it in an arbitrary manner or extent.
[951 G 852 B] The proposition that when a provision requiring sanction of the Government to the maximum rate fixed by the Corporation is absent, the rest of the factors which exist in the Act lose their efficacy and cease to be guidelines cannot be accepted.
Further, if the Corporation has the flexibility of power given to it in fixing the rates, the State Legislature can at any moment withdraw that flexibility by fixing the maximum limit up to which the Corporation can tax.
Indeed the State Legislature had done so by section 4 of the Gujarat Act, 8 of 1968.
In view of the decisions of this Court it is not possible to agree with the contention that the Act conferred on the Corporation such arbitrary and uncontrolled power as to render such conferment an excessive delegation.
[954 F G] 943 Corporation of Calcutta vs Liberty Cinema, [1965] 2 S.C.R. 477, Municipal Corporation of the City of Ahmedanwd vs Zaveri Keshavia, , Western India Theatres Ltd. vs Municipal Corporation of the City Poona, [1959] Supp. 2 S.C.R. 71, Pandit Banarsi Das Bhanot vs Madhya Pradesh, ; and Devi Das vs Punjab ; referred to.
Municipal Corporation of Delhi vs Birla Mills, ; followed.
(2) The tax levied on the basis of one assessment book was not invalid, Rule 10 differs from section 157 of the Bombay Municipal Corporation Act, 1888, in that, whereas, it gives an option to the Commissioner either to maintain one assessment book for the entire city or separate assessment books, Sec. 157 gave no such option and provided only for ward assessment book which collectively constituted, as in r. 10(2), "the assessment book '.
The legislature deliberately made a departure from section 157 by leaving it to the discretion of the Commissioner either to maintain one book or several books ward wise.
Such a departure was presumably made because the Act was to apply not to one city only, as did the Bombay Act of 1888, but to an unknown number of cities where Municipal Corporations might in future be set up, each having different conditions from the other and not being certain whether one assessment book or separate ward assessment books would be suitable for each of them.
[955 G; 956 A] The contention that r. 10 should be, construed as mandatory ignores (1) the permissive language of the rule and (2) the deliberate departure made by the legislature from section 1 57 of the Bombay Corporation Act, 1888.
If it intended that assessment books for each ward shoud be kept, there was no necessity for it to depart from the language of section 157 of that Act.
The fact that it made such departure is a sure indication that it did not.
Unless compelled by the context and content of the other rules, there would be no justification not to give to r. 10 the plain meaning of its language, particularly in view of the fact that the Act intended to apply not to one but to an indefinite number of cities, each differing in conditions from the other a factor which, as aforesaid, led the legislature to make a departure from the said section 157.
[958 H 959 B] Certain anomalies would arise from the High Court 's interpretation that rr. 13, 15 and 19 would not apply in the case of one assessment book.
Rule 19 was intended to enable the Corporation to proceed to makedemands so soon as entries were made as provided by cl.
(e) of r. 9 and the Commissioner had given thereafter his authentication that there existed no valid objection to the ratable values entered under the said cl.
Since the object of r. 19 was to make the entry as to the amount of tax conclusive evidence so as to enable the Commissioner to issue the bills, the legislature could not have intended to apply the rule only when ward assessment books were kept and not when, one assessment book was maintained, especially when in r. 10 it had deliberately given discretion to the Commissioner to maintain either one assessment book or several ward assessment books.
Further if r. 19 were to be so construed, rr. 13, and 15 also would have on the same reasoning to be likewise construed.
That would mean that the notice to enable the rate payers to take inspection under r. 13 and the notice under r. 15 fixing the date on or before which complaints against 'ratable value can be made, would have to be given only where ward assessment books are kept and not where one L1100 SupCI/71 944 assessment book is kept.
it goes without saying that the right to inspect provided under r. 13 and the right to file a complaint under r. 15 are vital matters.
That being so it is hardly conceivable that the legislature intended these rules to apply only where the Commissioner kept ward assessment books.
Since r. 10 has to be construed as permissive and not mandatory, and the construction adopted by the High Court in regard to rr.
13, 15 and 19 is bound to create anomalies, the conclusion must be that it was through inadvertence that the old language used in sections 157 to 168 of the Bombay Corporation Act was allowed to be retained without carrying out the change.
of language necessitated as a result of r. 10 giving discretion to the Commissioner either to maintain one book or several books ward wise.
In the result the assessment book in question must be held to be valid and no objection as to the validity of the bills and demand notices can be raised on the ground that only one assessment book and not warding books were kept.
[959 C 960 E]
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<s>[INST] Summarize the judgementew Petition No. 29 of 1969.
Application for review of this Court 's Judgment dated July 17, 1969 in Civil Appeal No. 1878 of 1967 arising out of the judgmentand order dated July 18, 1966 of the Bombay High Court, Nagpur Bench in Special Civil Application No. 722 of 1965.
N. section Bindra and section P. Nayar,for the petitioner/appellants.
A. G. Ratnaparkhi, for the respondent.
47 The, Judgment of the Court was delivered by Shah, J. Appeal No. 1878 of 1967 was ordered to be dismissed by this Court on July 17, 1969.
The Court held that the sale of standing trees is not sale of goods chargeable to sales tax under the Bombay Sales Tax Act, 1959.
A petition for review of Judgment has been filed by the State contending that after the judgment of the High Court and before the appeal was heard, the Bombay Sales Tax Act, 1959 was amended by the Maharashtra Act 15 of 1967 with retrospective operation, and by the amendment standing timber was included 'in the definition of timber, but counsel for the State failed to invite the attention of the Court to that Act.
Since the judgment of this Court it is claimed suffers from an error apparent on the face of the record, we have granted review of judgment.
The expression "goods" was defined in section 2(13) of the Bombay Sales Tax Act, 1959.
By Maharashtra Act 15 of 1967 by section 2 the definition of "goods" was altered by providing that "In section 2 of the Bombay Sales Tax Act, 1959 .
in clause (13), after the words 'and commodities ' the following shall be, and shall be deemed always to have been, added, namely: 'and all standing timber which is agreed to be severed before sale or under the contract of sale '.
" The definition was retrospective in operation and the expression " goods" included at all relevant times standing timber agreed to be severed before sale or under the contract of sale.
The expression "sale of goods" in Entry 54 List 11 of Sch.
VII of the Constitution has the same connotation as it has in the .
This Court in The State of Madras vs Gannon Dunkerley & Co. (Madras) Ltd.(1) observed that the expression "sale of goods" was, at the time when the Government Of India Act, 1935, was enacted, a term of well recognised legal import in the general law relating to sale of goods and in the legislative practice relating to that topic and must be interpreted in Entry 48 in List 11 in Sch.
VII of the Act as having the same meaning as in the : see also Pandit Banarsi Das Bhanot vs The State of Madhya Pradesh (2).
The expression " sale of goods" in Entry 54 in List II of Sch.
VII of the Consti tution has also the same meaning as that expression had in Entry 48 in List II of the Government of India Act, 1935.
The State Legislature may not therefore extend the import of the expression (1) ; (2) ; 48 " sale of goods" so as to impose, liability for tax on transactions which are not sales of goods within the meaning of the .
By article 366(12) of the Constitution the expression "goods" is defined as inclusive of "all materials, commodities and articles".
That is, however an inclusive definition and does not throw much light on the meaning of the expression "goods".
But the definition of "goods" in the , as meaning "every kind of moveable property other than actionable claims and money; and includes stock and shares, growing crops, grass, and things attached to or forming part of the land which are agreed to be severed before sale or under the contract of sale".
Standing timber may ordinarily not be regarded as "goods", but by the, in clusive definition given in section 2(7) of the things which are attached to the land may be the subject matter of contract of sale provided that under the terms of the contract they are to be severed before sale or under the contract of sale.
In the present case it was expressly provided that the timber agreed to be sold shall be severed under the contract of sale.
The timber was therefore "goods" within the meaning of section 2(7) of the and the expression "sale of goods" in the Constitution in Entry 54 List 11 having the same meaning as that expression has in the , sale of timber agreed to be severed under the terms of the contract may be regarded as sale of goods.
The appeal is allowed and the petition filed by the respondent must be dismissed.
Since the State succeeds in this appeal, relying upon a statute which was passed after the judgment of the High Court, there will be no order as to costs throughout.
V.P.S. Appeal allowed.
[/INST]The appellant 's house was set on fire and burnt down.
As a result of a report filed by his son the police arrested Respondents 1 and 2 and submitted a charge sheet against them.
The appellant was dissatisfied that the police had not prosecuted Respondent No. 3 also and he filed a complaint against him, in the same Court.
The Magistrate inquired into the two cases together and committed separately the first two respondents and the third respondent separately to the Court of Sessions.
After the Sessions Judge had held all the three respondents not guilty and acquitted them, the appellant applied under section 417(3) Cr.
P.C., for special leave to appeal against the acquittal of the three respondents; but this petition was dismissed by the High Court on the ground that the petitioner had no locus standi to prefer an appeal when the State had pro secuted the respondents in the Sessions Court.
A revision application filed by the appellant was also rejected.
On appeal to this Court, HELD : The appellant was entitled to have a hearing of his petition for special leave under section 417(3) and the case must therefore be remitted to the High Court for this purpose.
The answer to the question whether the appellant had a right to move the High Court for special leave under section 417(3) depended upon whether there was a case instituted by him upon a complaint in which an acquittal was recorded, for this is the requirement of the special section and also the condition precedent to the right.
[4 B].
On the facts, there could be no doubt that one of the cases was instituted on the report of a police officer and the other on the complaint of the complainant.
There could be no question of merger because the identity of the two cases was maintained right upto the end of the Sessions Trial.
The case of the appellant proceeded on its own number and although evidence was led in both cases together, the acquittal was recorded separately in each of the two cases.
The appellant was therefore entitled to move the High Court for special leave in his own case.
[6 G] The fact that the appellant had also applied for revision which was rejected and had applied for special leave against that order which was refused by this Court, did not mean that that must conclude the matter.
The appellant 's statutory right to move the High Court could not be lost by reason of the revision and the result of the revision, had no bearing upon the matter.
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<s>[INST] Summarize the judgementivil Appeal No. 167 of 1954.
Appeal from the Judgment and decree dated September 14, 1953, of the Bombay High Court in Misc.
Application No. 267 of 1953.
R. J. Kolah, B. Narayanaswamy and J. B. Dadachanji, for the appellants.
H. M. Seervai, Advocate General for the State of Bombay and R. H. Dhebar, for the respondents.
December 20.
The following Judgment of the Court was delivered by VENKATARAMA AIYAR J.
The appellant is a limited Company incorporated under the Indian Companies Act, 1879.
It is carrying on business in the manufacture of textiles, and owns three factories called Spring Mills,, Textile Mills and Bombay Dye Works, all of, which are situate in Bombay.
In its balance sheet for the year 1951, it has shown as one of its liabilities a sum of Rs. 1,65,731 1 0 under the heading "Unclaimed wages ".
This amount is made up of wages earned by the workmen in the factories but remaining undrawn by them, and represents accumulations from year to year ever since the formation of the Company which, it is stated, was about the year 1880. ' The dispute in this appeal mainly relates to this amount.
In 1953, the Legislature of the State of Bombay enacted the Bombay Labour Welfare Fund Act (Bum.
XL of 1953) (hereinafter referred to as the Act), and it came into force on June 4, 1953.
We may, at this 1125 stage, refer to the relevant provisions of the Act, as it is their validity that is the main point for our determination in this appeal.
The preamble to the Act recites that " It is expedient to constitute a Fund for the financing of activities to promote welfare of labour in the State of Bombay and for conducting such activities ".
Section 2 is the definition section; sub section
(2) defines an " employee " as meaning " any person who, is employed for hire or reward to do any work, skilled or unskilled, manual or clerical, in an establishment".
Employer " is defined in sub section
(3) as meaning " any person who employs either directly or through another person either on behalf of himself or any other person, one or more employees in an establishment and includes in a factory any person named under section 7(i)(f) of the , as the manager ".
Sub section (10) defines " Unpaid accumulations " as meaning " all payments due to the employees but not made to them within a period of three years from the date on which they became due whether before or after the commencement of this Act including the wages and gratuity legally payable".
"Wages "is defined in sub section
(11) as meaning " all remuneration capable of being expressed in terms of money which would) if the terms of the contract of employment, express or implied were fulfilled, be payable to a person employed in respect of his employment or of work done in such employment. .
Then, there is section 3, which runs as follows: (1).
"There shall be constituted a fund called the Bombay Labour Welfare fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in sub section (2) ,shall be paid into the Fund.
The Fund shall consist of (a) all fines realised from the employees; (b) all unpaid accumulations; (c) any voluntary donations; (d) any fund transferred under sub section (5) of section 7; and (e) any sum borrowed under section 1126 (3).
The sums specified in sub section (2) shall be collected by such agencies and in such manner and the accounts of the Fund shall be maintained and audited in such manner as may be prescribed." Section 7(1) provides that "the Fund shall vest in and ,be held and applied by the Board as Trustees subject 'to the provisions and for the purposes of this Act.
" Sub section (2) of section 7 is very material, and is as follows: "Without prejudice to the generality of sub section (1) the moneys in the Fund may be utilized by the Board to defray expenditure on the following: (a) community and social education centres including reading rooms and libraries; (b) community necessities; (c) games and sports; (d) excursions, tours and holiday homes; (e) entertainment and other forms of recreations; (f) home industries and subsidiary occupations for women and unemployed persons; (g) corporate activities of a social nature; (h) cost of administering the Act including the salaries and allowances of the staff appointed for the purposes of the Act; and (i) such other objects as would in the opinion of the State Government improve the standard of living and ameliorate the social conditions of labour: Provided that the Fund shall not be utilized in financing any measure which the employer is required under any law for the time being in force to carry out; Provided further that unpaid accumulations and ,fines shall be paid to the Board and be expended by it under this Act notwithstanding anything contained in the (IV of 1936), or any other law for the time being in force ".
Section 11 provides for the appointment of an officer called the Welfare Commissioner, and defines his ,powers and duties.
Section.17 enacts that, " Any sum payable into the Fund under this Act shall without prejudice to any other mode of recovery, 1127 be recoverable on behalf of the Board as an arrear of land revenue.
" Section 19 authorises the State Government to make rules to carry out the purposes of this Act.
Section 23 provides that, "In section 8 of the (IV of 1936), to sub section (8) the following shall be added, before the Explanation namely: " but in the case of any factory or establishment to which the Bombay Labour Welfare Fund Act, 1953 (Bom.
XL of 1953), applies all such realisations shall be paid into the Fund constituted under the said Act.
" Rules were framed by the State of Bombay in exercise of the powers conferred by section 19, and they were published on June 30, 1953.
The material rules are Nos. 3 and 4, which are as follows: 3.
" Payment of fines and of unpaid accumulations by employer (I) Within fifteen days from the date on which the Act shall come into force in any area, every employer in such area shall pay by cheque, money order or cash to the Welfare Commissioner (a)all fines realised from the employees before the said date and remaining unutilized on that date; ,and (b)all unpaid accumulations held by the employer on the aforesaid date.
(2)The employer shall along with such payment submit a statement to the Welfare Commissioner giving full particulars of the amounts so paid.
(3) Thereafter, all fines realised from the employees and all unpaid accumulations during the quarters ending 31st March, 30th June, 30th September and 31st December shall be paid by the employer in the manner aforesaid to the Welfare Commissioner on or before the 15th of April, 15th of July , 15th of October and 15th of January succeeding such quarter and a statement giving particulars of the amounts so paid shall be submitted by him along with such payment to the Welfare Commissioner, 1128 4.
Notice for payment of fines and unpaid accumu lations by Welfare Commissioner: The Welfare Commissioner may, after making such enquiries as he may deem fit, and after calling for a report from the Inspector, if necessary, serve a notice on any employer to pay any portion of fines realised from the employees or unpaid accumulations held by him which the employer has not paid in accordance with rule 3.
The employer shall comply with the notice within 14 days of the receipt thereof." On July 7, 1953, the Welfare Commissioner, Bombay appointed under section 1 1 of the impugned Act, sent a notice to the appellant and other companies similarly situate, inviting their attention to the relevant provisions of the Act and of the rules and calling upon them to remit the fines and unpaid accumulations remaining with, them, in accordance with the directions contained therein.
To this, the appellant sent a reply on the same date impugning the validity of the Act as being in violation of the provisions of article 31 (2), and followed it up by filing the writ petition out of which the present appeal arises, it being treated by consent of parties as a test case.
The application was heard by Chagla C. J. and Tendolkar J. who held that the impugned Act was intra vires but on different grounds.
The learned Chief Justice was of the opinion that, on its true construction, the Act merely substituted the Board as a creditor in the place of the employees, that there was no taking of property, and that, in consequence, there was no contravention of article 31 (2).
Tendolkar J. hold that " unpaid wages " were unquestionably moneys which belonged to the employer and that he was being deprived of them, but there was no taking of possession or acquisition of property within .Art.
31 (2) of the Constitution but a deprivation of moneys, and as it was done under the authority of law, it fell within the protection of article 31 (1).
In the result, the petition was dismissed.
The learned Judges,however, granted a certificate under article 132, and that is how the appeal comes before us, 1129 The sole point for determination in this appeal is whether section 3 (1) and sub cls.
(a) and (b) of section 3(2) of the Act are void as contravening the provisions of the Constitution; but to decide it, we have to consider quite a number of questions which have been raised and discussed in the arguments before us.
It will be convenient to deal with the two items, fines realised ' from the employees, section 3 (2) (a) and unpaid accumulations, section 3 (2) (b) separately, as the issues involved in the determination of their validity are different.
Taking first unpaid accumulations, section 3 (2) (b), the contention of Mr. Kolah for the appellant is that s 3 (1) is repugnant to article 31 (2) inasmuch as it deprives the employers of moneys belonging to them without payment of any compensation merely on the ground that they represent wages due to the employees.
Now, money is undoubtedly property, and it cannot be disputed that a person who has money does not cease to be its owner merely by reason of the fact that he owes debts in satisfaction of which it may have to be applied.
Until the creditor takes appropriate proceedings under the law for the realisation of his debt and the title of the debtor is extinguished in those proceedings, the title to the property continues in the debtor.
Mr. Kolah is therefore clearly right in his contention that the liability of the appellant to pay wages to the employees does not ipso facto extinguish its title to the moneys belonging to it even pro tanto, and that the effect, therefore, of section 3 (1) is to take away money belonging to it.
Then, the question is whether such a provision is hit by article 31 (2) on the ground that it is acquisition or taking possession of property for a public purpose without payment of compensation.
It is common ground that the taking is for a public purpose.
The point in dispute is whether what is sought to be done under section 3 is acquisition or taking possession of property within article 31 (2).
Tendolkar, J., answered this question against the appellant, because, in his view, article 31 (2) would apply only if there was a transfer of title to or beneficial interest in the amounts to the State, that section 3 (1) effected neither, that it did deprive the employers of 1130 oheir moneys, but that fell under article 31 (1) and not article 31 (2), and that as that was done under the authority of law, it could not be questioned.
Subsequent to this decision, this Court had occasion to consider the true scope of article 31 (2) in relation to article 31 (1) in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd (2).
In The State Of West Bengal vs Subodh Gopal Bose(1), the majority of the learned Judges took the view that.
articles 31 (1) and 31 (2) were not mutually exclusive, that it was not an essential requisite of acquisition under article 31 (2) that there should be a transfer of title to the State, that deprivation of property and substantial abridgement of the rights of the owner were also within article 31 (2), and that a law which produced those results must, in order to be valid, satisfy the conditions laid down in that Article.
Das, J., (as he then was) differed from this view, and held that the contents of the two provisions were distinct, that while article 31 (1) had reference to the " police power" of the State, article 31 (2) dealt with the power of " eminent domain ".
In Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co.(2) the majority of the Judges again reiterated the view expressed in The State of West Bengal vs Subodh Gopal Bose(1) that articles 31 (1) and 31 (2) covered the same ground, and that substantial interference with rights to property would be within the operation of Art ' 31 (2).
On these decisions, it should follow that section 3 of the impugned Act is bad as infringing article 31 (2), in that it deprives the appellant of its moneys without giving any compensation.
Mr. Seervai, however, resists this contention on the strength of article 31 (2A), which was introduced by the Constitution (Fourth Amendment) Act, 1955.
It is as follows: " Where a law does not provide for the transfer of the ownership or right to possession of any property to the State or to a corporation owned or controlled by the State, it shall not be deemed to provide for the (1) ; (2) ; 1131 compulsory acquisition or requisitioning of property,: notwithstanding that it deprives any person of his property.
" The argument is that the theory that acquisition in article 31 (2) is not confined to cases of transfer of ownership to the State, and that even deprivation of property would fall within it, which is the basis of ' the decisions in The State of West Bengal vs Subodh Gopal Bose (1) and in Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2) can, in view of the above amendment, no longer be accepted as correct, and that those decisions therefore require to be reconsidered in the light of the new article 31 (2A).
But it is not disputed that this provision has no retrospective operation, and that the rights of the parties must be decided in accordance with the law as on the date of the writ application, and that on the provisions of the Constitution as they stood on that date and as interpreted in The State of West Bengal vs Subodh Gopal Bose (1) and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (2), section 3 (1) of the impugned Act would be obnoxious to article 31 (2).
This should be sufficient to conclude this, question in favour of the appellant, but the respondents contend that section 3 (1) is not within the prohibi tion of article 31 (2), because it operates only on money, and money is not property for purposes of that Article.
There is considerable authority in America that the power of eminent domain does not extend to the taking of money, the reason being that compensation which is to be paid in respect of money can only be money, and that, therefore, in substance it is a forced loan.
In The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga(3 ), this view was adopted by Mahajan J. at pages 943 944, by Mukherjea J. at page 961 and by Chandrasekhara Aiyar J. at pages 1015 to 1018.
It is argued for the respondents that the position under article 31(2) is the same as in America, as the provision therein that either the (1) ; (2) ; (3) 144 1132 amount of the compensation should be fixed or the principles on which and the manner in which compensation is to be determined should be specified, involves that what is taken is not money.
It is argued, on the other hand, for the appellant that the latest trends in American law show, as was observed by Das J. (as he then was), at pages 984 985 in The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh of Darbhanga (1), a departure from the view held in earlier authorities that moneys and choses inaction could not be the subject of " eminent domain "; and that, in any case, the principles of American law should not be applied in the interpretation of the provisions of our Constitution.
If the contention of the respondents is to be accepted, the question naturally arises what protection a person has in respect of moneys belonging to him if he can be deprived of them by process of legislation.
The answer of Mr. Seervai is that that protection is to be sought in article 19(1)(f), that the word " property" therein has a wider connotation than what it bears in article 31(2) and includes money, and that the citizens have the right to hold money subject only to law such as is saved by article 19(5).
In support of this position, he relied on the decision in Bijay Cotton Mills Ltd. vs
The State of Ajmer (2) in which this Court applied article 19(6) in pronouncing on the validity of the Minimum Wages Act (XI of 1948) requiring the employers to pay wages at a rate not less than that to be fixed by the Government.
Assuming that the correct position is what the res pondents contend it is, the question that has still to be determined is whether the impugned Act could be supported under article 19(5).
There was some discussion before us as to the scope of this provision, the point of the debate being whether the words "imposing reasonable restriction" would cover a legislation, which not merely regulated the exercise of the rights guaranteed by article 19(1)(f) but totally extinguished them, and whether a law like the present one which deprived the owner of his properties could be held to fall within that provision.
It was argued that a law authorising (1) (2) ; 1133 the State to seize and destroy diseased cattle, noxious drugs and the like, could not be brought within article 19(5) if the word 'restriction ' was to be narrowly construed, and that accordingly the power to restrict must be held to include, in appropriate cases, the power to prohibit the exercise of the right.
That view does find support in the observations of Lord Porter in Commonwealth of Australia vs Bank of New South Wales (1); but the present legislation cannot be sustained even on the above interpretation of the word 'restriction ', as section 3(1) of the Act deals with moneys and money cannot be likened to diseased cattle or noxious drugs so as to attract the exercise of police power under article 19(5).
It appears to us that whether we apply article 31(2) or article 19(5), the impugned Act cannot be upheld, and it must be struck down, unless we accept the other contentions which have been urged for the respondents in support of its validity.
Those contentions are firstly, that the Act merely substitutes the Board as the creditor in the place of the employees, and that sections 3 and 17 merely prescribe the mode in which the obligation is to be enforced and that was the ground on which Chagla C. J. based his judgment; and secondly, that the impugned legislation is one in respect of abandoned property, and it is not open to attack as contravening either article 19 (1)(f) or article 31(2).
It is those contentions that now fall to be considered.
As regards the first contention, the question is whether on a fair construction of the provisions of the impugned Act, it is possible to spell out a substitution of creditors.
When an employee has done his work, the amount of wages earned by him becomes a debt due to him from the employer, and it is property which could be assigned under the law.
If the employee had assigned the debt to the Board constituted under the Act, the latter would be entitled to recover it from the employer.
And what could be done by act of parties can also be done by legislation.
What we have to see, therefore, is whether on the provisions of the statute it could be held that there is a statutory (1) [1950] A C. 235, 311.
1134 transfer of the wages earned by the workman to the Board.
Section 5 of the Act vests the amounts mentioned in section 3(2) in the Board, and section 3(1) directs that those amounts should be paid by the employer to the Board.
Counsel for the appellant contends that there are in the Act no words of transfer of the debts to the ;Board, and that there is only a provision for payment of the amounts.
But this is taking too narrow a view of the true scope of those provisions.
Looking at the substance of the matter, we are of opinion that section 3(1) and section 5(1) do operate to transfer the debts due to the employees, to the Board.
It will be observed that the definition of "unpaid accumulations " takes in only payments due to the employees remaining unpaid within a period of three years after they become due.
The intention of the Legislature obviously was that claims of the employees which are within time should be left to be enforced by them in the ordinary course of law, and that it is only when they become time barred and useless to them that the State should step in and take them over.
On this, the question arises for consideration whether a debt which is time barred can be the subject of transfer, and if it can be, how it can benefit the Board to take it over if it cannot be realised by process of law.
Now, it is the settled law of this country that the statute of Limitation only bars the remedy but does not extinguish the debt.
Section 28 of the Limitation Act provides that when the period limited to a person for instituting a suit for possession of any property has expired, his right to such property is extinguished.
And the authorities have held and rightly, that when the property is incapable of possession, as for example, a debt, the section has no application, and lapse of time does not extinguish the right of a person thereto.
Under section 25(3) of the Contract Act, a barred debt is good consideration for a fresh promise to pay the amount.
When a debtor makes a payment without any direction as to how it is to be appropriated, the creditor has the right to appropriate it towards a barred debt.
(Vide section 60 of the Contract Act).
It has also been held that a creditor is entitled 1135 to recover the debt from the surety, even though a suit on it is barred against the principal debtor.
Vide Mahant Singh vs U Ba Yi (1), Subramania Aiyar vs Gopala Aiyar (2), and Dil Muhammad vs Sain Das (3).
And when a creditor has a lien over goods by way of security for a loan, he can enforce the lien for obtaining satisfaction of the debt, even though an action ' thereon would be time barred.
Vide Narendra Lal Khan vs Tarubala Dasi (4).
That is also the law in England.
Vide Halsbury 's Laws of England (Hailsham 's Edition), Vol. 20, page 602, para.
756 and the observations of Lindley L. J. in Carter vs White (5) and of Cotton L. J. in Curwen vs Milburn (6).
In American Jurisprudence, Vol.
34, page 314, the law is thus stated : " A majority of the courts adhere to the view that a statute of limitations, as distinguished from a statute which prescribes conditions precedent to a right of action, does not go to the substance of a right, but only to the remedy.
It does not extinguish the debt or preclude its enforcement, unless the debtor chooses to avail himself of the defence and specially pleads it.
An indebtedness does not lose its character as such merely because it is barred; it still affords sufficient consideration to support a promise to pay, and gives a creditor an insurable interest." In Corpus Juris Secundum, Vol.
53, page 922, we have the following statement of the law : " The general rule, at least with respect to debts or money demands, is that a statute of limitation bars, or runs "against, the remedy and does not discharge the debt or extinguish or impair the right, obligation, or cause of action.
" The position then is that under the law a debt subsists notwithstanding that its recovery is barred by limitation, and no argument has been addressed to us by the appellant that the transfer of such a debt is invalid; and indeed it could not be, in view of the provisions in the impugned Act, which release the debts (1) (1939) L. R. 66 1.
A. 198.
(2) Mad.
(3) A.I.R. 1927 Lah.
(4) Cal. 817, 823.
(5) , 672.
(6) 24, 434.
1136 due to the employees from the bar of limitation.
Section 3(1) provides that payment shall be made of the amounts specified in sub cl.
(2) "notwithstanding anything contained in any other law for the time being in force.
" A similar provision is again enacted in the second proviso to sub section
(2) of section 5 that "unpaid accumulations " and fines shall be paid to the Board "notwithstanding anything contained in the , or any other law for the time being in force.
" One of those laws is the law of limitation, and the effect of these provisions is to suspend limitation in respect of the claims to which section 3(2) relates.
To dispel any doubt as to whether it was competent to the Legislature of the Bombay State to modify the provisions of the Limitation Act, it should be stated that limitation is a topic enumerated in the Concurrent List, being Entry 13 in List III in Seventh Schedule to the Constitution, and under article 254(2), the State Legislature can enact a law modifying the Central Act, provided it is reserved for consideration by the President and assented to by him, and that has been done in the present case.
Coming to the impugned Act, there is one other provision therein to which reference must be made.
Section 17 provides that without prejudice to other modes of recovery, the sums payable to the fund under section 3 may be recovered as arrears of land revenue.
This is a provision which is generally made when amounts are due and payable to the State, and Mr. Kolah concedes, that if the impugned law is otherwise valid, it cannot be said to be bad by reason of this section.
On the above analysis, there cannot be any doubt that the effect of the relevant provisions of the Act is to transfer to the Board the debts due by the appellant to its employees free from the bar of limitation.
The question still remains whether there has been a substitution of creditors, and that can only be, if the debt due to the employee is discharged and in its place there is substituted the debt in favour of the Board.
If, however, the employer is not released from his liability to the employee, then the effect of section 3(1) is only to create in the Board a statutory creditor in 1137 addition to the creditor under the contract of employment, and there can be no question of substitution.
Mr. Seervai agrees that if the Act does not operate to ' discharge the employer from his obligations to the employees in respect of the wages due to them, then it must be held to be unconstitutional as infringing article 19(1)(f), because his contention that the effect of ' the Act was only to take the property of the employer in discharge of its obligations could not then be maintained.
The real point for determination, therefore, is whether on payment of the amounts in accordance with section 3(1) of the Act, the appellant gets a discharge of his obligations to the employees in respect of wages due to them.
The Act does not contain any provision to that effect, and the absence thereof has been strongly relied on by the appellant as showing that no substitution of creditors was intended.
In answer to this contention, Mr. Seervai urges firstly that though the Act does not, in terms, provide for the discharge of the appellant on payment of the amount under section 3(1), that is the result of the provisions of the (Act IV of 1936), hereinafter referred to as the Wages Act, and secondly, that the effect of section 3(1) of the Act is to render the contract of employment void under section 56 of the Contract Act, and the appellant is thereby discharged from his obligations thereunder.
We shall now examine both these contentions.
To appreciate the first contention, it is necessary to refer to the relevant provisions of the Wages Act.
Section 2(vi) defines "wages" in terms which comprehend whatever falls within the definition of that word in section 2(11) of the impugned Act.
Section 3 casts on the employer the responsibility for payment of wages to persons employed by him.
Section 4 provides for the fixing of wage periods, which, however, are not to exceed one month.
Under section 5, the wages have to be paid before the expiry of ten days after the last day of the wage period in case of employees who continue in service and in the case of those whose employment has been terminated, within the second 1138 working day of such termination.
Section 15 provides that where an unauthorised deduction has been made from the wages of an employed person or payment of wages has been delayed, such person may apply to the authority appointed under the Act for a direction for payment of the amount deducted or the delayed ;wages, as the case may be, together with payment of compensation.
Such application has to be made within six months from the date on which the deductions were made or the date on which the payment of wages became due, and by Act No. 62 of 1953 of the Bombay Legislature, the period of six months has been enlarged to one year.
There is a proviso to this section that an application thereunder can be made after the period prescribed therein "when the applicant satisfies the authority that he had sufficient cause for not making the application within such period.
" Section 22(d) of the Act provides that, "No Court shall entertain any suit for the recovery of wage or of any deduction from wages in so far as the sum so claimed could have been recovered by an application under section 15. .
Now, the argument of the respondents is that under the provisions aforesaid, an employee has to prosecute his claim for unpaid wages before the authority within the time limited by section 15 of the Wages Act, which is one year in the State of Bombay, that if he fails to do so it becomes unenforceable, and a suit with respect thereto under the general law is also barred.
The result is, it is contended, that having regard to the definition of "unpaid accumulations" as meaning all payments due to the employees but not made to them within a period of three years, the employer runs no risk of being called upon to pay to the employee what has been paid by him to the Board under section 3(1), and that therefore a payment under the impugned Act gives him what is, for all practical purposes, a good discharge.
This argument rests on the supposition that so far as unpaid wages are concerned, the operation of the Wages Act is co extensive with that of the impugned Act.
But that clearly is erroneous.
It is true that wages as defined in the Wages Act 1139 would include whatever are wages under the impugned Act.
But section 1(6) limits the application of the Wages Act to wages which are below Rs. 200 for a wage period.
In respect of wages of Rs. 200 or more, it is the general law that would apply, and the period of limitation is not one year under section 15 of the Wages Act but three years under article 102 of the Limitation ' Act, which period is capable of extension under the provisions of the Limitation Act beyond the three years mentioned in section 2(10) of the impugned Act.
Then, it is to be noted that under the proviso to section 15(1), the authority has the power to admit a petition even beyond the period mentioned there, if sufficient cause is shown therefor.
To this, the reply of the respondents is that as on the terms of section 3(1) and the second proviso to section 5(2) they are to take effect notwithstanding anything contained in the Wages Act or any other law, they override the power conferred by the proviso to section 15(1) of the Wages Act or the provisions of the Limitation Act.
Even as regards section 22 of the Wages Act, there is divergence of judicial opinion as to its true scope.
In Simpalax Manufacturing Co. Ltd. vs Alla Ud Din (1), it was held that if there was any bona fide dispute as to the amount payable, the jurisdiction of the Civil Court was not barred by section 22.
On the other hand, it was held in Bhagwat Rai vs Union of India (2) that the jurisdiction of the Civil Court would be barred, even if there was a bona fide dispute, and that the bar under section 22(d) was absolute, and certain observations in Modern Mills Ltd. vs Mangalvedhekar (3) and A. B. Sarin vs B. C. Patil (4) were relied on, as supporting this contention.
Even if Mr. Seervai is right in his contention that the law is correctly laid down in Bhagwat Rai vs Union of India (2) and that the decision in Simpalax Manufacturing Co. Ltd. vs Alla Ud Din(1) is wrong, the fact remains that claims in respect of unpaid wages to which the impugned Act applies must, in view of section 1(6) of the Wages Act, fall at least (1) A.I.R. 1945 Lah.
(2) I.L.R. (4) A.I.R. 1951 BOM.
(3) A.I.R. 1950 Bom.
145 1140 in part outside the purview of that Act, and the protection afforded by section 15 of that Act will not be available with reference thereto.
It is next contended that even if the impugned Act does not protect the employer in respect of unpaid wages which fall outside the Wages Act, it should be upheld in so far as it relates to those claims which fall within the purview of that Act, as the bar of limitation under section 15 of that Act is sufficient safeguard to the employer against being made liable at the instance of the employees for wages which had been paid to the Board.
And it is also contended that even with reference to claims for unpaid wages which fall outside the Wages Act, the impugned Act should be held to be valid if such claims are barred under the provisions of the Limitation Act.
In other words, the contention is that the impugned Act should be upheld in respect of that portion of the unpaid wages the recovery of which by the employees is barred by limitation whether under section 15 of the Wages Act or the Limitation Act.
The impugned Act, it should be noted, merely enacts that all unpaid accumulations should be paid to the Board.
It makes no distinction between claims for unpaid wages which are barred by limitation and those which are not so barred.
It is contended for the respondents that when the subject matter of a law comprehends distinct matters as to some of which it is unconstitutional and bad, it should nevertheless be upheld as regards the others, if those others form a distinct category, and that this principle applies not only when a classification into distinct categories appears on the face of the law but also when it exists in fact.
Now, the doctrine of severability in application is well established in our law (vide The State of Bombay vs F. N. Balsara (1), The State of Bombay vs
The United Motors (India) Ltd.and R. M. D. Chamarbaugwalla vs Union of Indiaand the principles applicable have been stated fullyin Chamarbaugwalla 's Case (3).
But assuming on the basis of the above autho (1) ; (2) [1953] S.C.R.1069.
(3)[1957] S.C.R. 930.
1141 rities that we can confine the operation of the impugned Act to those claims of unpaid wages which are barred by limitation, the question still is whether the impugned Act gives a discharge to the employer even in respect of those claims; for, as already stated, the operation of article 19(1)(f) can be avoided only if it is established that there has been a substitution of creditors, which can only be if and when the employer gets a discharge from those obligations to the employees.
The point to be decided therefore is whether the effect of the bar of limitation is to discharge the employer from liability to the employees.
It has been already mentioned that when a debt becomes time barred, it does not become extinguished but only unenforceable in a court of law.
Indeed, it is on that footing that there can be a statutory transfer of the debts due to the employees, and that is how the Board gets title to them.
If then a debt subsists even after it is barred by limitation, the employer does not get, in law, a discharge therefrom.
The modes in which an obligation under a contract becomes discharged are well defined, and the bar of limitation is not one of them.
The following passages in Anson 's Law of Contract, 19th Edition, page 383, are directly in point: " At Common Law lapse of time does not affect contractual rights.
Such a right is of a permanent and indestructible character, unless either from the nature of the contract, or from its terms, it be limited in point of duration.
"But though the right possesses this permanent character, the remedies arising from its violation are withdrawn after a certain lapse of time; interest reipub licae ut sit finis litium.
The remedies are barred, though the right is not extinguished." And if the law requires that a debtor should get a dis charge before he can be compelled to pay, that requirement is not satisfied if he is merely told that in the normal course he is not likely to be exposed to action by the creditor.
That this distinction is not purely academical but.
1142 is of practical importance will be seen, when regard is had to the provisions of the Industrial Disputes Act.
Under that Act, there is no period of limitation prescribed for referring a dispute for adjudication by a tribunal.
Even when a claim for wages falls within the purview of the Wages Act and an application under section 15 of that Act would be barred, it can nevertheless give rise to an industrial dispute in respect of which action can be taken under the provisions of the Industrial Disputes Act.
It was held by the Federal Court in Shamnagore Jute Factory Co. Ld.
vs section M. Modak (1) that section 22(d) of the Wages Act did not take away the power of the authorities to refer to a tribunal set up under the Industrial Disputes Act a claim which could be made under the Wages Act, as that section had application only to suits and did not exclude other proceedings permitted by law for the enforcement of payment.
If a tribunal appointed under that Act can direct an employer to make payment of wages, it follows that the bar under section 15 of the Wages Act does not give an absolute protection to the employer, and the same consequence must follow when the bar of limitation arises under the Limitation Act.
The result therefore is that when an employer makes a payment under section 3(1) of the Act he gets no discharge from his obligation to the employees, even when the enforcement thereof is barred by limitation.
The contention based on the provisions of the Wages Act failing, Mr. Seervai falls back on section 56 of the Contract Act as furnishing a ground for holding that the employer is discharged.
(2) of section 56 provides that, " a contract to do an act which, after the contract is made, becomes impossible, or by reason of some event which the promisor could not prevent, unlawful, becomes void when the act becomes impossible or unlawful.
" It is argued that by operation of section 3 of the impugned Act, the performance of the contract by the employer has become impossible, and the contract has thereby (1) 1143 become void.
Section 56 of the Contract Act embodies the law relating to frustration of contracts, and the true scope of that section was considered by this Court in Satyabrata Ghose vs Mugneeram Bangur and Co. The position was thus stated by Mukherjea J.: " In the large majority of cases however the doctrine of frustration is applied not on the ground that the parties themselves agreed to an implied term which operated to release them from the performance of the contract.
The relief is given by the court on the ground of subsequent impossibility when it finds that the whole purpose or basis of a contract was frustrated by the intrusion or occurrence of an unexpected event or change of circumstances which was beyond what was contemplated by the parties at the time when they entered into the agreement.
Here there is no question of finding out an implied term agreed to by the parties embodying a provision for discharge, because the parties did not think about the matter at all nor could possibly have any intention regarding it.
When such an event or change of circumstances occurs which is so fundamental as to be regarded by law as striking at the root of the contract as a whole, it is the court which can pronounce the contract to be frustrated and at an end.
The court undoubtedly has to examine the contract and the circumstances under which it was made.
The belief, knowledge and intention of the parties are evidence, but evidence only on which the court has to form its own conclusion whether the changed circumstances destroyed altogether the basis of the adventure and its underlying object.
This may be called a rule of construction by English Judges but it is certainly not a principle of giving effect to the intention of the parties which underlies all rules of construction.
This is really a rule of positive law and as such comes within the purview of section 56 of the Indian Contract Act.
" Counsel for the respondents relies on these obser vations, and contends that when the contract of service was entered into between the employer and the employees, they could not have contemplated (I) ; ,323. 1144 that the Legislature would have intervened and required the employer to pay the arrears of wages to the Board, and that that is a supervening impossibility which brings section 56 into play and renders the contract void.
We are not satisfied that the performance of the contract of service has been rendered impossible by reason of section 3(1) of the impugned Act.
But assuming that that is the position, what follows ? The matter would then be governed by section 65 of the Contract Act, which provides that when a contract becomes void, any person who has received any advantage under such agreement or contract is bound to restore it or to make compensation for it to the person from whom he received it.
Under this section, the employer is liable to make compensation to the employee for the work done by him, and that liability can be enforced against him in spite of the fact that he has paid the unclaimed wages to the Board under section 3 (1) of the Act.
We are therefore of opinion that even if the matter is governed by section 56 of the Contract Act, the employer is no more discharged than by the operation of the bar of limitation under section 15 of the Wages Act, or the provisions of the Limitation Act.
In this view, it must be held that the provisions of the impugned Act are unconstitutional, in that they take away the property of the appellant in violation of either article 19 (1) (f) or article 31 (2) of the Constitution.
A contention was also raised on behalf of the appellant that even if the impugned Act did not encroach on any of the Constitutional rights of the appellant, it clearly violated the rights of the employees in that it deprives them of their right to wages earned by them , that it was therefore void as against them as being in contravention of article 31 (2), and being void against them, it was void against the appellant as well.
For the respondents, it is contended that the Act cannot be held to infringe article 31 (2) even as regards the employees, as choses in action equally with money are outside the operation of that Article, and reliance is placed on the observations already referred to in The State of Bihar vs Maharajadhiraja 1145 Sir Kameshwar Singh of Darbhanga (supra) at pages 942, 960 961 and 1015 to 1018.
Now, as the Act takes over the rights of the employees in respect of wages due to them even when they are not barred without making any provision for compensation of the same to them, it must at least to that extent be held to be unconstitutional, whether as contravening article 19 (1) (f) or article 31 (2) it is unnecessary to decide.
It is then argued that this is an objection open only to the employees, and that the appellant can make no grievance of it.
It is no doubt true that a question as to the constitutionality of a statute can be raised only by a person who is aggrieved by it; but here, the statute deals with rights arising out of contract, and that presupposes the existence of at least two parties with mutual rights and obligations, and it is difficult to see how when the rights of one party to it are interfered with, those of the other can remain unaffected by it.
Let us assume that the appellant makes a payment to the Board under section 3 (1) of the impugned Act on the footing that the law is not unconstitutional as against him.
What is there to prevent the employee from suing to recover the same amount from the appellant on the ground that the Act is unconstitutional ? It will be no answer to that claim to plead that the appellant has already paid the amount to the Board.
The fact is that a statute which operates on a contract must affect the rights of all the parties to the contract, and if it is bad as regards one of them, it should be held to be bad as regards the others as well.
It is unnecessary to pursue this question further, as we have held that the Act is unconstitutional even as regards the appellant.
It remains to deal with the contention of the res pondents that the impugned legislation is, in substance, one in respect of abandoned property, and that, by its very nature, it cannot be held to violate the rights of any person either under article 19 (1) (f) or article 31 (2).
That would be the correct position if the character of the legislation is what the respondents claim it to be, for it is only a person who has some interest in property that can complain that the 1146 impugned legislation invades that right whether it be under article 19 (1) (f) or article 31 (2), and if it is abandoned property, ex hypothesi there is no one who has any interest in it.
But can the impugned Act be held to be legislation with respect to abandoned property ? To answer this question, it is necessary to examine the basic principles underlying such a legislation, and ascertain whether those are the principles oil which the Act is framed.
The expression " abandoned property " or to use the more familiar term "bona vacantia " comprises properties of two different kinds, those which come in by escheat and those over which no one has a claim.
In Halsbury 's Laws of England, Third Edition, Vol. 7, page 536, para.
1152, it is stated that " the term bona vacantia is applied to things in which no one can claim a property and includes the residuary estate of persons dying intestate ".
There is, however, this distinction between the two classes of property that while the State becomes the owner of the properties of a person who dies intestate as his ultimate heir, it merely takes possession of property which is abandoned.
At common law, abandoned personal property could not be the subject of escheat.
It could only be appropriated by the Sovereign as bona vacantia.
Vide Holdsworth 's History of English Law, Second Edition, Vol. 7, pages 495 496.
In Connecticut Mutual Life Insurance Company vs Moore(1), the principle behind the law was stated to be that " the State may, more properly, be custodian and beneficiary of abandoned property than any other person." Consistently with the principle stated above, a law relating to abandoned property enacts firstly provisions for the State conserving and safeguarding for the benefit of the true owners property in respect of which no claim is made for a specified and reasonable period, and secondly, for those properties vesting in the State absolutely when no claim is made with reference thereto by the true owners within a time limited.
There has been quite a number of laws on abandoned property in the American States, and their validity (I) ; , 546; ; , 869.
1147 has been the subject of numerous decisions in the Supreme Court of United States.
In Anderson National Bank vs Luckett (1), the law related to Bank deposits.
It provided that if moneys in deposit had not been demanded or operated on, for a period of 10 years in the case of demand deposits and 25 years in the case of non demand deposits, they might be presumed to have been abandoned and the Banks were to transfer them to the State.
Claims to the deposits might be made to the Commissioner of Revenue, who was to determine on their validity, his decision being open to review by the Courts.
The validity of this law was questioned on the ground that sufficient opportunity had not been given to the depositors to claim the deposits, and that as they could attack the law as unconstitutional, the Bank got no protection by payment to the State.
In repelling this contention, the Supreme Court observed that the Act did not deprive the depositors of any of their rights, they being given ample opportunity to establish their rights, and that it merely substituted the State in the place of the Bank as their debtor.
The Court also held that it was " within the Constitutional power of the State to protect the interests of depositors from the risks which attend long neglected accounts, by taking them into custody when they have been inactive so long as to be presumptively abandoned ".
In Connecticut Mutual Life Insurance Co. vs Moore (supra), the law was with reference to moneys payable on life insurance policies, which had matured.
It provided that if those amounts had remained unclaimed for a period of seven years, then it had to be advertised by the companies in the manner provided therein, and if no claims were preferred thereafter, the amounts were to be paid to the State Comptroller for care and custody.
In holding that the law was valid, the Court observed : " There is ample provision for notice to beneficiaries and for administrative and judicial hearing of their claims and payment of same.
There is no possible injury to any beneficiary." (1) ; , 241; ; , 701 146 1148 In Standard Oil Company vs New Jersey (1), the law related to shares and unpaid dividends, and provided for the State taking them over, if they remained unclaimed for a period of 14 years.
There was a provision for notice to the unknown owners by advertisement.
It was held following Connecticut Mutual Life Insurance Company vs Moore (supra) that the law was valid.
In the light of the above discussion, there cannot be any reasonable doubt that the impugned Act cannot be regarded as one relating to abandoned property.
The period of three years mentioned in section 2 (10) of the Act is merely the period of limitation mentioned in article 102 of the Limitation Act, and even taking into account the class of persons whose claims are dealt with in the Act, as counsel for respondents would have us do, the period cannot be regarded as adequate for raising a presumption as to abandoment.
A more serious objection to viewing the legislation as one relating to abandoned claims is that there is no provision made in the Act for investigating the claims of the employees or for payment of the amounts due to them, if they established their claims.
The purpose of a legislation with respect to abandoned property being, in the first instance, to safeguard the property for the benefit of the true owner and the State taking it over only in the absence of such claims, a law which vests the property absolutely in the State without regard to the claims of the true owners cannot be considered as one relating to abandoned property.
This contention of the respondents must also be rejected.
In the result, we are of opinion that section 3(1) in so far as it relates to unpaid accumulations in section 3(2)(b) is unconstitutional and void.
We have now to deal with the question as to the validity of section 3(1) and section 3(2)(a) of the Act, which require the employers to hand over to the Board the fines realised from the employees.
So far as this item is concerned, the position of the employers is wholly (1) ; ; , 1149 different from what it is as regards unpaid accumulations.
Section 8 of the Wages Act deals with the question of fines which could be imposed by the employer, and it provides that they should be entered in a separate register, and applied for the benefit of his employees.
It is not denied by the appellant that under this provision the fines are constituted a trust ' fund, and that the employers are bare trustees in respect of such fund.
Now, the grievance of the appellant is that the Act deprives it of its rights as trustees, and vests them in the Board, and that, further, while the beneficiaries under section 8 of the Wages Act are its own employees, under section 5(2) of the impugned Act they include otherpersons as well.
There might have been substance in the complaint that the appellant had been deprived of its rights as trustee if it bad any beneficial interest in the fund.
But admittedly, it has none, and it is therefore difficult to hold that there has been such substantial deprivation of property, as will offend article 31(2) according to the decisions in The State of West Bengal vs Subodh Gopal Bose and Dwarkadas Shrinivas of Bombay vs The Sholapur Spinning and Weaving Co. Ltd. (supra) or such unreasonable interference with rights to property, as will infringe article 19(1)(f).
It is argued with some emphasis that in enlarging the circle of beneficiaries, the Act has encroached on the rights of the employees of the appellant.
But then, the trust is the creation not of the appellant but of the Legislature, which gave the employees certain rights which they did not have before, and what it can give, it can also take away or modify, and we do not see how the employers are aggrieved by it.
We are of opinion that no valid grounds exist on which section 3(1) and section 3(2)(a) of the impugned Act could be attacked as unconstitutional, and they must accordingly be held to be valid.
In the result, we hold, in modification of the order of the Court below, that the provisions of the impugned Act are unconstitutional and void in so far as they relate to " unpaid accumulations", but that they are valid as regards " fines "; and an appropriate writ will 1150 issue against the respondents in the terms stated above.
The appeal succeeds in part, but as it is stated that " unpaid accumulations " form by far the most substantial portion of the claim, we direct the respondents to pay half the costs of the appellant here and in the Court below.
Appeal allowed in part.
[/INST]The Bombay Labour Welfare Fund Act (Bom.
XL of 1953) was enacted by the State Legislature with the object of constituting a fund for the financing of activities for the welfare of labour and section 3(1) of the Act provided as follows: "There shall be constituted a fund called the Bombay Labour Welfare Fund and, notwithstanding anything contained in any other law for the time being in force, the sums specified in subsection (2) shall be paid into the Fund.
" Section 3(2) provided, inter alia, as follows "The Fund shall consist of : (a) all fines realised from the employees; (b) all unpaid accumulation;" Notices were served on the appellant 's company as also on other companies similarly situated, by the Welfare Commissioner, appointed under the Act, calling upon them to remit to him the fines and unpaid accumulations in their custody.
The appellant in reply questioned the validity of the Act on the ground that it contravened article 31(2) Of the Constitution and, thereafter, filed a Writ petition, out of which the present appeal arises, which was treated by consent of parties as a test case.
The Judges of the Division Bench who heard the matter field that the impugned Act was intra vires, though on different grounds, and dismissed the petition.
The sole point for determination in the appeal was whether section 3(I) and sub cls.
(a) and (b) Of section 3(2) Of the Act were void as being violative of article 31(2) Of the Constitution: Held, that the unpaid accumulation of wages remaining with the appellant company was its own property and section 3(1) of the impugned Act in so far as it directs the payment of it tinder 3(2)(b) of the Act contravenes article 31(2) Of the Constitution and must be invalid.
Article 31(2A) of the Constitution has no retrospective effect and cannot apply and the matter must be decided on the law as it stood at the date of the Writ petition.
1123 The State of West Bengal vs Subodh Gopal Bose, ; and Dwarkadas Shrinivas of, Bombay vs Sholapur Spinning and Weaving Co. Ltd., ; , applied.
Assuming that money was not property within the meaning of article 31(2) and article 19(1)(f) applied that Article also would be of no help to the respondent as the Act could not be supported under article 19(5) Of the Constitution.
Commonwealth of Australia vs Bank of New South Wales, , held inapplicable.
The State of Bihar vs Mahayajadhiraja Sir Kameshwar Singh of Darbhanga, , considered.
The impugned Act had not the effect of substituting the Board as the creditor in place of the employee nor could it be said to be a legislation in respect of abandoned property.
Although by defining 'unpaid accumulation ' in the way it did the Legislature obviously intended that only such wages of the employees as were time barred should be taken by the State, it being well settled that the law of limitation only bars the remedy but does not extinguish the debt, sections 3(I), 5(2) and 17 of the Act must be held to have the effect of transferring to the Board the debts due by the appellant to its employees free from the bar of limitation.
Such a transfer can be valid only if it gives a complete discharge to the employer from the debts.
If it does not, the Act must be held to infringe article 19(1)(f) of the Constitution.
The Act contains no provision granting a discharge to the debtor.
The bar of limitation prescribed either by section 15 Of the Payment of Wages Act (Act IV Of 1936) or article 102 of the Limitation Act or the provisions of section 56 of the Contract Act, assuming they applied, could not give such a discharge.
Where the Statute deals with rights arising out of a contract and interferes with the rights of one of the parties to it, it must affect those of the other parties to it as well.
Consequently, the impugned Act which takes over the rights of the employees in respect of wages due to them without compensation and is, therefore unconstitutional, as contravening article 19(1)(f) or Art 31(2) of the Constitution, would be unconstitutional as regards the appellant as well.
The purpose of a legislation relating to abandoned property must be, in the first instance, to safeguard the property in the interest of the true owner and thereafter, in absence of any claim, the taking over of it by the State.
The impugned Act which vests the property absolutely in the State without any regard for the claims of the true owner cannot be said to be a law relating to abandoned property.
I43 1124 Connecticut Mutul Life Insurance Company vs Moore, ; , Anderson National Bank vs Luckett, ; and Standard oil Company vs New Jersey, ; , referred to.
As regards the fines mentioned in section 3(2)(a) of the Act the appellant must be held to be a bare trustee under section 8 of the Wages Act having no beneficial interest in fund created by that Act, and, consequently, sections 3(I) and 3(2)(a) of the Act cannot contravene article 31(2) Or article 19(1)(f) of the Constitution.
Nor could it be said that the Act by extending the circle of beneficiaries had encroached on the rights of the employees of the appellant.
These sections must, therefore, be held to be constitutionally valid.
</s> |
<s>[INST] Summarize the judgementAppeal No. 5617 of 1990.
From the Judgment and Order dated 9.8.1990 of the Karna taka Administrative Tribunal, Bangalore in Application No. 3155 of 1989.
P.P. Rao, S.R. Bhat, Alok Aggarwal and Ms. Mohini L. Bhat 1or the Appellant.
393 P. Chidambaram, M. Veerappa (N.P.) and K.H Nobin Singh for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
Even the General Law later in time, prevails over the earlier Special Law if it clearly and directly supersedes the said Special Law ' is an unexcep tionable proposition of law.
K. Jayachandra Reddy, J. has interpreted Rule 3(2) of General Rules consistently with Rules 1(3)(a), 3(1) and 4(2) of the same Rules.
Giving harmonious construction to various provisions of the General Rules the learned Judge has held that the General Rules do not supersede the Special Rules.
Yogeshwar Dayal, J. on the other hand has focused his attention on the language of Rule 3(2) of the General Rules and has concluded that there is clear indication in the said Rule to supersede the Special Rules.
I have given my thoughtful consideration to the reason ing adopted by the learned Judges in their respective judg ments.
Rule 1(3)(a) of the General Rules, which lays down the extent and applicability of the General Rules, specifi cally provides that the General Rules shall not be applica ble to the State Civil Services for which there are express provisions under any law for the time being in force.
When the General Rules were enforced the Special Rules were already holding the field.
The Special Rules being "law" the application of the General Rules is excluded to the extent the field is occupied by the Special Rules.
I do not agree that the non obstante clause in Rule 3(2) of the General Rules has an overriding effect on Rule, 1(3)(a) of the said Rules.
With utmost respect to the erudite judgment prepared by Yogeshwar Dayal, J. I prefer the reasoning and the conclusions reached by K. Jayachandra Reddy, J. and agree with the judgment proposed by him.
K.JAYACHANDRA REDDY, J.
This appeal is directed against the order of the Administrative Tribunal, Bangalore dismiss ing an application filed by the appellant.
The principal question involved is whether SubRule (2) of Rule 3 of Karna taka Civil Services (General Recruitment) Rules, 1977 ( 'General Rules ' for short) has the overriding effect over the Karnataka General Service (Motor Vehicles Branch) (Recruitment) Rules, 1976 ( 'Special Rules ' for short).
For a better appreciation of the question it becomes necessary to state few facts.
The appellant was appointed initially as Inspector of Motor ' Vehicle and was promoted as Assistant Regional Transport Officer in the 394 year 1976 in which year the Special Rules were framed.
In the year 1981 the appellant was promoted as Regional Trans port Officer.
Some of the General Rules of 1977 were amended in the year 1982 and Sub Rule 2 of Rule 3 was inserted in the said Rules.
In the year 1989 the second respondent was promoted as Deputy Commissioner of Transport on seniority cure merit basis alone as purported to have been provided in new Rule 3(2) of General Rules.
Being aggrieved by the same the appellant filed an Application No. 3155/89 before the Karnataka Administrative Tribunal questioning the promotion of second respondent on the ground that the promotion to the post of Deputy Commissioner of Transport should be by selec tion from the cadre of Regional Transport Officers and not merely on seniority cum merit basis.
His application was dismissed by the Tribunal holding that Rule 3(2) of General Rules which was introduced later overrides the earlier Special Rules.
It is this order which is questioned in this appeal.
Shri P.P. Rao, learned counsel appearing for the appel lant contended that the Special Rules are exclusively meant to govern the recruitment and promotion of officers of various cadres of the Motor Vehicle Department and the General Rules which generally regulate the recruitment of all State Civil Services broadly even though later in point of time cannot abrogate the Special Rules and that they are not meant to do so since the Special Rules also are very much in force inasmuch as they are not superseded.
Shri P. Chidambaram, learned counsel for the State of Karnataka contended that the non obstante clause in Rule 3(2) of the General Rules which was introduced later clearly indicate the intention of he Legislature to supersede the Special Rules and promotions from the cadre of Regional Transport Officer to that of Deputy Commissioner of Transport could only be on the basis of seniority cam merit and not by election.
From the rival contentions it emerges that the real question involved is one of construction of non ob stante clause in Rule 3(2) and its fleet on the Special Rules providing for promotion to the post of Deputy Commis sioner of Transport by selection from the cadre of Regional Transport Officers.
We shall now refer to the relevant Special and General Rules.
The special Rules were framed in exercise of the powers conferred by the proviso to Article 309 of the Con stitution of India in the year 1976.
The special Rules of recruitment for the category of post of Deputy Commissioner of Transport reads thus: 395 Category of Method of Minimum posts recruitment Qualification 1. 2. 3.
Deputy Transport By promotion by Must have put in not Commissioner selection from the less than five years of cadre of Regional service in cadre of Transport Officers Regional Transport Officers.
" It can be seen that this part of Special Rules clearly provides for promotion to the post of Deputy Commissioner of Transport by selection from the cadre of Regional Transport Officers who have put in not less than five years of serv ice.
The General Rules were framed in the year 1977 and Rule 3 reads as under: "Method of recruitment (1) Except as otherwise provided in these rules or any other rules specially made in this behalf, recruitment to any service or post shall be made by direct recruitment which may be either by competitive examination or by selection, or by promotion which may be either by selection or on the basis of seniority cure merit.
The methods of recruitment and qualifications shall be as specified in the rules of recruitment special ly made in that behalf, ' provided that in respect of direct recruitment to any service or post when the method of recruitment is not specified in the rules of recruitment specially made, the method of recruitment be by selection after an interview by the Commission, the Advisory of Selection Committee or the Appointing Authori ty as the case may be.
Provided further that no person shall be eligible for promotion unless he has satisfac torily completed the period of probation or officiation, as the case may be, in the post held by him.
(2) Notwithstanding anything contained in these rules or in the rules of recruitment specially made in respect of any service or (a) the promotion to the post of Head of Department or the 396 post of an Additional Head of Department, if it is in a grade equivalent to that of the Head of Department concerned, shall be by selection; Provided that for the purpose of promotion by selection, the number of persons to be consid ered shall be such number of persons eligible for promotion in the order of seniority, as is equal to five times the number of vacancies to be filled.
(b) the promotion to all other posts shall be on the basis of seniority cam merit." (Emphasis supplied) It may be noted that Sub Rule 3(2) with which we are mainly concerned was inserted in the year 1982.
Shri Chidam baram strongly relying on the non obstante clause in Rule 3(2) with which this Sub Rule begins, contended that this general rule dearly supersedes the special law and there fore, according to him, the Tribunal was right in holding that the promotion to the post of Deputy Commissioner of Transport could be only on the basis of seniority cum merit.
It is true that a simple reading of Rule 3(2) appears to lay down that notwithstanding anything contained in the General Rules or in the Special Rules, the promotion to the post of a Head or Additional Head of a Department only shall be by selection and that the promotion to all other posts shall be on the basis Of seniority cum merit.
This clause (b) of Sub Rule (2) is in general terms and as already noted the General Rules indicate that they regulate general recruit ment to all the Karnataka State Civil Services broadly.
It is not in dispute that just like the Special Rules providing for recruitment of the Transport Department there are such special rules in respect of many other departments also.
It is therefore clear that while General Rules broadly indicate that they regulate general recruitment including promotion to all the State Civil Services but at the same time each Department has its own Special Rules of recruitment and they are co existing.
Such Special Rules of recruitment for the Motor Vehicles Department are not repealed by any provision of the General Rules which are later in point of time.
As a matter of fact Rule 21 which provides for repeal does not in any manner indicate that any of the Special Rules stood repealed.
It is in this background that we have to consider the interpretation of non obstante clause in Rule 3(2) of the General Rules.
At this juncture it is necessary to note that some of the rules of the General Rules also provide for promotion by way of selection and that Special Rules providing for such promotion by selection should be adhered 397 to.
They are Rule 1(3)(a), the first part of Rule 3 and Rule 4 which are existing.
In Sub rule 1(3)(a) of the General Rules, we find the following "1(3)(a) These rules shall apply to recruit ment to all State Services and to all posts in connection with the affairs of the State of Karnataka and to members of all State Civil Services and to the holders of posts whether temporary or permanent except to the extent otherwise expressly provided (i) by or under any law for the time being in force; or XX XX (emphasis supplied) This is the opening rule of the General Rules and it abundantly makes it clear that the rest of the rules are subject to any other rules expressly providing for recruit ment.
Then in clause (1) of Rule (3) of the General Rules we find the words "Except as otherwise provided in these Rules or any other rules specially made in this behalf recruitment to any service or post shall be made by direct recruitment which may be either by competitive examination or by selec tion or by promotion which may be either by selection or on the basis of seniority cum merit.
The methods of recruit ment and qualification shall be as specified in the rule of recruitment specially made in that behalf.
" This part of General Rule 3 provides for recruitment by way of promotion either by selection or on the basis of seniority cum merit as specified in the said Rules of recruitment specially made.
Further the opening words of clause (1) "Except as otherwise provided in these Rules or any other Rules spe cially made" give a clue that the special rules would govern and regulate the method of recruitment including promotion by way of selection.
Further Rule 4 of the General Rules which lays down the procedure of appointment contains Sub Rule 2 which reads as under: "4.
Procedure of appointment subject to the provisions of these rules, appointment to any service or post shall be made xxxx xxxx xxxx (2) in the case of recruitment by promotion (a) if it is to a post to be filled by promo tion by, selection, by selection of a 398 person, on the basis of merit and suitability in all respects to discharges the duties of the post with due regard to seniority from among persons eligible for promotion.
(b) if it is to a post other than that re ferred to in sub clause (a) by selection of a person on the basis of seniority cure merit, that is, seniority subject to fitness of the candidate to discharge the duties of the post, from among persons eligible for promotion." (emphasis supplied) Though Rule 3(2) of the General Rules is inserted later, the above mentioned Rules remain undisturbed and they co exist.
They provide for recruitment and promotion by selection to certain categories of posts and for others on the basis of seniority cure merit.
From a combined reading of these provisions of General Rules it follows that re cruitment to any service by promotion as regulated by Special Rules can be by way of selection.
"Then the question is whether Rule 3(2) of the General Rules which is intro duced in 1982 particularly providing the method of promotion by selection to the post of heads and additional heads of departments has altogether dispensed with the promotion by selection to all other posts and whether, the non obstante clause in this rule, in these circumstances can be inter preted as to have the overriding effect as contended by the learned counsel for the respondents.
The non obstante clause is sometimes appended to a section or a rule in the begin ning with a view to give the enacting part of that section or rule in case of conflict, an overriding effect over the provisions or act mentioned in that clause.
Such a clause is usually used in the provision to indicate that the said provision should prevail despite anything to the contrary in the provision mentioned in such non obstante clause.
But it has to be noted at this stage that we are concerned with the enforceability of special law on the subject inspire of the general law.
In Maxwell on the Interpretation or Signites, Eleventh Edition at page 168, this principle of law is stated as under: "A general later law does not abrogate an earlier special one by mere implication.
Generalia specialibus non derogant, or, in other words," where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such 399 general words, without any indication of a particular intention to do so.
In such cases it is presumed to have only general cases in view, and not particular cases which have been already otherwise provided for by the special Act." In Maharaja Pratap Singh Bahadur vs Thakur Manmohan Dey and ors. ,AIR 1966 S.C. 1931, applying this principle it is held that general law does not abrogate earlier special law by mere implication.
In Eileen Louise Nicoole vs John Winter Nicolle, , Lord Phillimore observed as under: "It is a sound principle of all juris prudence that a prior particular law is not easily to be held to be abrogated by a poste rior law, expressed in general terms and by the apparent generality of its language ap plicable to and covering a number of cases, of which the particular law is but one.
This, as a matter of jurisprudence, as understood in England, has been laid down in a great number of cases, whether the prior law be an express statute, or be the underlying common or customary law of the country.
Where general words in a later Act are capable of reasonable and sensible application without extending them to subjects specially dealt with by earlier legislation, that earlier and special legislation is not to be held indi rectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so.
" In Justiniane Augusto De Piedade Barreto vs Antonio Vicente Da Fortseca and others etc.; , , this Court observed that A law which is essentially general in nature may contain special provisions on certain matters and in respect of these matters it would be classified as a special law.
Therefore unless the special law is abrogated by express repeal or by making provisions which arc wholly inconsistent with it, the special law cannot be held to have been abrogated by mere implication.
I have already noted that even in the General Rules the promotion by selection is provided for and if there are any special rules in that regard they are not abrogated except by an express repeal.
I shall now examine whether the interpretation of non obstante clause in Rule 3(2) of the General Rules as given by the Tribunal is warranted.
The Tribunal has held that the non obstante clause which was 400 introduced in the General Rules clearly indicates the inten tion to supersede the special law.
The Tribunal has also noted even a later general law provision can override earli er special law if it clearly indicates the intention to supersede the special law.
As a proposition of law one cannot dispute this part of the finding but I am not able to agree with the finding of the Tribunal that the non obstante clause in Rule 3(2) clearly abrogates earlier special law.
This very question was considered by Karnataka High Court in Muniswamy vs Superintendent of Police, ILR 1986 Karnataka 344 (Vol. 36).
In that case also the same General Rules and particularly Rule 3(2) inserted later came up for consideration.
The Special Rules were that of Karnataka State Police State Recruitment Rules, 1967.
The Director General of Police issued a circular for the purpose of recruitment of Head Constables on purely seniority cum merit basis.
It was contended that the posts of the Head Consta bles have to be filled up by promotion by selection as provided in the Special Rules and Rule 3(2) of the General Rules cannot have an overriding effect inspire of a non obstante clause.
The Division Bench of the Karnataka High Court held that Sub rule (2) of Rule (3) which is an amend ment to the General Rules cannot be treated as an amendment to the Special Police Rules and that Rule 3(2) cannot be read as amending all other special rules of recruitment of all other department of Government in general.
It also further observed that this amendment to the General Rules must be read as subordinate to the application of Rules declared by Rule 1(3) of the Rules and cannot be read as enlarging the scope.
This judgment rendered by the High Court in the year 1986 has become final.
The fact that the State did not appeal or repeal the Special Rules suitably in spite of the decision clinchingly shows that it accepted this position.
In Aswini Kumar Ghosh and Another vs Arabinda Bose and Another, ; , it was observed as under: "It should first be ascertained what the enacting part of the section provides on a fair construction of the words used according to their natural and ordinary meaning, and the non obstante clause is to be understood as operating to set aside as no longer valid anything contained in relevant existing laws which is inconsistent with the new enactment.
" It was further held that: 401 "Nor can we read the non obstante clause as specifically repealing only the particular provisions which the learned Judges below have been at pains to pick out from the Bar Coun cils Act and the Original Side Rules of the Calcutta, and Bombay High Courts.
If, as we have pointed out, the enacting part of section 2 covers all Advocates of the Supreme Court, the non obstante clause can reasonably be read as overriding "anything contained" in any relevant existing law which is inconsistent with the new enactment, although the draftsman appears to have had primarily in his mind a particular type of law as conflicting with the new Act.
The enacting part of a statute must, where it is clear, be taken to control the non obstante clause where both cannot be read harmoniously; for, even apart from such clause, a later law abrogates earlier laws clearly inconsistent with it.
Posteriors leges priores contrarias abrogant (Broomo 's Legal Maxims, 10th Edn., p.347)." (emphasis supplied) In The Dominion of India (Now the Union of India) and another vs Shribai A. Irani and another; , , it was observed as under: "While recognising the force of this argument it is however necessary to observe that al though ordinarily there should be a close approximation between the non obstante clause and the operative part of the section, the non obstante clause need not necessarily and always be co extensive with the operative part, so as to have the effect of cutting down the clear terms of an enactment.
If the words of the enactment are clear and are capable of only one interpretation on a plain and gram matical construction of the words thereof a non obstante clause cannot cut down the construction and restrict the scope of its operation.
In such cases the non obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the Legisla ture by way of abundant caution and not by way of limiting the ambit and scope of the opera tive part of the enactment".
(emphasis supplied) In Union of India and Another.
vs G.M. Kokil and 0 hers.
, it was observed as under: "It is well known that a non obstante clause is a legislative device which is usually employed to give overriding effect to certain provisions over some contrary provisions that may be found either in the same enactment or some other enactment, that is to say, to avoid the operation and effect of all contrary provisions.
" In Chandavarkar Sita Ratna Rao vs Ashalata section Guram, [ ; , the scope of non obstante clause is ex plained in the following words: "A clause beginning with the expression "notwithstanding anything contained in this Act or in some particular provision in the Act or in some particular Act or in any law for the time being in force, or in any contract" is more often than not appended to a section in the beginning with a view to give the enacting part of the section in case of con flict an overriding effect over the provision of the Act or the contract mentioned in the non obstante clause.
It is equivalent to saying that in spite of the provision of the Act or any other Act mentioned in the non obstante clause or any contract or document mentioned the enactment following it will have its full operation or that the provisions embraced in the non obstante clause would not be an impediment for an operation of the enactment.
" On a conspectus of the above authorities it emerges that the non obstante clause is appended to a provision with a view to give the enacting part of the provision an overrid ing effect in case of a conflict.
But the non obstante clause need not necessarily and always be co extensive with the operative part so as to have the effect of cutting down the clear terms of an enactment and if the words of the enactment are clear and are capable of a clear interpreta tion on a plain and grammatical construction of the words the non obstante clause cannot cut down the construction and restrict the scope of its operation.
In Such cases the non obstante clause has to be read as clarifying the whole position and must be understood to have been incorporated in the enactment by the Legislature by way of abundant caution and not by way of limiting the ambit and scope of the Spe cial Rules.
Further, the influence of a non obstante clause has to be considered on the basis of the context also in which it is used.
In State of West Bengal vs Union of India, [1964] 1 SCR 371, it is observed as under: "The Court must ascertain the intention of the legislature by 403 directing its attention not merely to the clauses to be construed but to the entire statute; it must compare the clause with the other parts of the law and the setting in which the clause to be interpreted occurs.
" It is also well settled that the Court should examine every word of a statute in its context and to use context in its widest sense.
In Reserve Bank of India etc.
vs Peerless General Finance and Investment Co. Ltd. & Ors. ; , it is observed that "That interpretation is best which makes the textual interpretation match the contextual".
In this case, Chinnapa Reddy, J. noting the importance of the context in which every word is used in the matter of inter pretation of statutes held thus: Interpretation must depend on the text and the context.
They are the bases of interpretation.
One may well say if the text is the texture, context is what gives the colour.
Neither can be ignored.
Both are important.
That interpretation is best which makes the textual interpretation match the contextual.
A statute is best interpreted when we know why it was enacted.
With this knowl edge, the statute must be read, first as a whole and then section by section, clause by clause, phrase by phrase and word by word.
If a statute is looked at, in the context of its enactment, with the glasses of the statute maker, provided by such context, its scheme, the sections, clauses, phrases and words may take colour and appear different than when the statute is looked at without the glasses provided by the context.
With these glasses we must look at the Act as a whole and discover what each section, each clause, each phrase and each word is meant and designed to say as to fit into the scheme of the entire Act.
No part of a statute and no word of a statute can be construed in isolation.
Statutes have to be construed so that every word has a place and everything is in its place".
If we examine the scope of Rule 3(2) particularly along with other General Rules, the context in which Rule 3(2) is made is very clear.
It is not enacted to supersede the Special Rules.
As already noted, there should be a clear inconsistency between the two enactments before giving an overriding effect to the non obstante clause but when the scope of the provisions of an earlier enactment is clear the same cannot be cut down by resort to non obstante clause.
In the instant case we have noticed that even the General Rules of which Rule 404 3(2) forms a part provide for promotion by selection.
As a matter of fact Rules 1(3)(a) and 3(1) and 4 also provide for the enforceability of the Special Rules.
The very Rule 3 of the General Rules which provides for recruitment also pro vides for promotion by selection and further lays down that the methods of recruitment shall be as specified in the Special Rules, if any.
In this background if we examine the General Rules it becomes dear that the object of these Rules only is to provide broadly for recruitment to services of all the departments and they are framed generally to cover situations that are not covered by the Special Rules of any particular department.
In such a situation both the Rules including Rule 1(3)(a), 3(1)and 4 of general rules should be read together.
If so read it becomes plain that there is no inconsistency and that amendment by inserting Rule 3(2) is only an amendment to the General Rules and it cannot be interpreted as to supersede the Special Rules.
The Amendment also must be read as being subject to Rules 1(3)(a), 3(1) and 4(2) of the General Rules themselves.
The amendment cannot be read as abrogating all other Special Rules in respect of all departments.
In a given case where there are no Special Rules then naturally the General Rules would be applicable.
Just because there is a non obstante clause, in Rule 3(2) it cannot be interpreted that the said amendment to the General Rules though later in point of time would abrogate the special rule the scope of which is very clear and which co exists particularly when no patent conflict or inconsistency can be spelt out.
As already noted Rules 1(3)(a), 3(1) and 4 of the General Rules themselves provide for promotion by selection and for enforceability of the Special Rules in that regard.
Therefore there is no patent conflict or inconsistency at all between the General and the Special Rules.
Shri P. Chidambaram, in this context, however, submit ted that the intention of the Legislature is to do away with promotion by selection and instead of amending every special rule, the General Rule in the form of Rule 3(2) is inserted and therefore by virtue of non obstante clause all other special rules governing the recruitment to all departments stand abrogated.
I am unable to agree.
If such was the intention of the amendment then I see no reason as to why even in the General Rules as noted above the promotion by selection is recognised and provided for and these Rules remain unaffected.
This is also clear from the fact that the Government did not even appeal against the High Court deci sion rendered in Muniswamy 's case.
Shri P. Chidambaram, however, further submitted that a plain reading of Rule 3(2) which is later in point of time would clearly indicate that 405 the Special Rule providing for promotion by selection is repealed at least by implication.
There is no doubt that a later statute may repeal an earlier one either expressly or by implication.
In the instant case we have already noted that there is no express repeal of the Special Rule provid ing for promotion by selection.
The Courts have not favoured such repeal by implication.
On the other hand it is indicat ed by the courts that if earlier and later statutes can reasonably be construed in such a way that both can be .
given effect to, the same must be done.
In Re Chance Farewell, J. observed that "If it is possible it is my duty so to read the section . . as not to effect an implied repeal of the earlier Act".
In Kunter vs Phi/lips it is held that: "It is only when the provisions of a later enactment are so inconsistent with or repugnant to the provisions of an earlier one then only the two cannot stand together and the earlier stands abrogated by the later".
In Municipal Council Palai vs T.J. Joseph, ; , this Court has observed that there is a presumption against a repeal by implication; and the reason of this rule is based on the theory that the Legislature while enacting a law has a complete knowledge of the existing laws on the same subject matter and therefore, when it does not provide a repealing provision, it gives out an intention not to repeal the existing legislation.
It is further observed that such a presumption can be rebutted and repeal by necessary implication can be inferred only when the provisions of the later Act are so inconsist ent with or repugnant to the provisions of the earlier Act, that the two cannot stand together.
I am satisfied that there is no patent inconsistency between the General and Special Rules but on the other hand they co exist.
Therefore, there is no scope whatsoever to infer the repeal by implication as contended by the learned counsel Shri.
Chidambaram.
In the result the appeal is allowed and the Government is directed to consider the case of the appellant for promo tion to the post of Deputy Commissioner of Transport on the basis of promotion by selection, as provided in the Special Rules namely Karnataka General Service (Motor Vehicles Branch) (Recruitment) Rules, 1976.
In the circumstances of the case there will be no order as to costs.
YOGESHWAR DAYAL, J.
I have had the pleasure of going through the judgment prepared by my learned brother, Justice K.J. Reddy.
However, with due respect, 1 regret 1 have not been able to persuade myself to 406 agree to either his reasoning or the conclusion.
There is no quarrel that general principle is that special law prevails over general law but the learned Judge has failed to note that even there is an exception to such a general law, namely it is a later general law which prevails over the earlier special law if it clearly indicates the intention to supersede the special law.
This appeal by Special Leave has been filed by Sri R.S. Raghunath against the order of the Karnataka Administrative Tribunal, Bangalore, dated 9th August, 1990.
Before the Tribunal the appellant sought a declaration that the promo tion of Shri I.K. Devaiah, respondent No. 2 herein, was illegal and to direct the respondent No. 1 to consider the case of the appellant for promotion to the cadre of Deputy Transport Commissioner with all consequential benefits.
The Tribunal dismissed the application filed by the appellant.
The Tribunal was called upon to construe Rule 3(2) of the Karnataka Civil Services (General Recruitment) Rules, 1977 as amended in June, 1982 (hereinafter referred to as "the General Rules ')The Tribunal, after considering the general Rules took the view that the non obstante clause in Rule 3(2) of the General Rules which was introduced after framing of the Karnataka General Service (Motor Vehicles Branch) (Recruitment) Rules, 1976 (in short 'the Special Rules ') clearly indicates the intention to supersede the special law.
The Tribunal took the view that the general principle that the special law prevails over the general law has one exception and that is a later general law prevails over earlier special law if it clearly indicates the intention to supersede the special law.
The Tribunal held that a non obstante clause in Rule 3(2) of the General Rules, which was enacted after the Special Rules, clearly indicates the intention to supersede the special law.
The controversy rises in the following circumstances.
The Special Rules came into force on or about 10th December, 1976 on the publication of the same in the Karna taka Gazette (Extraordinary).
It consisted of only two Rules (I) and (II).
The first Rule gave the 'title and commencement ' and the second Rule dealt with the 'method of recruitment and minimum qualifications '.
There was a sched ule attached to Rule 1I.
In the schedule for the post speci fied in column 1 thereof the method of recruitment and minimum qualification were specified in corresponding en tries in columns 2 and 3 thereof.
It dealt with roughly 35 categories of posts.
I may mention that there was only one post, namely the post of Deputy Transport Commissioner for which the method of recruitment was by selection from the cadre of Regional Transport Officers who must have put in not less than five years of service in that cadre.
407 For all the rest of the posts in the schedule there was no provision for recruitment by way of promotion by selection.
For all the posts the method of recruitment was either by promotion or by deputation or by direct recruitment, or both by direct recruitment and promotion or by merely posting a suitable officer or by direct recruitment through employment exchange etc.
The only recruitment to the post of Deputy Transport Commissioner was by method of promotion by selec tion.
At the time when the aforesaid Special Rules were enact ed the Karnataka State Civil Services (General Recruitment ) Rules, 1957 (in short the General Rules of 1957 ) were in operation which were repelled by the General Rules.
So long as the General Rules of 1957 continued the Special Rules continued to govern the method of recruitment of the posts as specified in the schedule attached to the said Special Rules.
The General Rules of 1957, as stated earlier, were repelled by the General Rules which came into force on 25th June, 1977.
Rule 1(3)(a) of the General Rules provided thus: "1.(3) (a) These rules shall apply to re cruitment to all State Services and to all posts in connection with the affairs of the State of Karnataka and to members of all State Civil Services and to the holders of posts whether temporary or permanent except to the extent otherwise expressly provided (i) by or under any law for the time being in force; or (ii) in respect of any member of such service by a contract or agreement subsisting between such member and the State Government".
It is thus clear from the provision of Rule 1(3)(a) that the General Rules were applicable for all purposes to mem bers of all State Civil Services including the Motor Vehi cles Branch except to the extent otherwise expressly provid ed by the Special Rules.
The Special Rules, as mentioned earlier, dealt with the method of recruitment and qualifica tion for the Motor Vehicles Branch and so far as the post of Deputy Transport Commissioner was concerned, the method of recruitment was "promotion by selection".
The Special Rules dealt with nothing else.
It is also clear from Rule 1(3) of the General Rules itself as to what is the scope of its applicability.
It was applicable to all posts except to the extent otherwise expressly provided for by the Special Rules.
Rule 3(1) of the General 408 Rules, before the insertion of sub rule (2), reads as fol lows: "3.
Method of recruitment (1) Except as otherwise provided in these rules or any other rules specially made in this behalf, recruit ment to any service or post shall be made by direct recruitment which may be either by competitive examination or by selection, or by promotion which may be either by selection or on the basis of seniority cum merit.
The methods of recruitment and qualifications shall be as specified in the rules of recruit ment specially made in that behalf: Provided that in respect of direct recruitment to any service or post when the method of recruitment is not specified in the rules of recruitment specially made, the method of recruitment shall be by selection after an interview by the Commission, the Advisory or Selection Committee or the Appointing Authori ty as the case may be.
Provided further that no person shall be eligible for promotion unless he has satisfac torily completed the period of probation or officiation as the case may be, in the post held by him.
" The substantive part of Rule 3(1) described various methods of recruitment but stated that the methods of re cruitment and qualifications shall be as specified in the rules of recruitment specially made in that behalf.
The first proviso described that when in the Special Rules for recruitment no provision is made for direct recruitment, the method of recruitment shall be by selection after an inter view by the Commission, the Advisory or Selection Committee to the Appointing Authority, as the case may be.
The second proviso to Rule 3(1) contemplated that no person shall be eligible for promotion unless he has satisfied three com pleted years of probation or officiation, as the case may be, in the post held by him.
The second proviso is by way of abundant caution in view of the Karnataka Civil Services (Probation) Rules, 1977 (hereinafter referred to as 'the Probation Rules ') because of Probation Rules contemplated that the period of probation shall be as may be provided for in the rules of recruitment specially made for any service or post, which shall not be less than two years '.
The Proba tion Rules also contemplated declaration of satisfactory completion of probation at the end of the prescribed period of probation as extended or reduced by the appointing au thority.
It may be useful to note that Rule 19 of the Gener al Rules also dealt with probation and appointments by promotion.
It is clear from reading of Rules 1, 2 and 409 3, as originally enacted, of the General Rules that so far as the Special Rules expressly provided to any particular branch of the State Service that was to prevail over the General Rules.
Rule 3A, as amended, provided for qualifica tion in respect of ex servicemen, irrespective of the provi sions of the Special Rules.
Rule 4 provided the procedure of appointment.
It also provided that if the appointment is by way of selection, how a selection has to be conducted and if the recruitment is by way of promotion, how it has to be done.
Rule 5 provided for disqualification for appointment.
Rule 6 provided the age limit for appointment.
Rule 8 pro vided for reservation of appointments for scheduled castes, scheduled tribes, backward tribes etc.
Rule 9 contained provision for ex servicemen and physically handicapped notwithstanding anything contained in the Special Rules.
Rule 10 contemplated conditions relating to suitability and certificates of character.
Rule 11 provided for procedure how the applications have to be made by the Government servants for recruitments.
Rule 16 provided for relaxation notwithstanding the provisions contained in the General Rules or the Special Rules.
Rule 16 A provided for appoint ment by transfer.
Rule 17 dealt with appointment by direct recruitment or by promotion in certain cases notwithstanding anything contained in the General or Special Rules.
All these Rules arc applicable to all the posts except to the extent as contemplated by Rule(3) of the General Rules.
This was the position at the time of enactment of General Rules in 1977.
appears that Rule 3 of the General Rules was amended and subrule (2) was added to Rule 3.
Rule 3(2) of the Gener al Rules, so added in June, 1982, reads thus: "3(2).
Notwithstanding anything contained in these rules or in the rules of recruitment specially made in respect of any service or post (a) the promotion to the post of Head of Department of the post of an Additional Head of Department, if it is in a grade equivalent to that of the Head of Department concerned, shall be by selection: Provided that for the purpose of promotion by selection, the number of persons to be consid ered shall be such number of persons eligible for promotion in the order of seniority, as is equal to five times the number of vacancies to be filled.
410 (b) the promotion to all other posts shah be on the basis of seniority cum merit".
We are really concerned with the scope of Rule 3(2) of the General Rules for proper decision of this case.
Both the General Rules and the Special Rules have been framed by the Government of Karnataka in exercise of powers under Article 309 of the Constitution of India.
It is clear from Rule 1(3)(a) of the General Rules that the General Rules apply to recruitment to all State Services and to all posts in connection with the affairs of the State.
A perusal of different rules in the General Rules makes it clear that the general provisions which apply to recruitment to all posts under the Government are specified in those Rules instead of repeating them in each and every Special Rules of recruitment relating to different depart ments.
For example, provisions relating to age limit for recruitment, disqualification for recruitment, joining time etc.
should find place in Special Rules and normally they should be uniform for all categories of posts.
Instead of repeating them in all Special Rules of each department they have been put in one set of rules known as the General Rules.
It would be impossible to limit the application of the General Rules only for recruitment to posts for which no Special Rules have been made.
If that was so, what arc the provisions relating to disqualification, age limit, joining time etc.
for posts for which Special Rules governing of recruitment have been made ? There are no other rules gov erning the subject except the General Rules.
By the wording of Rule 3(2) of the General Rules it is clear that the Government took conscious and deliberate policy decision and gave a mandate to make only posts of Head of Departments, Additional Head of Departments as selection posts and all other posts on promotion will be filled by the criterion of "seniority cum merit '.
To give effect to that policy decision instead of amending every Special Rules of recruitment relating to different State Civil Services, the Government made a provi sion in the General Rules by incorporating a non obstante clause stating that it would apply to all services and posts j notwithstanding the provisions in the General Rules or in the Special Rules of the State.
This aspect is absolutely clear by a mere reading of Rule 3(2) of the General Rules.
In the case of Maharaja Pratap Singh Bahadur vs Man Mohan Dev.
AIR 1966 SC 1931, the Supreme Court approved the following quotation from Maxwell on Interpretation of Stat ute:/ 411 "A general later law does not abrogate an earlier special one by mere implication.
Generalia specialibus non derogant, or, in other words, "where there are general words in a later Act capable of reasonable and sensible application without extending them to subjects specially dealt.
with by earlier legislation, you are not to hold that earlier and special legislation indirectly repealed, altered, or derogated from merely by force of such general words, without any indication of a particular intention to do so.
" In such cases it is presumed to have only general cases in view, and not particular cases which have been already otherwise provided for by the special Act? ' It is stated therein that for the general principle that the special law prevails over general law there is one exception and that is a later general law prevails over earlier special law if it clearly indicates the intention to supersede the special law.
The non obstante clause intro duced by amending Rule 3 of the General Rules by adding Rule 3(2) which was enacted after the Special Rules indicates the clear intention to supersede the Special Law to the extent that for the posts which arc not Head of the Departments or Additional Head of Departments the promotion, if provided for by way of selection, would mean on the basis of seniori ty cum merit and not on the basis of merit only.
As I have noticed earlier if we look at the Special Law it contained various methods of recruitment to about 35 posts mentioned in the Schedule annexed thereto but there is only one post for which the promotion was proposed by selec tion.
Surely it would have been flimsy way of drafting if one particular clause of a particular Special Law was sought to be individually repelled by enacting a repealing clause for that purpose.
To get over that the non obstante clause is introduced later on by the same authority which enacted both the General and Special Laws to give its latest man date.
The latest mandate cannot be ignored.
Rule 1(3) of the General Rules which accepted the ap plicability of Special Rules is itself a part of General Rules and the non obstante clause is not merely to what is mentioned to the contrary in the Special Rules but it is also notwithstanding anything contained in the General Rules itself.
In the present case the respondent No. 2 herein was promoted after the amendment of Rule 3 of the General Rules and there is no dispute about his recruitment by way of promotion on the basis of seniority cummerit and that the earlier Special Rules which contemplated the promotion by selection were not followed in view of the latest intention clearly given 412 by a positive mandate.
The learned counsel for the appellant strongly placed reliance on the decision of the Karnataka High Court in the case of Muniswamy vs Superintendent of Police, dated 18th July, 1986 (Annexure 'F ' pages 66 to 108 of the paper book).
That decision dealt with the General Rules and the Special Rules in relation to Karnataka State Police Service (Re cruitment) Rules,.
We have to construe the meaning of Clause 3(2) for ascertaining the object and purpose which the legislature had in view in enacting the said provision and the context thereof.
It appears to me that the Special Rules for re cruitment to some of the services had been in force provid ing a particular method of either selection or promotion.
It appears that because of the experience the Government had of its working, it was thought proper to change this policy, namely instead of providing selection on the basis of merit to every post, in certain posts, it thought it fit to give due weightage to seniority and merit instead of having the 'best '.
The selection of 'best ' very often has an ele ment of chance which may not be very conducive to proper climate and harmony in service.
It appears that because of that experience the rule making authority thought it fit that the process of promotion by selection should be con fined only to top posts and for rest of the posts the method should be promotion by adopting the principle of seniority cum merit.
I find that there is a clear mandate of latest intention of the rule making authority contained in Rule 3(2) of the General Rules and this must be respected by the Court.
The Courts are not expert body in knowing what is the best method for selection and to assume that the purest method must be found by the Court and implemented even by violation of the Rule, will not be sound rule of construc tion of statute.
I am afraid I have not been able to persuade myself to agree with the reasoning of the learned Division Bench in the aforesaid case of Muniswamy vs Superintendent of Police.
The learned Division Bench had restricted the scope of Rule 3(2) to only such officers whose "service or post is not regulated by any Special Rules.
then and then only the posts of Head of Departments of Government as defined in 1982 Rules had to be filled by promotion by selection and all other posts in such Departments have to be filled by promotion on seniority cure merit basis".
The Division Bench also examined the merits and demerits of various forms of selection at great length and took the view in paragraph 41 of the judgment as under: "We were shocked and surprised when the learned Govern 413 ment Advocate submitted before us that he was supporting the stand urged by Sri Bhat and the circular issued by the Director under instruc tions from Government.
We have no doubt that the Government had not really reflected on the untenable stand it was urging before this Court which, if accepted would have meant death knell to .efficiency in the services of the State.
" I am surprised with this type of approach.
It is not the function of the Court to examine the efficacy of one form of selection or the other.
It is for the recruiting authority, namely the Government to examine it and enforce it in the way it like.
To use such an expression "death knell to efficiency" really gives the mind of the Court that it wants to enforce the particular policy even though the latest mandate is for change of the policy in the name of efficien cy.
This type of reasoning really ignores the specific provision of the non obstante clause applying to even "in the rules of recruitment specially made in respect of any service or post".
In Ajay Kumar Banerjee and others vs Union of India and others, at page 153 Sabyasachi Mukharji, J. (as His Lordship then was) observed thus: "As mentioned herein before if the scheme was held to be valid, then the question what is the general law and what is the special law and which law in case of conflict would pre vail would have arisen and that would have necessitated the application of the principle "Generalia specialibus non derogant".
The general rule to be followed in ease of con flict between the two statutes is that the later abrogates the earlier one.
In other words, a prior special law would yield to a later general law, if either of the two fol lowing conditions is satisfied.
(i) The two are inconsistent with each other.
(ii) There is some express reference in the later to the earlier enactment.
If either of these two conditions is ful filled, the later law, even though general, would prevail".
It is thus clear that both the conditions mentioned by Mukharji, J., 414 speaking for the Bench are fulfilled.
In this case whether the promotion has to be by the method of selection or sim plicitor promotion on the basis of seniority cum merit, is the contest.
The Special Law contemplated promotion by selection whereas the later law contemplates promotion by the method of seniority cum merit.
The two are inconsistent with each other.
This fulfills the first condition.
So far as the second condition is concerned there is an express reference in the later general law "in the earlier enact ment".
But as per the proposition of Mukharji, J., if either of the two conditions are fulfilled the later law, even though general, would prevail.
Surely the provision of recruitment contemplated in the Special Police Rules is inconsistent with the latest general provision applicable to all posts in Karnataka.
In the present case the later gener al law prevails over the earlier special law because the non obstante clause specifically mentions its efficacy inspite of the Special Law.
It was for the legislature to choose the method of indicate its intention.
The Courts should not defeat their intention by overlooking it.
The respondent No. 2 has been selected for promotion by follow ing the General Rules amending the Special Rules and I find it was strictly in accordance with law.
I am, therefore, of the considered view that the appeal deserves to be dismissed with parties to bear their own costs.
G.N. Appeal allowed.
[/INST]These Writ Petitions filed before this Court challenged the liberalisation for private sector operations in the Road Transport field, under the .
The petitioners were the existing operators on different routes.
On behalf of the petitioners, it was contended that the issue of more permits on the same route adversely affected their rights guaranteed under Articles 14 and 19 of the Constitution of India.
It was further contended that though imposition of limit for grant of inter State permits was permissible under Section 88(5) of the Act, it was not so in respect of intra region permits and hence it is discrimina tory; that in public interest the grant of intra region permits should be limited.
Dismissing the Writ Petitions, this Court, HELD: 1.1.
Restricted licensing under the old Act led to the 429 concentration of business in the hands of few persons there by giving rise to a kind of monopoly, adversely affecting the public interest.
The apprehensions of the petitioners, that too many operators on a route are likely to affect adversely the interest of weaker section of the profession, is without any basis.
The transport business is bound to be ironed out ultimately by the rational of demand and supply.
Cost of a vehicle being as it is the business requires huge investment.
The intending operators are likely to be con scious of the economics underlying the profession.
Only such number of vehicles would finally remain in operation on a particular route as are economically viable.
In any case the transport system in a State is meant for the benefit and convenience of the public.
The policy to grant permits liberally under the new Act is directed towards the said goal.
[438 A C].
1.2 The petitioners are in the full enjoyment of their fundamental right guaranteed to them under Article 19(1)(g) of the Constitution of India.
There is no threat of any kind whatsoever from any authority to the enjoyment of their right to carry on the occupation of transport operators.
There is no complaint of infringement of any of their statu tory rights.
More operators mean healthy competition and efficient transport system.
Over crowded buses, passengers standing in the aisle, persons clinging to the bus doors and even sitting on the roof top are some of the common sights in this country.
More often one finds a bus which has noisy engine, old upholstery, uncomfortable seats and continuous emission of blacksmoke from the exhaust pipe.
It is, there fore, necessary that there should be plenty of operators on every route to provide ample choice to the commuter public to board the vehicle of their choice and patronise the operator who is providing the best service.
Even otherwise the liberal policy is likely to help in the elimination of corruption and favouritism in the process of granting per mits.
[437 EH; 438 A].
Hans Raj Kehar & Ors.
vs The State of U.P. and Ors., ; , followed.
Jasbhai Desai vs Roshan Kumar & Ors., ; ; ,Saghir Ahmad vs The State of U.P. and Ors., ; , relied on.
Rameshwar Prasad & Ors.
vs State of Uttar Pradesh & 0rs.[1983] 2 SCC 195, distinguished.
It is only the State which can impose reasonable res tric 430 tions within the ambit of Article 19(6) of the Constitution of India.
Section 47(3) and S7 of the old Act were some of the restrictions which were imposed by the State on the enjoyment of the right under Article (19)(1)(g) so far as the motor transport business was concerned.
The said re strictions have been taken away and the said provisions have been repealed from the Statute Book.
The new Act provides liberal policy for the grant of permits to those who intend to enter the motor transport business.
The provisions of the Act are in conformity with Article 19(1)(g) of the Constitu tion of India.
When the State has chosen not to impose any restriction under Article 19(6) of the Constitution of India in respect of motor transport business and has left the citizens to enjoy their right under Article 19(1)(g) there can be no cause for complaint.
[440 B D].
The three categories of permit seekers in respect of interegion, intra region and inter State permits cannot be considered to be belonging to the same class.
Different criteria have been provided under the Act for granting permits in respect of each of the categories.
It is not the case that Section 80 brings about discrimination in the matter of grant of permits between applicants belonging to the same class.
[442 B] Hans Raj Kehar & Ors.
vs The State of U.P. and Ors.
; , relied on.
Matters such as conditions of roads, social status of the applicants possibility of small operators being eliminated by big operators, conditions of hilly routes, fuel availability and pollution control are supposed to be within the comprehension of the transport authorities.
The legislative policy under the Act cannot be challenged on these grounds.
It is not disputed that the Regional Trans port Authority has the power under the Act to refuse an application for grant of permit by giving reasons.
It is for the authority to take into consideration all the relevant factors at the time of quasi judicial consideration of the applications for grant of permits.
The statutory authorities under the Act are bound to keep a watch on the erroneous and illegal exercise of.
power in granting permits under the liberalised policy.
[444 D F]
</s> |
<s>[INST] Summarize the judgementivil Appeal Nos.
2309 & 2310 of 1989 etc etc.
From the Judgment and Order dated 23.9.1988 of the Jammu & Kashmir High Court in Writ Petition No. 87/81 and C.M.P. No. 2519 of 1988.
K. Parasaran, D.D. Thakur, M.H. Beg, Raja Ram Agrawal, M.L. Verma, Prashant K. Goswami, Anil B. Divan, Pramod Kohli, P.H. Parekh, Hari Khanna, J.P.Pathak, Sandeep Thakral, S.M.Thakral, B.V. Desai, Ms. Vinita Ghorpade, E.C. Aggarwala, N.N. Bhatt, Dhiraj Singh and Ashok Mathur for the appearing parties.
The Judgment of the Court was delivered by V. RAMASWAMI, J.
Civil Appeal No. 2309 of 1989 arises out of an order made by the High Court of Jammu & kashmir in Writ Petition No.87 of 1981 dismissing the Writ Petition filed by M/s. Pine Chemicals Ltd., which is a public limited company manufacturing Rosin, Turpentine and Rosin Derivatives and carrying on business at Bari Brahmana, Jammu Tawi.
The appellants had prayed in the writ petition for quashing the order of assessment dated 20th January, 1981 made by the Assessing Authority, Incharge Sales Tax Circle, Jammu under the for the year ending 30.6.1980 and the penalty order made on February 2, 1981 under Section 10 of the in respect of the same period.
They had also prayed for a declaration that they are entitled to exemption from payment of tax under the and the Jammu & Kashmir General Sales Tax Act, 1962, on the finished goods produced by them for a period of five years commencing from 8th November, 1979, when the Company went into commercial production.
This main relief had been prayed for on the grounds that the appellant were exempt from payment of sales tax in terms of the Government Orders No. 159 Ind. dated 25.3.1971 as amended by Government Order No. 414 Ind.
dated 25th August, 1971 read with section 8(2A) of the .
Their further case was that the Government represented and announced a package of incentive for large and medium scale industries including grant of exemption from sales tax both on the raw materials purchased by the industries and the scale of their finished products, that acting upon such representation and assurances, appellants set up their factory at Bari Brahmana on the land allotted by the State Industrial Development Corporation and that therefore the Government is estopped from charging sales tax on the doctrine of promissory estoppel.
The High Court was of the view that 190 the two Government orders referred to above were only declarations of an intention to exempt from payment of sales tax and that they are not exemption notifications under sections 5 of the General Sales Tax Act.
The High Court was also of the view that the appellant have failed to prove the necessary factual foundation for invoking the principle of promissory estoppel and that, therefore, they are not entitled to any relief under that doctrine.
In that view the writ Petition was dismissed.
It may be mentioned that Civil Appeal No. 2310 of 1985 is against an order made in a Civil Misc.
Petition No. 2519 of 1988 which was also dismissed on 23.9.1988 along with the writ petition.
This miscellaneous petition was filed after the judgment in the writ petition was reserved for permission to file reply affidavit on the ground that the assessment files produced at the time of hearing contained certain documents needing certain explanation by the appellants.
Both on the ground that it was belated and on the ground that the judgment in the writ petition was delivered only relying on the material placed on record and therefore there was no need for giving an opportunity to the writ petitioners to file a reply statement, the learned judgment dismissed this miscellaneous petition also.
Civil appeals 3140 50 of 1989 have been filed by M/s. K.C. Vanaspati, a firm of partnership manufacturing Vanaspati Ghee at Bari Brahmana, Jammu Tawi.
They filed writ petition 52 of 1982 praying to quash a sales tax assessment order dated 16.1.1982 assessing them to sales tax for the period from 2nd September, 1981 till the end of the month under the Jammu & Kashmir General Sales Tax Act.
They also prayed for a mandamus directing the Government and the Assessing officer not to assess them to sales tax or recover any amount on account of sales tax from them for a period of five years from 2nd September, 1981 when their industry started commercial production.
This relief was prayed again on the ground that Government Order 159 Ind.
dated 26.3.1971 as amended by Government Order 414 Ind.
dated 25.8.1971 exempted the sales of their finished product of Vanaspati Ghee from sales tax and also on the ground that in any case the Government is estopped from collecting tax on the principle of promissory estoppel.
When this writ petition was pending as assessment order was made on 14.11.1984 for the assessment year ending 30th September 1982 including the period 2nd September to 30th September, 1981 which was the subject matter of the earlier assessment order and which was questioned in writ petition No. 52 of 1982.
The validity of this assessment order was the subject matter of writ petition No. 822 of 1984 filed by the appellants.
The relief prayed for and the grounds on which the relief prayed for were almost identical as that in writ petition No. 52 of 1982 except that 191 on the question of promissory estoppel, more detailed facts were mentioned in this writ petition.
The respondents filed their counter affidavits contending that the said Government orders were not exemption orders under Section 5 of the General Sales Tax Act and that there is no factual foundation for the plea of promissory estoppel.
Since we will be dealing with contentions in detail at the appropriate place we are not setting out contentions of the petitioners and the replies of the Government in the writ petitions in details.
During the pendency of the writ petitions certain other Government orders came to be passed and certain assessment orders for the subsequent periods were also sought to be made and questioning these actions M/s. K.C. Vanaspati filed Writ petition No. 711 of 1987 for a writ of prohibition restraining the Assessment Officer and Government from recovering any sales tax at any point of sale in the series of sales in respect of Vanaspati Ghee manufactured by them for a period of 10 years from 2nd September, 1981 when their factory went into commercial production and also for a declaration that SRO 448 dated 22nd October, 1982 issued by the Government of Jammu & Kashmir (which will be referred to later) was illegal and unconstitutional.
They had also prayed for a mandamus directing the respondents to refund the sales tax already recovered from them with interest and damages.
In this writ petition also they contended that Government Order No. 159 Ind. dated 26.3.1971 and Government Order 414 Ind.
dated 25.8.1971 were exemption orders referable to section 5 of the General Sales Tax Act.
They have also referred elaborately to the representations, declarations and promises of the Government in support of the plea of promissory estoppel.
The respondents had filed a counter affidavit refuting these contentions of the appellants.
The High Court dismissed all these three writ petitions by a common order dated 22nd February, 1989.
Civil Appeals 3148 50 of 1989 have been filed against this common order.
Civil Appeal No. 3151 of 1989 has been filed by M/s. Kashmir Vanaspati Ltd. against the judgement of the High Court in Writ Petition No.5 of 1989 in which they had prayed for the writ of certiorari to quash certain notices issued to the appellants, their selling agents and the owner of the premises where they have their sale depots, issued under section 17 of the General Sales Tax Act and for a declaration that the Vanaspati Ghee manufactured by the appellants is exempt from payment of tax at all stages upto January, 1992 i.e. for a period of 10 years from the date from which they have started their commercial production.
In this writ petition also the appellants had relied on Government Order 159 Ind.
dated 26.3.1971 and Government Order No. 414 Ind.
dated 25th August, 1971 as orders exempting their goods from sales tax under Section 5 of the General Sales Tax Act.
They have also relied on certain statement of Government as commitments 192 to continue the incentives and exemptions from sales tax for a period of 10 years on the principle of promissory estoppel.
The respondents had filed their counter affidavit.
This writ petition was also dismissed on 17th March, 1989 almost on the same grounds as in earlier two cases.
The first common question that arises for consideration in all these appeals therefore is whether Government Order No. 159 Ind.
dated 26.3.1971 and the amending Government Order No. 414 Ind.
dated 25.8.1971 are orders of exemption referable to section 5 of the General Sales Tax Act, 1962.
The said Government Orders are extracted below : GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to large and Medium Scale industries in the Jammu & Kashmir State Ref: Cabinet Decision No. 101 dated 26.3.1971 Government Order No. 149 Ind.
of 1971 dated 26.3.1971 Sanction is accorded to the grant of the following incentives and facilities to Large and Medium Scale Industries in the State of Jammu & Kashmir : 1.
Land: As provided in Government Order No. 206 Ind. of 1968 dated 5.7.1968.
However, such land. include a reasonable amount of land for the establishment of residential colonies required to house the workers of Large and medium scale Industries and would be granted on the terms and conditions defined in the Government Order No. 206 Ind.
of 1968 dated 5.7.1968.
Grant of exemption from the State Sales Tax both on raw materials and finished products for the period of five years from the date the unit goes into production.
Grant of exemption from levy of additional surcharge on Toll Tax for an initial period of five years from the date the unit goes into commercial production with respect to raw materials and finished goods.
The question of grant of exemption from this levy for further periods would be reviewed thereafter in every 193 individual case and further grant of this concession would only be considered in deserving individual cases.
Grant of exemption from the levy of Urban Immovable Property Tax on the lands and buildings belonging to such industries would be available as admissible under the Urban Immovable Property Taxation Rules.
By order of the Government of Jammu and Kashmir.
Sd/ G.R.Renzu, Secretary to Government" This order was partially modified in G.O. 414 Ind. dated 25.8.1971 which read as follows: " GOVERNMENT OF JAMMU AND KASHMIR INDUSTRIES AND COMMERCE DEPARTMENT Sub: Grant of incentives to the Large and Medium Scale Industries in the Jammu & Kashmir State Ref: Director Industries and Commerce 's letter No. SSI J/455/2251 52 dated 22 7 1971 Government Order No. 414 Ind.
of 1971 dated 25.8.1971 In partial modification of Government Order No. 159 Ind.
of 1971 dated 26.3.1971, item 2 may be read as under: 2.
Grant of exemption from the sales tax both on raw materials and finished products.
The State Sale Tax paid by Large and Medium Scale Industries on the raw materials procured by them for the initial 5 years of the production would be refunded to such industries.
Similarly such industries will be granted exemption from the payment of any state sales tax on their finished products for a period of five years from the date the unit goes into production.
194 By order of the Government of Jammu and Kashmir.
Sd/ Secretary to Government".
It may be noted at this stage itself that the amending Order G.O. 414 Ind.
dated 25th August, 1971 was also published in the Government Gazette.
Section 5 of the General Sales Tax Act, 1962 empowers the State Government to grant exemption from taxation and that section reads as follows: "Exemption from taxation: The Government may subject to such restrictions and conditions as may be prescribed, including conditions as to licence and licence fees, by order exempt in whole or in part from payment of tax any class of dealers or any goods or class or description of goods.
" The Government orders were made implementing the Cabinet decision No. 101 of the same date.
There is no ambiguity about the class of persons or dealers to whom the Government orders apply, no ambiguity about the class or description of goods and the transactions of sale which are exempt from tax.
It has been duly authenticated in terms of Section 45 of the Constitution of Jammu and Kashmir.
It is well settled that if power to do an act or pass an order can be traced to an enabling statutory provision, then even if that provision is not specifically referred to, the act or order shall be deemed to have been done or made under the enabling provision.
Thus the Government orders satisfy all the requirements of the provisions of Section 5 of local Act.
The section also does not talk of any notification: it only talks of a Government order exempting in whole or in part from payment of tax.
This is very insignificant, if contrasted with Section 4(1) and 4(5) of the local Act relating to the fixation of the taxable point refers to a notification by the Government.
The Act itself thus makes a distinction requiring a notification to be made for certain purposes and the making of a Government order in respect of certain other purposes.
Moreover, since there is no form prescribed in this behalf if the particular order in effect is an exemption order, whether it takes the form of an order or notification makes no difference.
But we may note from the various orders produced before us that normally in the case of grant of tax exemptions as an incentive to industry the exemption orders have generally taken the form of Government order rather than a notification.
But in the 195 case of other exemptions though they are also under section 5 of the local Act they have taken the form of notification.
Thus the pattern followed in Jammu & Kashmir seems to be that in respect of exemptions from payment of taxes following Cabinet decision on policy matters and incentive they have taken the form of Government order.
It is necessary to refer this aspect because in later modifications while superseding the earlier order or notifications, the Government have followed the specific pattern and have used the word `orders ' in cases of grant of incentive and the word `notifications ' in the other cases.
It may also be pointed out that the Government orders 159 and 414 were also understood and treated as such exemption orders as seen from the publicity given them by the Government while inviting entrepreneurs to establish industries in Jammu & Kashmir and certain other communications to the parties.
The booklet published by the Government in December, 1975 under the heading "Incentives to Development of Industries in Jammu & Kashmir" contained incentives available for small scale industries as also large and medium scale industries.
The above said two Government Orders were reproduced in this booklet as the orders relating to incentives available to large and medium scale industries.
Another brochure issued in March, 1978 under the heading `The State Marches Towards Industrial Development ' after noting the efforts made by the Government to invite industrial enterprises from outside the State to locate the industries in Jammu & Kashmir and the response by the industrialist, listed the package of incentives under the heading `Incentives Available to help you establish your beautiful industrial ventures in the J & K State '.
Item 5 of this list related to `exemption from certain taxes '.
This was followed by the Finance Minister 's Budget Speech for the year 1978 79 in which the Finance Minister stated: "We have to continue a consistent policy of support and protection to industry and attract as many new units as we can, both in order to increase the employment opportunity and to achieve better economic growth.
It is as such proposed to continue the grant of exemption from payment of sales tax on the goods manufactured by new units for a period of ten years from the date the unit goes into production.
" Subsequent to this speech of the Finance Minister another Brochure was published by the Government on the 7th September, 1978 which referred to the sustained efforts made by the Government to involve successful and experienced entrepreneurs from all over the country in 196 setting up the industries in J & K and incentives available to the industries.
In page 14 of this Brochure "Exemption from Sales Tax and toll tax for 10 years and exemption from CST" is listed as one of the incentives available in the State.
Obviously these announcements, references and statements relating to exemption from sales tax refer to G.O. 159 Ind.
dated 26.3.1971 and G.O. 414 Ind.
dated 25.8.1971.
No other Government order of notification relating to exemption from payment of sales tax by large and medium industries were bought to our notice as relating to these references in the Brochures and speeches.
Thus on a plain reading there could be no doubt that the two Government orders are referable to the power of the Government under Section 5 of the General Sales Tax Act and are exemption orders falling within the scope of that provision.
In this connection, we may also refer to three decisions of this Court cited at the Bar wherein similar orders of Government without specifying the source of power under which they were made and also not in the form of a notification, were considered to be orders granting exemption.
In Pournami Oil Mills & Ors.
vs State of Kerala & Anr., [1986], Supp.
SCC 728, this Court had occasion to consider almost identical Government orders as those we are concerned with in these appeals.
The first was a Government Order dated 11th April, 1979 and the relevant portion of the same reads as follows: "The Government has considered the recommendations and suggestions of the Committee in detail and they are pleased to approve the following package of measures for promoting industrial development in Kerala: SMALL SCALE INDUSTRIES: Sales Tax Concessions: New industrial units under small scale industries set up after April, 1979, will be exempted from the payment of sales tax for a period of five years from the date of production.
The second was a notification dated 21st October, 1980 made under Section 10 of the Kerala General Sales Tax Act which read as follows: "In exercise of the power conferred by Section 10 of the Kerala 197 General Sales Tax (15 of 1963) the Government of Kerala have considered it necessary in the public interest so to do, hereby make an exemption in respect of the tax payable under the said Act on the turnover of the sale of goods produced and sold by the new industrial units under the small industries for a period of five years from the date of commencement of sale of such goods by any such units by way of tax on their sales shall be paid over to Government and that the sales tax, if any, already paid by such units to Government shall not be refunded.
Provided that such units shall produce proceedings of the General Manager, District Industries Centre, declaring the eligibility of the units for claiming exemption from sales tax.
Provided further that the cumulative sales tax concessions granted to a unit at any point of time within this period shall not exceed 90 per cent of the cumulative gross fixed capital investment of the unit.
Explanation For the purpose of this notification new industrial unit under the Small scale Industries shall mean undertakings set up on or after April 1, 1979 and registered with the Department of Industries and Commerce as a small scale industrial unit.
This notification shall be deemed to have come into force with effect from April 1, 1979.
" Section 10 of the Kerala General Sales Tax Act empowered the Government if they consider it necessary in the public interest, by notification in the Gazette, to make an exemption or reduction in rate either prospectively or retrospectively in respect of any tax payable under the Act.
It may be seen that the first Government Order dated 11th April, 1979 did not refer to any statutory power under which that order was made and it was generally in the nature of an order approving package of measures and incentives for promoting industrial development in Kerala and not in the form of a notification, while the second notification was made specifically in exercise of the statutory powers under section 10 of the Kerala Act.
It may also be seen that the first Government Order gave more tax exemption while the second notification did not give any exemption relating to purchase tax and also confined the exemption from sales tax to the limits specified in the proviso to the notification.
Two main questions were 198 considered by this Court.
The first was whether the first Government Order dated 11th April, 1979 was an exemption order referable to the powers of the Government under section 10 of the Kerala Act.
On this issue this Court held that it was an exemption order and that since there was an enabling provision in the statute empowering the Government to give exemption, though the Government Order did not refer to the statutory provision conferring such powers the order should be deemed to have been made under the said enabling provision and that therefore both the orders were made in exercise of the powers under section 10 of the Kerala Act.
The second important point that was decided was that the second notification was prospective in operation and that industries set up on or after Ist April, 1979 and before the 21st October, 1980 would be entitled to the benefit of the whole exemption under the first Government order for the full period of five years from the date they started production and that right could not have been curtailed by the second notification dated 21st October, 1980.
As the Govt. was bound by the rule of estoppel from taking away the right which had accrued to them under the first Government order.
Only new industries set up after the 21st October, 1980 would have the restricted benefit as provided in the second notification.
In Bakul Oil Industries & Anr.
vs State of Gujarat & Anr.
, ; , the effect of two exemption notifications made in exercise of the Government 's power under section 49(2) of the Gujarat Sales Tax Act, 1960 was considered.
Under the first notification dated 29.4.1970 certain exemption from payment of sales tax or purchase tax was given in respect of certain specified classes of sales and purchases described in the Schedule to that notification without any specification of period.
The second notification dated 11.11.1970 amended the first notification by adding a new entry in the Schedule exempting a manufacturer who established a new industry from the whole of purchase tax and sale tax for a period of five years from the date of commissioning of the industry .
This second notification stated that for the benefit of claiming the exemption the industry shall have been commissioned at any time during the period from Ist April, 1970 to 31st March, 1975.
The assessee in that case had commissioned his plant on the 17th May, 1970 and when the Industries Commissioners refused to give him the eligibility certificate for claiming exemption he filed a writ petition under Article 226 before the Gujarat High Court.
During the pendency of the writ petition the State Government issued another notification dated 17th July, 1971 amending the definition of `new industry ' and excluding among others decorticating, expelling, crushing, roasting, parching, frying of oil, seeds and colouring, decolouring and scenting of oil, from the purview of the exemption notification.
This Court 199 held that under the first notification dated 9.4.1990 the exemption granted was general and did not stipulate as to how long the exemption would remain in operation and that would mean that the exemption granted under the notification was to have operative force till such time that exemption was allowed to remain before being withdrawn by a subsequent notification.
Though the second notification dated 11.11.1970 gave exemption for a period of five years from the date of commissioning of the industry this Court was of the view that, that exemption cannot be invoked by the assessee in that case for claiming the benefit of tax exemption for five years because the second notification was prospective in operation and would apply only to those new industries which were commissioned subsequent to the issue of that notification and since the assessee in that case commissioned the Mill on 17.5.1970 before the second notification he was not eligible for the benefit of second notification.
However, the learned counsel for the respondents relied on the observation in the first paragraph at page 192 of the Bakul Oil Industries case (supra) wherein the learned Judges have held that the State Government was under no obligation in any manner known to law to grant exemption and that it was fully within its powers to revoke the exemption by means of a subsequent notification.
These observations will have to be understood in the light of the earlier statement that the second notification dated 11.11.1970 was prospective; that is to say if the industry had been commissioned subsequent to 11.11.1970 the assessee would have been entitled to the exemption for the full period of five years.
These observations are apposite only to the notification dated 9.4.1970 which was the one which the assessee was entitled to.
In correctly understanding the ratio of this judgment we have to keep in mind that the date of commissioning of the industry was the relevant factor to the entitlement of the relief.
Therefore this is an authority only for the proposition that if the exemption notification did not stipulate as to how long the exemption would remain in operation it would be open to the Government to withdraw the same at any time by a subsequent notification.
But the learned Judges did not stop with that but make a further observation that if the exemption notification gave exemption from payment of tax for a particular period and an industry was commissioned after the date of the exemption order but before the exemption was withdrawn, the said industry would be entitled to the benefit of exemption for the period specified in the exemption order though the exemption was withdrawn before the expiry of that period if the industry could rely on any estoppel.
This is also clear as the learned Judges themselves have observed that the industry commissioned subsequent to the notification could also plead estoppel and observed: "We must, however, observe that the power of revocation or 200 withdrawal would be subject to one limitation viz. the power cannot be exercised in violation of the rule of Promissory Estoppel.
In other words, the Government can withdraw an exemption granted by it earlier if such withdrawal could be done without offending the rule of Primissory Estoppel and depriving an industry entitled to claim exemption from payment of tax under the said rule.
If the Government grants exemption to a new industry and if on the basis of the representation made by the Government an industry is established in order to avail the benefit of exemption, it may then follow that the new industry can legitimately raise a grievance that the exemption could not be withdrawn except by means of legislation having regard to the fact that Primissory Estoppel cannot be claimed against a statute.
" The Government Order which was considered by this Court in Assistant Commissioner of Commercial Taxes (Asstt.).
Dharwar & Ors.
vs Dharmendra Trading Company and Ors., ; read as follows: "Consequently, the Governor of Mysore is pleased to sanction the following incentives and concessions to the entrepreneurs for starting new industries in Mysore State: (1) Sales Tax A cash refund will be allowed on all sales tax paid by a new industry on raw material purchased by it for the first (five) years from the date the industry goes into production, eligibility to the concessions being determined on the basis of a certificate to be issued by the Department of Industries and Commerce. " Though this again was in the form of a Government order giving incentives and concessions, this Court held that since there is a power to grant an exemption or concessions under the Statue the mere fact that it did not specify the power under which it was issued will make no difference and that the assessee would be entitled to the benefit of this order.
The High Court was of the view that the Government orders are, as such, not exemption orders but only a policy decision.
The learned Judges observed that Section 5 of the General Sales Tax Act "does not speak of general order of exemption as the power to grant exemption is related to 201 a class of dealers or goods and that too subject to restrictions and conditions as may be prescribed.
So there could no general order of exemption and hence the need for specific order in favour of the petitioner is quite obvious.
" On this interpretation the High Court held that the appellant has to first establish that he had set up an industry in the State which conforms to the intent of 1971 order and thereafter ask for an exemption and that on being satisfied the Government will have to make an order of exemption under section 5 of the General Sales Tax Act.
We are unable to agree with this reasoning of the learned Judges on the interpretation of section 5 of the General Sales Tax Act.
We are of the view that the High Court was in error in thinking that the exemption order should be specific in favour of the appellant.
The exemption as can be seen from the provisions of section 5 of the General Sales Tax Act could be in respect of any class of dealers of any goods or class or description of goods.
There could be an exemption in an individual also but the power of exemption is not restricted to such cases alone.
It may refer to transactions of sale of a particular type of goods or class or description of goods or in respect of any class of dealers or a combination of both.
Of course even as an order of exemption the appellant will have to show that he had set up the industry in conformity with the intent of 1971 order and entitled in terms thereof to the exemption in respect of the goods manufactured by him.
But that is not to say that after he establishes those facts the Government will have to make a separate order of exemption in relation to him.
When the appellants sought to rely on the decision of this Court in Pournami Oil Mills case (supra) the learned Judges of the High Court sought to distinguish the same on the ground that the Government order in Pournami Oil Mills case (supra) used the words `will be exempted ' whereas in the Government orders now under consideration the words used are `will be granted exemption. ' According to the learned Judges there is a vast difference between the two expressions.
Whereas the expression `will be exempted ' is in the nature of an order the expression `will be granted exemption ' clearly implies a declaration of intention which could result in an order of exemption being issued by taking further follow up action.
We have carefully considered this reasoning of the learned Judges.
The Government orders follow an earlier Cabinet decision to give incentives to large medium scale industries.
The intention was clear that they wanted to attract entrepreneurs from all over the country to come and establish industries in the State of Jammu and Kashmir.
It is not with reference to any particular industrialist or industry that the order was intended to be operative.
The subject in both the Government orders show that it is grant of incentives.
In the light of the context in which expressions came to be used we are 202 of the view that `will be granted exemption ' has the same meaning as `will be exempted ' and does not in any way show that it requires a further follow up action.
Even in Pournami Oils Mills case (supra) under the Government order dated 11th April, 1979 the industries which are to be benefited are those which are to be set up on or after 1st of April, 1979.
The exemption is thus with are to be set up on or after 1st of April, 1979.
The exemption is thus with reference to an industry which is to be established subsequent to the Government order.
Therefore in that sense both expression mean the same.
It was then pointed out by the learned Judges of the High Court that this Government Order No. 159 dated 26.3.1971 dealt with to grant four different types of facilities and incentives and three out of them are covered by different legislative enactments and, therefore, it was futile to contend that without any follow up action the said order can be treated as notification of exemption under the different statutes.
We are unable to agree with this reasoning of the learned Judges also.
As we have already pointed out there is no prescribed form for granting exemption under section 5 of the General Sales Tax Act.
There is also no prohibition against reference to any other matter or matter in exemption orders under section 5 of the General Sales Tax Act.
If the incentives related also to other benefits or rights merely because they are included in the same Government Order does not make it any the less an exemption order so far as the exemption related to payment of Sales Tax.
In fact it appears to be that factually the submission of the learned counsel for the State that follow up action was taken in pursuance of the Government order in respect of exemption from the levy of Urban immovable property tax and the exemption from levy of an additional surcharge on toll tax is not correct.
Mr. Verma, learned senior counsel appearing for the State of Jammu & Kashmir in two of the appeals referred to what he called as a follow up action in relation to the exemption from payment of tax under the Urban Immovable Property Act, a notification issued on the 3rd of June 1971 in SRO 214 of that date, in exercise of the powers conferred by section 23 of the Jammu and Kashmir Urban Immovable Property Tax Act, 1962 amending the Immovable Property Tax Rules, 1962 by inserting Rule 20A.
The relevant portion of this Rule 20A stated that under the provisions of clause (f) of sub section (1) of section 4 of the Act "all buildings and lands owned by proprietors of a factory and used by him for the purposes thereof shall be exempted from the levy of tax etc. ".
It is true that this notification was subsequent to GO 159 Ind.
dated 26.3.1971.
But it is seen from the notification itself that the same was previously published on 25.3.1971 in the Government Gazette under section 23(1) for information of all persons likely to be affected thereby informing that notice is given thereby that it 203 will be taken up for consideration on 7.4.1971 and any objection or suggestion which may be received in the Finance Department from any person with respect to the said draft before the said date will be considered by the Government.
It is by reason of the fact that this draft rule has been published calling for objection the GO 159 Ind. itself stated that the grant of immovable property tax exemption would be available "as admissible under the Urban Immovable Property Taxation Rules." Thus on the day when the Government order was made there was already the draft amendment rules, and therefore, it could not be stated that the amendment was a follow up action in pursuance of the Government order.
Rather the Government order refers to the draft and says as per the amendment they will be entitled to the exemption.
So far as the toll tax is concerned the notification dated 18.7.1977 relied on by the learned counsel for the respondents only extended the benefit of exemption to large and medium scale industries in respect of additional toll leviable `till the construction phase is completed ' that is in respect of tax on construction materials and it did not relate to the grant of exemption of additional surcharge on toll tax.
But it is significant to note that this notification itself stated that `the raw materials brought into the stage for the purpose of manufacturing and finished products marketed outside the State by the said industries shall remain exempt from payment of additional toll for a period of ten years in respect of all the units from the date of commencement of production by them." (emphasis supplied).
This definitely shows that there is already an exemption from payment of additional toll in respect of raw materials brought and finished product marketed and the Government order related only to an extension of exemption benefit in respect of the construction phase as well.
These notifications under the Immovable Property Tax Act and Toll tax act rather reinforce thus contention of the learned counsel for the appellant that the Government orders themselves are exemption orders under section 5 of the General Sales Tax Act and no follow up action was intended under those orders and the said orders operate as exemption orders.
Thus there could be no doubt the Government Order 159 Ind.
dated 26.3.1971 and the amending Government Order 414 dated 25.8.1971 are orders of exemption from payment of sales tax issued under section 5 of the General Sales Tax Act.
Though the learned counsel for M/s Kashmir Vanaspati Limited and the learned counsel appearing tr M/s K.C. Vanaspati strenuously argued that the exemption from payment of tax was extended from 5 years to 10 years and the Government was bound to give the exemption for 10 years on the ground of promissory estoppel.
We think there is absolutely no factual foundation for such a plea.
The only reference to 10 years was in 204 the Finance Minister 's speech and in the Brochure dated September, 1978.
The Brochure only lists the concessions and incentives available generally.
It does not refer to any Government decision or Cabinet decision or any order of the Government.
No decision of the Government, let alone a Cabinet decision, or any Government order extending the period of exemption was produced before us.
It is not clear on what basis the Brochure mentioned 10 years.
Further the reference in the Brochure is not for sales tax alone, but also refers to toll tax and central sales tax.
It is noticed that so far as toll tax is concerned there are Government orders exempting the industries covered by the notifications for a period of 10 years.
The Finance Minister 's statement made in March, 1978 only refers to a proposal to continue the grant of exemption from payment of sales tax for a period of 10 years.
This statement also is not unambiguous.
It may mean that the benefits under the Government Orders 159 and 414 may be continued for another 10 years without withdrawing the same.
This is merely a budget proposal which could give rise to no right to the appellants.
As no decision order or notification is produced extending the period of exemption in relation to sales tax it is not possible to consider the claim of the appellants for exemption for 10 years on the ground of promissory estoppel.
In exercise of the powers under section 4(7) of the General Sales Tax Act the Government notified that "In supersession of all the previous notifications on the subject, the Government hereby specify, in column 3 of the Schedule appended thereto, the point of tax on the turnover in the series of sales of goods specified in column 2 of the said schedule.
"This was notified and published as SRO 195 dated 31.3.1978.
The schedule in column 2 gave the description of the goods and the column 3 point of tax.
This schedule was amended by SRO 448 dated 22nd October, 1982 the relevant portion of which read as follows: "SRO 448 .
In exercise of the powers conferred by sub section (7) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962), the Government hereby direct that in notification SRO 195 dated 31.3.1978, the following amendments shall be made namely : (1) Sub item (C) in column 2 under the heading "Goods manufactured in the State" appearing against serial No. 2 shall be numbered as sub item (d) and before sub item (d) as so numbered the following shall be inserted as sub item (c) (c) Vanaspati and edible Oils.
205 (i) When sale is made by 2nd sale in the State manufacturer to another i.e. Sale is made by dealer in the State for such dealer who purchases re sale.
goods from the manufact urer.
(ii) When sale is made by Ist sale in the State i.e. manufacturer to when sale is made by the consumer direct.
manufacturer.
By order of the Government of Jammu & Kashmir.
" Before the High Court the vires of SRO 448 was questioned on various grounds.
However, the High Court rejected all those contentions and held that it is valid and that it has superseded the exemption, if any, granted under G.O. 159 and 414.
Mr. Thakur, the learned counsel for M/s Kashmir Vanaspati and Mr. Beg, learned senior counsel for M/s. K.C. Vanaspati, apart from contending that SRO 448 was ultra vires also contended on merits that this had no effect of superseding exemption granted under the said orders.
Since we are agreeing with the learned counsel that this SRO did not and could not supersede the exemption granted under the said Government orders we are not going into the question of vires of the same.
As may be seen from SRO 195 dated 31.3.1978 the notification was made by the Government in exercise of the power under section 4(7) of the State Act which related to the power to fix a point of sale for purposes of taxation in the series of sales of goods.
In fact the notification specifically stated that it is made in supersession of all previous notifications on the subject and specified the point of tax on the turnover in the series of sales of goods specified in column 2 of the Schedule (emphasis supplied).
The said notification therefore could not have and did not supersede the exemption notification SRO 448 dated 22nd October, 1982 that vanaspati and edible oils are taxable at the point specified therein it only means that those vanaspati and edible oils which are not exempted are taxable at the points specified in the Schedule.
It may be noted that the Government order gave exemption only for five years from the date of commencement of the industry and those industries who had been manufacturing for more than that period and also those industries who were not entitled to the benefit of the said Government order would be liable to pay sales tax on the vanaspati manufactured by them and the said goods were 206 liable to tax at the point specified in the Schedule.
In the Scheme of levy of single point taxation, there could be no doubt, the Government could fix and point in the series of sales for the Government have fixed the sale by the dealer, that if the second sale, as the taxable point no exception can be taken.
In that sense no question of vires on the ground of lack of power would arise.
Under Section 4(1) of Jammu & Kashmir General Sales Tax Act the goods are taxable only once, that is it could be taxed only at one point of sale.
We have already held that the Government Orders 159 and 414 are exemption orders and exempt the sale by appellants of their manufactured products.
The exemption would not arise unless the goods are taxable at the point of their sale.
Thus the effect of exempting their sale is that the said goods manufactured by them could not be taxed at the second or subsequent sales also as that would offend section 4(1) which provides for single point levy.
In case where there are no exemption orders and the state fixed the second or subsequent sale as point of taxation the first or prior or subsequent sales are not exempted sales but are not taxable sales.
Therefore, SRO 448 fixing the sale of vanaspati ghee by a dealer would not be applicable to vanaspati ghee manufactured by the appellant which are exempt under the said Government orders.
No question of vires of SRO 448 thus arises in these cases.
Thus we are not called upon to decide the vires of SRO 448 on the ground of discrimination as in our view the goods manufactured by the appellants are exempt under Government Orders 159 and 414 and that exemption covers entire series of sales of that very goods.
As already noticed in the case of Pine Chemicals the assessment orders related to their liability for tax under the in respect of their interstate sales.
The High Court has not considered their claim for exemption under section 8 (2 A) of the .
They seem to have proceeded on the assumption that if Government orders 159 and 414 above referred to are exemption orders or if the dealers were entitled to exemption under the State Act on the principle of promissory estoppel they would automatically be entitled to the benefit of section 8 (2 A) of the .
However, probably since the High Court was of the view that the said Government orders are not exemption orders and that the appellant had not laid the factual foundation for claiming the benefit of promissory estoppel, the question of consideration of the applicability of section 8 (2 A) of the did not arise and was not considered.
In fact the appellants in the special leave petition after claiming that the Government orders above referred to are exemption orders 207 and that in any case on facts they have established their case of promissory estoppel and the Government is bound to give exemption, stated as a ground that in the High Court the Advocate General made a concession to the effect that "he was not disputing that if the appellants were entitled to exemption in respect of finished goods under section 5 of the Jammu & Kashmir Sales Tax Act they would automatically be exempted under section 8 (2 A) of the in respect of interstate transaction.
" On the basis of this concession it appears that the appellants have also filed a review petition against certain observations made in the judgment of the High Court.
However, in the reply filed by the State in the special leave petition in this Court of the Government have denied that any concession was made by the Advocate General of the State in the High Court and that in any case the concession referred to related to a question of Law and that the State is entitled to press that point in this Court.
In these circumstances we have permitted the State to raise the question that even if the said Government orders were exemption orders under section 5 of the General Sales Tax Act the appellants are not eligible for exemption in respect of their interstate sales under section 8 (2 A) of the .
Under section 6(1) of the every dealer who sells goods in the course of interstate trade or commerce shall be liable to pay tax under that Act.
A sale of goods shall be deemed to take place in the course of interstate trade or commerce if the sale occasions the movement of goods from one state to another or if effected by a transfer of documents of title to the goods during their movement from one State to another.
The rate of tax on sales in the course of inter state trade of commerce is fixed under section 8 of the .
The tax payable by any dealer under the Act shall be collected in the State from which the movement of the goods commenced by the assessment officers of that State on behalf of the Government of India in accordance with the provisions of section 9(2) of the .
The learned Advocate General of Jammu & Kashmir contended that even if the sale of a particular commodity is exempted from payment of tax under the local Act the dealer selling the same in interstate trade or commerce would be liable to pay central sales tax under the provisions of section 6(1A) of the .
His further submission was that if section 6(1A) of the is applicable to a particular transaction of sale section 8 (2A) of the would not be applicable to that transaction.
Section 6(1A) of the Act reads as follows: 208 "(1 A) A dealer shall be liable to pay tax under this Act on a sale of any goods effected by him in the course of inter state trade or commerce notwithstanding that no tax would have been leviable (whether on the seller or the purchaser) under the sales tax law of the appropriate State if that sale had taken place inside that State.
" In other words the liability of a dealer to pay Central Sales Tax on his interstate transactions of sale will not be affected merely on the ground that if the same dealer had sold the goods locally he would not have been liable to pay tax under the local Sales Tax Act.
This is part of the general provisions of Section 6 of the making a dealer liable to tax on inter state sales.
The rate of tax payable on inter state sale is fixed at 4% in the case of sales to a registered dealer of goods of the description coming under section 8 (2) of the or where the sale is to a Government and at 10% under Section 8 (2) (b) of the in the case of goods other than declared goods.
In respect of declared goods under section 8(2) (a) of the shall be payable at twice the rate applicable to sale or purchase of such goods inside the appropriate State.
In view of the provisions of Section 15 the State law can impose tax on sale of declared goods only at a rate not exceeding four per cent of the sale price and such tax also shall not be levied at more than one stage.
If the tax has been levied under the State Law on declared goods and such goods are sold in the course of inter state trade and tax has been paid under the Central Sales Tax the tax levied under the State law shall be reimbursed to the person making such sale in the course of inter state trade.
Section 8 (2A) of the is in the nature of an exception to these general provisions.
That sub section reads as follows: "8(2 A) Notwithstanding anything contained in sub section (1 A) of section 6 or in sub section (1) of this section, tax payable under this Act by a dealer on this turnover in so far as the turnover or any part thereof relates to the sale of any goods, the sale of, as the case may be, the purchase of which is, under the sales tax law of the appropriate State, exempt from tax generally or subject to tax generally at a rate which is lower than four per cent (whether called a tax or fee or by any other name), shall be nil or, as the case may be, shall be calculated at the lower rate.
Explanation For the purpose of this sub section a sale or 209 Purchase of any goods shall not be deemed to be exempt from tax generally under the sales tax law of the appropriate State if under that law the sale or purchase of such goods is exempt only in specified circumstances or under specified conditions or the tax is levied on the sale or purchase of such goods at specified stages or otherwise than with reference to the turnover of the goods".
It may be seen from these provisions that Section 8 (2 A) of the does not have any overriding affect on the scheme of taxation relating to inter state sale of declared goods.
There is also scope for the applicability of Section 6 (1 A) of the when the inter state sale takes place when the goods are in transit and is effected by transfer of documents of title to the goods during their movement from one State to another.
There may be other instances also which may not affect the levy under section 6(1A) of the as in case where Section 8(2 A) of the was not applicable though the transaction was not taxable under the State law.
Suffice it to say that only certain cases which would have been covered by Section 6(1 A) of the have been carved out for the purpose of exemption subject to the applicability of section 8 (2 A) of the .
Section 6 (1 A) of the has not become otiose by reason of inclusion of that section in the non obstante clause in section 8(2 A).
Both provisions, therefore, operate and they should not be read so as to nullify the effect of one another.
On a plain reading of section 8(2 A) of the it deals with the liability of a dealer to pay tax under the Act on his inter state sales turnover relating to any goods on the turnover relating to such goods if the sale had taken place inside the State is exempt from payment of sales tax under the sales tax law of the appropriate State.
It provides that if an intra state sale or purchase of a commodity by the dealer is exempted from tax generally or subject to tax generally at a rate which is lower than 4 per cent then his liability to tax under the when such commodity is sold on inter state trade would be either nil or as the case may be shall be calculated at the lower rate.
Explanation states as to when the sale or purchase shall not be deemed to be exempt from tax generally under the sales tax law.
That is to say an intra state sale or purchase of a commodity shall not be deemed as exempt from State tax generally if the exemption is given only (1) in specified circumstances or under specified conditions or (2) the tax is leviable on the sale or purchase of such goods at specified stages or (3) otherwise than with reference to the turnover of 210 the goods.
These conditions or limitations are therefore with reference to the transaction of sale or purchase.
The main clause deals with the turnover of `a dealer ' which the term would include `any dealer ' or `any class of dealers '.
The existence or otherwise of the three limitations under the explanation above referred to on claiming exemption under section 8(2 A) of the will therefore, have to be tested with reference to the transaction of sale or purchase as the case may be of the dealer who claims the transaction of sale or purchase as the case may be of the dealer who claims the exemption in respect of his intra state sale of purchase of the same goods.
Thus the specified circumstances and the specified conditions referred to in the explanation should be with reference to the local turnover of the same dealer who claims exemption under section 8(2 A) of the .
The learned Advocate General for the state contended that the conditions that the industry should have been set up and commissioned subsequent to the Government orders 159 and 414 above referred to and the commodity sold by him in order to claim the exemption under the said Government order, shall be those manufactured by that industry are conditions or specified circumstances within the meaning of the explanation and, therefore, the dealer (Pine Chemicals) is not entitled to any exemption under section 8 (2 A) of the .
We are unable to agree with this submission of the learned counsel for the state.
The facts which the dealer has to prove to get the benefit of the Government orders are intended only to identify the dealer and the goods in respect of which the exemption is sought and they are not conditions or specifications of circumstances relating to the turnover sought to be exempted from payment of tax within the meaning of those provisions.
The specified circumstances and the specified conditions referred to in the explanation should relate to the transaction of sale of the commodity and not identification of the dealer or the commodity in respect of which the exemption is claimed.
These conditions relating to identity of the goods and the dealer are always there in every exemption and that cannot be put as a condition of sale.
We have already held that not only sale by the manufacturer to dealer that is exempt under the Government orders but since the General Sales Tax Act had adopted only a single point levy, even the subsequent sales would be covered by the exemption order.
Therefore, the question whether the tax is leviable on the sale or purchase at "specified stages" does not arise for consideration.
This is not also a case where the exemption is with reference to some thing other than the turnover of the goods.
In this connection we may refer to two decisions of this Court reported as Indian Aluminium Cables Ltd. & Anr.
vs State of Haryana (38 211 STC 108) and Industrial Cables India Ltd. vs Assessing Authority.
[1986] sup.
SCC 695.
The question for consideration in this case was whether the transaction of sale which would be covered by section 5 (2)(a) (iv) of the Punjab Sales Tax Act could be said to be exempt from tax generally within the meaning of section 8(2)(a) of the .
Section 5 (2A) in effect provided that in determining the taxable turnover of a dealer his turnover on "(iv) sales to any undertaking supplying electrical energy to the public under a licence or sanction granted or deemed to have been granted under the Indian Electricity Act, 1910(IX of 1910), of goods for use by it in the generation or distribution of such energy" is to be deducted.
That is to say that the transaction covered by this clause are exempt from Punjab Sales Tax Act.
As may be seen from the provision the two conditions relate to the purchaser company being a licensed undertaking supplying electrical energy to the public and the goods sold are for use by the said undertaking in generation or distribution of such energy.
This court rejected the contention of the dealer that they are descriptive of the goods and not conditions and held that they are conditions under which exemption is granted and that therefore section 8(2A) of the was not attracted.
As may be seen, the two conditions are attached to the sale of the dealer who is liable to pay sales tax.
The description of the person who is to be the purchaser is not intended to identify the seller but relate to a condition of the sale being to a person of that description.
The condition that the goods sold are for use by the licensed undertaking in the generation or distribution of electrical energy is again a condition attached to the sale and not identification of the goods .
The goods are already identified.
If the same goods had been sold to a person who is not a licensed undertaking and/or not for purposes of use in the generation or distribution of electrical energy the transaction would be liable to levy of tax under local Sales Tax Law.
If the conditions specified are satisfied then that transaction which would have otherwise formed part of the taxable turnover is allowed to be deducted from the total taxable turnover.
Clearly, therefore, they are specified circumstances or specified conditions within the meaning of the explanation to section 8(2A) of the and therefore cannot be treated as exempted from tax generally.
There is also another judgment of this Court, namely, International Cotton Corporation (P) Ltd. vs Commercial Tax Officer & Ors., (35 STC 1) wherein they have generally considered the scope of section 8 (2A) of the .
After a consideration of the arguments the learned Judges observed: 212 "Reading section 6(1 A) and section 8(2A) together along with the explanation the conclusion deducible would be this: Where the intra state sales of certain goods are liable to tax, even though only at one point, whether of purchase or of sale, a subsequent inter state sale of the same commodity is liable to tax, but where that commodity is not liable to tax at all if it were an intra state sale the inter state sale of a particular commodity is taxable at a lower rate than 3 per cent then the tax on the inter state sale of tax commodity will be at that lower rate.
A sale or purchase of any goods shall not be exempt from tax in respect of inter state sales of those commodities if as an inter state sale the purchase or sale of those commodities is exempt only in specific circumstances or under specified conditions or is leviable on the sale or purchase at specified stages.
On this interpretation section 6(A) as well as section 8 (2A) can stand together." In view of the pronouncement of this Court in above decisions and on our interpretation we do not consider it necessary to refer to the decisions of the High Courts cited at the bar.
In the result we hold that the dealer "Pine Chemicals" is entitled to claim the benefit of exemption under G.O. 159 dated 26.3.1971 and G.O. 414 Ind. dated 25.8.1971 in respect of his turnover on inter state sales and the benefit of exemption is available for a period of five years from the commencement of commercial production.
Mr. Verma learned counsel appearing for the State Government then contended that the said Government orders were superseded by SRO 80 dated 12.3.1982 (hereinafter referred to as SRO 80/82) and Vanaspati Ghee has been made liable to tax at the rate of eight per cent.
The goods manufactured by M/s. Pine Chemicals are also made taxable as falling under the residuary item at the rate of 8 per cent.
S.R.O. 80 dated 12th March, 1982 reads as follows: "In exercise of the powers conferred by sub section (1) of section 4 of the Jammu & Kashmir General Sales Tax Act, 1962 (XX of 1962) and in supersession of all the previous notifications issued on the subject, the Government hereby direct that the tax on the taxable turnover shall be payable at the rates specified in schedule A 1 to A XI annexed hereto : Further the Government, in exercise of the powers conferred by section 5 of the said Act and in supersession of all the previous notifications issued on the subject, hereby direct that the goods, 213 persons and classes of persons as specified in Schedule "B" annexed hereto shall be exempt from payment of tax leviable under said Act.
Explanation: Nothing contained in schedule `B ' shall be deemed to exempt any goods specified in Schedule A I to A XI (both inclusive).
This notification shall come into force with effect from 1 4 1982.
By order of the Government of Jammu & Kashmir.
" It then sets out the description of the goods and the rates at which they are taxable in Schedule A, Annexures I to XI.
Items 1 to 3 schedule "A" Annexures IV, reads: SCHEDULE A IV Goods chargeable to tax at 8% 1.
Hydrogenated vegetable oil (Vanaspati) and palm oil of all sorts.
Lubricants.
All goods other than items (1) & (2) above and those specified in other Schedules.
x x x" In Schedule B goods except under section 5 of the General Sales Tax Act are set out.
Vanaspati Ghee is not one of the items of goods exempted under Schedule B.
The learned counsel for the appellants contended that the second paragraph in the SRO only superseded the `notification ' under Section 5 of the General Sales Tax Act made earlier and did not supersede and did not have the effect of superseding the Government orders made, in pursuance of policy decisions taken by the Cabinet, exempting from payment of tax as an incentive to the industries.
In any case the exemption for five years granted under the said Government orders could not be withdrawn so far as the appellants are concerned both on the ground that SRO 80/82 was prospective in operation and also on the ground of promissory estoppel.
214 There could be no doubt that SRO 80/82 was prospective in operation.
We have noticed in the earlier part of this judgment that the Government seems to have been following as a pattern that is in the case of incentives to industries the exemption orders had taken the form of a Government order.
Government order 159 and 414 were also in pursuance of a Cabinet decision.
SRO 80/82 though a Government notification under the Business Rules it is issued by the Ministry concerned.
In the circumstances we have also a serious doubt whether the said incentives could have been superseded by the said SRO 80/82.
In this connection we may also refer to Government order No. 54 Ind. of 1983 dated 26.2.1983 again an order made in pursuance of Cabinet decision which reads as follows: "CIVIL SECRETARIAT INDUSTRIES & COMMERCE DEPARTMENT GOVERNMENT OF JAMMU AND KASHMIR Incentives for development of Large/Medium/Small Scale and Tiny Sector Industries in Jammu & Kashmir.
Cabinet Decision No. 57 dated 5.2.1983 GOVERNMENT ORDER NO.
54 IND OF 1983 Dated 26 2 1983 In supersession of all previous orders it is ordered that the package of incentives as per Annexure to this order will now be applicable to the existing and new Large Medium/Small Scale and Tiny Industrial Units.
Such of the Industrial Units which have partly availed of the package of incentives, sanctioned under Government Order No. 391 Ind.
of 1972 dated 21.6.1972 and subsequent orders issued in amplification thereof, as well as such units which have become entitled to the availment of the earlier package of incentives, shall have the option to get benefit under the new package of incentives, sanctioned hereunder, for the remaining period of their entitlement.
215 3.
X X X 4.
X X X 5.
X X X 6.
X X X By order of the Government of Jammu & Kashmir.
J.A. Khan Secretary to Government Industries and Commerce Department.
" The annexures to this order contain the incentives, benefits privileges and priorities given to large, medium and small scale industries and tiny industries.
So far as sales tax payable by large and medium scale industries which is relevant for our purpose paragraph XII/XIII states as follows: "XII/XIII.
GST/CST/Additional Toll Tax on SSI Units and Medium/Large Units: (i) No GST shall be charged on any raw material purchased by any industrial units except on items brought on a negative list.
(ii) X X X (iii) X X X (iv) An equivalent amount of loan would be granted interest free to Medium and Large Units for a period of 10 years against GST/CST paid in the State, each installment of loan shall be recoverable in 7 years after a moratorium of 3 years, the total amount of tax loan at any point of time not to exceed 33% of capital investment or Rs. 25 Lakhs whichever is less.
Penal rate of interest may be prescribed for delay in repayment of loan.
(v) X X X (vi) X X X" 216 It may be seen that paragraph I of this order refers to `supersession of all previous orders ' and then speaks of package of incentives and then states as applicable to existing large and medium scale industries also.
If SRO 80/82 had superseded G.O. 159 and 414 does it mean that this Government order has superseded SRO 80/82 and if that is so what are incentives available after SRO 80/82 to the existing industries? This Government order is thus consistent with the pattern followed and deals only with incentives to industries.
In the second paragraph an option has been given to the industry which has not utilised the full benefit of the earlier exemption either to continue to enjoy the earlier exemption given by way of incentive or to opt for the scheme of incentive under the new Government order.
Thus all, these provisions are consistent with the case of the appellants that neither SRO 80/82 superseded GO 159 and 414 nor Government order 54 dated 26.2.1983 took their right to continue to enjoy the exemption benefit for the total period of five years as provided in the said Government orders.
The learned counsel for the appellants also contended that they are entitled to enjoy the benefit for the full period of five years both on law as also on the ground of estoppel.
We have already noticed that in Bakhul Oil case (supra) this Court held that in the case of a grant of exemption without specifying any period for which the exemption is available the Government could withdraw the same at any time.
Though in that case on facts no further question can arise since it was held that the dealer was not entitled to the benefit of the subsequent notification giving the exemption for a period of five years on the ground that the notification was prospective in operation and therefore not applicable to the dealer in that case, this Court made certain further observations to the effect that even in the case of exemption for a particular period it could be withdrawn at any time subject of course to the plea of estoppel.
In Pournami Oil Mills case also the learned Judges appear to have given the benefit of exemptions for the full period even after the withdrawal on the basis that the industry was set up in pursuance of some representation made by the Government amounting to estoppel.
In the present appeals also there are lot of materials to show that the Government made representations to industry that they would give tax exemptions and other incentives and invited entrepreneurs to establish their industries in J. & K. Relying on those representations each of these appellants have set up their industries.
It is not necessary to set out these factual details in the judgment.
Suffice it to say that we have carefully considered all the materials and are of the view that the appellants acting on the representations had set up their industries.
Therefore they are entitled to claim the benefit of the exemption for the entire period of five years calculated 217 as per the terms of the Government orders, even if it were to be held that SRO 80/82 superseded the earlier exemption orders.
It was then contended by Mr. Verma learned counsel appearing for the State that in the assessment order relating to Assessment Year 1981 82 for the period from 1.9.1981 to 30.8.1982 in the case of K.C. Vanaspati there is a finding that the assessee had collected sales tax in respect of their sales turnover for which the exemption is now claimed and that under section 8 B of the J&K General Sales Tax Act the said amount is refundable to the Government.
As has already been seen there was an assessment order for the period covering from 2nd September, 1981 to 30th September, 1981 which was the subject matter of Writ Petition No. 52 of 1982.
The same period merged in the assessment order 1.9.1981 to 30.8.1982 and consolidated assessment order was made and that was subject matter of Writ Petition No. 882 of 1984.
Both these assessment orders were regular assessment orders and they are not section 8 B orders of the Local Act.
They were made on the findings that Government Orders 159 and 414 above referred to are not exemption orders and the assessee could not be said to have acted upon any representation by the Government that they are exemption orders on the ground that if they had relied on those orders as exemption orders they would not have collected any tax in respect of their sales and that therefore the Government was not precluded by any principle of promissory estoppel from assessing their sales turnover.
The assessees had challenged these assessment orders mainly on the ground that the Government orders were exemption orders and that in any case the State is precluded from levying any sales tax on the ground of promissory estoppel.
The learned Judges of the High Court held, as already stated that, the said Government orders were not exemption orders but were only in the nature of declaration of intention to exempt the said industries from payment of sales tax and that the assessee had also not established any right for non payment of tax on any ground of promissory estoppel.
For holding that the assessees could not be said to have relied on any representation from the Government that they would be exempted from payment of tax the learned Judges relied on the facts that the assessees had collected sales tax or the sales tax element had gone into the fixation of price of Vanaspati Ghee showing thereby that the appellants had not relied on any representation from the Government that their sales are exempt from payment of tax.
Since the assessment orders were regular assessment orders on the ground that their sales are taxable sales the question of applicability of section 8 B of the local Act does not arise.
That question arises in view of our finding that their sales turnover are exempt but still under section 8 B of the Local Tax they are liable to refund any money collected "by way of a tax".
Since 218 neither the High Court had any occasion to decide this question of applicability of section 8 B of the Local Act on the basis that the sales turnover were exempt from payment of tax nor the assessing authorities had any opportunity to decide or made any order under section 8 B of the Local Act separately, we think that the entire question relating to the applicability of section 8 B of the Local Act and even the question whether there was any collection of sales tax will have to be left open.
The learned counsel Mr. Verma strenuously contended that there is a finding in the assessment orders that the appellants had collected tax and that finding had not been either challenged or set a side by the High Court and that therefore they should be directed to refund the amount collected.
We are not able to agree with this contention of the learned counsel.
As already stated the assessment order itself was questioned in the writ petitions filed by the assessees.
The High Court had proceeded on the basis that the Government orders are not exemption orders and that the Government also was not precluded from collecting tax on any ground of promissory estoppel and that therefore the question of applicability of section 8B of the Local Act did not arise before the High Court.
It may be mentioned it is not the case of the State that they had collected any amount in excess of the percentage of sales tax i.e. collectable in respect of taxable Vanaspati sales.
In the light of our findings that the sales were exempt the question now arises whether the assessees had collected any tax and whether the amount was collected by way of tax and whether any element of sales tax has merged in the fixation of the price and that amounts to collection of sales tax.
These questions will have to be decided if the State considers that the assessees had collected sales tax, in separate proceedings that may have to be initiated under Section 8 B of the Local Act or when the State demands payment of the money under section 8 B of the Local Act.
Suffice it so say that we are unable to agree with the observations of the learned Judges of the High Court that merely because in the balance sheet a reserve fund is made for payment of sales tax or on basis of a letter of Kashmir Vanaspati giving a break up of the sales price of Rs. 238 it can be said to be conclusively established that sales tax had been collected.
Any way we do not want to say anything because the matter will have to be considered by the authorities concerned in case they want to invoke Section 8 B of the Local Act on the basis that the said government orders gave exemption from payment of sales tax in respect of these assessees for a period of five years as we have held.
In this view we are also not going into the question as to the validity of section 8 B of the Local Act and we leave open that question which was outlined before us.
Thus interpretation of section 8 B of the Local Act and the question of fact of collection and the liability to refund all have to wait till a demand is made by the competent authority for refund of the amounts 219 in exercise of their power under section 8 B of the Local Act.
The assessees have made some deposits in pursuance of interim orders made by this Court pending the appeals.
It is also stated that during the pendency some other amounts were also paid by the assessees in addition to the amounts paid as per the directions given by the Court.
The refunds of this money and the liability of the State Government to pay any interest while refunding the deposits will all have to await the demand, if any, that may be made by the Government under section 8 B of the Local Act.
However, we make it clear that the stay of refund of money collected as aforesaid will be only for a period of six months by which time the Department should initiate proceedings, if any, under Section 8 B of the Local Act, if so advised.
To sum up : G.O. 159 Ind dated 26.3.1971 and G.O. 414 dated 25.8.1971 are exemption from payment of sales tax orders referable to the powers of the Government under Section 5 of the J & K General Sales Tax Act and that exemption covers the entire series was available only for a period of five years from the date of commissioning of the industries and not for ten years.
The benefit of the exemption under the said Government orders are also available in respect of the inter State sales of the same commodities for a period of five years from the commencement of the commercial production.
The appeals are accordingly allowed to the extent mentioned above.
However, there will be no order as to costs.
V.P.R. Appeal allowed.
[/INST]The Education and Youth Services Department of the State of Karnataka issued an order dated 3rd October 1981 which provided two different methods of selection of teachers in private aided degree colleges one by Selection Committee and another by Management.
Under the order appointments for more than three months could be made by a selection committee whereas temporary appointments for less than 3 months could be made by the Management and such temporary appointments could be continued for a futher period of not more than 3 months, with one day 's break in service.
The Government order also provided that such temporary teachers shall be paid fixed salary being ten rupees less than the minimum payable to regular teachers.
The teachers temporarily appointed under the said order accordingly continued in service for a long period but with a break of a day or two every three months in their service.
Subsequently, they filed a writ petition in this Court seeking regularisation of their services by invoking the principle of equitable estoppel arising from implied assurance due to their long continuance.
It was contended on behalf of the petitioners that; (i) since the State has regularised the services of contract teachers and local teachers appointed in Government or vocational colleges they should also he extended similar treatment; and (ii) payment of fixed salary instead of regular emoluments for eight months in a year was discriminatory and arbitrary.
398 Allowing the petition, this Court, HELD: 1.
Provision of one day 's break in service in the Government order is deprecated and is struck down as ultra vires.
If the intention was to differentiate between appointments for more than three months and others it was a futile exercise.
That was already achieved by providing two different methods of selection one by Selection Committee and other by Management.
Distinction between appointment against temporary and permanent vacancies are well known in service law.
It was unnecessary to make it appear crude.
If the purpose was to avoid any possible claim for regularisation by the temporary teachers then it was acting more like a private business house of narrow outlook than government of a welfare State.
Such provisions cannot withstand the test of arbitrariness.
[403 G; 402 A B] B.R. Parineeth & Ors.
vs The State of Karnataka & Ors.
CMW 6232 of 1990 decided on 3.7.1990, referred to.
Order for payment of fixed salary to temporary teachers is declared invalid.
An appointment may be temporary or permanent but the nature of work being same and the temporary appointment may be due to exigency of service, non availability of permanent vacancy or as stop gap arrangement till the regular selection is completed, yet there can be no justification for paying a teacher, so appointed, a fixed salary by adopting a different method of payment than a regular teacher.
Fixation of such emoluments is arbitrary and violative of Article 14 of the Constitution.
[403 G; 402 F G] 2.1 Payment of nearly eight months ' salary by resorting to government order and, that too fixed amount, for the same job which is performed by regular teachers is unfair and unjust.
Such injustice is abhorring to the constitutional scheme.
[403 A B;] 3.
The practice of management of not making regular selection utmost within six months of occurrence of vacancy is condemned.
The helplessness expressed by the State that the managements went on continuing such teachers without holding regular selections despite orders of educational authorities may be true but not convincing and sounds like surrender in favour of private managements.
[403 C, 402 E] 3.1 Managements shall take steps, whenever necessary, to fill up permanent vacancies in accordance with rules.
Delay in filling 399 up the vacancies shall not entitle the management or director to terminate the services of temporary teachers except for adequate reasons.
But it shall entitle the government to take such steps including supersession of management or stopping grants in aid if premitted under law to compel the institutions to comply with the rules.
[404 B] 4.
Regularisation of services of teachers of Government colleges by the State may not furnish, any basis for petitioners to claim that the state may be directed to issue similar order regularizing services of teachers of privately managed colleges.
All the same such policy decisions of government in favour of one or the other set of employees of sister department are bound to raise hope and expectations in employees of other departments.
Therefore, it is incumbent on governments to be more circumspect in taking such decisions.
[404 E G] 5.
Ad hoc appointments, a convenient way of entry usually from backdoor, at times even in disregard of rules and regulations, are comparatively recent innovation to the service jurisprudence.
The infection is widespread in government or semi government departments or State financed institutions.
Malady appears to be widespread in educational institutions as provisions for temporary or ad hoc appointments have been exploited by the managements of private aided colleges to their advantage by filling it, on one hand, with persons of own choice, at time without following the procedure and keeping the teachers exposed to threat of termination, on the other, with all evil consequences flowing out of it.
Any institution run by State fund but managed privately is bound to suffer from such inherent drawbacks.
[400 G H; 401 C D] 6.
In the circumstances of the case following directions are issued: a) Any teacher appointed temporarily shall be continued till the purpose for which he has been appointed exhausts or if it is in waiting of regular selection then till such selection is made; [404 A] b) Services of such temporary teachers who have worked as such for three years, including the break till today shall not be terminated.
They shall be absorbed as and when regular vacancies arise; [405 B] 400 c) If regular selections have been made the government shall creat additional posts to accommodate such selected candidates; [405 B] d) From the date of judgment every temporary teacher shall be paid salary as is admissible to teachers appointed against permanent post.
[405 D]
</s> |
<s>[INST] Summarize the judgementiminal Appeal No.30 of 1970.
Appeal by special leave from the judgment and order dated June 19, 1969 of the Judicial Commissioner 's Court, Goa, Daman and Diu in Criminal Revision Application 23 of 1968.
M. C. Chagla, E. C. Agarwala and section R. Agarwal, for the appellant.
V. A. Seyid Muhammad and section P. Nayar, for the respondents.
The Judgment of the Court was delivered by Sikri, J.
This appeal by special leave is from the judgment and order of the Judicial Commissioner, Goa, Daman & Diu, allowing the revision application under section 435 of the Indian Code of Criminal Procedure filed by the State.
The only point involved in this appeal is whether the order passed by the Lt. Governor dated November 6, 1963, was invalid.
This order reads as under : "ORDER GAD 74 63 25007 In exercise of the powers conferred by the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962 and notwithstanding anything to the contrary contained in any law for the time being in force in this Territory, the Lieutenant Governor makes the following order : All criminal proceedings in relation to offenses committed prior to the date of coming into force of the Criminal Procedure Code shall be carried on under the law in force in the Territory before that date.
By order and in the name of the Lieutenant Governor of Goa, Daman and Diu." Before dealing with the question of the validity of this order it is necessary to give a few facts.
On December 20, 1961, Goa, Daman and Diu became part of the territory of India.
The residence of the appellant was raided on June 25, 1963, and 72 bars of gold were seized.
On November 1, 1963, the Goa, Daman and Diu (Laws) Regulation, 1962 (Regulation No. XII of 1962) hereinafter referred to as the Regulation was promulgated by the President and published in the Gazette on November 22, 1962.
The effect of section 3 of the Regulation, read with the Schedule, was inter alia to extend the provisions of the Code of Criminal Procedure, 1898, to Goa, Daman and Diu. 716 Section 3 (2) of the Regulation enabled the Lt. Governor to fix the date of coming into force of the Act in Goa, Daman and Diu.
It appears that by notification dated September 24, 1963, the date of the coming into force of the Indian Penal Code and the Code of Criminal Procedure was changed from October 1, 1963, to November 1, 1963.
Accordingly, it is the latter date on which the Code of Criminal Procedure came into force in Goa, Daman and Diu.
Section 7 of the Regulation provides: "Until the relevant provisions of the Code of Criminal Procedure, 1898, are brought into force in Goa, Daman and Diu, all offenses under any Act shall be investigated, inquired into, tried and otherwise dealt with according to the provisions of the corresponding law in force in Goa, Daman and Diu." The effect of section 7, as is clear from the section, was that offenses committed prior to the coming into force of the Criminal Procedure Code were to be investigated, inquired into, etc., under the provisions of the corresponding law in force in Goa, Daman and Diu.
Section 8 of the Regulation provides "If any difficulty arises in giving effect in Goa, Daman and Diu, to the provisions of any Act extended by this Regulation to that Union territory, the Central Government may, by order in the Official Gazette, make such provisions or give such directions as appear to it to be necessary for the removal of the difficulty.
" it appears that some difficulties were experienced by the Lt. Governor and he purported to pass the impugned order which we have set out above.
It will be noticed that the impugned order does not refer to section 8 of the Regulation but refers instead, to Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962.
We have seen this Order and it is common ground that this Order did not enable the Lt. Governor to pass the impugned order.
On April 20, 1966, a complaint was filed against the appel lant in the Court of Judicial Magistrate 1st Class, Margao, under the Defence of India Rules.
The prosecution was challenged on various grounds but these grounds failed before the Judicial Magistrate.
The order of the Judicial Magistrate is not on the record.
A revision was filed to the Sessions Judge, who first discussed the question of jurisdiction.
He held that by virtue of 717 the impugned order the procedure to be followed in the case is one laid down by the Portuguese Criminal Procedure Code and not by the (Indian) Code of Criminal Procedure, 1898.
On a revision filed by the State, the learned Judicial Com missioner came to the conclusion that the impugned order was ultra vires.
He agreed with the Government pleader that the impugned order was not in conformity with the 19612 Order [Goa, Daman and Diu (Administration) Removal of Difficulties Order] passed by the Central Government.
It is common ground that if a power subsists and the Lt.
Governor call justify the impugned order under any law, the appellant is not debarred from relying on that law.
It seems to us that section 8 of the Regulation clearly authorised the Lt. Governor to pass the impugned order.
The learned counsel for the State says that the word "diffi culty" in section 8 of the Regulation has to be interpreted in a very narrow sense and in this connection relies on the following observations of Hidayatullah, I., as he then was, in Jalan Trading Co. (Private) Ltd. vs Mill Mazdoor Union( '): "The order, of course, would be passed within the four comers of the parliamentary legislation and would only apply the Act to concrete cases as the courts do when they consider the application of an Act.
" He says that there was no concrete case arising in this case and, therefore, the impugned order cannot be justified by reference to section 8 of the Regulation.
But Hidayatullah, J., was in minority and Shah, J., speaking for the majority, proceeded on the basis that the section under consideration authorised the Government to determine for itself what the purposes of the Act were and to make provisions for removal of doubts or difficulties.
Shah, J., did not give any limited, meaning to the word "difficulty" in that case.
We may mention here that neither the appellant nor the res pondent has urged before us that section 8 of the Regulation itself is invalid.
It seems to us that difficulty was bound to arise in giving effect to the Code of Criminal Procedure because, this Code contemplates investigation and trial under the Code.
If investigations had been done under the Portuguese Criminal Procedure Code, unless there was some clear provision to deem that investigation as investigation under the Code of Criminal Procedure, fresh (1) ; ,59. 718 investigations under the Code of Criminal Procedure would have to be undertaken.
Be that as it may, whatever the difficulties which impelled the Lt. Governor to act, he was competent to make provisions to remove the difficulties.
We may mention that although section 8 of the Regulation enables the Central Government to remove the difficulty, by reading the definition of the "Central Government ' in the General Clauses Act, the Administrator of Goa, Daman and Diu is en titled to exercise the powers of the Central Government, and the Lt. Governor is the Administrator of Goa, Daman and Diu.
We are accordingly of the opinion that the impugned order is valid and the prosecution must be conducted in accordance with its provisions.
in the result the appeal is allowed, the judgment and order of the Judicial Commissioner set aside and that of the learned Sessions Judge restored.
V.P.S. Appeal allowed.
[/INST]Under section 3(2) of the Goa, Daman and Diu (Laws) Regulation, 1962.
November 1, 1963, was the date fixed for coming into force of the Indian Po" Code and the Indian Code of Criminal Procedure in Goa, Daman and Diu.
Under section 8 of the Regulation if any difficulty arises in giving effect in Goa, Daman and Diu, to any Act extended to that territory the Central Government may make provision for the removal of the difficulty.
As some difficulties were experienced regarding the law relating to criminal procedure the Lt. Governor, on November 6.
passed an Order, not under section 8 of the Regulation, but in Purported exercise of the powers conferred by the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, to the effect that all criminal proceedings in relation to offenses committed prior to the date of coming into force of the Indian Criminal Procedure Code shall be carried on under the law in force in the territory before that date.
On June 25, 1963, some bars of gold were seized from the residence of the appellant and a complaint was filed against him, in 1966.
On the question of the procedure to be followed, the Judicial Commissioner, in revision, held that the Order of November 6, 1963 was ultra vires the Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, and held that the procedure laid down in the Indian Criminal Procedure Code should be followed.
in appeal this Court, HELD:(1) 'Me Goa, Daman and Diu (Administration) Removal of Difficulties Order, 1962, does not enable the Lt. Governor to Pass the Order dated November 6, 1963.
But section 8 of the 1962 Regulation autborised him to pass the Order.
If the power subsists, and the Lt. Governor could justify the order under any law, the parties are not debarred from relying on it.
[717 B D] (2) Section 8 of the Regulation authorises the Government to make provision for removal of difficulties.
The word 'difficulty ' is not to be construed in the narrow sense of a difficulty with respect to a concrete case.
[1717 F] Majority opinion in Jalan Trading Co. (P) Ltd. vs Mill Afazdoor Union, ; , 59, followed.
(3) Under the definition of 'Central Government ' in the General clause% Act, the Lt. Governor, as the Administrator of Goa, Daman and Diu is entitled to exercise the powers of the Central Government, [178 B C] 715 (4) Therefore, the procedure to be followed in the present case is the one laid down by the Portuguese Criminal Procedure Code and not by the Indian Code of Criminal Procedure.
[718 C]
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<s>[INST] Summarize the judgementCivil Appeal No. 62 of 1961.
212 Appeal by special leave from the judgment and order dated December 20, 1956, of the Madras High Court in Case Referred No. 85 of 1953.
A. V. Viswanatha Sastri, R. Ganapathy Iyer and G. Gopalakrishnan for the appellant.
K. N. Rajagopala Sastri and P.D. Menon for the respondent.
December 20.
The Judgment of the Court was delivered by KAPUR, J.
This appeal by special leave is directed against the judgment and order of the High Court of Judicature at Madras.
The appellant is the assessee and the respondent is the Commissioner of Income tax and the question raised is as to applicability of section 10(2)(xv) of the Indian Income tax Act to a gratuity paid by the appellant to one of its officers on his retirement from service.
The appeal relates to the assessment year 1950 51.
M/s. Gordon Woodroffee & Co. (Madras) Ltd., was incorporated as a private limited company in 1922 and became the Managing Agent of a public limited company M/s. Gordon Woodroffee Leather Manufacturing Company Ltd., which is the assessee.
One J. H. Philips was employee in the Managing Agent Company from 1922 to 1935 and from 1935 he became an employee of the appellant company and became its Director from 1940.
On March 22, 1949, he wrote a letter to the appellant company expressing his intention to resign from the Board of the Company as from April 4, 1949 upon his retirement from the employment of the company and requested that his resignation be accepted.
On March 24, 1949, the Board of Directors of the appellant Company passed a resolution that his resignation be accepted and in appreciation of his long and valuable services to Company hebe paid a gratuity of Rs. 50,000/ out 213 of which the appellant Company was to pay Rs. 40,000/ and the Managing Agent Company the balance of Rs. 10,000/ April 4, 1949, this resolution of the Board of Directors was confirmed.
On the same date a resolution to the same effect was passed at an Extraordinary General Meeting of the Company and before the end of its accounting year i. e. October 31, 1949, this amount of Rs. 40,000/ was paid to Mr. J. H. Philips.
This amount was claimed as a deduction under section 10 (2)(xv) of the Income tax Act which reads : Section 10(2) "Such profits or gains shall be computed after making the following allowances, namely: . . . . . . . . . . . . . . . . . (xv) any expenditure (not being an allowance of the nature described in any of the claused (i) to (xiv) inclusive, and not being in the nature of capital expenditure or personal expenses of the assesee) laid out or expended wholly and exclusively for the purpose of such business, profession or vocation.
" The amount was disallowed by the Income tax Officer as well as by the Appellate Assistant Commissioner on the ground that the appellant Company had no pension scheme; the payment was voluntary and that the entry in the assessee 's books clearly indicated it to be a capital payment.
Against this order the appellant Company took an appeal to the Income tax Appellate Tribunal which upheld the order of the Appellate Assistant Commissioner.
It held that according to the resolution the gratuity was paid "for long and valuable services to the Company"; that there was nothing to indicate that Mr. J. H. Philips had accepted a lower salary in expectation of getting a gratuity at the end of his service; that there 214 was no such practice in the appellant Company and that during the course of his service he was being remunerated at a graduated scale of salary and a commission of 2 1/2% on the profits; that there was no "expectancy" that at the end of the service there would be a recompense for faithful and efficient service that he had been suitably rewarded by being given a commission on the profits in order to whip up his enthusiasm".
It was also mentioned that in the books of the appellant Company the amount had not been debited in the profit and loss account but was debited to the appropriation account thereby indicating that it was an extra payment or a payment made in the nature of a capital expense.
Taking all these circumstances into consideration the Tribunal came to the conclusion that it was difficult to hold that the expenditure was not in the nature of a capital expenditure or that it was expended wholly and exclusively for the purpose of the assessee 's business.
At the instance of the appellant Company the case was stated to the High Court under section 66(1) of the Income tax Act and the following question was referred : "Whether the sum of Rs. 40,000/ paid to Mr. J. H. Philips on his retirement from the service of the Company was not an admissible deduction under Section 10(2)(xv) of the Income tax Act, 1922.
" The High Court answered the question against the appellant Company.
It held that in order that section 10(2) (xv) be applicable it had to be proved that the amount was laid out or expended wholly and exclusively for purposes of the company 's business.
In this case the amount was paid on retirement and for valuable services rendered by Mr. J. H. Philips; there was no evidence that he expected to receive this amount or the Company contemplated its payment at any time before; the payment 215 was voluntary and there was no evidence to show that it was in the future interest of the business of the Company that the expenditure was incurred.
The High Court observed: "In the case of a payment of a gratuity to a retiring employee recognition of his past services, with nothing more cannot, in our opinion satisfy the requirements of Section 10(2)(xv), even if those requirements are judged from the view point of commercial expediency, as it always should be when a claim arises under Section 10(2)(xv).
Was the expenditure incurred in the future interest of the business of the assessee? Was there any connection between the purpose of the payment and the further conduct of the business of the assessee ? These are the tests to be satisfied before it could be said that in paying the gratuity money was laid out or expended wholly and exclusively for the purpose of the business of the Company.
These tests the assessee did not satisfy in this case.
" Against this judgment and order the appellant Company has brought this appeal by special leave.
It was argued on behalf of the appellant that the amount had been paid as a matter of commercial expediency and in the interest of the Company as an inducement to other employees that if they rendered service in a similar manner with efficiency and honesty they would be similarly rewarded.
Decisive test, it was submitted, was whether such payments of gratuity were likely in future also and was the payment made as an incentive to the employees to give their best to the employer and if it was so then the payment was a matter of commercial prudence, It was also submitted that the Company had acted not with any oblique motive and 216 its good faith was not in doubt and in support of the contention several cases were relied upon.
In our opinion on the findings as given the payment in dispute does not fall within the provisions of section 10(2)(xv).
The amount was paid not in pursuance of any scheme of payment of gratuities nor was it an amount which the recipient expected to be paid for long and faithful service but it was voluntary payment not with the object of facilitating the carrying on of the business of the appellant Company or as a matter of commercial expediency but in recognition of long and faithful service of Mr. J. H. Philips.
There was no practice in the appellant company to pay such amounts and it did not affect the quantum of salary of the recipient.
The two cases strongly relied upon by the appellant Company were J. P. Hancok vs General Reversionary & Investment Company Ltd.(1) and J. W. Smith vs The Incorporated Council of Law Reporting for England and Wales(2).
In the former case the assessee Company sought to charge as a trade expense a lump sum which it had paid for the purchase for the benefit of a former actuary, of an annuity equal in amount to the pension which the Company had resolved to pay him.
This was held to be an expense admissible in computing the Company 's profits assessable to income tax.
But in that case it was the practice of the assessee company to grant pensions to its servants after a considerable period of service and this practice was known to the employees and affected the rate of salary paid by the Company in that the employees were willing to serve the Company at lower rates than they otherwise would have by reason of the expectation of the pension at the end of their service, In the latter case there was a practice of granting gratuities and that was the ground for holding the amount to be a proper deduction.
217 In our opinion the proper test to apply in this case is, was the payment made as a matter of practice which affected the quantum of salary or was there an expectation by the employee of getting a gratuity or was the sum of money expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business.
But this has not been shown and therefore the amount claimed is not a deductible item under section 10(2)(xv) The appeal therefore fails and is dismissed with costs.
Appeal dismissed.
[/INST]The company accepted the resignation of one of its directors and in appreciation of his long valuable services to the company, paid him a gratuity of Rs. 40,000/ .
This amount was claimed as a deduction under section 10(2) (xv) of the Income tax Act which was disallowed by the Income tax Officer, on the ground that the appellant company had no pension scheme; the payment was voluntary and that the entry in the assessee 's books clearly indicated it to be a capital payment.
^ Held, that the payment does not fall within the provisions of section 10(2)(xv) of the Act.
The amount was paid not in pursuance of any scheme of payment of gratuities nor was it an amount which the recipient expected to be paid for long and faithful service but it was for a voluntary payment not with the object of facilitating carrying on the business of the appellant company or as a matter of commercial expediency but in recognition of long and faithful service.
There Was no practice in the appellant company to pay such amounts to and did not affect the quantum of salary of the recipient.
To claim a deduction under section 10(2)(xv) of the Act the proper test to apply is, was that the payment made as a matter of practice which affected the quantum of salary or was there an expectation by the employee of getting a gratuity or was the sum of money expended on the ground of commercial expediency and in order indirectly to facilitate the carrying on of the business.
J. P. Hancok vs General Raversionary & Investment Co. Ltd. and J. W. Smith vs The Incorporated Council of Law Reporting for England and Wales, , REFERRED TO.
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<s>[INST] Summarize the judgementl Appeal No. 1613 of 1966.
Appeal from the judgment and decree dated August 19, 1963 of the Punjab High Court, Circuit Bench at Delhi in Letters Patent Appeal No. 50 D of 1960.
V.A. Seyid Muhammad, S.P. Nayar and B.D. Sharma ', for the appellants.
S.T. Desai, K.L.Arora, Bishambar Lal and H.K. Puri, for the respondent.
The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought by certificate from the judgment of the Division Bench of the Punjab High Court dated August 19, 1963 in Letters Patent Appeal No. 50 D of 1960.
An auction was held for the sale of licence of country liquor shop in Bela Road for the year 1949 50 on March 23, 1949.
The auction took place in pursuance of the conditions of "Auction of Excise Shops in Delhi for the year Clauses 31 and 33 of the conditions were to the following effect: "31.
The Chief Commissioner is under no obligation to grant any license until he is assured of financial status of the bidder.
At the conclusion of the auction an enquiry will be made into the financial position of any bidder not known to the excise staff and any such bidder shall if necessary be called upon to furnish security for the observance of the terms of his licence as required by sub section (2) of section 34 of the Punjab Excise Act 1 of 1914, as extended to Delhi Province.
596 33.
All final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons.
If no bid is accepted for any shop,_ the Chief Commissioner reserves the right to dispose.
it off by tender or otherwise as he thinks The respondent offered the highest bid of Rs. 4,01,000/ for the shop.
Under the Excise Rules the bidder had to deposit one sixth of the purchase price within seven days of the auction but the deposit was not made by the respondent.
In these circumstances the Chief Commissioner did not confirm the bid of the respondent and resale of the Excise Shop was ordered.
On May 3, 1949 the shop was again auctioned when Messrs Daulat Ram Amar Singh offered the highest bid of Rs. 2,20,000/ which was confirmed by the Chief Commissioner, on July 7, 1949.
Holding the respondent liable for the loss of Rs. 1,81,000 being the difference between the bid of the respondent and of Messrs Daulat Ram Amar Snigh the Collector of Delhi started proceedings for the recovery of Rs. 1,81,000,./. On July 22, 1949 the respondent filed a suit in the court of Senior Subordinate Judge, Delhi praying for a permanent injunction restraining the appellants from taking any proceedings to recover the amount.
The trial judge decreed the suit holding that the sale was subject to confirmation by the Chief Commissioner under cl. 33 and since the auction in favour of the respondent was not accepted by him there was no binding obligation between the parties.
The decree of the trial court was upheld by the lower appellate court.
In second appeal False, J., took the view that cl. 3 3 was not in consonance with the statutory rules and the contract came into existence when the bidding was closed in favour of the respondent on March 23, 1949.
The respondent was therefore held liable to make good the loss which the Government sustained in resorting to the resale of the excise shop.
The resportdent preferred an appeal under Letters Patent.
The Division Bench allowed the appeal reversing the decision of the single Judge and restored that of the trial court.
Clause 21 of rule 5.34 states: "A person to whom a shop has been sold shall pay one sixth of the annual fee within seven days of the auction (any deposits already made shall be credited to this sum, and any excess shall be either returned to him or credited to future payments).
By the 7th of the month in which he begins his business under his license and by the 7th of every subsequent month the licensee shall pay one twelfth of the annual fee till the whole fee is paid.
But he may at any time pay the whole amount due if he wishes.
If the total amount due is less than Rs. 100 it shall be payable in one sum unless the Collector for 597 special reasons, allows payment to be made in instalments.
If any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one sixth of the annual fee, or if he refuses to accept the license, the Collector may resell the license, either by public auction or by private contract, and any deficiency in price and all expenses of such resale or attempted resale shall be recoverable from the defaulting bidder in the manner laid down in section 60 of the Punjab Excise Act, 1 of 1914, as applied to the Delhi Province.
Rule 22 states: "When a license has been cancelled, the Collector may resell it by public auction or by private contract and any deficiency in price and all expenses of such resale or attempted resale shall be recoverable from the defaulting licensee in the manner laid down in section 60 of the Excise Act as applied .to the Delhi Province.
" On behalf of the appellants it was contended by Dr. Seyid Muhammad that the respondent was under a legal obligation to pay one sixth of the annual fee within seven days of the auction under cl. 21 of r. 5.34 and it.
was due to his default that a resale of the excise shep was ordered.
Under cl. 22 of r. 5.34 the respondent was liable for the deficiency in price and all expenses of such resale* which was caused by his default.
We are unable to accept this argument.
The first portion of cl. 21 requires the "person to whom the shop has been sold" to deposit one sixth of the total annual fee within seven days.
But the sale is deemed to have been made in favour of the highest bidder only on the completion of the formalities before the conclusion of the sale.
Clause 16 of r. 5.34 states that "all sales are open to revision by the Chief Commissioner".
Under cl. 18, the Collector has to make a report to the Chief Commissioner where in his discretion he is accepting a lower bid.
Clause 33 of the Conditions, exhibit D 28, states that "all final bids will be made subject to the confirmation by the Chief Commissioner who may reject any bid without assigning any reasons.
" It is, therefore, clear that the contract of sale was not complete till the bid was confirmed by the Chief Commissioner and till such confirmation the person whose bid has been provisionally accepted is entitled to withdraw his bid.
When the bid is so withdrawn before the confirmation of the Chief Commissioner the bidder will not be liable for damages on account of any breach of contract or for the shortfall on the resale.
An acceptance of an offer may be either absolute or conditional.
If the acceptance is conditional the offer can be withdrawn at any moment until absolute acceptance has taken place.
This view is borne out by the 598 decision of the Court of Appeal in Hussey vs HornePayne(1).
In that case V offered land to P and P accepted 'subject to the title being approved by my solicitors '.
V later refused to go on with the contract and the Court of Appeal held that the acceptance was conditional and there was no binding contract and that V could withdraw at any time Until P 's solicitors had approved the title.
Jessel, M.R. observed at p. 626 of the report as follows: "The offer made to the Plaintiff of the estate at that price was a simple offer containing no reference whatever to title.
The alleged acceptance was an acceptance of the offer, so far as price was concerned, 'subject to the title being approved by our solicitors '.
There was no acceptance of that additional term, and the only question which we are called upon to decide is, whether that additional term so expressed amounts in law to an additional term or whether it amounts, as was very fairly admitted by the counsel for the Respondents, to nothing at that is, whether it merely expresses what the law would otherwise have implied.
The expression 'subject to the title being approved by our solicitors ' appears to me to be plainly an additional term.
The law does not give a right to the purchaser to say that the title shall be approved by any one, either by his solicitor or his conveyancing counsel, or any one else.
All that he is entitled to require is what is called a marketable title, or, as it is sometimes called, a good title.
Therefore, when he puts in 'subject to the title being approved by our solicitors ', he must be taken to mean what he says, that is, to make a condition that solicitors of his own selection shall approve of the title.
" It was submitted on behalf of the appellant that the phrase "person to whom a shop has been sold" in cl.
21 of r. 5.34 means a " 'person whose bid has been provisionally accepted".
It is not possible to accept this argument.
As we have already shown the first part of cl.
21 deals with a completed sale and the second part deals with a situation where the auction is conducted by an officer lower in rank than the Collector.
In the latter case the rule makes it clear that if any person whose bid has been accepted by the officer presiding at the auction fails to make the deposit of one sixth of the annual fee, or if he refuses to accept the licence, the Collector may resell the licenee, either by public auction or by private contract and any deficiency in price and all expenses of such resale shall be recoverable from the defaulting bidder.
In the present case the first part of cl. 21 applies.
It is not disputed that the (1) at 676.
599 Chief Commissioner has disapproved the bid offered by the respondent.
If the Chief Commissioner had granted sanction under cl. 33 of exhibit D 23 the auction sale in favour of the respondent would have been a completed transaction and he would have been liable for any shortfall on the resale.
As the essential pre requisites of a completed sale are missing in this case there is no liability imposed on the respondent for payment of the deficiency in the price.
For these reasons we hold that the judgment of the Punjab High Court dated August 19, 1963 in L.P.A. No. 50 D of 1960 is correct and this appeal must be dismissed with costs.
G.C. Appeal dismissed.
[/INST]In an application under section 15 of the the respondents claimed that they were workers within the meaning of section 2(1) of the .
The Additional District Judge found that some of the respondents were time keepers who maintained attendance of the staff.
job card particulars of the various jobs under operation and the time sheets of the staff working on various shops dealing with the production of Railway spare parts and repairs etc.
and that other respondents were head time keepers entrusted with the task of supervising the work of other respondents.
He, therefore, came to the conclusion that the work done by the respondents was "incidental to" or "connected with" the manufacturing process.
The High Court in revision affirmed this order.
On the question whether the respondents fell within the purview of the definition of "worker" in section 2(1) of the .
HELD : (ii) The conclusion of the Additional District Judge on the nature of the work of the respondents being one of fact must be held to be binding on the High Court on revision and also not open to reassessment on the merits in this Court on special leave appeal from the order of the High Court.
(ii) The definition in section 2(1) is fairly wide because it takes within its sweep not only persons employed in manufacturing process but also in cleaning any part of the machinery or premises used for a manufacturing process and goes far beyond the direct connection with the manufacturing process by extending it to other kinds of work which may either be incidental to or connected with not only the manufacturing process itself but also the subject of the manufacturing process.
The definition therefore does not exclude those employees who were entrusted solely with clerical duties, if they otherwise fell within the definition of the word " worker".
All legislation in a welfare state is enacted with the object of promoting general welfare, but certain types of enactments are more responsive to some urgent social demands and also have more immediate and visible impact on social vices by operating more directly to achieve social reforms.
The belongs to this category and, therefore.
demands an interpretation liberal enough to achieve the legislative purpose, without doing violence to the language.
[728 C D; 731 B D]
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<s>[INST] Summarize the judgementCivil Appeal No. 559 of 1960.
Appeal by special leave from the judgment and order dated May 1/14, 1957, of the Income Tax Appellate Tribunal of India (Delhi Bench) in I.T.A. No. 2070 of 1956 57.
K.N. Rajagopal Sastri and D. Gupta, for the appellant.
Radhey Lal Agarwal and P.C. Agarwal for the respondents.
867 1962.
January 29.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal against the order of the Income tax Appellate Tribunal, Delhi Bench, dated May 1/14, 1957, by which the tribunal, reversing the order of the Appellate Assistant Commissioner, held that a loss arising from the sale of certain shares by the respondent Company was a capital loss.
Subsequent to the order of the Tribunal impugned here, the Commissioner of Income tax, New Delhi, who is the appellant before us, had moved the Tribunal for a reference to the High Court on certain questions of law said to arise out of the order of the Appellate Tribunal.
That application was found to be barred by one day, and since, under the law, the Tribunal had no jurisdiction to extend the time, the application was dismissed.
Against the decision of the Tribunal, an application was filed in the High Court under section 66(3) of the Income tax Act; but the High Court dismissed the application, agreeing with the Tribunal that the application to the Tribunal for a reference was barred by time.
The Commissioner of Income tax then applied for special leave against the order passed by the Tribunal in the appeal before it, and the present appeal, with special leave, has been filed.
Before we examine the merits of the case, we shall deal with a preliminary objection raised on behalf of the respondent that the appeal is incomepetent, in view of the decision of this Court in Chandi Prasad Chokhani vs State of Bihar (1) where it was held that this Court would not entertain an appeal directly from an order of the Tribunal by passing the decision of the High Court, except in very exceptional circumstances.
The appellant relies upon the decision of this Court in Baldev Singh vs Commissioner of Income tax (2), and contends 868 that the exceptional circumstances existing in the latter case and adverted to in the former, govern the present case.
The facts relating to the filing of the application for reference together with the relevant dates are these: The Tribunal 's order was passed by two learned Members, who signed their respective orders on different dates.
The Accountant Member signed his order on May 1, 1957, and the Judicial Member, on May 14, 1957.
The notice of the order was sent to the Commissioner of Income tax, New Delhi, and reached his office by registered post on July 15, 1957.
It was received by one Motilal Pathak, a clerk in the office of the Commissioner.
Motilal 's affidavit shows that, he suddenly fell ill, and had to take casual leave for the day.
He returned to the office the next day, and dealt with the notice received from the Tribunal.
By a mischance, which is easy to appreciate, the date stamp of the receipt of the papers was affixed on the 16th, and bore that date instead of the real date, viz., the 15th, on which the papers had actually been received.
Relying upon the date stamp, everybody took it for granted that limitation would expire on the 60th day, counting time from July 16, 1957.
The application was filed on the last day of limitation on that supposition.
Actually, the application was barred by a day.
The Income tax Tribunal, therefore, dismissed the application on December 4, 1957.
The decision of the Tribunal was unsuccessfully challenged before the High Court.
It is evident that the decision of the Tribunal was quite correct, and the Tribunal had no option but to dismiss the application, since the law gives no jurisdiction to the Tribunal to extend limitation, as is done under section 5 of the Indian Limitation Act.
This Court then granted special leave against the order of the Tribunal passed in the appeal 869 before it, and the question is whether the appeal should be heard or the leave revoked, in view of the decision in Chokhani 's case (1).
In Chokhani 's case (1), the attempt was to bypass the decision of the High Court on a question referred to the High Court for decision and also another decision of the High Court that no other point of law arose from the order of the Tribunal.
It was held that this Court would not allow the High Court to be by passed, and that an appeal from the decision of the Tribunal in the circumstances was incompetent.
A similar view was again expressed in two other cases, viz., Indian Aluminium Co. Ltd. vs Commissioner of Income tax (2) and Kanhaiyalal Lohia vs The Commissioner of Income tax (3).
In all the three cases, reliance was placed by the appellants therein upon the decisions of this Court in Dhakeswari Cotton Mills, Ltd. vs Commissioner of Income tax (4) and Baldev Singh vs Commissioner of Income tax (5) It was pointed out in the judgments of this Court that the two cases relied upon were decided on the special circumstances existing there.
In the first, there was a question of breach of the principles of natural justice, which could not be raised otherwise than by an appeal with the special leave of this Court.
In the second case, it was pointed out that limitation was lost by the party through no fault of his, inasmuch as a letter was unduly delayed in post.
In our opinion, in the present case also, special circumstances which justified the grant of special leave in Baldev Singh 's case (5), exist.
There was a combination of circumstances which led to the filing of the application a day late, but in circumstances showing that the default was not due to any negligence on the part of the Commissioner of Income tax.
The receipt of the notice on July 15 is admitted; but the affixing of the date stamp on the 16th was due to the failure of the 870 clerk to deal with the notice on the 15th because he fell ill and had to leave the office.
It is common knowledge that date stamps are altered every day in the office, and this is done mostly by a very junior employee.
The affixing of the date stamp on the 16th and the notice consequently bearing that date went unnoticed, and relying upon the date stamp, the appeal was filed, though on the last day of limitation but within time.
In these circumstances, it is difficult to say that the Commissioner of Income tax was negligent and the negligence, if any, on the part of the clerk in affixing a wrong date stamp is excusable, if one considers his illness and his absence from the office on the 15th.
In our opinion, this case comes within the rule of Baldev Singh 's case (1) and an appeal direct to this Court from the Tribunal 's order is justified by the special circumstances.
By this appeal, no decision of the High Court can be said to be bypassed, because the decision of the High Court related to the correctness of the decision of the Tribunal on the question of limitation, which is not a question which is sought to be raised in an indirect way by the present appeal.
We, therefore, overrule the preliminary objection.
The assessee Company is the National Finance Ltd., New Delhi.
It is a public limited Company which was incorporated in 1943.
It deals in shares and securities and also as financiers.
The present case arises from a deal in 3,000 shares of the Madhusudan Mills Ltd., Bombay, by the assessee Company.
In the year of account, May 1, 1949, to April 30, 1950, corresponding to the assessment year, 1951 52, the assessee Company sold these shares suffering a loss of Rs. 5,48,712 8 0, which it claimed as one on the sale of its stock in trade.
The Income tax Officer and the Appellate Assistant Commissioner held it to be a capital loss.
The 871 Appellate Tribunal, Delhi Bench, reversed the decision, and held in favour of the assessee Company.
The only question in this appeal is whether the decision of the Tribunal is right.
The assessee Company belongs to a group of Companies controlled by one Lala Yodh Raj Bhalla and certain persons associated with him.
It is convenient to describe these persons as the 'Yodh Raj Bhalla group '.
These Companies are (1) Jaswant Sugar Mills Ltd., (2) Jaswant Straw Boards Ltd., (3) National Finance Ltd., (4) National Construction and Development Corporation Ltd., (5) Ganesh Finance Corporation Ltd., and (6) Raghunath Investment Trust Ltd. The interrelation of these.
Companies is very intimate, and they are practically owned by the 'Yodh Raj Bhalla group '.
To understand this, the following analysis of the shareholdings of these Companies must be sufficient: (1) Jaswant Sugar Mills Ltd. 2,00,000 shares (i) Jaswant Straw Board Ltd. 44,845 (ii) National Finance Ltd. 67,390 (iii)National Construction and Development Corporation Ltd. 47,800 _______ 1,60, 035 (i.e. over 80 per cent) (2) Jaswant Straw Board Ltd. 6,176 shares.
(i) National Finance Ltd. 4,783 (ii) National Construction and Development Corporation Ltd. 500 _____ __ 5,200 odd (or nearly 84 per cent) 872 (3) National Finance Ltd. (assessee Company) 50,000 shares.
Ganesh Finance Corporation Ltd. 48,000 (or over 96 per cent) (4) National Construction and Develop ment Corporation Ltd. 1,30,504 shares.
Ganesh Finance Corporation Ltd. 1,30,500 (almost all) (5) Ganesh Finance Corporation Ltd. 50,000 shares.
Raghunath Investment Trust Ltd. 49,795 (99.6 per cent of the capital) (6) Raghunath Investment Trust Ltd. 10,000 shares.
(i) Mr. Yodh Raj Bhalla 1,500 (ii) Mrs. Bhalla 1,000 (iii) Mr. N. C. Malhotra (brother in law) 1,000 (iv) Mr. Ram Prasad (father in law) 1,000 (v) Mr. Dina Nath (Secretary) 1,000 (vi) National Finance Ltd. 3,499 (vii) Mr. Piyare Lal Saha 1 9,000 (90 per cent).
The resulting position may be stated thus: Ganesh Fiance Corporation Ltd. practically owns the assessee Company and National Construction and Development Corporation Ltd., Raghunath Investment Trust Ltd. practically owns the Ganesh Finance Corporation Ltd., and 'Yodh Raj Bhalla group ' practically owns Raghunath Investment Trust Ltd. 873 Jaswant Sugar Mills Ltd. is practically owned by Jaswant Straw Board Ltd., National Finance Ltd., and National Construction and Development Corporation Ltd., and Jaswant Straw Board Ltd., is practically owned by National Finance Ltd., and National Construction and Development Corporation Ltd. Thus, the entire group is owned by a consortium, and there is no doubt about it.
The shares of Madhusudan Mills Ltd. were acquired in the following circumstances: In July 1948, Mr. Yodh Raj Bhalla, who was in a position by reason of his holdings in these six Companies to influence decisions of the Board of Directors, arranged to purchase 26,547 shares of the Mills from Messrs. Bhadani Brothers, Ltd., who were the managing agents of the Mills.
This block of shares represented about 80 per cent of the total issued capital of the Mills, The purchase was made at Rs. 400 per share, when the price in the market, was about Rs. 250 per share.
Out of the remaining shares which were on the market 200 shares were purchased at Rs. 252 8 0 per share, which was then the quoted price.
Now, these shares were purchased by Jaswant Sugar Mills Ltd., but the money for the purchase of the shares was obtained by borrowing it from some of the other concerns.
These Companies, as has been shown above, were completely under the control of 'Yodh Raj Bhalla group '.
The arrangement for the money was as follows: Rs. 14,75,000 borrowed from the assesee Company.
Rs. 5,00,000 from National Construction and Development Corporation Ltd. Rs. 55,00,000 from the assessee Company but advanced by Ganesh Finance Corporation Ltd. 874 The shares were registered as follows: 10,500 shares registered in the name of the assessee Company.
5,400 shares in the name of the National Construction and Development Corporation Ltd., and the balance in the names of the nominees of Jaswant Sugar Mills Ltd., which meant, largely, persons belonging to the 'Yodh Raj Bhalla group '.
On October 9, 1949, the assessee Company purchased 15,547 shares at Rs. 400 per share from Jaswant Sugar Mills Ltd., and the amount paid by the assessee Company was adjusted towards the purchase price and the balance was paid.
On the same day, the remaining 11,000 shares were sold by Jaswant Sugar Mills Ltd. to National Construction and Development Corporation Ltd., at Rs. 400 per share.
Thus, on that date Jaswant Sugar Mills Ltd. ceased to have any connection with the present matter.
It may be pointed out that on the date on which the two transactions took place, the priceruling in the market was about Rs. 217 8 0.
Before Jaswant Sugar Mills Ltd. parted with the shares, they.
had appointed a new Board of Directors of the Madhusudan Mills Ltd., and these new Directors also belonged to the same group.
The managing agency of Messrs. Bhadani Brothers Ltd. was terminated, and on the same day on which the shares were purchased from these managing agents, the assessee Company was appointed as the purchasing and selling agent of the Mills.
The assessee Company made enormous profit from the acquisition of these shares by way of dividend and commission as the purchasing and selling agent.
In October and November, 1948 they, however, sold 6,525 shares to Dalmia Cement and Marketing Company Ltd. at Rs. 400 per share.
These shares subsequently came back to the same group; but 875 that is not a matter with which we are immediately concerned.
On April 7, 1949, 4,500 shares were sold by the assessee Company to the National Investment Trust Ltd. at Rs. 181 per share resulting in a loss of Rs. 8,80,000, and on June 1, 1949, another block of 3,000 shares was sold to the National Investment Trust Ltd., at Rs. 180 per share, resulting in a loss of Rs. 5,86,312.
We are not concerned with the loss arising from the first sale which was considered in the assessment year, 1950 51, and in respect of which a reference is pending in the High Court of Punjab.
We are concerned with the loss in the second year relating to the assessment year, 1951 52.
In that year, the loss on the sale of the shares was sought to be set off against the profits made, and the loss practically cancelled the profits.
The shares which were sold by the assessee Company on the two occasioning were sold to one Amrit Bhushan (a relative of Mr. Yodh Raj Bhalla) who sold then the same day to Messrs. National Investment Trust Ltd., at the slender profits of 8 annas per share, which was brokerage.
Thus, at the beginning and at the end, though numerous transactions had taken place, the shares continued to be the property of the 'Yodh Raj Bhalla group '.
The question is whether the loss on the sale of the shares be set off against the profits in the year in which the sales and profits were respectively made.
The assessee Company was assessed for the assessment year, 1950 51, by the Income tax Officer, Meerut.
In that year, the loss of Rs. 8,78,062 8 0 arising from the sale of Rs. 4,520 shares of Madhusudan Mills Ltd. was set off against the profits of the assessee Company.
The case of the assessee Company for the assessment year, 1951 52, was considered by the Income tax Officer, Central Circle V, New Delhi, to whom the cases of the other Companies above named were also transferred.
By looking into the 876 affairs of these Companies, he came to learn, that the shares of the Madhusudan Mills Ltd. were purchased at a price, which was almost double the current market price, by the 'Yodh Raj Bhalla group, and were transferred at the same price to the assessee Company.
He found that this was done with a view to removing Messrs. Bhadani Brothers, Ltd. from their managing agency and to securing for the assessee Company the purchasing and selling agency of the Mills.
On the date of the purchase from Messrs. Bhadani Brothers, Ltd., Jaswant Sugar Mills Ltd. achieved this purpose in view of their controlling interest.
Bhadani Brothers, Ltd. ceased to be the managing agents from that date, and the purchasing and selling agency of the Madhusudan Mills, Ltd. was given to the assessee Company, though it had, on that day, done no more than give a loan to Jaswant Sugar Mills Ltd. In the assessment year, 1951 52, the loss of Rs. 5,86,312 8 0 on the sale of 3,000 shares was, therefore, disallowed holding it to be a capital loss.
The order of the Income tax Officer, Central Circle V, New Delhi was confirmed on appeal by the Appellate Assistant Commissioner.
On further appeal by the assessee Company, the Income tax Appellate Tribunal, Delhi, reversed the order of the Appellate Assistant Commissioner, and held that the loss was a trading loss.
Whether a particular loss is a trading loss or a loss on the capital side undoubtedly depends upon the facts of each case.
But it has been held, over and over again, that the question is not one of pure fact, and that a mixed question of fact and law is always involved.
The cases to which we shall make a reference presently, have laid down this proposition, and those cases have also indicated how the matter is to be viewed in the context of facts.
In Commissioner of Income tax vs Ramnarain Sons Ltd. (1), the Company was a dealer in shares 877 and also carried on the business of acquiring managing agencies of other Companies.
The Company the acquired the managing agency of a Textile Mill from Messrs. Sassoon J. David and Co. Ltd., and also agreed as part of the same transaction to buy 2,507 shares of the Mills.
1,507 shares were purchased at Rs. 2,321 8 0 per share, and the remaining 4,000 shares were purchased at Rs. 1,500 per share.
These shares were quoted on the market at Rs. 1,610.
Later,4,000 shares were sold at a loss of Rs. 1,78,000 This was shown in the books of the Company as a busines loss but was disallowed, as the shares were not held to be the stock in trade of the business of the Company as share dealers.
On a reference to the High Court of Bombay, a Divisional Bench upheld the view of the Tribunal.
Chagla,C. J., in delivering the judgment of the Court, observed that a managing agency being an asset of an enduring nature, the way to look at the matter was to enquire what was, the primary intention in acquiring the shares.
The learned Chief Justice then referred to a judgment of this Court reported in Kishan Prasad & Co. Ltd. vs Commissioner of Income tax (1), where it was observed: "It seems that the object of the assessee Company in buying shares was purely to obtain the managing agency of the third mill which no doubt would have been an asset of an enduring nature and would have brought them profits but there was from the inception no intention whatever on the part of the assessee Company to re sell the shares either at a profit or otherwise deal in them." The learned Chief Justice then considered the argument that a block of shares might have to be bought, if at all, at a higher price, and observed as follows: "A dealer in shares may succeed in getting a large number of shares at a price less than 878 the market price if the seller is in difficulties and wants to get rid of his shares and to get liquid assets.
But we have not heard of a dealer in shares purchasing a large number of shares at a higher value than the market value.
The other circumstance which is equally strong in this case is that the shares were purchased for the acquisition of the managing agency.
Therefore the real object of the assessee company was not to do business in these shares, not to make profit out of these shares, but to acquire a capital asset out of which it would earn managing agency commission and make profit." Messrs. Ramnarain and Sons.
Ltd. then appealed to this Court, and the decision of the Bombay High Court was upheld.
The Judgment of this Court is reported in Ramnarain Sons (Pr.) Ltd. vs Commissioner of Income tax (1).
It was laid down by this Court that in considering whether a transaction was or was not an adventure in the nature of trade, the problem must be approached in the light of the intention of the assessee, having regard to the "legal requirements which are associated with the concept of trade or business".
Dealing with the price above the market price which was paid in that case, it was observed: "Even assuming that the appellants acquired the entire block of 2,507 shares from M/s. Sassoon J. David & Co. Ltd. the shares transferred to the names of the directors being held by them merely as nominees of the appellants the price per share was considerably in excess of the prevailing market rate.
The only reason for entering into the transaction, which could not otherwise be regarded as a prudent business transaction, was the acquisition of the 879 managing agency.
If the purpose of the acquisition of a large block of shares at a price which exceeded the current market price by a million rupees was the acquisition of the managing agency, the inference is inevitable that the intention in purchasing the shares was not to acquire them as part of the trade of the appellants in shares.
" The above two decisions are merely the application of a principle of long standing, which has been stated over and over again in the past.
In Oriental Investment Co. Ltd. vs Commissioner of Income tax (1), that principle was reiterated, and it was that the object for which a company was formed did not invest the deal with the characteristics of a trade in shares, but that other circumstances along with that fact must be considered to find out the real object of a particular venture.
Before we deal with the present case, one other case of this Court may be noticed.
In Rajputana Textiles vs Commissioner of Income tax (2), the converse conclusion was reached.
There, on the facts and circumstances of the case, it was held that a particular deal in shares was a commercial venture and had all the attributes of an adventure in the nature of trade.
In that case, the transaction was not a single or an undivided one with a slump payment, because for the managing agency, Rs. 12,50,000 were paid separately and for the shares, a sum of Rs. 83,98,000 was paid.
The two acquisitions being different, the profit on the sale of some of the shares was considered to be a gain on the revenue side.
There is no doubt, whatever, that the shares of the Madhusudan Mills Ltd. were acquired at a price considerably higher than the market price.
In fact, that the price paid was almost double.
Such a deal, from the business point of view, was not prudent, unless the purchaser stood to gain in some 880 other way.
It was contended before us that this was a speculative deal in the hope that the price of the shares would firm up when the textile industries would revive.
If this was the intention, then it might possibly be argued that the purchasers miscarried in their calculations, and suffered a loss in a business transaction.
But, was this the intention of the Directors of Jaswant Sugar Mills Ltd. ? Those who sold the shares were not only in possession of the shares but also of the managing agency of the Madhusudan Mills Ltd., and the intention of the Directors of Jaswant Sugar Mills Ltd. was to remove the sellers from their position as managing agents and to get the entire benefit of such or other agencies for themselves.
The assessee Company has urged that might have been the intention of they Jaswant Sugar Mills Ltd. but not of the assessee Company which had, on that day, merely given a loan to Jaswant Sugar Mills Ltd. Curiously enough, however, the immediate benefit of the deal was the acquisition of the selling and purchasing agency of the Mills, and that was obtained not in favour of Jaswant Sugar Mills Ltd. but of the assessee Company, even though on July 15, 1948 (the date of purchase) the assessee Company had obtained registration of 10,5000 shares by way of security in its own name.
Why the assessee Company was favoured in this way is not far to seek.
It mattered not whether Jaswant Sugar Mills Ltd. acquired that agency or the assessee Company; the benefit thereof went to the same group of persons.
The transaction of sale of the shares was also made within three months of their purchase, and the assessee Company not only bought the 10,500 shares which stood in its name but 15,547 shares, which gave the assessee Company a controlling voice in the affairs of the Mills.
The assessee Company continued to retain the selling and purchasing agency, which was very profitable.
Indeed, on its investment in the first year of Rs. 14 lakhs odd, it 881 made a profit of about Rs. 7 lakhs.
The question, therefore, would be whether the assessee company in purchasing the shares merely wished to deal in shares as stock in trade, or was acquiring a capital asset of an enduring nature.
This question is not one of fact, pure and simple, hut one of an inference in law from the proved circumstances of the case.
The Income tax Officer, in deciding this question against the assessee Company, pointed out numerous circumstances, which showed clearly that this was not a mere purchase of shares as shares by a speculator, who, buying a big block, sometimes pays slightly more than the market rate.
Bhadani Brothers Ltd., owned not only the shares but also the managing agency, and it is obvious that they would not part with the shares without charging for the managing agency.
The price of Rs. 400 per share was so out of proportion to the market price that it indicated, by itself, the acquisition of something more than the mere shares.
According to the Income tax officer, the real intention was to acquire lucrative agencies of the Mills, and this intention, whether it was held by Jaswant Sugar Mills Ltd. Or the assessed Company or both, was of the same body of persons.
The Appellate Assistant Commissioner endorsed the view of the Income tax officer; but the Tribunal made a distinction between one Company and another, and that distinction has been pressed upon us by the assessee Company.
Relying upon the well known case of Salomon vs Salomon & Co. Ltd.(1), it was argued before us that each company must be viewed as a separate entity, and that the intention of one company could not be attributed to another company, even though the proprietorship of the companies might be same.
As a proposition affecting companies, it cannot be gainsaid; but we are not concerned with a theoretical question as to the assesee Company being a separate legal entity, but with the 882 question whether a particular loss made by the assessee Company is a capital or a revenue loss.
The two Companies, i. e., jaswant Sugar Mills Ltd. and the assessee Company, were directed by the same set of persons, and the facts show that even though Jaswant Sugar Mills Ltd. temporarily acquire the shares, they conferred all the benefits of the acquisition upon the assessee Company from the very first day.
The assessee Company also ultimately came into possession of all the shares along with another Company, which was also directed by the same persons, and Jaswant Sugar Mills Ltd. went out of the picture within three months.
In these circumstances, it is easy to see that the interposition of Jaswant Sugar Mills Ltd. was merely a device to secure the benefit of the English case, to which we have referred.
It was never intended that Jaswant Sugar Mills Ltd. would hold the shares or the benefits arising from the acquisition of a block of shares, giving to the holder a decisive voice in the affairs of Madhusudan Mills Ltd. That controlling interest was acquired by the `Yodh Raj Bhalla group ' for the benefit of the assessee Company, and it was an acquisition of an interest of an enduring nature.
Reference was made, in this connection, to the transactions with the Dalmia Cement and Marketing Co. Ltd. in which the latter paid the same price namely, Rs. 400 per share.
Perhaps, the Dalmia Company was after the controlling interest in its own way, and it is significant to note that within a short time, those shares again found their way in the hands of the same group.
Similarly, the shares changed hands even within this group through the agency of Amrit Bhushan, no doubt a broker but also a relative of Mr. Yodh Raj Bhalla, who profited only to the extent of 8 annas per share, and bought and sold the shares from one Company to mother on the same day.
All this show that the affairs of there Companies were centrally arranged, and the 883 intention was to benefit the assessee Company by the acquisition of a large block of shares at a very much later prices than obtaining in the market, to acquire certain agencies of a profitable character.
In our opinion, this transaction must be regarded as one on the capital side.
Shares were never treated as part of the stock in trade.
They were not sold in the market, but were sold at a loss to another Company belonging to the same group, with the obvious intention of setting off the losses against the profits, thus cancelling the profits, and saving them from taxation.
In the result, the appeal is allowed, with costs on the respondent.
Appeal allowed.
[/INST]The respondent was a company dealing in shares and securities and belonged to a group of companies all controlled by the same persons.
In the year of account, corresponding to the assessment year 1951 52, the respondent sold the shares relating to Madhusudan Mills Ltd., which it had acquired sometime earlier, suffering a loss for which it claimed a set off against the profits in that year.
The Income tax Officer found that the shares in question had been purchased by J, a company belonging to the group, at a price which was almost double the current market price, that it was so done with a view to removing the sellers from their managing agency and to securing for the respondent the purchasing and selling agency of the Mills, and that after the purchase J achieved the purpose in view of its controlling interest and the purchasing and selling agency of the Mills was given to the respondent, though the latter had done no more than give a loan to J.
It was also found that soon after the purchase the shares in question came into the possession of the respondent and that when the shares were sold it was not in the market but at a loss to another company belonging to the same group.
The Income tax Officer came to the conclusion that in getting the shares the respondent did not deal with them as stock in trade but was acquiring a capital asset of an enduring nature.
Accordingly, he disallowed the claim holding the loss to be a a capital loss.
The Appellate Tribunal, however, held in favour of the respondent on the view that a distinction must be made between the respondent company and J. The Commissioner of Income tax moved the Tribunal for a reference to the High Court, but it was dismissed on the ground that though it was barred only by one day and there was no negligence on the part of the Commissioner, the Tribunal had no power to extend time.
An application to the High Court was also dismissed.
The Commissioner of Income tax then applied for and got special leave to appeal against 866 the order passed by the Tribunal.
When the appeal came on for hearing in due course the respondent raised an objection that the appeal was not maintainable because no appeal was filed against the order of the High Court, and relied on the decision in Chandi Prasad Chokani vs State of Bihar, ; ^ Held, that the appeal was maintainable because there was no question of by passing the order of the High Court which only related to the correctness of the decision of the Tribunal on the question of limitation which was not the subject of the present appeal.
Held, further, that there were special circumstances which justified the grant of special leave.
Baldev Singh vs Commissioner of Income tax , applied.
Chandi Prasad Chokhani vs State of Bihar ; , distinghuished.
Held, also, that, on the facts, the object was to purchase a large block of shares at a much larger price than the market value to acquire certain agencies of a profitable character, that the purchase of the shares by J was merely a device but the controlling interest was acquired by the respondent, and that the transaction must be regarded as one on the capital side.
Ramanarain Sons (P.) Ltd. vs Commissioner of Income tax, ; and Oriental Investment Co. Ltd. vs Commissioner of Income tax, ; , applied.
Salomon vs Salomon & Co. Ltd. ; , distinguished.
</s> |
<s>[INST] Summarize the judgementminal Appeal No. 226 of 1960.
Appeal by special leave from the judgment and order dated July 28, 1960 of the Madhya Pradesh High Court in Criminal Appeal No. 385 of 1959.
A. R. Choubay and Naunit Lal, for the appellant.
I. N. Shroff, for the respondent.
April 23.
The judgment of the Court was delivered by RAGHUBAR DAYAL J.
This appeal, by special leave, is directed against the order of the High Court of Madhya Pradesh reversing, on State appeal, the order of the Additional Sessions judge, Hoshangabad, acquiring the appellant, and convicting him of an offence under section 414 I. P.C. Five bales, containing woollen shawls and mufflers despatched from Kanpur by the British India Corporation Ltd., Kanpur Woollen Mills Branch, Kanpur, and another bale despatched from 291 Haimanpur to Kanpur were loaded at Itarsi railway station on September 18, 1957, in Wagoa No. C.R. 325.
The lock of the wagon wag found broken open at Pandhurna Railway Station at about 1.00 a.m. on September 20, 1957.
on checking at Nagpur the aforesaid bales were found missing.
One of the bales despatched from Kanpur was found lying the next morning near the railway line between railway stations Jaulkheda and Multai.
On September 23, 1957, the house of one Gopi Nath, at Multai, was searched and certain articles, including some torn labels were recovered from that house.
The same day, the police found the appellant and a few other persons come out of Gopi Nath 's house at Betul, whose front door was locked.
Subsequently, these persons were taken to the police station, where the appellant made a statement showing readiness to point out the stolen property.
At his instance, the police recovered from different places of that house, woollen shawls, mufflers, bed sheets and certain house breaking implements.
These recoveries were made on September 23 and 24.
As a result of investigation, six persons were put on trial in the Magistrate 's Court.
Ajendra Nath, appellant, was charged under sections 120 B, 379 and 414, I.P.C. Babu Ram was charged under sections 120 B and 379 I.P.C. Ram Prasad and Gyarsi were charged under section 120 B read with section 879 I.P.C., Gopinath under section 120 B read with section 414 I.P.C. and Birendranath under section 414 I.P.C.
The learned Magistrate acquitted Birendra Nath and convicted the other accused of the offence under section 120 B read with section 379 I.P.C., except in the case of Gopinath, who was convicted of the offence under section 120 B read with section 414 I.P.C. Ajendra Nath was also convicted of the offence tinder section 414 I.P.C. 292 On appeal, the learned Additional Sessions judge, Hoshangabad, acquitted all these convicted persons.
He held that the property recovered was not proved to be stolen property and that the alleged conspiracy was not proved.
The State filed an appeal against the acquittal of Gopinath and Ajendra Nath.
The High Court dismissed the appeal against Gopinath and the appeal against Ajendra Nath for the offence of conspiracy.
It however allowed the appeal against Ajendra Nath with respect to the offence under section 414 I.P.C.
It is against this order that this appeal has been filed by Ajendra Nath, appellant.
Ajendra Nath did not question the recovery of the various articles from Gopi Nath 's house at Betul at his instance.
He did not claim the property to be his own, but stated that it was not stolen property.
The main contention for the appellant in this Court has been that these recovered article; were not proved to be stolen property.
Tile articles consisted of those said to have been sent by the British India Corporation Ltd., Kanpur Woollen Mills Branch, Kanpur, and bed sheets sent by the firm of V.S.N.C. Narsingha Chettiar, which carries on business of wholesale Hand Loom Cloth at Karur.
The invoices relating to the four bales sent by ' the Kanpur Woollen Mills give the details of the shawls and mufflers the bales contained.
A very large quantity of these has been recovered.
Out of 95 shawls and 63 mufflers, as many as 80 shawls and, 43 mufflers had been recovered.
Similarly, out of 10 pairs of bed sheets stolen, 8 pairs have been recovered.
The absence of any adequate explan ation for the presence of such a large quantity of articles similar to those proved to have been despatched by the Kanpur Woollen Mills or by the Karur company, the recovery of these articles within 293 a few days of the theft, the presence of silk and paper labels of Kanpur Woollen Mills on most of the shawls and mufflers recovered and of certain manuscript writings on the labels of the bed sheets by P.W. 24 Krishnamurthi, brother of P.W. 16, Venkat Raman, who does the Karur business, have been taken into consideration by the High Court for coming to the finding that the property recovered was proved to be stolen property.
These circumstances cannot be said to be such which would not justify the finding arrived at.
The main contention for the appellant however is that it has not been definitely established from the evidence of Kunzru, P. W. 10, that the shawls, mufflers recovered were manufactured by the Kanpur Woollen Mills and were despatched in the bales which were subsequently stolen.
Kunzru 's evidence does fall short of establishing that the shawls and mufflers recovered were manufactured by the Kanpur Woollen Mills.
He has not identified the recovered shawls and mufflers as those manufactured by these mills.
In fact, he was not even shown all the shawls and mufflers recovered.
He was shown by the Police Inspector, Government Railway Police, two lois (two shawls) and two mufflers.
He got them examined by the textile expert and, on the report of the expert, gave the certificate that they appeared to be manufactured by the Woollen Mills of Kanpur.
That expert has not been examined in Court and therefore Kunzru 's statement alone fails to establish that these shawls and mufflers were manufactured by these mills.
However, it is not open to doubt that they were manufactured by these mills when most of them had sewn silk labels of these mills and quite a good number of them had even paper labels indicating that they were manufactured by these mills.
There, is no reason to suppose and in fact no such suggestion has been made that these labels had been put on these articles by some one for the purpose of 294 deception.
We therefore consider that the finding that these shawls and mufflers were the manufacture of Kanpur Woollen Mills is correct.
It was also contended for the appellant that it was not proved that these shawls and mufflers were in the bales which were despatched by the Kanpur Woollen Mills and that the gate passes and the invoices produced by Kunzru were not proved as persons who wrote them had not been examined.
Kunzru produced the originals of these documents.
He is the salesman of the Kanpur Woollen Mills.
His cross examination in no way indicates that his statement about the genuineness of the invoices and gate passes was questioned in cross examination.
There is nothing to suppose that the invoices and gate passes produced in Court did not correctly represent the articles placed inside particular bales to which specific numbers were given and that those bales were despatched from the Mills in accordance with the gate passes.
In this connection reference was made to the fact that five of the shawls recovered were of violet colour and no shawl of such a colour was mentioned in any of the invoices.
There can be a possibility of a misdescription in the invoices, There can be a possibility of the violet shawls being the property stolen in some other incident.
The fact remains that even the violet shawls are not claimed by the appellant as his own.
So, we do not consider any force in this contention for considering the finding of the High Court defective about the property recovered to be stolen property.
With respect to the identity of the bed sheets, there is the evidence of P.Ws. 16 and 24.
P.W. 16 deposed that he had supplied 10 pairs of bed sheets to a certain customer who disowned the bale.
Thereupon he asked the Station Master, Ahimanpur to return the parcel to Karur.
He recognized the various sheets to be of his firm which they had 295 despatched to Ahimanpur.
He further deposed that before despatching the goods they paste the firm labels on them.
He stated that his younger brother Krishna Murti had noted size number and pattern over these sheets in his handwriting, as he happened to be at home on vacation.
Krishna Murti, P.W.24, admits that certain labels on the bed sheets were in his hand writing, that he wrote them under instructions of his brother and that he had not written sirnilar numbers on any other bed sheets.
He however stated subsequently that he did such type of markings casually, on occasions, and that the Sub Inspector had also got him write the size, pattern etc., on certain other blank labels of the shop as well.
The learned Additional Sessions judge did not rely on these statements and felt that the Investigating Officer might have got those markings on the labels of the recovered articles during the investigation.
The High Court thought that there was no reason for doubting the correctness of the statements of these witnesses and for suspecting that the writings on the labels were obtained during the investigation.
No question was put to P.W. 24 about the police making him write on the labels on the recovered articles.
In fact, according to the witness, labels with his writings were shown to him for purposes of recognition and he recognized those writings to be his.
The police took his writings on blank labels for purposes of comparison.
We therefore see no good reason for considering the finding of the High Court with respect to the bed sheets recovered to be stolen property to be wrong.
It was also contended that it was not open to the High Court to record a finding about the recovered property to be stolen property when the Government had not appealed against the other co accused who were acquitted on the basis of the finding that the property recovered was not proved to be stolen 296 property.
We do not see any force in this contention.
The mere fact that the learned Additional Sessions judge acquitted the other accused on the ground that the property recovered was not proved to be stolen property did not preclude the State from appealing against the acquittal of the appellant against whom there is better evidence for establishing that he was in possession of the stolen property than the evidence was against the other co accused.
The State could challenge the correctness of the findings of the learned Additional Sessions judge about the property being stolen property and, consequently, the High Court can record its own finding on that question.
Lastly, it was also urged that even if the identity of the articles recovered with the articles stolen be established, no offence under s.414 I.P.C. is made out against the appellant as the other accused have been acquitted and it is not known whom the appellant is supposed to have helped in concealing the stolen property.
Section 414 I.P.C. makes it an offence for a person to assist voluntarily in stealing or disposing of or making away with property which he knows or has reason to believe to be stolen property.
It is not necessary for a person to be convicted under s.414 I.P.C. that another person must be traced out and convicted of an offence of committing theft.
The prosecution has simply to establish that the property recovered is stolen property and that the appellant provided help in its concealment and disposal.
The circumstances of the recovery sufficiently make out that the property was deliberately divided into different packets and was separately kept.
May be that the property failing to the share of a particular thief was kept separately.
It was recovered from several different places in the same house.
These places included an iron safe and an underground cellar.
The evening before, several persons, including the appellant, were found to be coming out of the back door of the house which had its front door 297 locked.
The appellant also knew the whereabouts of the property inside the house of his maternal grandfather.
He attempted to sell a few mufflers a day before the recoveries were made.
He was seen arriving at the house, during the night, in a car with some persons and then removing property which looked like bales from the car to the house.
All these circumanstances go to support the finding that he had assisted in the concealment of the stolen property and had thus committed the offence under s,414 I.P.C. We therefore see no force in this appeal and, accordingly, dismiss it.
Appeal dismissed.
[/INST]Five bales, containing woollen shawls and mufflers dispatched from Kanpur by the British India Corporation Ltd. and another bale despatched from Haimanpur to Kanpur, were loaded in wagon at Itarsi railway station.
The lock of the wagon was found broken open and on checking at nagpur the aforesaid bales were found missing.
On search, certain articles including some torn labels were recovered from the house of one Gopinath.
The same day the appellant and few other persons were found by the Police,coming out of Gopinath 's house whose front door was locked.
They were taken to the Police Station and at the instance of the appellant the police recovered woollen shawls, mufflers, bed sheets and certain house breaking implements from different places of that house.
After investigation, six persons including the appellant were put on trial before the Magistrate for several charges under sections 120 B, 379 and 414 of the Indian Penal Code and except one Birendra Nath, all were convicted.
On appeal, all the convicted persons were acquitted by the Additional Sessions Judge, on further appeal by the State, against the acquittal of Gopinath and the appellant, the High Court allowed the appeal only against the appellant with respect to the offence under section 414 of the Indian Penal Code.
On appeal by special leave, this Court held : Held that the mere fact that the other accused persons were acquitted on the ground that the property recovered was not proved to be stolen property did not preclude the State from appealing against the acquittal of the appellant against 290 whom there is better evidence.
The State could challenge the correctness of the findings of the Additional Sessions Judge about the property being stolen property and the High Court could record its own findings on that question.
Held further, that it is not necessary for a person to be convicted under section 414 Indian Penal Code that another person must be traced out and convicted of an offence of committing theft.
The prosecution has simply to establish that the property recovered is stolen property and that the appellant provided help in its concealment and disposal.
The circum stances of the recovery in the present case sufficiently prove that the appellant had assisted in the concealment of the stolen property and had thus committed the offence under section 414 Indian Penal Code.
The appeal therefore, must be dismissed.
</s> |
<s>[INST] Summarize the judgementION: Criminal Appeal No. 194 of 1960.
Appeal by special leave from the Judgment and Order dated January 20, 1960, of the Punjab High Court in Criminal Revision No. 1485 of 1959.
Porus A. Mehta, J. B. Dadachanji, O. C. Mathur and Ravinder Narain, for the appellants.
H. R. Khanna and P. D. Menon, for the respondent.
November 13.
The Judgment of the Court was delivered by AYYANGAR, J.
The three appellants were convicted by the First Class Magistrate of Jullundur of an offence under section 167 (81) of the for "having acquired possession of smuggled gold and for carrying, keeping and concealing the said gold with intent to defraud the Government knowing that the gold had been smuggled into India from a foreign country and that no duty had been paid thereon," and were sentenced to terms of imprisonment.
Appeals were filed by the accused to the Sessions Judge, Jullundur but the convictions were upheld though the sentence was reduced in the case of the third appellant.
A revision petition preferred therefrom to the High Court of Punjab was dismissed and thereafter the appellants obtained leave from this Court under article 136 of the Constitution and filed the appeal which is now before us.
A few facts are necessary to be stated to appreciate the point raised for decision.
The City Inspector of Police, Jullundur is stated to have 366 received information that some smugglers were on the point of transporting gold from Amritsar into Jullundur and at about mid night on July 16, 1958, further information that some of these had actually come and were present in the house of Gian Chand the first appellant.
A raid party was accordingly orgainsed and the house of the first appellant was cordoned and raided at about 3 A.M. on the early morning of July 17,1958.
In the course of the search certain bars of gold were found on the person of some of the inmates of the house and in the house itself, as also a large amount of cash.
Thereafter the first appellant, his wife the third appellant and her brother the second appellant were arrested, the gold found was seized and a complaint filed charging the three accused of offences under sections 411 and 414 of the Indian Penal Code.
This charge of receiving stolen property preferred against the three appellants was, however, not proceeded with and the Police Inspector made a report to the Court on January 7, 1959, that no case had been made out against them, and the case was thereupon dropped.
Meanwhile, the Assistant Collector of Customs contacted the City Police at Jullundur and made an application to the Court of the First Class Magistrate, Jullundur for the delivery of these gold bars to the Customs authorities obviously under section 180 of the to the terms of which we shall refer later, and they were delivered to the Customs authorities on January 7, 1959, this being the date on which the case against the appellants under sections 411 and 414 of the Indian Penal Code was dismissed.
Very soon thereafter a notice was issued to the appellants to show cause why the gold in the possession of the Customs authorities should not confiscated under section 167 (8) of the , and after considering the explanations of the appellants the Collector passed an order directing the confiscation of the gold.
That order has 367 become final and this appeal is not concerned with the correctness of the order of confiscation of the gold under section 167 (8).
During the proceedings before the Customs authorities for confiscation, sanction was accorded to prosecute the appellants for an offence under section 167 (81) which runs in these terms: "167.
The offences mentioned in the first column of the following schedule shall be punishable to the extent mentioned in the third column of the same with reference to such offences respectively: Section of this Act to Offences which off Penalties ence has reference.
If any person General such person knowingly, and with shall on con intent to defraud the viction before Government of any duty a Magistrate payable thereon, or to be liable to evade any prohibition or imprisonment restriction for the time for any term being in force under or not exceeding by virtue of this Act with two years, or respect thereto acquires to fine, or to possession of, or is in both.
any way concerned in carrying, removing, depo siting, harbouring, keep ing or concealing or in any manner dealing with any goods which have been unlawfully removed from a ware house or which are chargeable with a duty which has not been paid or with respect 368 to the importation or exportation of which any prohibition or restriction is for the time being in force as aforesaid; or If any person is in relation to any goods in any way knowingly con cerned in any fraudulent evasion or attempt at evasion of any duty chargeable thereon or of any such prohibition or restriction as aforesaid or of any provision of this Act applicable to those goods," and it is the correctness of the conviction in the prosecution that followed which is the subject matter of the appeal now before us.
It will be seen from the terms of section 167 (81) that there are two distinct matters which have to be established before a person could be held guilty of the offence there set out: (1) that the goods in this case (gold) were smuggled, i.e., imported into the country either without payment of duty or in contravention of any restriction or prohibition imposed as regards the entry of those goods, and (2) that the accused knowing that the goods were of that character did the acts specified in the latter part of the provision.
It is clear that in the absence of any valid statutory provision in that behalf the onus of establishing the two ingredients necessary to bring home the offence to an accused is on the prosecution.
In regard to the first of the above matters the position stands thus: With a view to conserve the foreign exchange resources of this country, in line with provisions framed for a like object by 369 several other Governments, the Foreign Exchange Regulation Act, 1947, was enacted which came into force on March 25, 1947.
Section 8(1) of the Act enacted: "8.
(1) The Central Government may, by notification in the Official Gazette, order that, subject to such exemptions, if any, as may be contained in the notification, no person shall, except with the general or special permission of the Reserve Bank and on payment of the fee, if any, prescribed bring or send into India any gold or silver or any currency notes or bank notes or coin whether Indian or foreign.
Explanation.
The bringing or sending into any port or place in India of any such article as aforesaid intended to be taken out of India without being removed from the ship of conveyance in which it is being carried shall nonetheless be deemed to be a bringing, or as the case may be sending, into India of that article for the purposes of this section.
" On the same day on which the Act came into force a notification was issued under this section reading: "(1) Restrictions on import of gold and silver.
In exercise of the powers conferred by sub section 1 of section 8 of the Foreign Exchange Regulation Act, 1947 (Act 7 of 1947) and in supersession of the notification of the Government of India in the late Finance Department No. 12 (11) FI/47, dated the 25th March, 1947, the Central Government is pleased to direct that except with the general or special permission of the Reserve Bank no person shall bring or send into India from any place outside India (a) any gold coin, gold bullion, gold sheets or gold ingot whether refined or not; " 370 Virtually therefore a ban was imposed on the import of gold into the country.
This prohibition naturally resulted in the rise of the internal price of gold compared to its external price, i.e., its price in the international markets and this gave a great incentive to smuggling in the commodity.
As a result Parliament enacted a provision (section 178 A of the ) reading: "178 A. (1) Where any goods to which this section applies are seized under this Act in the reasonable belief that they are smuggled goods, the burden of proving that they are not smuggled goods shall be on the person from whose possession the goods were seized.
shifting the onus of proof in respect of particular commodities seized under the Act in stated circumstances that the goods were not smuggled, on the person from whose possession they were taken.
Sub section (2) set out the commodities to which the section applied and gold was specified as one such.
The details of the circumstances in which this provision found its place in the statute book as well as its construction have been dealt with in Collector of Customs, Madras vs Nathella Sampathu Chetty and need not here be repeated.
Suffice it to say that if the terms of the section were satisfied the gold seized in the present case would be presumed to be smuggled and the burden of proving that they are not, would be on the person from whom they were seized.
Without much of a discussion or a consideration of the several provisions the learned First Class Magistrate held that section 178 A of the was applicable to the case and that accordingly the onus was properly on the accused.
Before considering his reasoning it is necessary to refer to a few other provisions of the 371 which have a bearing on the point now under discussion.
Section 178 of the Act which empowers Customs Officers to effect a seizure of goods suspected by them to be smuggled, enacts: "178.
Any thing liable to confiscation under this Act may be seized in any place in India either upon land or water, or within the Indian customs waters by any officer of Customs or other person duly employed for the prevention of smuggling.
" Section 180 under the provisions of which the gold seized by the police as a result of their search on July 17, 1958, came into the possession of the Customs authorities, runs in these terms: "180.
When any things liable to confiscation under this Act are seized by any Police officer on suspicion that they have been stolen, he may carry them to any police station or Court at which a complaint connected with the stealing or receiving of such things has been made, or an enquiry connected with such stealing or receiving is in progress, and there detain such things until the dismissal of such complaint or the conclusion of such enquiry or of any trial thence resulting.
In every such case the Police officer seizing the things shall send written notice of their seizure and detention to the nearest custom house; and immediately after the dismissal of the complaint or the conclusion of the enquiry or trial, he shall cause such things to be conveyed to, and deposited at, the nearest custom house, to be there proceeded against according to law.
" The question that now arises is whether the possession obtained by the Customs department by goods being "conveyed to and deposited at the nearest Custom house" within the last words of the second 372 paragraph of section 180 are goods which have been seized under the Act within the opening words of section 178A.
In the first place, it would be seen that these three sections which have to be read together draw a distinction between seizure under the Act and a seizure under provisions of other laws.
A seizure under the Act is one for which the authority to seize is conferred by the Act and in the context it could be referred to as a seizure under section 178.
The seizure from the owner of the property under section 180 is not a seizure under the Act but by a police officer effecting the seizure under other provisions of the law, for instance the Criminal Procedure Code.
And that is made clear by appropriate language in the first paragraph of section 180.
Learned Counsel for the respondent State has urged that "the conveyance and deposit" in the office of the Customs authority under the second paragraph of section 180 also involves a seizure under the Act and for this purpose relied on the meaning of the word 'seize ' given in Ballantyne 's Law Dictionary where it is equated to "taking a thing into possession".
This however might be the meaning in particular contexts when used in the sense of the cognate Latin expression "Seized" while in the context in which it is used in the Act in section 178A it means 'take possession of contrary to the wishes of the owner of the property '.
No doubt, in cases where a delivery is effected by an owner of the goods in pursuance of a demand under legal right, whether oral or backed by a warrant, it would certainly be a case of seizure but the idea that it is the unilateral act of the person seizing is the very essence of the concept.
There is another matter to which reference should be made which, in our opinion, conclusively establishes that the delivery of the goods to the Customs authorities under the latter part of section 180 is not seizure under the Act within the meaning of section 178A.
The last part of sub section
(1) of section 178A lays 373 the burden of proving that the goods are not smuggled on "the person from whose possession the goods are taken".
Assuredly when the goods are delivered to the Customs authorities by the Magistrate they are not taken from the possession of the persons accused in criminal case so as to throw the burden of proof on them and it would lead to an absurdity to hold that the section contemplated "proof to the contrary" by the Magistrate under whose orders the delivery was effected.
For the purpose of deciding the point arising in this case we do not think it necessary to enter into the philosophy or refinements of the law as to the nature of possession.
When the goods were seized by the police they ceased to be in the possession of the accused and passed into the possession of the police and when they were with the Magistrate it is unnecessary to consider whether the Magistrate had possession or merely custody of the goods.
The suggestion that the goods continued to be, at that stage, in the possession of the accused does not embody a correct appreciation of the law as regards possession.
A 'seizure ' under the authority of law does not involve a deprivation of possession and not merely of custody and so when the police officer seized the goods, the accused lost possession which vested in the police.
When that possession is transferred, by virtue of the provisions contained in section 180 to the Customs authorities, there is no fresh seizure under the .
It would, therefore, follow that, having regard to the circumstances in which the gold came into the possession of the Customs authorities, the terms of section 178A which requires a seizure under the Act were not satisfied and consequently that provision cannot be availed of to throw the burden of proving that the gold was not smuggled, on the accused.
Through the learned Magistrate held that section 178A applied to the case, he also entered into an elaborate discussion of the positive evidence in the case, so that it is not quite clear whether he would 374 have reached the same conclusion, viz., that the gold was smuggled, even without reference to the rule as to onus enacted by that section.
When the matter was before the learned Sessions Judge he first held that section 178A of the Customs Act did apply to the case before him but proceeded also to deal with the case on an alternative footing that the provisions of section 178A were not applicable to the case and set out the circumstances which led him to that conclusion.
The learned Single Judge who heard the revision in the High Court, however, dealt with the case solely on the footing that section 178A was applicable.
The constitutional validity of that section was challenged before the High Court and figured prominently in the grounds of appeal to this Court but this point has been decided against the appellants by this Court and is therefore no longer a live issue.
If, as we have pointed out earlier, the delivery to the Customs authorities under section 180 is not a seizure under the Act within section 178A it would follow that the judgment of the High Court cannot be upheld for it has proceeded on the sole basis of the provisions of that section being attracted.
We have already pointed out that the learned Sessions Judge had upheld the conviction of the appellants by an independent finding that the prosecution had positively established that the goods were smuggled and that the accused had knowingly done the acts referred to in section 167(81) with which they were charged.
This part of the case of the prosecution has not been considered by the learned Judge in the High Court and this would have to be done before the revision petition of the appellants could properly be disposed of.
The appeal is accordingly allowed and the order of the High Court set aside.
The case will be remitted to the High Court for the revision petition of the appellants being disposed of in the light of this judgment and in accordance with law.
[/INST]The validity of a scheme of road transport service approved by the Government of Orissa under section 68D (2) of the 682 , was challenged by the petitioners on the grounds (1) that a proper notice was not given for the hearing of objections to the scheme, (2) that the Minister for Transport who approved of the scheme was biased, (3) that the final scheme did not mention the date on which it was to come into operation, and (4) that the Transport Controller who published the scheme had no authority to do so.
^ Held, that; (1) r. 8 of the Rules framed by the Orissa State Government under Ch.
IVA of the , applied only to the first date to be fixed for hearing, and that if for any reason the hearing was adjourned, it was not necessary to give a fresh notice under the rule for the adjourned date of hearing; (2) the statement made by the minister in answer to a question put in the legislative assembly that the Government had decided to take over all the routes from April 1, 1961, eliminating all private operators, was merely an indication of the Government 's policy and that the minister could not be said to be personally biased; (3) the approved scheme was not invalid for the reason that the actual date of operating the route was not mentioned in the final scheme, as required under r. 3 (vi) of the Rules, inasmuch as the notification publishing the final scheme referred to the draft scheme which contained that date and said that the draft scheme was approved, and, consequently, the rule must be considered to have been substantially complied with; and (4) the Transport Controller, being the Chief Officer of the State Transport Undertaking, had the authority to publish the scheme under section 68C of the Act since the section provided that the State Transport Undertaking "shall cause it to be published" which meant that some officer of the Undertaking would have it published in the Gazette.
</s> |
<s>[INST] Summarize the judgementAppeal No. 101 of 1960.
Appeal by special leave from the Award dated 2nd March, 1959, of the Labour Court, Chotanagpur Division, Ranchi, in Misc.
Cases Nos. 73,76, 77, 79 82, 84 90 of 1958.
N. C. Chatterjee, A .
K. Dutt and B. P. Maheshwari for the appellants.
Sohrab D. Vimadalal, section N. Andley, J. B. Dadachanji, Rameshwar Nath and P. L. Vohra, for the respondents.
March 25.
The Judgment of the Court was delivered by DAS GUPTA, J.
When the management of an industry holds an enquiry into the charges against a workman for the purpose of deciding what action if any, should be taken against him, has the workman a right to be represented by a representative of his Union at the enquiry ? That is the principal question raised in this appeal.
The 14 appellants, all workmen in M/s. Tata Locomotive & Engineering Co., Ltd., Jamshedpur, were dismissed under the orders of the company 's management on the result of an enquiry held 408 against them.
As industrial disputes between these workmen and the company were at that time pending before the Industrial Tribunal, Bihar, the company filed applications purporting to be under section 33 of the Industrial Disputes Act praying for approval of the action taken by it against the workmen.
Workmen also filed applications under section 33A of the Industrial Disputes Act complaining of the action taken against them by the company.
The applications of the com pany under section 33 were however ultimately held to have become infructuous and the applications under section 33A were only considered and disposed of by the Labour Court.
The applications of these 14 appellants were however dismissed.
Against that order the appellants have preferred this appeal after having obtained special leave for the purpose.
The common contention urged on behalf of the appellants was that the enquiry on the results of which the orders of dismissal were based was not a proper and valid enquiry inasmuch as the workmen were not allowed to be represented at the enquiry by a representative of the Jamshedpur Union to which these workmen belonged.
It has been urged that fair play demands that at such an enquiry the workman concerned should have reasonable assistance for examination and cross examination of the witnesses and for seeing that proper records are made of the proceeding& It has been argued that a representative of the workmen 's Union is best suited to give such assistance and in the absence of such assistance the workman does not get a fair chance of making his case before the Enquiry Officer.
It appears that when on June 5, 1953, requests were made on behalf of the several workmen that they should be allowed to be represented by a representative of the Jamshedpur Mazdoor Union at the enquiry to conduct the same on workmen 's behalf, the management rejected this request but informed the workmen that they could, if they so desired, be represented by a co worker from the workmen 's own department at the enquiry.
, The question which arises therefore is whether this refusal of the workmen 's request to be represented at the 409 enquiry by a representative of their Union vitiated the enquiry.
Accustomed as we are to the practice in the courts of law to skilful handling of witnesses by lawyers specially trained in the art of examination and cross examination of witnesses, our first inclination is to think that a fair enquiry demands that the person accused of an act should have the assistance of some person, who even if not a lawyer may be expected to examine and cross examine witnesses with a fair amount of skill.
We have to remember however in the first place that these are not enquiries in a court of law.
It is necessary to remember also that in these enquiries, fairly simple questions of fact as to whether certain acts of misconduct were committed by a workman or not only fall to be considered, and straightforward questioning which a person of fair intelligence and knowledge of conditions prevailing in the industry will be able to do will ordinarily help to elicit the truth.
It may often happen that the accused workman will be best suited, and fully able to cross examine the witnesses who have spoken against him and to examine witnesses in his favour.
It is helpful to consider in this connection the fact that ordinarily in enquiries before domestic tribunals the person accused of any misconduct conducts his own case.
Rules have been framed by Government as regards the procedure to be followed in enquiries against their own employees.
No provision is made in these rules that the person against whom an enquiry is held may be represented by anybody else.
When the general practice adopted by domestic tribunals is that the person accused conducts his own case, we are unable to accept an argument that natural justice demands that in the case of enquiries into a chargesheet of misconduct against a workman he should be represented by a member of his Union.
Besides it is necessary to remember that if any enquiry is not other.
wise fair, the workman concerned can challenge its validity in an industrial dispute.
Our conclusion therefore is that a workman against whom an enquiry is being held by the management has no right to be represented at such enquiry by a 410 representative of his Union; though of course an employer in his discretion can and may allow his employee to avail himself of such assistance.
On behalf of the appellants, Charan Singh, Parmanand and K. Ganguli, it was urged that the orders of dismissal were bad inasmuch as they were based on a finding of guilt of misconduct not mentioned in the charge sheet.
Each of these appellants it appears, was accused in the charge sheet of four different acts of misconducts: 1.
Participating in an illegal strike; 2.
Leaving your appointed place of duty; 3.
Inciting other employees to strike work; 4.
Threatening and intimidating other workers.
The Enquiry Officer found each of them guilty of the first three charges.
He, however, recorded no findings as regards the fourth charge but instead found these workmen guilty of a misconduct not mentioned in the charge sheet, viz., " Behaving in a riotous and disorderly manner by shouting slogans on the shop floor ".
On behalf of the appellants it is urged that as it is not possible to ascertain as to how this finding of guilt as regards misconduct not mentioned in the charge sheet affected the decision of the manager, the order of dismissal must be set aside.
The record however discloses three cases in which the manager made orders of dismissal on a finding of guilt of only of the acts of misconduct alleged in these three charges, namely, (i) participating in an illegal strike; (ii) leaving the appointed place of duty; and (iii) inciting other employees to strike work.
There is no reason to think therefore that he would have discriminated in favour of these appellants, Charan Singh, parmanand and K. Ganguli.
The conclusion that Necessarily follows is that leaving out of account the misconduct not mentioned in the charge sheet, viz., "behaving in a riotous and disorderly manner by ' shouting slogans in the shop floor ", the manager would have made the order of dismissal.
The fact that this act of misconduct not mentioned in the charge sheet was also mentioned as one of the items on which the order of dismissal was based does not Therefore affect the validity of the order.
411 The charge sheet against section B. Nath accused him of four acts of misconduct: "1.
Participating in an illegal strike; 2.
Leaving your appointed place of duty; 3.
Inciting other employees to strike work; 4.
Threatening and intimidating other workers.
" The relevant portion of the order of dismissal is in these words: He has been found guilty of the following acts of misconduct: For entering the works when not on duty and inciting other employees to strike work.
He is therefore dismissed from the service of the company. ".
It is argued that as he has not been accused in the charge sheet " for entering the Works when not on duty " but this had been taken into consideration in deciding on his punishment the order is bad.
It has to be noticed however that " entering the Works when not on duty " is not a misconduct under the company 's standing orders.
It is quite clear that the statement in the dismissal order as regards " entering the Works when not on duty " was really intended to state the manner and occasion in which the misconduct of " inciting other employees to strike work " was committed.
The unnecessary and indeed slightly erroneous mention that he had been found guilty of "entering the Works when not on duty " does not justify the conclusion that this fact of ,entering the works when not on duty " played any part in the mind of the punishing authority in determining his punishment.
A statement in the dismissal order " that he has been found guilty of entering the Works when not on duty " as an act of misconduct is obviously erroneous.
The act of misconduct of which this appellant was found guilty was " inciting other employees to strike work " and that is the only misconduct which weighed with the punishing authority.
The contention that the mention in the dismissal order of " entering the Works when not on duty " as an act of misconduct of which he had 412 been found guilty, vitiates the order of dismissal cannot therefore be accepted.
On behalf of the appellant M .
R. Ghosh it was urged that the alleged misconduct of " deliberately preventing the man in charge of the Compressor in the repair shop from carrying out his duty" of which he is said to have been found guilty in the order of dismissal was not alleged in the charge sheet.
This is really a misreading of the charge sheet.
Against this appellant four acts of misconduct were alleged in the charge sheet : "1. Participation in an illegal strike; 2.
Inciting other employees in the other sections of the Auto Division to strike work; 3.
Leaving your appointed place of duty or work without permission ; 4.
Threatening and intimidating the other workers in the Repair Shop.
" The dismissal order after mentioning that he was found guilty of the first three charges further states that he was found guilty of the following acts of misconduct: "threatening and intimidating the workers in the Repair Shop and deliberately preventing the man in charge of the Compressor in the Repair Shop from carrying out his duty.
" The argument is that the charge as set out in the charge sheet does not mention this act of " deliberately preventing the man in charge of the Compressor in the Repair Shop from carrying out his duty.
" This is obviously erroneous.
The charge sheet after alleging the four acts of misconduct went on to give particulars of these charges.
As regards the fourth charge, viz., " threatening and intimidating the other workers in the Repair Shop " the particulars were in thesewords: "By threatening and intimidating others in the repair shop you stopped them from working and also you took the Compressor man by his hand and got the Compressor stopped.
" The statement in the dismissal order as regards his being quilty of deliberately preventing the man in charge of the Compressor in the Repair Shop from carrying out his duty " has in fact been mentioned in the charge sheet, though in slightly different words.
There is no substance therefore, in the contention that 413 the acts of misconduct on which the dismissal order was based included one not mentioned in the chargesheet.
The four acts of misconduct alleged in the chargesheet against Gurbux Singh were: 1.
Participating in an illegal strike; 2.
Leaving your appointed place of duty; 3.
Inciting other employees to strike work; 4.
Threatening and intimidating other workers.
The Enquiry Officer 's report found him guilty of the following acts: 1.
Participating in an illegal strike; 2.
Leaving his place of duty without permission; 3.
Inciting other employees to strike work and 4.
Threatening and intimidating Mr. Charan Singh to stop work.
The manager 's order on these is in these words: " I have gone through the findings of the Enquiry Officer as well as the proceedings of the Inquiry.
Though Mr. Gurubux Singh created a scene on the 11th June, 1958, and left the place of enquiry, still he was given a chance and the enquiry was held at a later date.
Having gone through the evidence recorded against him during the enquiry, I agree with the findings of the C. P. 0.
The charges being of a very serious nature, I order that he be dismissed from the services of the company with effect from the date of the charge sheet.
" The formal dismissal order that was drawn up on the basis of this finding and served on him after stating that he was found guilty of the first three charges stated that he was found guilty of threatening and intimidating Mr. Chakravarty, chargeman, who was compelled to stop work on 21 5 58.
On his behalf it has been urged that though the enquiry officer 's report says that he was guilty of " threatening and intimidating Charan Singh " the General Manager misled himself into thinking that he had threatened and intimidated Mr. Chakravarty, Chargeman.
There being no finding by the Enquiry Officer that Gurubux Singh was guilty of threatening and intimidating 53 414 Mr. Chakravarty, Chargeman, the General Manager was not entitled to take such a misconduct into consideration.
On an examination of the Enquiry Officer 's report it is however obvious that there is a clerical error in the concluding portion of the report in stating the finding as regards the fourth charge as " threatening and intimidating Charan Singh to stop work ".
Charan Singh was really one of the striking workers and there was no quest ion of intimidating him.
It is abundantly clear from the report that the case that was sought to be made as regards the fourth charge was that Chakravarty had been intimidated and that this allegation was found proved.
There could not have been and was not any allegation of Charan Singh being intimidated.
It is quite clear that the name of Charan Singh was accidentally mentioned in the concluding portion of the report instead of the correct name Chakravarty.
There is no justification for thinking that the General Manager who had gone through the evidence and report of the Enquiry Officer could possibly have been misled by this clerical mistake.
The relevant charge was threatening and intimidating other workers, whether Charan Singh or Chakravarty was intimidated would not be of any consequence ' In fact however the allegation against this appellant clearly was that Chakravarty had been intimidated by him.
The body of the report shows that that was what the Enquiry Officer found proved.
It is reasonable to think that that conclusion and not the wrong statement that Charan Singh was threatened and intimidated which was nobody 's case weighed with the General Manager in determining the punishment.
In our opinion, there is no substance in the contention urged on his behalf that the finding that Charan Singh was threatened and intimidated as an act of misconduct instead of Chakravarty was wrongly relied upon.
On behalf of the appellant section K. Dhanda it has been urged that in making the dismissal Manager wrongly thought that guilty of all the four acts of misconduct order the General he had been found which were against him in the charge sheet though in fact he was 415 found guilty only of three and the fourth charge was not proved.
The four acts of misconduct alleged in the charge sheet were : (1) Participation in an illegal strike; (2) Leaving his place of duty without permission; (3) Inciting other employees in the Paint Shop Propeller Shaft Section, Rear Axle Section and Press Section of the Auto Division to stop work; (4) Behaving in a riotous and disorderly manner and threatening and intimidating another coworker.
The formal order of dismissal that was drawn up stated that he had been found guilty of the following acts of misconduct: (1) Participating in an illegal strike; (2) Leaving his place of duty without permission; (3) Inciting other employees in the Paint Shop Propeller Shaft Section, Rear Axle Section and Press Section of the Auto Division ' to stop work.
(4) Threatening and intimidating another employee by name Mr. T. section N. Rao, T. No. 6610/60205/1, and stopping him from doing his work.
He is therefore dismissed from the service of the Company. . ".
The Enquiry Officer 's report states the conclusions reached by him thus: " From the statement of the witnesses, it has been conclusively proved that Mr. Dhanda: (1) participated in an illegal strike; (2) left his place of duty without permission; (3) incited other employees to stop work.
It can be said that the charge of threatening and intimidating has not been proved beyond doubt.
" If one looks at the formal order of dismissal only it seems that though the charge of threatening and intimidating other employees was not proved against him the order of dismissal was partially based on it.
If there was nothing else this might be a serious infirmity in the order.
We find however that the General Manager recorded his order on the formal Report itself in these words: 416 I have gone through the findings of the Enquiry Officer and the proceedings of the enquiry.
Even though the charge of threatening and intimidating other workers has not been proved against Mr. Dhanda the other charges are also of a serious nature.
In the circumstances, order that he be dismissed from the service of the company with effect from the date of the charge sheet.
" This was dated July 3, 1958, and the formal order also bears the same date.
Reading the two together it is quite clear that the General Manager in passing the order of dismissal proceeded on the basis that the charge of threatening and intimidating other employees had not been proved against Mr. Dhanda but a mistake crept into the formal order that was drawn up and among the acts of misconduct mentioned as those of which Dhanda had been found guilty and on which the dismissal order was based the fourth charge as regards threatening and intimidating other employees was also mentioned.
It is proper to hold that this was an accidents clerical mistake and that in fact the General Manager did not proceed on the wrong basis that Dhanda had been found guilty on this fourth charge also.
The mere fact that such a clerical error appears in the formal order does not affect the validity of the order in any way.
We have therefore come to the conclusion that the separate contentions pressed oil behalf of seven of the appellants that the Tribunals below did not consider certain infirmities in the order cannot also be sustained.
The appeal is accordingly dismissed, but in the circumstances we make no order as to costs.
Appeal dismissed.
[/INST]A workman against whom an enquiry is being held by the management has no right to be represented at such enquiry by a representative of his union, though the employer in his discretion, can and may allow him to be so represented.
In such enquiries fairly simple questions of fact as to whether certain acts of misconduct were committed by a workman or not fall to be considered and the workman is best suited to conduct the case.
Ordinarily, in enquiries before domestic tribunals a person accused of any misconduct conducts his own case and so it cannot be said that in any enquiry against a workman natural justice demands that he should be represented by a representative of his Union.
</s> |
<s>[INST] Summarize the judgementivil Appeal Nos.
437 437 and 1460 of 1970.
Appeals by Special Leave from the Judgments and orders dated 24 3 1969 & 10 11 1969 of the Kerala High Court in Writ Appeal Nos, 451/79, 630/69 & 807/69.
A. B. Divan, M. Vellapally and T. M. Ansari for the Appellant in CA 437/70.
M. Vellapally and T. M. Ansari for the Appellant in C.A. 438/ 70.
Kapil Sibal, M. Vellapally and T. M. Ansari for the Appellant in C.A. 438/70.
Kapil Sibal, M. Vellapally and T.M. Ansari for the Appellant in 1460/70.
K. T. Harindranath and K. M. K. Nair for the Respondents in all the appeals.
The Judgment of the Court was delivered by KAILASAM, J.
These three appeals are by special leave granted by this Court against the judgment and order of the High Court of Kerala in Writ Appeals Nos. 451, 630 and 807 of 1969 respectively.
The questions that arise for consideration in all the three appeals and the same and can be dealt with together.
As the facts so far as they are necessary for decision in these appeals are similar, we will confine the judgment to the facts in Civil Appeal No. 437 of 1970.
The appellant in Civil Appeal No. 437 of 1970 is Travancore tea Estates Co. Ltd. Vandiperiyar in Kerala State.
The 1st respondent is the State of Kerala and respondents nos.
2 and 4 are the authorities functioning under the Kerala Motor Vehicles taxation Act (Act 24 of 1963) which will hereafter be referred to as the Act, was brought into force on 1 7 1963.
The Act provides that "a tax at the rates fixed by the Government by notification in the Gazette not exceeding the maximum rates specified i the First Schedule shall be levied on all Motor Vehicles used or kept for use in the State.
" The appellant company owned 17 motor Vehicles, tractors, trailers and lorries all of which are registered in the company 's name under the .
The company alleged that the vehicles were purchased by it solely and exclusively for use in the estates and intended to be used only for agricultural purpose and were not used nor kept for use in the State as contemplated under section 3 of the Act.
The company is a tea plantation having eight estates which lie contiguous to each other and have an extent of 1391 9422.44 acres in the aggregate.
The company for the purpose af plantation are maintaining roads fit for vehicular traffic in the eight estates covering a length of 131 miles in the aggregate on 23rd September, 1964 a Bedford Lorry owned by the company and bearing registration No. KLK 1540 was seized by the police and taken into custody under section 13 of the Act.
According to the appellant the seizure was effected in Tengamullay Estate which is one of the eight estates owned by the company.
The company wrote to the Department on 28 12 1964 stating that the vehicle was being used for agricultural purpose on private roads in the Estates and the company is not liable to pay tax and asked for the release of the vehicle.
On the company paying a sum of Rs. 3,150/ as tax under protest for the period between 1 7 63 to 31 12 94, the vehicle was released.
The department proceeded to prosecute the appellant in the Peermade 1st Class Magistrate 's Court and the case is still pending, The appellant company filed o. P. No. 199/65 before the High Court of Kerala claim in that they were not liable to pay any tax on the motor vehicles.
The High Court by its judgment dt.
3rd March, 1966 directed the Regional Transport officer, Kottayam 2nd respondent herein, to examine the question raised in the writ petition and to pass final orders.
It also directed that if the petitioner was aggrieved with the order he was at liberty to approach the High Court.
In the meanwhile it directed stay of prosecution and collection of tax the matter was taken up for consideration by the 2nd respondent.
The 2nd respondent rejected the pleas of the appellant and by his order dt.
12 4 68 held that the 13 vehicles mentioned in the original Petition were liable to pay was under they act.
The appellant filed a petition before the High Court for appropriate relief.
The High Court disposed of the petition o. P. No. 2173/68 along with o. P No. 2081/68 filed by Peermade Tea Co. who are the appellants in C.A. 438/70 in this Court, by a common order dt.
19th December, 1968.
The learned Judge held that the language in section 3 of the Act showed that there is a departure from the legislative policy of restricting the tax liability only to vehicles using pubic roads.
It held that the tax is imposed by section 3 on alt the motor vehicles used or kept for use in the State irrespective of any question as to whether they are used or kept for G use on pubic roads or not.
It rejected the contention on behalf of the appellant that legislature must be taken to have intended to levy such tax only on motor vehicles using or kept for use on public roads.
The learned Judge also held that the Act is not beyond the competence of the legislative powers of the State as the tax is leviable by the State in respect of all motor vehicles are used or kept for use in the State quite irrespective of any question as whether or not such vehicles are used on public roads.
1392 Aggrieved by the decision of the single Judge the appellant took the matter up on Letters Patent Appeal.
The main contention raised on behalf off the appellant was that the learned single Judge was in error in holding that all motor vehicles used or kept for use in the State quite irrespective of any question as to whether or not they are used on public roads, is erroneous in so far as it related to motor vehicles used or kept exclusively for use in private estate and not used or kept for use on the public roads of the State.
The Letters Patent Bench affirmed the decision of the single Judge and rejected the appeal.
The constitutional validity of the Act was not questioned before the Bench.
Holding that the legislative Entry 57 if the State list only required that the vehicles should be suitable for use on roads and the charging section only provided that the vehicle should be used or kept for use in the State the required conditions were satisfied and there would be no justification for reading into the statute words that and not there, and restricting the levy only on vehicles using public roads.
While not contesting the correctness of the observation of the Bench of the Kerala High Court that the levy cannot be restricted to vehicles using the public roads, it was submitted that the words in section 3 cl.
(1) of he Act "shall be levied on all motor vehicles used or kept for use in the State" should be confined to vehicles used or kept for use on the public roads of the State, and not to vehicles that arc intended to be confined within the premises of the Estate.
In other words the controversy between the parties before the R.T.O. the single Judge of the High Court and the Bench of the High Court can be stated by extracting the question at issue as framed by the R.T.O. "I understand that the roads used by these vehicles (even those within the estates) come under the definition of "Public Roads and Public Place" since at present I have .
not afforded opportunity to the company to refute the basis on which that fact is to be found.
I make it clear that I am not relying on that matter as a basis for this order and I reserve my right to investigate that matter if needed be later.
I assume for argument sake (without conceding) that the estate roads are private roads.
Even in that case, I am of .
the view that the company 's vehicles are liable to pay tax.
It is not in dispute that the vehicles are used and are kept for use within the State (The company roads arc within the Kerala State).
It is also not disputed that the vehicles are registered and their registration certificates are current and they are usable motor vehicles.
The tax levied under the K.M.V.T. Act is a tax on the possession of usable motor 1393 vehicle and it is realised for the propose of State Revenue.
Such being the nature of the levy according to me, I feel that irrespective of the question whether the road on which the vehicle is intended to be used is private or public, the tax is attracted.
" The question that falls for decision is whether on the assumption that the motor vehicles are used or kept for use within the estate, and not intended to be used on public roads of the State; the tax is leviable? In order to appreciate the question raised, it is necessary to refer to the relevant entry in the Constitution, the provisions of the Act and the and the decision relating to the question rendered by this Court.
(Entry 57 in List II of the Constitution relates to taxes on vehicles, whether mechanically propelled or not, suitable for use on roads, including tramcars subject to the provisions of entry 35 of List III.
This entry enables the State Government to levy a tax on all vehicles whether mechanically propelled or not, suitable for use on roads.) (emphasis supplied).
There is no dispute that the vehicles are mechanically propelled and suitable for use on roads.
Section 3 of the impugned Act (Kerala Motor Vehicles Taxation Act (Act 24 of 1963) provides that a tax "shall be levied on all motor vehicles used or kept for use in the State.
" The levy is within the competence of the State legislature as entry 57 in List II authorises by on vehicles suitable for use on roads.
It has been laid down by this Court in "Bolani Ores Ltd. vs Orissa," that under Entry 57 of List II, the power of taxation cannot exceed compensatory nature which must have some nexus with the vehicles using the roads i.e. public roads.
If the vehicles do not use the roads, notwithstanding that they are registered under the Act, they cannot be taxed.
If the words used or kept for use in the State is construed as used or kept for use on the public roads of the State, the Act would be in conformity with the powers conferred on the State legislature under Entry 57 of List II.
If the vehicle are suitable for use on public roads they are liable to be taxed.
In order to levy a tax on vehicles used or kept for use on public roads of the State and at the same time to avoid evasion of tax the legislature has prescribed the procedure.
Sub section 2 of sec.
3 provides that the registered owner or any person having possession of or control of a motor vehicle of which a certificate of registration is current shall for the purpose of this Act be deemed to use or kept such vehicles for use 1394 in the State except during any period for which the Regional Transport Authority has certified in the prescribed manner that the motor vehicle has not been used or kept for use.
Under this sub section there is a presumption that a motor vehicle for which the certificate of registration is current shall be deemed to be used or kept for use in the State.
This provision safeguards the revenue of the State by relieving it from the burden of proving that the vehicle was used or kept for use on the public roads of the State.
At the same time the interest of the bonafide owner is safeguarded by enabling him to claim and obtain a certificate of non user from the prescribed authority.
In order to enable the owner of the vehicle or the person who is in possession or being in control of the motor vehicle of which the certificate of registration is current to claim exempting from tax he should get a certificate in the prescribed manner from the Regional Transport Officer.
Section 5 of the Act provides for exemption from payment of tax under certain circumstances.
It enables the registered owner or the person having possession or control of such vehicle to give previous intimation in writing to the R.T.O. that the vehicle would not be used for such period and at the same time surrender certificate of registration and permit of the vehicle.
Section 6 enables the registered owner or a person in possession or control of such a vehicle to get refund of tax if conditions specified in section 6 are satisfied.
Thus in order to enable the registered owner or person in possession or control of a vehicle to get exemption of tax, advance intimation of the R.T.O. along with the surrender of certificate of registration is necessary.
The provision of section 3, sub sec.
(2) as well as 6. 5 and section 6 are meant to prevent evasion of tax and to provide for exemption from tax in proper cases.
Though the purpose of the Act is to tax vehicles that are used or kept for use on the public roads of the State, the State is entitled for the purpose of safeguarding the revenues of the state and to prevent evasion of the tax, to enact provision like provision as in section 3 raising ' a presumption that the vehicle is used or kept for use in the Situate without any further proof unless exemption is claimed under section 3(2), section 5 and s.6.
It may be observed that reading sections 3, 5 and 6 it is clear that a levy of tax is contemplated only on the vehicles.
that are used or kept for use on the public roads of the state.
`While we agree with the contentions of the learned counsel for the appellant that the tax is only eligible on vehicles used or kept for use on public roads, we must deserve that in order to claim exemption from payment of tax requirements of section 3(2) or sections 5 and 6 should be satisfied.
Surrender of the registration certificate 1395 contemplated under section 5 is for making sure that the motor vehicle is not being put to any use and does not have the effect of annulling the certificate of registration.
If the requirement contemplated under the Act is not satisfied the registered owner or person m possession or control of the vehicle would not be entitled to claim any exemption from payment of tax '.
It remains for consideration as to what is the appropriate order that should be passed on the facts and circumstance of this case.
As a general proposition of law as exemption from payment of tax had not been claimed and obtained as required under this Act, the appellant would be liable to pay tax but as already pointed out and set out clearly in the order of the R.T.O., the question that was raised and disputed was whether on the assumption that the vehicles were kept for use in the states alone and not for use on the public roads of the State, tax is leviable.
The authorities proceeded on the basis that even assuming that the vehicles were not intended to be used on the public roads, they are liable to tax.
In this view, the appellant did not apply for exemption or notify non user as required under the provisions of the Act.
But on the facts and circumstances of the case it is clear that the appellant claimed for exemption from tax on the ground that it was not being used on the public roads.
In the circumstances of the case we have to take it that though, in terms, requirement of sections 3 and 5 have not been complied with, in effect the requirements have been satisfied as the dispute proceeded throughout on that basis.
But as has been specifically stated by the R.T.O., the question whether estate roads are.
public roads is reserved for further investigation and decision.
Equally the R.T.O. will be at liberty to act under section 5(2) of the Act and decline exemption from the liability to pay tax for the relevant period if on verification it is found that the vehicle has been used during that period on the public road.
Before concluding, we would refer to a contention raised by the learned counsel based on the decision of this Court in Bolani Ores Ltd. vs Orissa, (supra).
The plea of the learned counsel is that the word "motor vehicle" should be understood as defined by section 2(18) of the and excluded from taxation motor vehicles "used solely upon the premises of the owner.
" As the vehicles with which we arc concerned were claimed to have been kept for use solely in the premises of the company, it was contended that the vehicles are not exigible to tax.
This Court in the decision cited was dealing with the Orissa Motor Vehicles Taxation Act, 1930.
Section(2c) of the Orissa Taxation Act adopted the definition of Motor vehicles Act as found in Motor Vehicles Act, 1914.
The Motor vehicles Act. ]914 was repealed and replaced by the Motor Vehicles The definition of motor vehicle ' in section 2(18) of the excluded motor vehicles used solely upon the premises of the owner.
The Orissa Motor vehicles Taxation Act was amended and orissa Amendment Act, 1943 re enacted the provisions of the Taxation Act. 'Motor Vehicles ' was defined under section 2(18) of the excluding vehicles used solely upon the premises of the owner.
Subsequently the definition of 'motor vehicle ' under section 2(18) of the was amended by the Act 100 of 1956 which confined the exemption from taxation to "motor vehicles of a special type adopted for use only in a factory or in any other enclosed premises.
" The exemption from tax only be claimed after amendment to section 2(18) by Act, 100 of 1956, if the vehicle was of special type adopted for use only in a factory or in any other enclosed premises and the exemption that was avail able before the amendment by Act 100 of 1956 to Motor Vehicles used solely upon the premises of the owner was taken away.
This Court held "if the subsequent, Orissa Motor Vehicles Taxation (Amendment) Act, 1943, incorporating the definition of`motor vehicle ' referred to the definition of 'motor vehicle ' under the Act as then existing, the effect of this legislative method would, in our view, amount to and incorporation by reference of the provisions of section 2(1) of the Act in section 2(c) of the Taxation Act .
Any subsequent argument in the Act or a total repeal of the Act under a fresh legislation on that topic would not affect the definition of 'motor vehicle ' in section 2(c) of the Taxation Act.
" As a result this Court held that the definition of 'motor vehicle ' given in section 2(18) of the Motor Vehicles Act, 1939 before the amendment by Act 100 of 1956 was applicable.
Relying on this decision, the learned counsel submitted that the test that is to be applied to determine whether motor vehicle is liable to tax or not is whether it comes under the exemption provided by under section 2(18) of the before the amendment.
We are unable to accept the contention mainly on the ground that the Kerala Motor Vehicles Taxation Act, 1963 (Act 24 of 1963) came into force on 18 3 63.
Section 2(1) of the Taxation Act provided that words and expression used but not defined in the Motor Vehicle Act, 1939 (Central Act 4 of 1939) shall have the meaning respectively assigned to them in that Act.
On the date when the Kerala Motor Vehicles Taxation Act was enacted, was amended by Act 10() of 1956 and the amended definition on the date when the Taxation Act came into force exempted only motor vehicles which are of a special type adopted for use only in a factory or in any other enclosed premises.
The amended definition will have to be read into the Taxation Act which was enacted subsequent to the date of the ,.
amendment of the definition of 'Motor Vehicle ' by Act 100 of 1956 1397 In this view we feel that the decision in Bolani 's case (supra) will not be of any assistance to the learned counsel for the appellants.
The appeals are allowed to the extent indicated above.
But in the circumstances there will be no order as to costs.
S.R. Appeals allowed in part.
[/INST]The two detenus were carrying Dn business in diamonds and precious stones.
The Customs Officer at Bombay raided their premises and seized a huge quantity of valuables.
During interrogation they claimed that some of the articles seized were not smuggled goods but were locally acquired and gave names of four persons from whom they were acquired.
The detenus were released on bail by the Magistrate on certain conditions.
An order of detention under section 3(i) of the COFEPOSA, 1974 alongwith the grounds of detention was served on the detenus on Feb. 16, 1980.
The wife of the detenu addressed a letter on Feb. 18, 1980 to the first respondent requesting him to furnish the detenus with the materials relied upon by the detaining authority in the grounds of detention.
The detenu received a letter dated March 14, 1980 from the State Government on March 25, 1980 declining the request for supply of copies.
The detenu had also sent a petition through the Central Government on March 11, 1980 complaining the non supply of copies of the necessary documents and also prayed for the revocation of the order of detention.
On April 3, 1980 the Central Government wrote to the detenu that his request for revocation had been rejected, The Central Government, however, advised the State Government to furnish the detenu with the copies of the required documents.
As a result, the copies were received by the detenu on April 3, 1980.
The detenu had also made a representation to the State Government on March 24, 1980 which, according to the information by the counsel of Respondent No. 1, was declined.
The counsel for the detenus challenged the detention order on the grounds; (i) that the detaining authority callously and deliberately refused to supply the copies of the statements and documents relied upon in the grounds of detention, (ii) the detenu had a constitutional right to be afforded a fair and full opportunity to make an effective representation against their detention and his representation dated March 11, 1980, was wrongly rejected by an unauthorised person.
The respondent argued that (i) the substance of the information required had been incorporated in the grounds of detention ! which were served on the detenus, (ii) the supply of further information would have exposed the informants to bodily harm and the information would have adversely affected the investigation and harmed public interest.
344 Accepting the petition ^ HELD: The very fact that soon after the directions of the Central Government copies were ready and despatched to the detenus within three days thereof, shows that there was no physical difficulty in preparing and supplying the copies to the detenus, with due promptitude.
[349A B] It is well settled that "the constitutional imperatives enacted in Article 22(5) of the Constitution are two fold: (i) the detaining authority must, as soon as may be, that is, as soon as practicable after the detention, communicate to the detenu the grounds on which the order has been made and (ii) tho detaining authority must afford the detenu the earliest opportunity of making a representation against the detention order.
In the context 'grounds ' does not merely mean a recital or reproduction of a ground of satisfaction of the authority in the language of section 3, nor is its connotation restricted to a bare statement of conclusion of fact.
Nothing less than all the basic facts and materials which influenced the detaining authority in making the order of detention must be communicated to the detenue.
[350B D] The mere fact that the grounds of detention served on the detenu are elaborate, does not absolve the detaining authority from its constitutional responsibility to supply all the basic facts and materials relied upon in the ground to the detenu.
In the instant case, the grounds contain only tho substance of the statements, while the detenu had asked for copies of tho full text of those statements.
[350E F] Khudiram Das vs The State of West Bengal & Ors. ; referred to.
The statements supplied to the detenus are their subsequent statements in which they have completely resiled from their earlier statements.
It is obvious that the supply of the earlier statements which were entirely in favour of the detenus and the full texts of which have been withheld, could not, by any reckoning, expose those persons to any harm or danger at tho hands of the agents or partisans of the detenus.
If any part of the statements of those witnesses had to be withheld in public interest, the appropriate authority could, after due application of its mind, make an order under clause (6) of Article 22 of the Constitution withholding the supply of those portions of statements after satisfying itself that their disclosure would be against the public interest.
[351 F G] The detaining authority, without applying its mind to the nature of the documents, the copies of which were asked for by the detenus, mechanically refused as desired by the Collector, to supply the copies of all the documents.
It was on receiving a direction from the Central Government that the copies were supplied.
On account of this chill indifference and arbitrary refusal, the detenu, who had applied for copies on Feb. 18, 1980 could get the same only on March 27, 1980 i.e. after more than one month.
Thus, there was unreasonable delay of more than a month in supplying the copies to the detenus of the material that had been relied upon or referred to in the 'grounds ' of detention.
There was thus an infraction of the constitutional imperative that in addition to the supply of the grounds of detention, all the basic material relied upon or referred to in those 'grounds ' must be supplied to the detenu with reasonable expedition 345 to enable him to make a full and effective representation at the earliest.
What is 'reasonable ' expedition is a question of fact depending upon the circumstances of the particular case.
[351 H, 352 A C] In the peculiar facts of the instant case, the delay of more than a month, in supplying the copies of the basic materials and documents to the detenus has vitiated the detention.
[352 C D]
</s> |
<s>[INST] Summarize the judgementAppeal No. 1854 of 1992.
From the Judgment and Order dated 18.12.1990 of the Kerala High Court in M.F.A. No. 800 of 1990.
M.L. Verma, V.J. Francis, V. Subramanian and Padmakumar for the Appellant.
P.S. Poti and R. Sasiprabhu for the Respondent.
The Judgment of the Court was delivered by MOHAN, J.
This appeal by special leave is directed against i.e. judgment of the High Court of Kerala in M.F.A. No. 800/90 dated 18.12.90.
The short facts leading to this appeal are as under: The respondent Hotel is situated in Kaloor, Cochin 17.
It is a commercial establishment.
In July, 1985 this establishment obtained a Bar licence whereupon a Bar was started.
After running the business for some time it was closed down with effect from 31.3.88.
The Insurance Inspectors of the appellant verified the records of the respondent establishment on 29.9.87, 9.10.87 and 19.10 87.
It was reported that the employment strength of the respondent establishment including Chembaka Restaurant and Mayuri Bar was more than 19 as on 17.7.85.
Therefore, it was treated as covered under the (hereinafter referred to as the Act) with effect from 11.7.85 provisionally.
The fact of coverage was intimated to the respondent by notice dated 21.3.88.
Since the final date of coverage could be decided only after verifying all the records pertaining to the date of functioning of the establishment, the respondent was requested to produce all the records such as attendance register, wage register, ledgers etc.
from the date of starting of the establishment.
The respondent was also called upon to start 222 compliance under the Act with effect from 11.7.85.
But there was no compliance.
Hence, a notice was issued in Form C 18 dated 26.3.88 along with a draft order for contribution amount of Rs. 49,399.75 which was assessed under section 45 A of the Act for the period 11.7.85 to 313.88.
Though the respondent was afforded an opportunity to appear before the officer, it was not availed of However, a letter dated 13.7.88 was received but the explanations were not acceptable to the appellant.
Subsequently, a detailed order dated 3.8.88 under section 45 A of the Act was passed calling upon the respondent to pay a contribution of Rs. 49,399.75 together with interest at 6 per cent, failing which it would be covered as an arrears of land revenue.
Again, reminder was sent on 22.9.88.
No reply was received.
Hence, in order to recover the contribution under section 45 A of the Act, a claim in Form 19 was sent to the District Collector, Ernakulam on 31.10.88 requesting to recover the contribution for the period from 11.7.85 to 31.3.88.
Challenging these proceedings the respondent filed an application under section 75 of the Act before the Employees ' Insurance Court, Alleppey.
Inter alia it was contended that the applicant (respondent in this appeal) at no time employed 20 or more persons during the relevant time.
The order was illegal because under section 45 A of the Act the respondent was entitled to a reasonable opportunity of being heard.
That was not afforded.
These contentions were refuted by the appellant.
It was incorrect to state that on no occasion the respondent employed 20 or more workmen since the inspection report dated 8.12.86 clearly established to the contrary.
The contention that no opportunity had been afforded before initiating the revenue recovery proceedings, was also denied in view of Form C 18 dated 23.6.88, show cause notice dated 3.8.88 and reminder dated 22.9.88.
By its order dated 6th June, 1990 the Employees ' Insurance Court, Alleppey came to the following conclusion: "In the result, I can only uphold the assessment made by the ESI Corporation.
But when the question of recovery is considered, certain other aspects cannot be ignored.
The adhoc assessment itself was made by the opposite party after the 223 closure of the entire establishment.
All the employees working in the establishment had left by that time after accepting the termination of their services.
In respect of those employees who had already left, the ESI Corporation is now trying to recover contribution.
Now the position emerges is that despite the collection of contribution it will be impossible to bring under coverage those employees, because, they are not at all available for coverage and for enjoying the benefits under the scheme.
Therefore, even if the proceedings initiated earlier were sus tainable, so long as the employees are not available for the purpose of coverage, there is no meaning in collecting contribution alone.
In these circumstances, I can only hold that the applicant had failed to comply with provisions of the ESI Act at the appropriate time.
Therefore, according to me, after the closing of the establishment such recovery steps are not justified but only the prosecution as contemplated under sec.
85 of the ESI Act is attracted.
Therefore, it is upto the ESI Corporation to decide whether any prosecution should be launched against the applicant for the contravention or noncompliance of the requirements of the ESI Act and Rules. ' Aggrieved by the same the appellant Corporation preferred an appeal in M.F.A. No. 800 of 1990.
A Division Bench of the Kerala High Court by its order dated 18th December, 1990 posed the question for determination as to whether the appellant could proceed against respondent for realisation of contribution under the ESI scheme, after the closure of establishment.
The High Court upheld the finding of Insurance Court that the respondent had failed to comply with the provisions of the Act at the appropriate time.
However, it proceeded to hold that the respondent establishment was closed on 31.3.88.
P3 notice calling upon the respondent to pay the contribution was only on 23.6.88.
Since the scheme was made after the closure of the establishment, the appellant was not justified in proceeding against the respondent.
In this view, it dismissed the appeal.
It is under these circumstances, the ESI Corporation has come up by way of special leave to appeal.
Mr; M.L. Verma, learned senior counsel for the appellant urges the 224 following: 1.
The closure of the respondent establishment was on 31.3.88 but the liability with reference to contribution arose earlier.
The demand is for the period 11.7.85 to 31.3.88.
So long as the establishment is covered by the provisions of the Act it is not open to the respondent to circumvent its liability by contending that before actual recovery proceedings it had closed down.
If the finding of the High Court is accepted it would be the easiest way to evade the provisions of the Act.
In R.M. Lakshmanamurthy vs The Employees ' State Insurance Corporation, Bangalore, This Court has held that it is a beneficial piece of social security legislation in the interest of labour.
Further, the provisions of the Act will have to be construed with that end in view in order to promote the scheme and avoid the mischief.
Under section 26 of the Act all contributions are paid into a common fund.
Such a fund will have to be administered for the purposes of the Act as indicated under section 28.
Therefore, the employer cannot contend that he did not collect the employees ' contribution and hence, he cannot be called upon to pay.
Thus the impugned judgment is wrong and is liable to be set aside.
Per contra, Mr. P. Surbramanian Poti, learned senior counsel for the respondent would argue that the contention of the respondent throughout was that at no time it engaged 20 or more employees.
Therefore, it was under the belief that the Act would not be applicable.
In that belief the employer did not recover from the employees any contribution.
Nor was the employer called upon during that relevant time to comply with the provisions of the Act.
It was entirely due to the fault of the Officers of the appellant, the respondent did not make the contribution.
In any event, the establishment had been closed down on 31.3.88.
It will be unjust to enforce the provisions of the Act and to seek to recover contribution after the closure, more so, when the employees have settled their claims and have gone away.
Certainly, such a situation is not con templated under the Act.
From this point of view the judgment of the High Court is right and does not call for any interference.
In order to appreciate the rival contentions, it would be useful to set 225 out the necessary legal background.
The is an act for certain benefits to employees in cases of sickness, maternity and employment injury and to make provision for certain other matters in relation thereto.
Section 1(4) makes it applicable to all factories, in the first instance ' Under sub section (5) of the said section, the Government may, by a Notification, extend the provisions of the Act to any other establishment or class of establishment; industrial, commercial, agricultural or otherwise.
Admittedly, in this case, the hotel industry like that of the respondent has been notified under the Act.
Under section 26, a fund called Employees ' State Insurance Fund is created by all the contributions paid under this Act, the purposes, for which it may be expended, are cataloged under section 28.
Section 38 requires all employees in factories or establishments shall be insured.
Section 39 talks of contribution.
In respect of an employee it shall comprise of contribution payable by the employer (employer 's con tribution) and contribution payable by the employee.
It is this contribution which has to be paid to the Corporation.
Section 40 imposes the liability to pay contributions, in the first instance, on the principal employer.
After such contribution the employee 's contribution could be deducted from his wages.
Sub section (4) of section 40 is important.
That says as follows: "(4) Any sum deducted by the principal employer from wages under this Act shall be deemed to have been entrusted to him by the employee for the purpose of paying the contribution in respect of which it was deducted." (Emphasis supplied) Therefore, this sub section puts the matter beyond doubt that there is an entrustment.
In other words, the employer is a trustee.
Under section 44 there is an obligation on the employer to furnish returns and maintain registers.
The benefits available to the insured persons are stated in section 46: 1.
Sickness 2.
Maternity 3.
Disablement 226 4.
Injury 5.
Medical treatment for and attendance on insured persons.
Lastly, there is power to prosecute under section 85 which includes punishment for failure to pay contributions as well as for contravention of or non compliance with any of the requirements of the Act.
In the above legal background we may analyse the factual situation.
Two facts stare at us.
The liability to contribution of the respondent employer relates to a period between 11.7.85 to 31.3.88. 2.
The respondent establishment was closed on 31.3.88.
The contention of the respondent that at no time there were 20 or more employees in his establishment has to be rejected because at no point of time the respondent sought an adjudication on this aspect.
On the contrary, the inspections made by the officials of the appellant on 8.12.86, September 87 and October 87 state to the contrary.
Therefore, we have to proceed on the basis that the provisions of the Act are applicable to the respondent establishment, since (i) it is a notified industry, (ii) in the establishment more than 20 employees were working at the relevant time.
From the above provisions it is clear that from the date of his commencement of business, namely, 11.7.85, there was a liability to contribute.
It has already been seen under section 40 the primary liability is his, to pay, not only the employer 's contribution but also the employee 's contribution.
Therefore, he cannot be heard to contend that since he had not deducted the employee 's contribution on the wages of the employees, he could not be made liable for the same.
The object of making a deeming entrustment sub section (4) of section 40 will be altogether rendered nugatory if such a contention were to be accepted.
After all, when he makes employee 's contribution he is entitled to deduct from the wages.
Therefore, by force of the application of the statutory provisions, the liability to contribute, during this relevant period, namely, 11.7.85 to 31.3.88, arose.
There is no gain saying in that.
Hence, we reject the arguments of Mr. Subramanian Poti, learned senior counsel for the respondent.
From the above statutory provisions, it would be clear that from out 227 of the common fund maintained under section 26, the employees derive various benefits like sickness, maternity, disablement, injury, medical treatment for and attendance on insured persons.
Therefore, it is a beneficial piece of social security legislation.
As a matter of fact, this Court had occasion to consider the same in B.M. Lakshmanamurthy 's case (supra).
At page 370, paragraph 16 it was held : "The Act is thus a beneficial piece of social security legislation in the interest of labour in factories at the first instance and with power to extend to other establishments.
Provisions of the Act will have to be construed with that end in view to promote the scheme and avoid the mischief." Mr. M.L. Verma, learned senior counsel for the appellant is right in his submissions in this regard.
The Insurance Court as well as the High Court have correctly upheld the demand for contribution.
But it is rather strange to conclude that the demand could not be enforced against a closed business.
If this finding were to be accepted it would not promote the scheme and avoid the mischief.
On the contrary, it would perpetrate the mischief.
Any employer can easily avoid his statutory liability and deny the beneficial piece of social security legislation to the employees, by closing down the business before recovery.
That certainly is not the indentment of the Act.
To hold, as the High Court has done, would set at naught all these beneficial provisions.
It is equally fallacious to conclude that because the employees had gone away there is no liability to contribute.
It has to be carefully remembered that the liability to contribute arose from the date of commencement of the establishment and is a continuing liability till the closure.
The very object of establishing a common fund under section 26 for the benefit of all the employees will again be thwarted if such a construction is put.
We cannot also accept the finding of the High Court that because Ext.
P3 notice was issued on 23.6.88 after the closure of the respondent establishment on 31.3.88, the appellant was not justified in proceeding against the respondent.
The proceeding for the recovery is of the dues of contribution which arose prior to the closure on 31.3 88.
Therefore, it matters little when notice was issued, calling upon to pay the contribution.
228 In our considered view, such a notice is only a reminder to the employer to discharge his statutory obligation.
For all these reasons, we have little hesitation in setting aside the impugned judgment of the High Court which in turn upholds the order of Employees ' State Insurance Court.
The appellant will be entitled to proceed with the recovery proceedings in accordance with law.
Accordingly, the appeal will stand allowed with costs.
G.N. Appeal allowed.
[/INST]Section 32 (1) (ii) of the Income Tax Act, 1961 provided for depreciation, while computing business income for purpose of income tax.
It was allowed at a percentage of the written down value of certain capital assets employed in the business.
Section 35(1) provided for the deduction of four types of expenditure on scientific research and the deduction provided under 35 (1 ) (iv) was to the effect that in respect of any expenditure of a capital nature on scientific research related to the business carried on by the assessee, such deduction as may be admissible under the provisions of sub section (2).
Sub Section (2) provided that, for the purposes of clause (iv) of sub section (1), one fifth of the capital expenditure incurred in any previous year should be deducted for that previous year; and the balance of the expenditure should be deducted in equal instalments in each of the four immediately succeeding previous years.
It further provided in clauses (iv) and (v) that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of section 32 for the same previous year in respect of that asset; and where the asset mentioned in clause (ii) was used in the business after it ceased to be used for scientific research related to that business, depreciation should be admissible under clauses (i), (ii) and (iii) of sub section (1) of Section 32.
Explanation 1 to Section 43(1) also provided that where an asset was used in business after it ceased to be used for scientific research related to that business and a deduction had to be made under clause (i), clause (ii) or clause (iii) or sub section (1) or sub section (1A) of Section 32 in respect of that asset, the actual cost of the asset to the assessee, as reduced by the amount of any deduction allowed under clause (iv) of sub section (1) of Section 35.
The provisions of Section 32(1) (ii) and Section 35(2) (1) (iv) and (v) read with Explanation 1 to Section 43(1) virtually repeated the provisions contained in Section 10(2) (vi) and 10(2) (xiv) of the 1922 Act.
In 1968, there was an amendment in the provisions of Section 35(2).
The effect of the amendment was that the entire amount of capital expenditure incurred in relation to scientific research was allowed as a deduction in one year, instead of being spread over a period of five years as was the position earlier.
Thereafter, the Finance Act, 1980 made an amendment with retrospective effect from 1.4.1962, i.e. from the date of commencement of Act of 1961 which provided under clause (iv) of Section 35(2), that where a deduction was allowed for any previous year under this section in respect of expenditure represented wholly or partly by an asset, no deduction should be allowed under clauses (i), (ii) and (iii) of sub section (1) of Section 32, for the same or any other previous year in respect of that asset.
In the Writ Petitions filed before this Court on behalf of the asses sees it was contended that the allowances in respect of depreciation on the one hand and of capital expenditure on scientific research on the other are two totally different and independent heads of allowances; one was a notional allowance to provide for the wear and tear of a capital asset employed in the business as the years rolled by; and the other was an allowance for actual expenditure of a capital nature granted to give fillip to new industrial innovations and development of indigenous know how and techniques by proper planning on research and development by various business houses; and therefore there was nothing wrong in construing the statute as providing cumulatively for both types of deductions in respect of the same capital asset; that both the types of allowances were permissible under the statute except to the extent limited by clauses (iv) and (v) of Section 35 of the Act/Clauses (d) and (e) of the proviso to Section 10(2) (xiv) of the 1922 Act; that this interpretation of the statutory provisions was very clear.
patent and unambiguous; that the retrospective amendment of the provision would impose unexpected and impossible burden on them over the years, jeopardise their solvency and lay them open to action by creditors and financial institutions and such an onerous burden was unreasonable and oppressive and the provision imposing such a burden violated the fundamental rights of the assessees under Articles 14 and 19(1) (g) of the Constitution that retrospective provisions may be permissible even in taxing statutes in certain special circumstances such as in the case of provisions clarifying the impact of a statute provision curing defective legislations in the light of the judicial decisions and the like but if the legislature chose to impose a totally new burden which was not at all in contemplation earlier and proceeded to give full retrospective effect thereto such an attempt should be struck down as unreasonable and discriminatory.
that the amendment was not in the nature of a statutory clarification of an ambiguity but a totally new and fresh imposition sought to be unjustifiably given retrospective effect and that the statute did not intend one deduction to preclude other.
On behalf of the Revenue it was contended that the deduction provided by Section 35 (1) (iv) was in the alternative to the deduction provided by clauses (i) (ii) and (iii) of sub section (1) and sub section (1A) of Section 32; if one was availed of the other was not available not only during the year or years in which the deduction under Section 35(1) (iv) was availed of but permanently; for the reason that if both were allowed to be availed of; it amounted to grant of 200% deduction viz., 100% under Section 35(1) (iv) and another 100% under sub sections (1) and (1A) of Section 32, and this was totally outside the contemplation of the Act.
Dismissing the writ petitions, this Court, HELD: Per Ranganathan J. (For himself and Ramaswami, J.) 1.1.
There is a fundamental, though unwritten, axiom that no legislature could have at all intended a double deduction in regard to the same business outgoing; if it is intended it will be clearly expressed.
In other words, in the absence of clear statutory indication to the contrary, the statute should not be read so as to permit an assessee two deductions both under Section 10(2) (vi) and section 10(2) (xiv) under the 1922 Act or under Section 32 (i) (ii) and 35(2) (iv) of the 1961 Act qua the same expenditure.
The use of the words "in respect of the same previous year" in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 35 (2) (iv) of the 1961 Act is not a contra indication which permits a disallowance of depreciation only in the previous years in which the other allowance is actually allowed.
The purpose of the words above referred to is totally different.
That the two allowances cannot be and are not intended to be granted in respect of the same asset or expenditure, can be easily seen from the limitation imposed by these words.
Where the capital asset is one of the nature specified, the assessee can get only one of the two allowances in question but not both.
For determining which of the two allowances should be granted that which the assessee chooses or that which the assessing officer might prefer, it is necessary for the statute to define this and this is what has been done by the rider in clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act Section 35(2) (iv) of the 1961 Act.
It mandates that the asssessee should, in such a case, be granted the special allowance for scientific research and not the routine and annual one for depreciation.
Clause (d) of the proviso to Section 10(2) (xiv) of the 1922 Act and Section 30(2)(iv) of the 1961 Act thus fall into place as an appropriate and necessary provision.
The provision contained in clause (e) of the proviso to Section 10(2) (xiv) of the 1922 Act, re enacted in Explanation to Section 43(1) of the 1961 Act, also reinforces this line of approach.
Therefore, it is not correct to say that the allowances under the two provisions are by nature unconnected with, and indpendent of, each other.
[171 D H; 172 A E] 1.2.
Under the provisions of the statute as they stood earlier, the assessees could not have claimed continued grant of depreciation after the expiry of five previous years before the 1968 amendment and after the expiry of the first year after the 1968 amendment, even though the entire cost of the capital asset in question had been allowed to be written off completely against the business profits of those five previous years or one previous year as the case may be.
It is impossible to conceive of the legislature having envisaged a double deduction in respect of the same expenditure even though it is true that the two heads of deduction do not completely overlap and there is some difference in the rationale of the two deductions under consideration.
The last few words of the English statute, viz., "assets for any year of assessment during any part of which they were used by the person carrying on the trade for scientific research related to the trade" show that there is really no difference between the English and Indian Acts; the former also in terms prohibits depreciation only so long as the assets are used for scientific research.
[169 F H; 171 B, C] 1.3.
In the circumstances, it is clear that, even before the 1980 amendment, the Act did not permit a deduction for depreciation in respect of the cost of a capital asset acquired for purposes of scientific research to the extent such cost has been written off under Section 10(2) (xiv) of the 1922 Act/35(1) & (2) of the 1961 Act.
Prior to 1968, such assets qualified for an allowance of one fifth of the cost of the asset in five previous years starting with that of its acquisition and during these years the assessee could not get any depreciation in relation thereto.
In respect of assets acquired in previous year relevant to assessment year 1968 69 and thereafter, their cost was written off in the previous year of acquisition and no depreciation would be allowed in that year.
This is clear from the statute.
Equally, it is not envisaged, that depreciation could be allowed on them thereafter and also that it could be allowed starting with the original cost of the asset despite its user for scientific research and the allowances made under the 'scientific research ' clause.
There was no difficult at all in the interpretation of the provisions.
The mere fact that a baseless claim was raised by some over enthusiastic assessees who sought a double allowance or that such claim may perhaps have been accepted by some authorities is not sufficient to attribute any ambiguity or doubt as to the true scope of the provisions as they stood earlier.
[173 E H; 174 A] C.I.T. vs Indian Telephone Industries Ltd., and C.l.T. vs Hico Products, (1991) 187 I.T.R. 517, overruled.
Lohia Machines limited V. Union of India, S.C.; Alkali & Chemical Corporation of India Ltd, vs C.l.T., Cal.; C.l.
T vs Indian Explosive Ltd., Cal.; C.I.T vs International Instruments P. Ltd., Kar.
and Warner Hindustan Ltd. vs C.l.T., (1988) 171 I.T.R. 224 A.P., referred to.
The assessees may have some possible case only if the earlier statutory provisions can be said to have been unambiguously in favour of the assessee and the 1980 amendment had radically altered the provisions to cast a new and substantial burden on the assessee with retrospective effect but there is no ambiguity.
The 1980 amendment has effected no change at all in the provisions except to set out more clearly and categorically what the provision said even earlier.
Thus, even without the amendment, the assessees cannot claim the depreciation allowance in question.
Even if it is assumed that there was an ambiguity or doubt as to interpretation, that was retrospectively clarified by the legislature.
Therefore, the validity of the amendment cannot be challenged.
This is indeed beyond all doubt.
[174 C G] Rai Ramkrishna vs State of Bihar, [1964] 1 S.C.R. 897;Asst.
Commissioner of Urban Land Tax vs Buckingham & Carnatic Co. Ltd., ; ; Krishnamurthi & Co. vs State of Madras; , ; Hira Lal Rattan Lal vs Sales Tax Officer and Anr., (1973) 31 S.T.C. 178 and Shiv Dutt Rai Fateh Chand vs Union of India, (1984) 148 I.T.R. 644, referred to.
Per Jeevan, Reddy, J. (Concurring) 1.1.
A double deduction cannot be a matter of inference; it must be provided for in clear and express language, regard having to its serious impact on the revenues of the State.
If the Legislature/Parliament wanted to provide for more than 100% deduction they would have said so, as they done in cases where they have provided for what is called "weighted deduction", vide Section 35(B) of the Act of 1961.
It is not possible to agree that while introducing clause (xiv) in sub section (2) of Section 10 of the 1922 Act consequent on the introduction of Section 20(4) in the U.K. finance Act, 1944, the Indian Legislature as also the Parliament made a conscious departure from the English Amendment with the idea of providing an additional incentive over and above the deduction on account of depreciation, to induce the Indian assessees to invest more in scientific research.
The underlying reason in clause (iv) of Section 35(2) of Act of 1961 providing that during the years or year in which the assessee avails of the deduction under Section 35(1) (iv) he should not avail of the deduction on account of depreciation provided by clauses (i), (ii) and (iii) of sub section (1) and sub section (1A) of Section 32 is to ensure that the assessee does not get double deduction for example, where the asset was acquired prior to April 1, 1957, the deduction under Section 35(1) (iv) would be allowed in five consecutive years.
If during the very five previous years, depreciation under the aforementioned provisions is also allowed, the assessee would obtain, at the end of five years, a double depreciation i.e., 100% under Section 35 and almost 100% under Section 32.
(In many cases, the rate of depreciation under Section 32 is 20% or even higher).
If such a course was barred by clause (iv) during the initial five years, it would not be reasonable to say that same thing can be achieved by claiming the deduction after the expiry of five years.
If both the deductions are in the alternative, as indicated by clause (iv), they must be understood as being in the alternative and not consecutive.
It would be a rather curious thing to say (in the case of an asset acquired prior to April 1, 1967) that Parliament barred claim for depreciation under Section 32 even in the first year when only 20% of the cost of the asset is allowed as deduction under Section 35(1) (iv), it barred it in the second, third and fourth years, when the deduction had reached 40, 60 and 80 per cent but permitted it be claimed after the fifth year, by which year the entire 100% cost was allowed as a deduction.
No express provision was necessary to say what is so obvious.
The position after April 1.
1967 is no different.
That the aforesaid view is the correct one is indicated by Explanation (1) to clause (1) of Section 43 [the corresponding provision in the 1922 Act being sub clause (e) of clause (xiv) of Section 10(2) of 1922 Act].
[177 H; 178 A E] 13.
The amendment of Section 35(2) in 1980 is merely clarificatory in nature.
It makes explicit what was implicit in the provisions.
question of its constitutionality, therefore, does not arise.
Though purporting to be retrospective, it does not take away any rights which had legally vested in the assessees.
[180 B] Commissioner of Income Tax vs Hico Products Pvt. Ltd, , overruled.
None of the assessments relating to any of the assessment years in question has become final.
They are pending at one or the other stage and in one or the other forum.
Since the amendment under challenge merely makes explicit which was implicit in the unamended clause, there is no question of any right vesting in the assessee and its being taken away.
[180 H; 181 A]
</s> |
<s>[INST] Summarize the judgementetition Nos. 90 & 312 of 1992.
Under Article 32 of the Constitution of India. , D.D. Thakur, Tapash Ray, M.L. Verma, Gauray Jain, and Ms. Abha Jain for the Petitioner in W.P. No. 90 of 1992.
R.P. Gupta for the Petitioner in W.P. No. 312/92.
G. Ramaswamy, Attorney General, D.P. Gupta, Solicitor General, B. Parthasarthy, C.V.S. Rao, A.S. Bhasme and Chava Badri Nath Babu for the Respondent.
R. K. Jain, and Rajan Mukherjee for the customs, Excise & Gold (Control) Appellate Tribunal.
K.K. Venugopal, Ms. Pallav Shisodia and C.S.S. Rao for the Respondent.
The Judgments of the Court were delivered by AHMADI, J. We have had the benefit of the industry, erudition and exposition of the constitutional and jurisprudential aspects of law on the various questions urged before us in the judgment of our esteemed Brother K. Ramaswamy, J.
But while concurring with the hereinafter mentioned conclusions recorded by him we would like to say a few words to explain our points of view.
Since the facts have been set out in detail by our learned Brother we would rest content by giving an abridged preface which we consider necessary.
It all began with the receipt of a letter dated December 26, 1991, from Shri R.K. Jain, Editor, Excise Law Times, addressed to then Chief Justice of India, Shri M.H. Kania, J., complaining that as the Customs, Excise and Gold Control Appellate Tribunal (for short 'the CEGAT) was without a President for the last over six months the functioning of the Tribunal was adversely affected, in that, the Benches sit for hardly two hours or so, the sittings commence late at about 10.50 818 a.m., there is a tendency to adjourn cases on one pretext or the other so much so that even passing of interim orders, like stay orders, etc., is postponed and inordinately delayed, and the general tendency is to work for only four days in a week.
The work culture is just not there and the environmental degradation that has taken place is reflected in the letter of Shri G. Sankaran dated June 3, 1991 who prematurely resigned as the President of the CEGAT.
Lastly, he says that there were nearly 42,000 appeals and approximately 2000 stay petitions pending in the CEGAT involving revenue worth crores of rupees, which will remain blocked for long.
Three directions were sought, namely, "(i) the immediate appointment of the President to the CEGAT, preferably a senior High Court Judge , (ii) order an enquiry into the mal functioning of the CEGAT; and (iii) issue all other directions as your Lordship may deem fit and necessary.
" This letter was directed to be treated as Public Interest Litigation and notice was issued to the Union of India restricted to relief No. (i) i.e. in regard to the appointment of the President of the CEGAT.
On April 29, 1992, the learned Additional Solicitor General informed the Court that the appointment of the President was made.
On the next date of hearing the relevant file on which the decision regarding appointment was made was produced in a sealed envelope in Court which we directed to be kept in safe custody as apprehension was expressed that the file may be tempered with.
The focus which was initially on the working of the CEGAT and in particular against the conduct and behaviour one of its Members now shifted to the legality and validity of the appointment of respondent No. 3 as its President.
Serious allegations were made against respondent No. 3 and his competence to hold the post was questioned.
It was contended that his appointment was made in violation of the Rules and convention found mentioned in the message of Shri Y.V. Chandrachud, the then Chief Justice of India, dated October 5, 1992 forwarded on the occasion of the inauguration of the CEGAT.
The further allegation made is that even though High Court Judges were available no serious attempt was made to requisition the services of one of them for appointment as President of the CEGAT.
To put a quietus to the entire matter at an early date we called the file from the Registry on May 4,1992 but when we were about to peruse the same the learned Additional Solicitor General contended 'that the Court cannot inspect it because he desired to claim privilege '.
We, therefore, directed that a formal application may be made in that behalf before the next date of hearing and returned the file to enable the making of such an application.
819 Accordingly, the then Finance Secretary filed an affidavit claiming privilege under sections 123 and 124, Evidence Act, and Article 74(2) of the Constitution.
The Minister of State in the Finance Department was also directed to file an affidavit in support of the claim for privilege which he did.
It is in this context that the question of privilege arose in the present proceedings.
Our learned Brother Ramaswamy, J. dealt with this question elaborately.
After referring to the provisions of the relevant Statutes and the Constitution as well as the case law of both foreign and Indian courts, the authoritative text books.
he has concluded as under: "Having perused the file and given our anxious consideration we are of the opinion that on the facts of the case. . it is not necessary to disclose the contents of the records of the petitioner or his counsel.
" We are in respectful agreement with this conclusion recorded by our learned Brother though not entirely for in the reasons which have weighed with him.
On the question of appointment of respondent No. 3 as the President of the CEGAT we must notice a few provisions contained in the CEGAT Members (Recruitment anti Conditions of Service).
Rules, 1997 (hereinafter called 'the Rules ').
Rule 2(c) defines a member, to include the President of the CEGAT also; Rule 3 prescribes the qualifications for appointment and Rule 6sets out the method of recruitment of 'a member through a Selection Committee consisting of a Judge of the Supreme Court of 'India nominated by the Chief Justice of India.
Rule 10 provides for the appointment of the President.
It says that the Central Government shall appoint one of the members to be the President.
Sub rule (2) then provides as under "(2) Notwithstanding anything contained in rule 6.
a sitting or retired judge of a High Court may also he appointed by the Central Government as a member and President simultaneously.
" Sub rule (4) and the proviso thereto bear reproduction "(4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years, whichever is earlier: 820 Provided that where a retired judge of a High Court above the age of 62 years is appointed its President.
he shall hold office for such period not exceeding three years as may be determined by the Central Government at the time of ' appointment or re appointment.
" It will thus he seen that the rules empower the Central Government to appoint any member as the President of the CEGAT.
It is true that under sub rule (4), a serving judge and under the proviso thereto, a retired judge, can also be appointed a Member and President simultaneously.
In the case of a serving judge his age of superannuation is fixed at 02 years but in the case of a retired judge he may be appointed for it period of three years at the most.
Insofar as a serving High Court Judge is concerned, he holds office until he attains the age of 62 years, vide Article 217 of the Constitution.
It therefore, heats common sense why a sitting Judge of he High Court would opt to serve as the President of tile CEGAT if lie is to retire At the same age without any benefit.
On tile contrary he would lose certain perks which are attached to tile office of a High Court Judge.
Even status wise lie would suffer as his decisions would he subject to the writ jurisdiction of the High Court under Articles 226/227 of tile Constitution.
He may agree to accept the offer only if he had an extended tenure of at least three years.
We are, therefore, in agreement with our learned Brother that sub rule (4) of Rule 10 of the Rules needs a suitable change to make it sufficiently attractive for sitting High Court Judges to accept appointment as the President of the CEGAT.
We also agree with our learned brother that to instill the confidence of the litigating public in the CEGAT.
the Government must make a sincere effort to appoint a sitting Judge of the High Court is a President of the CEGAT in consultation of the Chief Justice of India and it a sitting Judge is not available the choice must fall on a retired Judge as far as possible.
This would he consistent with the assurance given by the Finance Department as is reflected in the letter of Shri Chandrachud, extract wherefrom is reproduced by our learned Brother in his judgment.
Shri Harish Chandra was a Senior Vice President when the question of ' filling, up the vacancy of the President came up for consideration.
He was fully qualified for the post under the Rules.
No challenge is made on that count.
Under Rule 10(1) the Central (Government is conferred the power to appoint one of the Members to be the President.
Since the validity of the Rule is not questioned there can be no doubt that the Central Government was entitled to appoint respondent No. 3 as the President.
But it was said that the track record of respondent No. 3 was poor and he was hardly fit to hold the post of the President of the CEGAT.
It has been averred that respondent No. 3 had been in the past proposed for appointment 821 as a Judge of the Delhi High Court but his appointment did not materialise due to certain adverse reports.
Assuming for the sake of argument that these allegations are factually accurate, this Court cannot sit in judgment over the choice of the person made by the Central Government for appointment as a President if the person chosen is qualified and eligible for appointment under the Rules.
We, therefore, agree with our learned Brother that this Court cannot sit in judgment over the wisdom of the Central Government in the choice of the person to be appointed as a President so long as the person chosen possesses the prescribed qualification and is otherwise eligible for appointment.
therefore, cannot interfere with the appointment of respondent No. 3 on the ground that his track record was poor or because of adverse reports on which account his appointment as a High Court Judge had not materialised.
The allegations made by Shri R.K. Jain in regard to the working of the CEGAT are rave and the authorities can ill afford to turn a Nelson 's eve to those allegations made by a person who is fairly well conversant with the internal working of the Tribunal.
Refusal to inquire into such grave allegations, some of which are capable of verification, can only betray indifference and lack of a sense of urgency to tone up the working of the tribunal.
Fresh articles have appeared in the Excise Law Times which point to the sharp decline in the functioning of the CEGAT pointing to a serious management crises.
It is high time that the administrative machinery which is charged with the duty to supervise the working of the CEGAT wakes up from its slumber and initiates prompt action to examine the allegations by appointing a high level team which would immediately inspect the CEGAT, identify the causes for the crises and suggest remedial measures.
This cannot brook delay.
Lastly, the time is ripe for taking stock of the working of ' the various Tribunals set up in the country after the insertion of Articles 323A 323B in the Constitution.
A sound justice delivery system is a sine qua non for the efficient governance of a country wedded to the rule of law.
An independent and impartial justice delivery system in which the litigating public has faith and confidence alone can deliver the goods.
After the incorporation of these two articles,Acts have been enacted whereunder tribunals have been constituted for dispensation of justice.
Sufficient time has passed and experience gained in these last few years for taking stock of the situation with a view to finding out if they have serve the purpose and objectives for which they were constituted.
Complaints have been heard in regard to the functioning, of other tribunals as well and it is time that a body like the Law Commission of India has comprehensive look in with a view to 822 suggesting measures for their improved functioning.
That body can also suggest changes in the different statutes and evolve a model on the basis whereof tribunals may be constituted or reconstituted with a view to ensuring greater independence.
An intensive and extensive study needs to be undertaken by the Law Commission in regard to the constitution of tribunals under various statutes with a view to ensuring their independence so that the public confidence in such tribunals may increase and the quality of their performance may improve.
We strongly recommend to the Law Commission of India to undertake such an exercise on priority basis.
A copy of this judgment may be forwarded by the Registrar of this Court to the Member Secretary of the Commission for immediate action.
We have thought it wise to clarify the extent of our concurrence with the views expressed by our learned Brother in his judgment to avoid possibility of doubts being raised in future.
We accordingly agree with our learned Brother that the writ petitions should stand disposed of accordingly with no order as to costs.
K.RAMASWAMY, J.: The same facts gave birth to the twin petitions for disposal.
by a common judgment.
On October 11, 1982, the Customs Central Excise and Gold (Control) Appellate Tribunal for short 'CEGAT ' came into existence with Justice F.S. Gill as its President.
After he retired in 1985 no Judge was appointed as President.
In letter dated December 26, 1991, addressed to the Chief Justice of India, the petitioner highlighted the mal functioning of the CEGAT and the imperative to appoint a sitting or retired judge of the High Court as President to revitalise its functioning and to regenerate warning and withering faith of the litigant public of the efficacy of its adjudication.
Treating it as writ petition on February 25, 1992 this court issued rule nisi to the first respondent, initially to make immediate appointment of the President of the CEGAT, prefer ably a senior High Court Judge.
On March 30, 1992 when the Union 's counsel stated that the matter was under active consideration of the government, having regard to the urgency, this court hoped that the decision would he taken within two weeks from that date.
On April 20, 1992 the learned Addl.
Solicitor General reported that the appointment of the President had been made, however.
the order was not placed on record.
In the meanwhile die petitioner filed writ petition No. 312 of 1992 impugning the appointment of Sri Harish Chander, as President and sought to quash the same being in violation of the direction issued by this ( 'our( on February 25, 1992 and to strike down Rules 10(1), (3) and (4) of the CEGAT Members (Recruitment and Conditions of Service) Rules 1987, for short the 'Rule ' as violative of article 43 of the Constitution.
Rule nisi was also issued to the respondents in that writ petition on May 4, 1992.
The tile in a sealed cover was produced.
The first and the third respondents were directed to file their counters 823 within four weeks.
This court also directed the first respondent "to reflect in the counter what was the actual understanding in regard to the convention referred to in the letter of the then Chief Justice of India dated October 5, 1982"; "What procedure was followed at the time of the appointment by first respondents" and "whether Chief Justice of India was consulted or whether the first respondent was free to choose a retired or a sitting Judge of the High Court as President of the Tribunal with or without consultation of the Chief Justice of India".
"It should also point out what procedure it had followed since then in the appointment of the President of the Tribunal".
It should also clarify whether "before the third respondent was appointed as the President, "any effort or attempt was made to ascertain if any retired or a sitting Judge of the High Court could be appointed as the President of the Tribunal" and directed to post the cases for final disposal on July 21, 1992.
At request, to enable to government to file a counter, the rile was returned.
The Solicitor General though brought the file on July 21, 1992.
objected to our inspecting the file and desired to claim privilege.
The file was directed to be kept in the custody of the Registrar General till further orders.
The union was directed to file written application setting out the grounds on which the claim for privilege is founded and directed the Registry to return the sealed envelop as the Solicitor General expressed handicap to make precise claim of the privilege for want of file.
Thereafter an application was filed supported by the affidavit of the Secretary, Finance and the State Minister also filed his affidavit.
Counter affidavits and rejoinders were exchanged in the writ petitions.
The Attorney General also appeared on behalf of the Union.
The government 's claim for privilege is founded upon section 123 of the and article 74 (2) of the Constitution of India.
Later on the Solicitor General modified the stand that the government have no objection for the court to peruse the file but claimed privilege to disclose the contents of the file to the petitioner.
Section 123 of the postulates that "no one shall be permitted to give any evidence derived from unpublished official records relating to any affairs of State, except with the permission of the officer at the head of the department concerned, who shall give or withhold such permission as he thinks fit.
Section 124 provides that no public officer shall be compelled to disclose communications made to him in official confidence, "when he considers that the public interests would suffer by the disclosure".
section 162 envisages procedure on production of the documents that a witness summoned to produce a document shall, if it is in his possession or power, bring it to the court, notwith standing any objection which there may be to its production or to its admissibility.
824 "The validity of any such objection shall be decided by the court.
" The court, if it deems fit, may inspect the documents, unless it refers to matters of State, or take other evidence to enable it to determine on its admissibility.
The remedy under article 32 of the Constitution itself is a fundamental right to enforce the guaranteed rights in Part 111.
This court shall have power to issue writ of habeas corpus, mandamus, certiorari, quowarranto or any other appropriate writ or direction or order appropriate to the situation to enforce any of the fundamental right (power of High court under article 226 is wider).
Article 144 enjoins that all authorities, civil and judicial, in the territory of India shall act in aid of this Court.
Article 142 (1) empowers this Court to make such orders as is necessary for doing complete justice in any cause or matter pending before it.
Subject to the provisions of any law made in this behalf by the Parliament, by Clause 2 of article 142.
this Court "shall have all and every power to make any order for the purpose of securing the attendance of any person, the discovery or production of any documents,or the investigation or punishment of any contempt of itself.
" When this Court was moved for an appropriate writ under article 32, rule nisi would be issued and for doing complete justice in that cause or matter, it has been invested with power to issue directions or orders which includes ad interim orders appropriate to the cause.
All authorities, constitutional, civil judicial, statutory or persons in the territory of India are enjoined to act in aid of this court.
This court while exercising its jurisdiction, subject to any law, if any, made by Parliament consistent with the exercise of the said power, has been empowered by Cl. 2 of article 142 with all and every power to make any order to secure attendance of any person, to issue "discovery order nisi" for production of any documents, or to order investigation .
Exercise of this constituent power is paramount to enforce not only the fundamental rights guaranteed in Part III but also to do complete justice in any matter or cause, presented or pending adjudication.
The power to issue "discovery order nisi" is thus express as well as inherent as an integral power of Judicial review and process in the court to secure the attendance of any person or discovery or production of any document or to order investigation in that behalf.
However.
in an appropriate case, depending on facts on hand, court may adopt such other procedure as would be warranted.
The petitioner must make strong prima facie case to order discovery order nisi, etc.
and it must not be a hunting expedition to fish out some facts or an attempt to cause embarrassment to the respondents nor for publicity.
But on issuance of rule nisi by this Court under article 32 or a discovery order nisi the government or any authority, constitutional, civil, judicial.
statutory or otherwise or any person, must produce the record in their 825 custody and disobedience thereof would be at the pain of contempt.
Section 123 of the Evidence Act gives right to the government, in other words, to the minister or in his absence head of the department, to claim privilege, in other words immunity from disclosure of the unpublished official state documents in public interest.
In a democracy, governed by rule of law State is treated at par with a person by article 19(6) in commercial/industrial activities.
It possessed of no special privileges.
This Court in State of U.P. vs Raj Narain & Ors.
at 349 held that an objection claiming immunity should be raised by an affidavit affirmed by the head of the department.
The court may also require a Minister to affirm an affidavit.
They must state with precision the grounds or reasons in support of the public interest immunity.
It is now settled law that the initial claim for public interest immunity to produce unpublished official records for short "state documents" should be made through an affidavit generally by the Minister concerned, in his absence by the Secretary of the department or head of the Department.
In the latter case the court may require an affidavit of the Minister himself to be filed.
The affidavit should indicate that the documents in question have been carefully read and considered and the deponent has been satisfied, supported by reasons or grounds valid and germane, as to why it is apprehended that public interest would be injured by disclosure of the document summoned or called for.
If the court finds the affidavit unsatisfactory a further opportunity may be given to file additional affidavit or be may be summoned for cross examination.
If the court is satisfied from the affidavit and the reasons assigned for withholding production or disclosure, the court may pass an appropriate order in that behalf.
The Court though would give utmost consideration and deference to the view of the Minister, yet it is not conclusive.
The claim for immunity should never be on administrative routine nor be a garb to avoid inconvenience, embarrassment or adverse to its defence in the action, the latter themselves a ground for disclosure.
If the court still desires to peruse the record for satisfying itself whether the reasons assigned in the affidavit would justify withholding disclosure, the court would, in camera, examine the record and satisfy itself whether the public interest subserves withholding production or disclosure or making the document as part of the record.
On the one side there is the public interest to be protected; on the other side of the scale is the interest of the litigant who legitimately wants production of some documents, which he believes will support his own or defeat his adversary 's case.
Both are matters of public interest, for it is also in the public interest that justice should be done between litigating parties by production of all relevant documents for which public interest immunity has been claimed.
They must be weighed one 826 competing public interest in the balance as against another equally competing public administration of justice.
The reasons are: there is public interest that harm shall not be done to the nation or the public service by disclosure of the document in question and there is public interest that the administration of justice shall not be frustrated by withholding the document which must be produced, if justice is to be done.
The court also should be satisfied whether, the evidence relates to the affairs of the State under sec.
123 or not; evidence is relevant to the issue and admissible.
As distinct from private interest, the principle on which protection is given is that where a conflict arise between public and private interest, private interest must yield to the public interest.
In S.P. Gupta & Ors.
etc vs Union of India & Ors.
[1982] 2 SCR 365, this court by seven Judges ' bench held that the court would allow the objection to disclosure if it finds that the document relates to affairs of State and its disclosure would be injurious to public interest, but on the other hand, if it reaches the conclusion that the document does not relate to affairs of State or that the public interest does not compel its non disclosure or that the public interest in the administration of justice in the particular case before it overrides all other aspects of public interest, it will overrule the objection and order disclosure of the document.
When an objection was raised against disclosure of a particular document that it belongs to a class which in the public interest ought not to be disclosed, whether or not it would be harmful to disclose that class document or the contents of that particular document forming part of the class would be injurious to the interest of the state or the public service, it would be difficult to decide in vacuum the claim because it would almost invariably be supported by an affidavit made either by the Minister or head of the department and if he asserts that to disclose the contents of the document would or might do to the nation or the public service a grave injury, the court out of deference will be slow to question his opinion or to allow any interest, even that of justice, to prevail over it unless there can be shown to exist some factors suggesting either lack of good faith or an error of judgment on the part of the minister or the head of the department or the claim was made in administrative routine without due consideration or to avoid inconvenience or injury to their defence.
However, it is well settled law that the court is not bound by the statement made by the minister or the head of the department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice.
The real question which the court is required to consider is whether public interest is so strong to override the ordinary right and interest of the litigant that he shall be able to lay before a court of justice of the relevant evidence.
In balancing the competing interest it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the 827 public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must be produced if justice is to he done.
It is, therefore, the paramount right and duty of the court not of the executive to decide whether a document will be produced or may he withheld.
The court must decide which aspect of public interest predominates or in other words whether the public interest which requires that the document should not be produced out weighs the public interest that a court of justice in performing its functions should not be denied access to relevant evidence.
In some cases, therefore, the court must weight one competing aspect of the public interest against the other, and decide where the balance lies.
If the nature of the injury to the public interest is so grave a character then even private interest or any other interest cannot be allowed to prevail over it.
The basic question to which the court would.
therefore, have to address itself for the purpose of deciding the validity of the objection would be, whether the document relates to affairs of State or in other words, is it of such a character that its disclosure would be against the interest of the State or the public service and if so, whether the public interest in it ; non disclosure is so strong that it must prevail over the private interesting the administration of justice and on that account, it should not be allowed to be disclosed.
By operation of Sec. 162 of Evidence Act the final decision in regard to the validity of an objection against disclosure raised under section 123 would always be with the court.
The contention, therefore, that the claim of public interest immunity claimed in the affidavit of the State Minister for Finance and the Secretary need privacy and claim for immunity of state documents from disclosure is unsustainable.
The same is the law laid down by the Commonwealth countries, see Conway vs Rimmer. ; ; D. vs National Society for the Prevention of Cruelty to Children ; ; Burmah Oil Co. Ltd. vs Governor and Company of the Bank of England, ; ; Butters Gas and Oil Co. vs
Hammer ; Air Canada vs Secretary of State for Trade ; and Council of Civil Service Unions vs Minister for the Civil service, ; Pursuant to the law laid down in Conway 's, case the Administration of Justice Act, 1970 was made enabling the court to order disclosure of the documents except where the court, in exercise of the power under sections 31 to 34, considered that compliance of the order would be injurious to the public interest consistent with the above approach is the principle laid by this court in S.P. Gupta 's case.
In United States of America the Primacy to the executive privilege is given only where the court is satisfied that disclosure of the evidence will expose military 828 secrecy or of the document relating to foreign relations.
In other respects the Court would reject the assertion of executive privilege.
hi United States vs Reynolds [1935] 1 ; , Environment Protection Agency vs Patsy T. Mink [410] U.S. ; 11; Newyork Times vs U. section ; Pentagan Papers case and U. section vs Richard M. Nixon ; = ; 1035.
What is known as Watergate Tapes case, the Supreme Court of U.S.A. rejected the claim of the President not to disclose the conversation he had with the officials.
The Administrative Procedure Act 5, Art 552 was made.
Thereunder it was broadly conceded to permit access to official information.
Only is stated hereinbefore the President is to withhold top secret documents pursuant to executive order to be classified and stamped as "highly sensitive matters vital to our national defence and foreign policies".
In other respects under the Freedom of Information Act, documents are accessible to production.
In the latest Commentary by McCormick on Evidence, 4th Ed. by John W. Strong in Chapter 12, surveyed the development of law on the executive privilege and stated that at p. 155, that "once we leave the restricted area of military and diplomatic secrets, a greater role for the judiciary in the determination of governmental claims of privilege becomes not only desirable but necessary. . .
Where these privileges.
are claimed, it is for the judge to determine whether the interest in governmental secrecy is out weighed in the particular case by the litigant 's interest in obtaining the evidence sought.
A satisfactory striking of this balance will, on the one hand, require consideration of the interests giving rise to the privilege and an assessment of the extent to which disclosure will realistically impair those interests.
On the other hand, factors which will affect the litigant 's need will include the significance of the evidence sought for the case.
the availability of the desired information from other sources, and in some instances the nature of the right being, asserted in the litigation." In Robinson vs State of South Australia, PC, Shankey vs Whitlan [1979] 53 ALR p.1; FAI Insurances Ltd. vs The Hon.
Sir, Henry Arthus Winneke and ors; , , whitlan vs Australian Consolidated Press Ltd.,[1985] 60 ALR p.7; Minister for Arts Heritage and Environment and Ors.
vs Pekoi Wallsend Ltd and Ors.
and Commonwealth of Australia vs Northern Land Council, and Anr.
, Australian Courts consistently rejected the executive privilege and exercise the power to determine whether the documents need immunity from disclosure in the public interest.
The same view was endorsed by the Supreme Court of 'Canada in R. vs Shinder and Gagnon vs Quebec, Securities Commission ; The Supreme Court of Victoria in Bruce vs Waldron.
[1963] VLR p.3; The Court of Appeal of New south Wales in Re Tunstall.
exhibit P. Brown, [1966] 84 W.N. (Pt.
2) 829 [N.S.W.] 13.
The Court of Appeal of the New Zealand in Corbett vs
Social Security Commission , Creednz Inc vs Governor General [1981] 1 N.L.R. p. 172; The Supreme Court of Ceylon in Apponhamy vs Illangaretute, [1964] 66 C.L.W. 17.
The Court of Appeal of Jamaica in Allen vs By field [No.2] at page 71 and The Court of Session in Scotland in Glasqow Corporation vs Central Land Board, [1956] Scotland Law Time p.4.
The learned Solicitor General contended that a Cabinet sub committee constituted under Rules of Business approved the appointment of Harish Chander as President of CEGAT.
The President accordingly appointed him.
By operation of article 77 (3) and 74(1), the appointment was made by the President.
The file constitutes Cabinet documents forming part of the Preparation of the documents leading to the formation of the advice tendered to the President.
Noting of the officials which lead to the Cabinet note and Cabinet decision and all papers brought into existence to prepare Cabinet note are also its part.
Section 123 of the Evidence Act and Article 74(2) precludes this court from inquiring into the nature of the advice tendered to the President and the documents are, therefore, immuned from disclosure.
The disclosure would cause public injury preventing candid and frank discussion and expression of views by the bureaucrats at higher level and by the Minister/Cabinet Sub committee causing serious injury to public service.
Therefore, Cabinet papers, Minutes of discussion by heads of departments; high level documents relating to the inner working of the government machine and all papers concerned with the government policies belong to a class documents which in the public interest they or contents thereof must be protected against disclosure.
The executive power of the Union vested in the President by Operation of article 53(1) shall be exercised by him either directly or through officers subordinate to him in accordance with the Constitution.
By operation of article 73(1), subject to the provisions of the constitution, the executive power of the Union shall extend to the matters with respect to which Parliament has power to make laws.
Article 75(1) provides that the Prime Minister shall be appointed by the President and the other Ministers shall be appointed by the President on the advice of the Prime Minister; article 75(3) posits that the Council of Ministers shall be collectively responsible to the House of the People; article 75(4) enjoins that before a Minister enters upon his office, the President shall administer to him the oaths of office and of secrecy according to the forms set out for the purpose in the Third Schedule to the Constitution.
Article 74(1) as amended by section 11 of the Constitution 42nd Amendment Act, 1976 with effect from January 3, 1977 postulates that there shall be a Council of Ministers with the Prime Minister as the head to aid and advise the President who shall, in the exercise of his functions, act in accordance with such 830 advice.
The proviso thereto added by section 11 of the Constitution 44th Amendment Act, 1978 which came into effect from June 20, 1979 envisages that "provided that the President may require the Council of Ministers to reconsider such advice, either generally or otherwise, and the President shall act in accordance with the advice tendered after such reconsideration.
" Clause (2) declares that "the question whether any, and if so what, advice was tendered by Minister to the President shall not be inquired into in any court.
" In Satwant Singh Sawhney vs D. Ramarathnam.
Asstt.
Passport Officer , and in Maganbhai Ishwarbhai Patel vs Union of India and anr.
; , this Court held that the Ministers are officers subordinate to the President under article 53 (1) or 'the Governor under article 154 (1),.
as the case may be.
The President exercises his executive power under Art: 74 (1) through the Council of Ministers with the Prime Minister as its head who shall be collectively responsible to the House of People.
The exercise of the power would be as per the rules of business for convenient transaction of the Govt.
administration made under article 77(3), viz., the Govt.
of India (Transaction of Business) Rules, 1961 for short the 'Business Rules '.
The Prime Minister shall be duty bound under article 78 to communicate to the President all decisions of the Council of Ministers relating to the administration of the affairs of the Union and proposals for legislation etc.
The details whereof are not material.
Article 77(1) prescribes that "all executive actions of the Govt.
of India shall be expressed to be taken in the name of the President and shall be authenticated in the manner specified in the Rules made by the President.
The President issued business rules and has allocated diverse functions to the Council of Ministers, its committees and the officers subordinate to them.
In Shamsher Singh vs State of Punjab ; , a Bench of seven Judges, speaking through Ray, C.J., held that the executive power is generally described as the residue which does not fall within legislative or judical power but executive power also partakes of legislative or judicial, actions.
All powers and functions of the President, except his legislative powers, are executive powers of the Union vested in the President under article 53(1).
The President exercises his functions, except conferred on him to be exercised in his discretion, with the aid and advice of the Council of Ministers as per the business rules allocated among his Ministers or Committees.
Wherever the constitution requires the satisfaction of the President, the satisfaction required of him by the Constitution is not the personal satisfaction of the President, but is of the Cabinet System of Govt.
The Minister lays down the policies.
The Council of Ministers settle the major policies.
The civil servant does it on behalf of the Govt.
as limb of the Govt.
The decision of any Minister or officer under the rules is the decision of the President.
831 Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered which would mean that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees.
Political decisions of importance are in their nature complies and need sufficient time and considerate thought.
Equally, the decisions relating to public service need probity and diverse consideration.
The Cabinet system is extremely well adapted to making considered decisions with all due speed and expedition.
The principle of ministerial responsibility has a verity of meanings precise and imprecise, authentic and vague.
Parliament rarely exercises direct control over Ministers.
Though the floor of the House is the forum for correcting excesses of the government but rarely a place where a Minister can be expected to keep the information secret.
Therefore, the Minister is answerable for his decision to the Parliament is fanciful.
Sir Ivor Jennings,in his Cabinet Government, stated that the Cabinet is the supreme directing authority.
It integrates what would otherwise be a heterogeneous collection of authorities exercising a vast variety of functions.
Neither the Cabinet nor the Prime Minister, as such, claims to exercise any powers conferred by law.
They take the decision, but the acts which have legal effect are taken by others the Privy Council, a Minister, a statutory commission and the like.
At page 81, it is stated, that the existence and activities of these coordinating ministers does not impair or diminish the responsibility to Parliament of the departmental ministers whose policies they co ordinate.
The ministers are fully accountable to Parliament for any act of policy or administration within their departmental jurisdiction.
It does not follow that the coordinating ministers are non responsible.
Having no statutory powers as coordinating ministers, they perform in that capacity no formal acts.
But they share in the collective responsibility of the Govt.
as a whole, and, as Minister they are accountable to Parliament.
At page 233, he stated that the Cabinet has to decide policy matters.
Cabinet is policy formulating body.
When it has determined on a policy, the appropriate department carries it out, either by administrative action within the law or by drafting a bill to be submitted to Parliament so as to change the law.
The Cabinet is a general, controlling body.
It neither desires, nor is able to deal with all the numerous details of the Govt.
It expects a minister to take all decisions which are not of real political importance.
Every Minister must, therefore, exercise his own discretion as to what matters arising in his department ought to receive cabinet sanction.
At page 35 1, he stated that civil servants prepare memorandum for their Ministers.
Ministers discuss in Cabinet.
Proposals are debated in the House of Commons.
At the, persons involved are peculiar people and nobody knows what the man in the back street thinks of it all, though the politician often thinks he does.
On the Cabinet 832 Minister 's responsibility at page 449, he stated that when it is said that a Minister is responsible to Parliament, it is meant that the House of Commons (in our constitution Lok Sabha) may demand an explanation.
If that explanation is not considered satisfactory and the responsibility is collective, the House will vote against the Govt.
and so compel a resignation or a dissolution.
If the responsibility is not collective, but the act or advice was due to the negligence of or to an error of judgment by a Minister and the House disapproves, the Minister will resign.
In Halsbury 's Laws of England, Fourth Ed., Vol. 8, para 820, it is stated that the Cabinet control of legislative and executive functions, the "modern English system of government is the concentration of the control of both legislative and executive functions in a small body of men, presided over by the Prime Minister, who are agreed on fundamentals and decide the most important questions of policy secretly in the Cabinet.
The most important check on their power is the existence of a powerful and organised parliamentary opposition, and the possibility that measures proposed or carried by the government may subject them to popular disapproval and enable the Opposition to defeat them at the next general election and supplant them in their control of the executive.
In Great Britain, Cabinet system is based on conventions.
Patrick Gordon Walker in his 'The Cabinet ' 1973 Revised Ed.
at p. 178 stated that basically Cabinet is a constitutional mechanism to ensure that before important decisions are reached many sides of the question are weighed and considered.
This means that much work must be done beforehand in interdepartmental discussions and in the preparation of papers for Cabinet Committees and the Cabinet.
Cabinet that acts without briefs or over hastily ' think for themselves ' usually, in my experience, make mistaken decisions.
Political decisions of importance are in their nature complex and need some time and thought.
The cabinet system is extremely well adapted to making considered decisions with all due speed.
Cabinet discussions as distinct from Cabinet decisions must, from their nature, be kept secret.
At page 184 he maintained that the main effective change towards less secrecy would be for the Cabinet to share with Parliament and public more of the factual information on which the government makes some of their decisions.
Moves in this direction have begun to be taken.
In his "the British Cabinet" John P. Mackintosh, 2nd Edn.
at p. 11 stated that if there is dissension between Ministers, matters may be thrashed out in private and the contestants plead in turn with the Prime Minister, but it is in the Cabinet that the conflict must be formally solved, the minority either accepting the decision and assuming joint responsibility or, if they cannot tolerate it, tender their resignations.
At p.529, he stated that some decisions are taken by the Prime Minister alone, some in consultation between him and the senior Ministers, while others are left to heads of departments, to the full Cabinet, to the concerned Cabinet Committee, or to the 833 permanent officials.
Of these bodies the Cabinet holds the central position because, thou oh it does not often govern in that sense, it is the place where disputes are settled, where major policies are endorsed and where the balance of the forces emerge if there is disagreement.
In the end, most decisions have to be reported to the Cabinet and Cabinet Minister are the only ones who have the right to complain, if they have not been informed or consulted.
Hood Phillips and Paul Jackson in their Constitutional and Administrative Law, 7th Ed.
at p.301 stated that the duties of Cabinets are: "(a) the final determination of the policy to be submitted to Parliament ', (b) the supreme control of the national executive in accordance with the policy prescribed by the Parliament, and (c) the continuous coordination and delimitation in the interests of the several departments of State.
" The Cabinet, giving collective . advice" to the Sovereign through the Prime Minister, was said to exercise under Parliament, supreme control over all departments of State, and to be the body which coordinate the work on the one hand of the executive and the legislature, and on the other hand of the organs of the executive among themselves.
At p.307, they stated that "committee system has increased the efficiency of the Cabinet, and enables a great deal more work to be done by Ministers".
The Cabinet itself is left free to discuss controversial matters and to make more important decisions, and its business is better prepared.
The system also enables non Cabinet Ministers to be brought into discussions.
At p.309 it is stated that "the responsibility of Ministers is both individual and collective".
The individual responsibility of a Minister for the performance of his official duties is both legal and conventional: it is owed legally to the sovereign and also by convention to Parliament.
Responsibility is accountability or answerability.
The responsible Minister is the one under whose authority an act was, done, or "who must take the constitutional consequences of what has been done either by himself or in his department".
In 'the Cabinet Walker, at page 183 stated that the feeling is widespread that the Cabinet shrouds its affairs in too much secrecy and that Parliament, Press and public should be able to participate to a greater degree in formulation of policy.
With few exceptions Cabinet decisions have to be made public in order to he made effective, although a small number that do not need to be executed, do not become known, for instance talks with a foreign country or a decision not to take some action.
All other cabinet decisions are necessarily disclosed and are subject to public scrutiny.
Cabinet discussions as distinct from Cabinet decisions must, from their nature, be kept secret.
Cabinet discussions often depend upon confidential advice from civil servants or reports from Ambassadors.
If those are disclosed and thus become subject to public attack, it would be extremely difficult for the cabinet 834 to secure free and frank advice.
In Rai Sahib Ram Jawaya Kapur & Ors.
vs The State of Punjab at 236, this Court held that the existence of the law is not a condition precedent for the exercise of the executive power.
The executive power connotes the residual government function that remain after legislative and judicial functions are taken away, subject to the provisions of the Constitution or the law.
It would thus be held that the Cabinet known as Council of Ministers headed by Prime Minister under article 75(3) is the driving and steering body responsible for the Governance of the country.
They enjoy the confidence of the Parliament and remain in office so long as they maintain the confidence of the majority.
They are answerable to the Parliament and accountable to people.
They bear collective responsibility and shall be bound to maintain secrecy.
Their executive function comprises of both the determination of the policy as well as carrying it into execution, the initiation of legislation, the maintenance of order, the promotion of social and economic welfare, direction of foreign policy.
In short the carrying on or supervision of the general administration of the affairs of Union of India which includes political activity and carrying on all trading activities, the acquisition, holding and disposal of property and the making of contracts for any purpose.
In short the primary function of the Cabinet is to formulate the policies of the Govt.
in confirmity with the directive principles of the Constitution for the Governance of the nation; place before the Parliament for acceptance and would carry on the executive function of the State as per the provisions of the Constitution and the laws.
Collective responsibility under article 75(3) of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under his/her consideration or shall become known to him/her as Minister except as may be required for the "due discharge of his/her duty as Minister".
The base and basic postulate of its significance is unexceptionable.
But the need for and effect of confidentiality has to be nurtured not merely from political imperatives of collective responsibility envisaged by article 75(3) but also from its pragmatism.
Bagehot in his 'The English Constitution ', 1964 Edition at p. 68 stated that the most curious point about the Cabinet is that so very little is known about it.
The meetings are not only secret in theory, but secret in reality.
By the present practice, no official minute in all ordinary cases is kept of them.
Even a private note is discouraged and disliked. .
But a Cabinet, though it is a committee of the legislative assembly,is a committee with a power which no assembly would unless 835 for historical accidents, and after happy experience have been persuaded to entrust to any committee.
It is a committee which can dissolve the assembly which appointed it; it is a committee with a suspensive veto a committee with a power of appeal.
In Commonwealth of Australia vs Northern Land Council & Anr.
[1991] 103 Australian Law Reports, p. 267, the Federal Court of Australia General Division, was to consider the scope of confidentiality of the cabinet papers, collective responsibility of the Council of Ministers and the need for discovery of the Cabinet note books and dealt with the question thus : "The conventional wisdom of contemporary constitutional practice present secrecy as a necessary incident of collective responsibility.
But historically it seems to have derived from the 17th century origins of the cabinet as an inner circle of Privy Councillors, sometimes called the Cabinet Council who acted as advisors to the monarch. .
However, that basis for confidentiality has to be assessed in the light of the political, imperatives of collective responsibility.
" Confidentiality has been described as ' the natural correlative of collective responsibility.
It is said to be difficult for Ministers to make an effective defence in public of decisions with which it is known that they have disagreed in the course of Cabinet discussions.
The Cabinet as a whole is responsible for the advice and conduct of each of its members.
If any member of the Cabinet seriously dissents from the opinion and policy approved ' by the majority of his colleagues it is his duty as a man of honour to resign.
Cabinet secrecy is an essential part of the structure of government which centers of political experience have created.
To impair it without a very strong reason would be vandalism the wanton rejection of the fruits of civilisation.
By operation of article 75 (3) and oaths of office and of secrecy taken, the" individual Minister and the Council of Ministers with the Prime Minister as its head, as executive head of the State as a unit, body or committee are individually and collectively responsible to their decisions or acts or policies and they should work in unison and harmony.
They individually and collectively maintain secrecy of the deliberations both of administration and of formulating executive or legislative policies.
Advice tendered by the Cabinet to the President should be unanimous.
The Cabinet should stand or fall together.
Therefore, the Cabinet as a whole is collectively responsible for the advice tendered to the President and for the conduct of business of each of his/her department.
They require to maintain secrecy and confidentiality in the performance of that duty of office entrusted by the Constitution and the laws.
Political promises or aims as per manifesto of the political party are necessarily broad; in their particular applications, when voted to power, may be the subject of disagreement among the members of the Cabinet.
836 Each member of the Cabinet has personal responsibility to his conscience and also responsibility to the Government.
Discussion and persuasion may diminish disagreement, reach unanimity, or leave it unaltered.
Despite persistence of disagreement, it is a decision, though some members like it less than others.
Both practical politics and good Government require that those who like it less must still publicly support it.
If such support is too great a strain on a Minister 's conscience or incompatible to his/her perceptions of commitment and find it difficult to support the decision, it would be open to him/her to resign.
So the price of the acceptance of Cabinet office is the assumption of the responsibility to support Cabinet decisions.
The burden of that responsibility is shared by all.
Equally every member is entitled to insist that whatever his own contribution was to the making of the decision, whether favourable or unfavourable, every other member will keep it secret.
Maintenance of secrecy of an individual 's contribution to discussion, or vote in the Cabinet guarantees most favourable and conducive atmosphere to express views formally.
To reveal the view, or vote, of a member of the Cabinet, expressed or given in Cabinet, is not only to disappoint an expectation on which that member was entitled to rely, but also to reduce the security of the continuing guarantee, and above all, to undermine the principle of Collective responsibility.
Joint responsibility supersede individual responsibility; in accepting responsibility for joint decision, each member is entitled to an assurance that he will be held responsible not only for his own, but also as member if the whole Cabinet which made it; that he will be held responsible for maintaining secrecy of any different view which the others may have expressed.
The obvious and basic fact is that as part of the machinery of the Government, Cabinet secrecy is an essential part of the structure of the government.
Confidentiality and collective responsibility in that scenario are twins to effectuate the object of frank and open debate to augment efficiency of public service or effectivity of collective decision to elongate public interest.
To hamper and impair them without any compelling or at least strong reasons, would be detrimental to the efficacy of public administration.
It would tantamount to wanton rejection of the fruits of democratic governance, and abdication of an office of responsibility and dependability.
Maintaining of top secrecy of new taxation policies is a must but leaking budget proposals a day before presentation of the budget may be an exceptional occurrence as an instance.
Above compulsive constraints would give rise to an immediate question whether the minister is required to disclose in the affidavit the reasons or grounds for public interest immunity of disclosure and the oath of secrecy is thereby whether breached or whether it would be a shield for non production of unpub 837 lished state documents or an escape route to acts impugned as fondly pleaded and fervently argued by Attorney General.
It is already held that on issuance of rule nisi or discovery order nisi" every or, ,an of the State or the authority or a person is enjoined to act in aid of this court and pursuant thereto shall be required to produce the summoned documents.
But when a claim for public interest immunity has been laid for non disclosure of the state documents, it is the Minister 's "due discharge of duty" to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the state papers and produce them.
The oath of secrecy the Minister had taken does not absolve him from filing the affidavit.
It is his due discharge of constitutional duty to state in the affidavit of the grounds or reasons in support of public interest immunity from producing the state documents before the Court, In Attorney General vs Jonathan Cape Ltd. [1976] Queen 's Bench, 752, Lord Widgery, C.J., repelled the contention that publication of the diaries maintained by the Minister would be in breach of oath of secrecy.
In support of the plea of secrecy reliance was placed on the debates on cabinet secrecy, that took place on December 1, 1932 in the House of Lords.
An extract from the official report of House of Lords, at Column 520 Lord Hailsham 's speech emphasised the imperative to maintain secrecy and the limitation which rigidly hedged around the position of a Cabinet Minister thus: "having heard that oath read your Lordships will appreciate what a complete misconception it is.
to suppose, as some people seem inclined to suppose, that the only obligation that rests upon a Cabinet Minister is not to disclose what are described as the Cabinet 's minutes.
He is sworn to keep secret all matters committed and revealed unto him or that shall be treated secretrly in council".
He went on to point out that: "I have stressed that because, as my noble and learned friend Lord Halsbury suggested and the noble Marquis, Lord Salisbury, confirmed, Cabinet conclusions did not exist until 16 years ago.
The old practice is set out in a book which bears the name of the noble Earl 's father, Halsbury 's Laws of England, with which I have had the honour to be associated in the present edition.
" Then in column 532 of the speech Lord Hailsham, stated that the oath of secrecy should be maintained.
"Upon matters on which it is their shorn duty to express, their. opinions.
with complete frankness and to give all information, without any haunting fear that what happens may hereafter by publication create difficulties for themselves or, what is far more grave, may create complications for the king and country that they are trying to serve.
For those reasons I hope that the inflexible rule which has hitherto prevailed will be maintained in its integrity, and that if there has been any relaxation or misunderstanding, of which I say nothing, 838 the debate in this House will have done something to clarify the position and restate the old rule in all its rigour and all its inflexibility." As a Council of Minister, his duty is to maintain the sanctity of oath and to keep discussions and information he had during its course as secret.
Lord Widgery after considering the evidence of a former Minister examined in that case who did not support the view of Lord Hailsham, held thus: "that degree of protection, afforded to cabinet papers and discussions cannot be determined by single rule of thumb.
Some secrets require a high standard of protection for short time, other requires protection till a new political generation has taken over.
In the Present action against the literary executors, "the perpetual injunction against them restraining from their publication was not proper".
It was further held that the draconian remedy when public interest demands it would be relaxed.
In Sankey vs Whitlan 1979 153 Australian Law Journal Reports, 11, while considering the same question, Gibbs, A.,C.J., at p.23, held that the fact that members of the Executive Council are required to take a binding oath of secrecy does not assist the argument that the production of State papers cannot be compelled.
The plea of privilege was negatived and the Cabinet papers were directed to be produced.
The contention that the Minister is precluded to disclose in his affidavit the grounds or the reasons as to how he dealt with the matter as a part of the claim for public interest immunity is devoid of substance.
It is already held that it is the duty of the Minister to file an affidavit stating the grounds or the reasons in support of the claim from public interest immunity.
He takes grave risk on insistence of oath of secrecy to avoid filing an affidavit or production of State documents and the court may be constrained to draw such inference as are available at law.
Accordingly we hold that the oath of office of secrecy adumberated in Article 75(4) and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the state documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued.
On the other hand it is his due discharge of the duty as a Minister to obey rule nisi or discovery order nisi and act in aid of the court.
The next limb of the argument is that the Cabinet Sub committee 's decision is a class document and the contents of state documents required to be kept in confidence for efficient functioning of public service including candid and objective expression of the views on the opinion by the Ministers or bureaucrats etc.
The prospects of later disclosure at a at a litigation would hamper and dampen 839 candour causing serious incursion into the efficacy of public service and result in deterioration in proper functioning of the public service.
This blanket shielding of disclosure was disfavoured right from Robinson vs State of South Australia [1931] Appeal Cases, (P.C.), p. 704 Lord Warrington speaking for the Board held that the privilege is a narrow, one and must sparingly be exercised.
This court in Raj Narain 's case considering green book, i.e., guidelines for protecting VVIPs on tour, though held to be confidential document and be wihheld from production, though part of its contents were already revealed, yet it was held that confidentiality itself is not a head of privilege.
In S.P. Gupta 's case, Bhagwati, J., speaking per majority, reviewing the case law and the privilege against disclosure of correspondence exchanged between the Chief Justice of the Delhi High Court, Chief Justice of India and the Law Minister of the Union concerning extension of term or appointment of Addl.
Judges of the Delhi High Court, which was not dissented, (but explained by Fazal Ali,J.) held that in a democracy, citizens are to know what their Govt.
is doing.
No democratic Govt.
can survive without accountability and the basic postulate of accountability is that the people should have information about the functioning of the Govt.
It is only if the people know how the Govt.
is functioning and that they can fulfill their own democratic rights given to them and make the democracy a really effective participatory democracy.
There can be little doubt that exposure to public scrutiny is one of the surest means of running a clean and healthy administration.
Disclosure of information in regard to the functioning of the Govt.
must be the rule and secrecy can be exceptionally justified only where strict requirements of public information was assumed.
The approach of the court must be to alleviate the area of secrecy as much as possible constantly with the requirement of public interest bearing in mind all the time that the disclosure also serves an important ' aspect of public interest.
In that case the correspondence between the constitutional functionaries was inspected by this court and disclosed to the opposite parties to formulate their contentions.
In Conway 's case, the speech of Lord Reid is the sole votery to support the plea of confidentiality emphasising that, "the business of Govt.
is difficult enough as it is no Govt.
could contemplate with equanimity the inner workings of the Govt.
machine being exposed to the gazes of those ready to criticise without adequate knowledge of the background and perhaps with some axe to grind".
Other Law Lords negated it.
Lord Morris of Borth y Gest referred it as "being doubtful validity".
Lord Hodson thought it "impossible to justify the doctrine in its widest term.
Lord Pearce considered that "a general blanket protection of wide classes 840 led to a 0complete lack of common sense".
Lord Upjohn found it difficult to justify the doctrine "when those in other walks of life which give rise to equally important matters of confidence in relation to security and personal matters as in the public service can claim no such privilege".
In Burmah Oil Co 'section case House of Lords dealing with the cabinet discussion laid that the claim for blanket immunity "must now be treated as having little weight, if any".
It was further stated that the notion that "any competent and conscientious public servant would be inhibited at all in the candour of his writings by consideration of the off chance that they might have to be produced in a litigation as grotesque".
The plea of impairment of public service was also held not available stating "now a days the state in multifarious manifestations impinges closely upon the lives and activities of individual citizens.
Where this was involved a citizen in litigation with the state or one of its agencies, the candour argument is an utterly insubstantial ground for denying his access to relevant document".
The candour doctrine stands in a different category from that aspect of public interest which in appropriate circumstances may require that the "Sources and nature of information confidentially tendered" should be with held from disclosure.
In Reg vs, Lewes Justices, Ex Parte Secretary of state for the Home Department [1973] A.C. 388 and D.V National Society ,for the Prevention of Cruelty to Children ; , are cases in point on that matter and needs no reiteration.
It would, therefore, be concluded that it would be going too far to lay down that no document in any particular class or one of the categories of cabinet papers or decisions or contents thereof should never, in any circumstances, be ordered to be produced.
Lord Keith in Burnnah Oil 's case considered that it would be going too far to lay down a total protection to cabinet minutes.
The learned Law Lord at p. 1134 stated that "something must turn upon the subject matter, the persons who dealt with it, and the manner in which they did so.
In so far as a matter of government policy is concerned, it may be relevant to know the extent to which the policy remains unfulfilled, so that its success might be prejudiced by disclosure of the considerations which led to it.
In that context the time element enters into the equation.
Details of an affair which is stale and no longer of topical significance might be capable of disclosure without risk of damage to the public interest. .
The nature of the litigation and the apparent importance to it of the documents in question may in extreme cases demand production even of the most sensitive communications to the highest level." Lord Scarman also objected total immunity to Cabinet documents on the plea of candour.
In Air Canada 's case, Lord Fraser lifted Cabinet minutes front the total immunity to disclose, although same were entitled to a hi oh degree of protection . ." 841 In Jonathan Cape Ltd. 's case, it was held that, "it seen is that the degree of protection afforded to Cabinet papers and discussions cannot be determined by a single rule of thumb.
Some secrets require a high standard of protection for a short time.
Others require protection until new political generation has taken over.
Lord Redcliff Committee, appointed pursuant to this decision, recommended time gap of 15 years to withhold disclosure of the cabinet proceedings and the Govt.
accepted the same.
Shanky 's case ratio too discounted total immunity to the Cabinet document as a class and the plea of hampering, freedom and candid advice or exchange of views and opinions was also rejected.
It was held that the need for protection depends on the facts in each case.
The object of the protection is to ensure the proper working of the Govt.
and not to shield the Ministers and servants of the crown from criticism however, intemperate and unfairly based.
Pincus J. in Harbour Corp. of Queensland vs Vessey Chemicals Ply Ltd. ; Wilcox J. in Manthal Australia Pty Ltd. vs Minister for industry, Technology and commerce 11987171 ALR 109; Koowarta vs Bjelke Petersen [1988] and took the same view.
In Australia, the recognised rule thus is that the blanket immunity of all Cabinet documents was given a go bye.
In United States vs Richard M. Nixon ; = 41 Lawyers Ed., 2nd Ed., 1039, a grand jury of the United States District Court for the District of Columbia indicted named individuals, charging them with various offences, including conspiracy to defraud the United States and to obstruct justice; and Mr Nixon, the President of United States was also named as an unindicted coconspirator.
The special prosecutor issued a third party subpoena duces tecum directing the President to produce at the trial certain tape recordings and documents relating to his conversations with aides and advisors known as Watergate rapes.
The President 's executive privilege again st disclosure of confidential communications was negatived holding that the right to the production of all evidence at a criminal trial has constitutional dimensions under sixth amendment.
The fifth amendment guarantees that no person shall be deprived of liberty without due process of law.
It was, therefore, held that it is the manifest duty of the court to vindicate those guarantees, and to accomplish that, it is essential that all relevant and admissible evidence be produced.
Though the court must weigh the importance of the general privilege of confidentiality of Presidential communications in performance of his responsibilities, it is an inroad on the fair administration of criminal justice.
In balancing between the President 's generalised interest in confidentiality and the need for relevant evidence in the litigation, civil or criminal and though the interest in preserving confidentiality is weighty indeed "and entitled to great respect.
" Allowing privilege to withhold evidence that is demonstrably relevant in a criminal trial would cut deeply into the guarantee of due process of law and gravely impair the basic function of the courts.
A President 's acknowledged need for 842 confidentiality in the communications of his office is general in nature, whereas constitutional need for production of relevant evidence in a criminal proceeding is specific, and central to the fair adjudication of a particular criminal case in the administration of justice.
Without access to specific facts a criminal prosecution may be totally frustrated.
The President 's broad interest in confidentiality of communications will not be vitiated by disclosure of a limited number of conversations preliminarily shown to have some bearing on the pending criminal cases.
If the privilege is based only on the generalized interest in confidentiality, it cannot prevail over the fundamental demands of due process of law in the fair administration of criminal justice.
The generalized assertion of privilege must yield to the demonstrated, specific need for evidence in a pending criminal trial.
Exemptions were engrafted only to the evidence relating to "the security of the State, diplomatic relations and defence".
It was held that "the importance of this confidentiality is too plain to require further discussion.
Human experience teaches that those who expect public dissemination of their remarks may well temper candor with a concern for appearances and for their own interest to the detriment of the decision making process.
Whatever the nature of the privilege of confidentiality of Presidential communications in the exercise of article 11 powers, the privilege can be said to derive from the supremacy of each branch within its own assigned area of constitutional duties.
Certain powers and privileges flow from the nature of enumerated powers, the protection of the confidentiality of Presidential communications has similar constitutional underpinnings.
However, neither the doctrine of separation of powers, nor the need for confidentiality of high level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances.
The President 's need for complete candor and objectivity from advisers calls for great deference from the courts.
However, when the privilege depends solely on the broad, undifferentiated claim of public interest in the confidentiality of such conversations, a confrontation with other values arises.
Absent a claim of need to protect military, diplomatic, or sensitive national security secrets, we find it difficult to accept the argument that even the very important interest in confidentiality of Presidential communications is significantly diminished by production of such material for in camera inspection with all the protection that a district court will be obliged to provide.
In a clash of public interest that harm shall be done to the nation or the public service by disclosure of certain documents and the administration of justice shall not be frustrated by withholding the document which must be produced if justice is to be done, it is the courts duty to balance the competing interests by weighing in scales, the effect of disclosure on the public interest or injury to administration 843 of justice, which would do greater harm.
Some of the important considerations in the balancing act are thus: "in the interest of national security some information which is so secret that it cannot be disclosed except to a very few for instance the state or its own spies or agents just as other counters have.
Their very lives may be endangered if there is the slighest hint of what they are doing.
In Mark Hosenball.
R. vs Home Secretary.
ex parte Hosenball , in the interest of national security Lord Denning, M.R. did not permit disclosure of the information furnished by the security service to the Home Secretary holding it highly confidence The public interest in the security of the realm was held so great that the sources of the information must not be disclosed nor should the nature of the information itself be disclosed.
There is a natural temptation for people in executive position to regard the interest of the department as paramount forgetting that there is yet another Greater interest to be considered, namely, the interest of justice itself.
Inconvenience and justice are often not on speaking terms.
No one can suppose that the executive will never be guilty of the sins common to all people.
Sometimes they may do things which they on which they on ought not to do or will not do things they ought to do.
The court must be alive to that possibility of the executive committing illegality in its process, exercising its powers, reaching a decision which no reasonable authority would have reached or otherwise abuse its powers, etc.
If and when such wrongs are suffered or encountered injustice by an individual what would be the remedy? Just as shawl is not suitable for winning the cold, so also mere remedy of writ of mandamus, certiorari, etc.
or such action as is warranted are not enough, unless necessary foundation with factual material, in support thereof, are laid.
Judicial review aims to protect a citizen from such breaches of power, non exercise of power or lack of power etc.
The functionary must be guided by relevant and germane considerations.
If the proceeding, decision or order is influenced by extraneous considerations which ought not to have been taken into account, it cannot stand and needs correction, no matter of the nature of the statutory body or status or stature of the constitutional functionary though might have acted in good faith.
Here the court in its judicial review, is not concerned with the merits of the decisions, but its legality.
It is, therefore, the function of the court to see that lawful authority is not abused.
Every communication that passes between different departments of the Govt.
or between the members of the same department interse and every order made by a Minister or Head of the Department cannot, therefore, be deemed to relate to the affairs of the state, unless it related to a matter of vital importance, the disclosure of which is likely to prejudice the interest of the state.
Confidentiality, candour and efficient public service often bear common 844 mask.
Lord Keath in Burmah Oil 's case, observed that the notion that any ' competent or conscientious public servant would be inhibited in the candour of his writings by consideration of the off chance that they might have to be produced inlitigationisgrotesque.
The possibility that it impairs the public service was also nailed.
This court in section P. Gupta 's case also rejected the plea of hampering candid expression of views or opinion by constitutional functionaries and bureaucrats.
In Whitlam vs Australian Consolidated Press [1985] 60 ALR p. 7, the Supreme Court of Australia Capital territory in a suit for damages for defamation, the plaintiff, the former Prime Minister of Australia was called upon to answer certain interrogatories to disclose discussions and words uttered at the meeting of the Cabinet or of the Executive Council at which the plaintiff had been present.
The commonwealth intervened and claimed privilege prohibiting the plaintiff to disclose by answering those interrogatories.
The claim was based on two grounds: (i) the oath taken by the plaintiff as a member of the Executive Council; and also immunity from disclosing of the Cabinet meetings and both were public policies.
It was also contended that it would be in breach of the principle of collective Cabinet responsibility.
The court held that the oath taken by the plaintiff did not in itself provide a reason for refusing to answer the interrogatories whether immunity from disclosure would be granted depends upon the balancing of two competing aspects, both of public policy, on the one hand the need to protect a public interest which might be endangered by disclosure, and on the other the need to ensure that the private rights of individual litigants are not unduly restricted.
The disclosure of the meeting of the Cabinet or of the Executive Council would not be a breach of the principle of other two responsibilities.
Bagehot stated, protection from disclosure is not for the purpose of shielding them from criticism, but of preventing the attribution to them of personal responsibility.
It was stated that "I am not required to lay down a precise test of when an individual opinion expressed in Cabinet becomes of merely historical interest".
The Cabinet minutes and minutes of discussion are a class.
They might in very special circumstances be examined.
Public interest in maintaining Cabinet secrecy easily outweighs the contrary public interest in ensuring that the defendant has proper facilities for conducting its case, principally because of the enormous importance of Cabinet secrecy by comparison with the private rights of an individual and also because of the relative unimportance of these answers to the defendant 's case.
Answers to interrogatories 87 (vii), (viii) and (ix) were restrained to be disclosed which relates to the members of the Council who expressed doubts as to whether the borrowing was wholly for temporary purpose and to identify such purpose.
In Jonathan Cape Ltd. case, Lord Widgery CJ.
held that publication of the Cabinet discussion after certain lapse of time would not inhibit free discussion in the Cabinet of today, even though the individuals involved are the same, and the national problems have a distressing similarity with those of a decade ago.
It is difficult to say at what point the material 845 loses its confidential character.
on the ground that publication will no longer undermine the doctrine of joint Cabinet responsibility.
The doctrine of ' joint Cabinet responsibility is not undermined so long as the publication would not "inhibit free discussion in the Cabinet and the court decides the issue '.
In Minister for Arts Heritage and Environment and Ors.
vs Peko Wallsend Ltd. and Ors.
11987175 ALR 218, Federal Court of Australia General Division, the respondent had mining lease under the existing law.
In 1986 the Cabinet decided that portion of the same land covered by KNP Kakadu National Park in the Northern Territory (State 2) was earmarked for inclusion in the World Heritage List (the List) which had been established under the World Heritage Convention (the Convention) and to submit to Parliament aplan of management for the national park which differed from a previous plan "which enabled exploration and mining to take place outside pre existing leases with the approval of the Governor General".
Under the Convention on listing, could be made without the "consent" of the State party concerned.
The respondents laid the proceedings to restrain the appellants from taking further steps to have Stage 2 nominated for inclusion on the list on the basis that Cabinet was bound by tile rules of natural justice to afford the man opportunity to be heard and that it failed to do so.
The Single Judge declared the action as void.
Thereafter the National Park and Wildlife conservation Amendment Act, 1987 came into force adding sub section
(IA) to section 10 of that Act which provides that "No operations for the recovery of ' minerals shall be carried on in Kakadu National Park".
While allowing the appeal, the full court held that the Executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from the prerogative rather than a statutory source.
The decision taken for the prerogative of the Cabinet is subject to judicial review.
In Commonwealth of Australia vs Northern Land Council and Anr.
[1991] 103 ALR p.267, in a suit for injunction for Northern Land Council (NLC) against the Commonwealth sought production of certain documents including 126 Cabinet notebooks.
A Judge of the Federal Court ordered the Commonwealth to produce the notebooks for confidential inspection on behalf of NLC.
On appeal it was held that information which may either directly or indirectly enable the party requiring them either to advance his own case or to damage the case of his advisory are necessary.
The class of Cabinet papers do not afford absolute protection against disclosure and is not a basis for otherwise unqualified immunity from production.
The Commonwealth cannot claim any immunity for public interest immunity from production.
The court should decide at the threshold balancing of the public interest in the administration of justice.
The court does not have to be satisfied that, as a matter of likelihood rather than mere speculation, the materials would contain evidence for tender at trial.
846 In a democracy it is inherently difficult to function at high governmental level without some degree of secrecy.
No Minister, nor it Senior Officer would effectively discharge his official responsibilities if every document prepared to formulates sensitive policy decisions or to make assessment of character rolls of coordinate officers at that level if they were to be made public.
Generally assessment of honesty and integrity is a high responsibility.
At high co ordinate level it would be a delegate one which would furthered compounded when it is not backed up with material.
Seldom material will be available in sensitive areas.
Reputation gathered by an officer around him would form the base.
If the reports are made known, or if the disclosure is routine, public interest grievously would suffer.
On the other hand, confidentiality would augment honest assessment it) improve efficiency and integrity in the officers.
The business of the Govt.
, when transacted by bureaucrats, even in personal level, it would be difficult to have equanimity if the inner working of the Govt.
machinery is needlessly exposed to the public.
On such sensitive issues it would hamper the expression of frank and forthright views or opinions.
Therefore, it may be that at that level the deliberations and in exceptional cases that class or category of documents get protection in particular, on policy matters.
Therefore.
the court would he willing to respond to the executive public interest immunity to disclose certain documents where national security or high policy, high sensitivity is involved.
In Asiatic Petroleium vs Anglo Persian Oil , the court refused production of the letter concerning the Govt.
plans relating to Middle Estern campaigns of the First World was.
as claimed by the Board of Admiralty.
Similarly, in Duncan vs Cammell Laired, ; , tile House of lords refused disclosure of the design of sub marine.
The national defence as a class needs protection in the interest of security of the State.
Similarly to keep good diplomatic relations the state documents or official or confidential documents between the Govt.
and its agencies need immunity from production.
In Council of Civil Service Union vs Minster for Civil Service the Govt.
Communications headquarters (GCHQ) functions were to ensure the security of military and official communications and to provide the Govt.
with signals intelligence.
They have to handle secret information vital to national security.
The staff of CCHQ was permitted to be members of the trade union, but litter on instructions were issued, without prior consultation, amending the Staff rules and directed them to dissociate from tile trade union activities.
The Previous practice of prior consultation before amendment was not followed.
Judicial review 847 was sought of the amended rules pleading that failure to consult the union before amendment amounts to unfair act and summoned the records relating to it.
An affidavit of the cabinet Secretary was filed explaining the disruptive activities, the national security, and the union actions designed to damage Govt.
agencies.
Explaining the risk of participation by the members in further disruption, the House held that executive action was not immune from judicial review merely because it was carried out in pursuance of a power derived from a common law, or prerogative, rather than a statutory source and a minister acting under a prerogative power might, depending upon its subject matter, whether under the same duty to act fairly as in the case of action under a statutory power.
But, however, certain information.
on consideration of national security, was withheld and the failure of prior consultation of the trade union or its members before issue the amended instruction or amending the rules was held not infracted.
In Burmah Oil Co 'section case.
at an action by the Oil Company against the Bank for declaration that the sale of units in British Petroleum held by the company at 2.30 Pounds per unit was unconscionable and inequitable.
The oil company sought production of the cabinet decision and 62 documents in possession and control of the bank.
The state claimed privilege on the basis of the certificate issued by the Minister.
House of Lords per majority directed to disclose certain documents which were necessary to dispose of the case fairly.
Lord Scarman laid that they were relevant, but their significance was not such a:, to override the public interest objections to their production.
Lords Wilberforce dissented and held that public interest demands protection of them.
In The Australian Communist Party & Ors.
vs Commonwealth & Ors.
[1950 51] 83 C.L.R. p. 1, at p. 179, Dixon, J. while considering the claim of secrecy and non availability of the proclamation or declaration of the Governor General in Council based on the advice tendered by the Minister rejected the privilege and held that the court would go into the question whether the satisfaction reached by the Governor General in Council was justified.
The court has ,one into the question of competence to dissolve a voluntary or corporate association i.e. Communist Party as unlawful within the meaning of Sec.
5(2) of the Constitutional Law of the Commonwealth.
In The Queen vs Toohey ; , the Northern Territory (Self Government) Act, 1978 provides appointment of an Administrator to exercise and perform the functions conferred under the Act.
The Town Planning Act, 1979 regulates the area of land to be treated as towns.
The Commissioner exercising powers under the Act held that part of the peninsula specified in the schedule was not available for town Planning Act.
When it was challenged.
there was a change in the law and the Minister filed an affidavit 848 claiming the privilege of certain documents stating that with a view to preserve the land to the original, the Govt. have decided to treat that the land will continue to be held by or on behalf of the originals.
Gibbs,.
held that under modern conditions, a responsible Govt., Parliament could not always be relied on to check excesses of power by the Crown or its Ministers.
The court could ensure that the statutory power is exercised only for the purpose it is granted.
The secrecy of the counsel of the Crown is by no means complete and if evidence is available to show that the Crown acted for an ulterior purpose, it is difficult to see why it should not be acted upon.
It was concluded thus: "In my opinion no convincing reason can be suggested for limiting the ordinary power of the courts to inquire whether there has been a proper exercise of a statutory power by giving to the Crown a special immunity from review.
If the statutory power is granted to the Crown for one purpose, it is clear that it is not lawfully exercised if it is used for another.
The courts have the power and duty to ensure that statutory powers are exercised only in accordance with law".
The factors to decide the "public interest immunity would include" (a) where the contents of the documents are relied upon, the interests affected by their disclosure; (b) where the class of documents is invoked, where the public interest immunity for the class is said to protect; (c) the extent to which the interests referred to have become attenuated by the passage of time or the occurrence of intervening events since the matters contained in the documents themselves came into existence; (d) the seriousness of the issues in relation to which production is sought; (e) the likelihood that production of the documents will affect the outcome of the case; (f) the likelihood of injustice if the documents are not produced.
In President Nixon 's case, the Supreme Court of the United States held that it is the court 's duty to construe and delineate claims arising under express powers, to interpret claims with respect to powers alleged to derive from enumerated powers of the Constitution.
In deciding whether the matter has in any measure been committed by the Constitution to another branch of Government, or whether the action of that branch exceeds whatever authority has been committed, is itself a delicate exercise in constitutional interpretation, and is the responsibility of the court as ultimate interpreter of the Constitution.
Neither the doctrine of separation of powers, nor the need for confidentiality of high level communications, without more, can sustain an absolute, unqualified Presidential privilege of immunity from judicial process under all circumstances.
The separation of powers given in the Constitution were not intended to operate with absolute independence when essential criminal statute would upset the constitutional balance of "a workable government" and gravely impair the role of the courts under article III.
The very integrity of the judicial system and public confidence in the system depend on full 849 disclosure of all the facts, within the framework of the rules of evidence.
To ensure that justice is done, it is imperative to the function of courts that compulsory process be available for the production of needed evidence.
The afore discussion lead to the following conclusions.
The President while exercising the Executive power under Art.73 read with article 53, discharges such of those Powers which are exclusively conferred to his individual discretion like appointing the Prime Minister under article 75 which are not open to judicial review.
The President exercises his power with the aid and advice of the Council of Ministers with the Prime Minister at the head under article 74 (1).
They exercise the power not as his delegates but as officers subordinate to him by constitutional mechanism envisaged under article 77 and express in the name of President as per Rules of Business made under Art.77(3).
They bear two different facets (i) the President exercise his power on the aid and advice; (ii) the individual minister or Council of Minister with the Prime Minister at the head discharge the functions without reference to the President.
Undoubtedly the Prime Minister is enjoined under article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Ministers if the President so requires and submit its decisions thereafter to the President.
That by itself is not conclusive and does not get blanket public interest immunity from disclosure.
The Council of Ministers though shall be collectively responsible to the House of the People, their acts are subject to the Constitution, Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court (High Court under Art.226).
When public interest immunity against disclosure of the state documents in the transaction of business by Council of Ministers of the affairs of State is made, in the clash of those interests, it is the right and duty of the court to weigh the balance in the scales that the harm shall not be done to the nation or the public service and equally of the administration of justice.
Each case must be considered on its backdrop.
The President has no implied authority under the Constitution to withhold the documents.
On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review.
The Cabinet as a narrow centre of the national affairs must be in a possession of all relevant information which is secret or confidential.
At the cost of repetition it is reiterated that information relating to national security, diplomatic relations.
internal security or sensitive diplomatic correspondence per se are class documents and that public interest demands total immunity from disclosure.
Even the slightest divulgence would endanger the lives of the personnel engaged in the services etc.
The maxim Salus Popules Cast Supreme Lax which means that regard 850 for public welfare is the highest law, is the basic postulate for this immunity.
Political decisions like declaration of emergency under article 356 are not open to judicial review but it is for the electorate at the polls to decide the executive wisdom.
In other areas every communication which preceded from one officer of the State to another or the officers inter se does not necessarily per se relate, to the affairs of the State.
Whether they so relate has got to be determined by reference to the nature of the consideration, the level at which it was considered, the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself.
Article 74(2) is not a total bar for production of the records.
Only the actual advice tendered by the Minister or Council or Ministers to the President and the question whether any, and if so, what ad ice was tendered by the Minister or Council of ministers to the President, shall not be enquired into by the court.
In other words the bar of judicial review is confined to the factum of advice, its extent, ambit and scope but not the record i.e. the material on which the advice is founded.
In S.P. Gupta 's case (his court held that only the actual advice tendered to the President is immuned from enquiry and the immunity does not extend to other documents or records which form part of the advice tendered to the President.
There is discernible modern trends towards more open government than was prevalent in the past.
In its judicial review the court would adopt in camera procedure to inspect the record and evaluate the balancing act between the competing public interest and administration of justice.
It is equally the paramount consideration that justice should not only be done but also would be publicly recognised as having been done.
Under modern conditions of responsible government, Parliament should not always he relied on as a check on excess of power by the Council of Ministers or Minister.
Though the court would not substitute its views to that of the executive on matters of policy, it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted.
Secrecy of the advice or opinion is by no means conclusive.
Candour, frankness and confidentiality though are integral facets of the common genus i.e. efficient governmental functioning, per se by no means conclusive but be kept in view in weighing the balancing act.
Decided cases how that power often was exercised in excess thereof or for an ulterior purpose etc.
Sometimes the public service reasons will be decisive of the issue, but they should never prevent the court from weighing them against the injury which would be suffered in the administration of justice if the documents was not to be disclosed, and the likely injury to the cause of justice must also be assessed and weighed.
Its weight will very according to the nature of the proceedings in which disclosure is sought, level at which the matter was considered , the subject matter of ' consideration, the 851 relevance of the documents and the degree of likelihood that the document will be of importance in the litigation.
it striking the balance, the court may always, if it thinks it necessary, itself inspect the documents.
It is therefore the constitutional, legitimate and lawful power and duty of this court to ensure that powers constitutional statutory or executive are exercised in accordance with the constitution and the law.
This may demand though no doubt only in limited number of cases yet the inner workings of government may be exposed to public gaze.
The contentions of Attorney General and Solicitor General that the inner workings of the government would be exposed to public gaze, and that some one who would regard this as an occasion without sufficient material to ill informed criticism is no longer relevant.
Criticism, calculated to improve teh nature of that working as affecting the individual citizen is welcome.
In so far as unpublished government policy is concerned, it may be relevant to know the extent to which the policy remains unfulfilled, so that its success might be prejudiced by disclosure of the considerations which led to it.
In that context the time element becomes relevant.
Details of affairs which are stale and no longer of significance might be capable of disclosure without risk of damage to the public interest .But depending on teh nature of he litigation and the apparent importance to it of the documents in question may in extreme case demand production even of the most be considered on its backdrop.
President has no implied authority to withhold the document.
On the other hand it is his solemn constitutional duty to act in aid of the court to effectuate judicial review.
The Cabinet as a narrow centre of the national affairs must be in possession of all relevant information which is secret or confidential.
Decided cases on comparable jurisdiction referred to earlier did held that executive had no blanket immunity to withhold cabinet proceedings or decisions.
We therefore hold that the communication decisions or policy to teh President under article 74(1) gives only protection by article 74(2) of judicial review of the actual advice tendered to the president of India.
The rest of the file and all the records forming part thereof are open to in camera inspection by this court.
Each case must be considered on its own facts and surrounding scenario and decision taken thereon.
In Jyoti Prokash Mitter vs Chief Justice Calcutta High Court ; the question was whether the President exercised the powers under article 217(3) of the Constitution was his discretionary one or acts with the aid and advice of Council of Ministers.
The Constitution Bench held that the dispute as be decided by the President.
The satisfaction on the correctness of age is that of he President.
Therefore the matter has to be placed before the President.
The 852 President has to give an opportunity to the judge to place his version, before teh President considers and decides the age of the judge.
Accordingly it would be the personal satisfaction of the President and not that of the Council of Ministers.
In the latter judgement sequential to this judgement in Union of India vs Jyoti Prakash [1971] 3SCR 4831, it was held that the mere fact that the President was assisted by teh machinery of Home Affaris Ministry in serving notices or receiving communications addressed to the learned judge cannot lead to an inference that he was guided review, this court upheld the decision of the President.
In this context it was held that the orders of the president, even though made final can be set aside by court in an appropriate case though the Court will not sit in appeal over order and will not substitute its own opinion to that of the president by weighing the evidence placed before the president.
The third category of case namely the decision taken at level of the minister or by the authorised Secretary at the Secretary level though expressed in the name of the President is not immured from judicial scrutiny and are to be produced and inspected by the court.
If public interest immunity under article 74(2) or Sec 123 of Evidence ACt is claimed, the court would first consider it in camera and decide the issue as indicated above.
Teh immunity must not be claimed on administrative route and it must be for valid, relevant and strong grounds or reasons stated in the affidavit filed in that behalf.
Having perused the file and given our anxious considerations.
We are of the view that on th facts of the case and in the light of the view we have taken, it is not necessary to disclose the contents of the records to the petitioner or his counsel.
The first schedule of the business rules provide constitution of Cabinet Standing committees with function specified therein.
Item 2 is "Cabinet Committee on appointments".
Which is empowered to consider in item 1 all recommendations and to take decisions on appointments specified in the Annexure to the first Schedule.
Therein under the residuary heading all other appointments item 4 provides that all other appointments which are made by the Govt.
of India or which required the approval of the Govt.
of India carrying a salary excluding allowances or a maximum salary excluding allowances of less than Rs. 5, 300 require the approval of the Cabinet Sub Committee.
As per item 37 of the Third Schedule read with Rule 8 of the business Rules it shall be submitted to the Prime Minister for appointment.
Mr. Harish Chander was appointed as judicial Member on October 29, 1982.
He was later on appointed on january 15, 1991 as Senior Vice President of 853 CEGAT after the direction were issued by this Court, he was appinted as the President Mr. Jain assailed the validity of his appointment on diverse grounds.
It was pleaded and Sri Thakur, his learned senior counsel, argued that as per the convention, a sitting or a retired judge of the High JCourt should have beenappointed as president of the CEGAT in consultation with the Chief Jusftice ofIndia and Harish Chander has been appointed in disregafrd of the express directions of this Court, It was, therefore, contended that it was in breach jof the judicial orderpassed by this Court.
It was therefore, contended that it was in breach of the judicial orderpassed by this Court under Art, 32 Secondly it was contended that before the Actwas made a positive commitment was made time and again by the Govt.
on the floor of the House that judicial independence of CEGAT is sifne qua non to sustain the confidence of the litigant public.
The appointment of any person other thansitting or a retired judge of the High Court as President would be in its breach.
Inits support it was cited the instance of Mr. Kalyansundaram as being the seniormost member, his claim should have been considered before Harish Chander was appointed.
Sri Thakur further argued that when recommendations of HarishChander for appointment as a Judge of the Delhi High Court was turned down by the Chief Justice of India doubting his integrity, the appointment of such personof doubtful integrity as President would erode the independence of the judiciary and undermine the confidence of the litigant public in the efficacy of judicial adjudication, even though the rules may permit such an appointment.
The rules are ultra vires of the basic structure, namely, independence of judiciary, Sri Thakur, to elaborate these conditions, sought permission to peruse the record.
Sri Venugopal , the learned Senior Counsel for Harish Chander argued that his client being the senior Vice President was fvalidly appointed as President of the CEGET.
Harish Chander has an excellent and impeccable record of service without any adverse remarks.
His recommendation for appointment as a judge of the Delhi High Court, was "apparently dropped" which would not be construed to be adverse to Harish Chander.
On behalf ofCentral Govt.
it was admitted in thecounter affidavit that since rules do not envisage consultation with the Chidf Justice consultation was not done.
It was argued that the Govt.
have prerogative to appoint any member or Vice Chairman or Senior Vice President as President of CEGAT.
Harish Chander being the senior Vice President, his case was considered and was recommended by the cabinet sub Committee for appointment.
Accordingly he was appointed.
Under section 129 of the Customs Act 52 of 1962 for short the Act.
The Central Govt.
shall constitute the CEGAT consisfting of as many judicial and technical members as it thinks fit to exercise the powers and discharge the functions conferred by the Act.
Subject to making the statement of the case for 854 decision on any question of law arising out of orders of the CEGAT by the High Court under section 130: it) resolve conflict of decisions by this Court under section 130A, the orders of the CEGAT by operation of sub sectiton (4) of Section 129B. "shall be final".
The President of CEGAT is the controlling authority as well as Presiding authority of the tribunals constituted at different places.
Constitution of the CEGAT came to be made pursuant to the 5th Schedule of the Finance Act 2 of 1980 with effect from October 11, 1982.
The President of India exercising the power under proviso it) article 309 of the Constitution made the Rules.
Rule 2(c) defined "member" means a member of the Tribunal and unless the context otherwise requires, includes the President, the Senior Vice President, a Vice President, a judicial member and a technical member.
2(d) defines "President" means the President of the Tribunal.
Rule 6 prescribes Method of Recruitment.
Under Sub rule (1) thereof for the purpose of recruitment to the Post of member, there shall be a Selection Committee consisting of (i) a judge of the Supreme Court of India as nominated by the Chief Justice of India to preside over as Chairman; (ii) the Secretary to the Govt.
of India in the Ministry of Finance, (Department of Revenue); (iii) the Secretary to the Govt.
of India in the Ministry of Law (Department of legal Affairs); (iv) the President; (v) such other persons, not exceeding two, as the Central Govt.
may nominate.
Sub Rule (4) Subject to the provisions of Section 10, the Central Govt.
shall, after taking into consideration the recommendations of the Selection Committee.
make a list of persons selected for appointment as members.
Rule 10 provides thus: (1) The Central Govt.
shall appoint one of the member to be the President.
(2) Notwithstanding anything contained in rule 6 a sitting, or retired judge of a High Court may also be appointed by the Central Government use member and President simultaneously.
(3) Where a member (other than a sitting or retired judge of a High Court is appointed as President, he shall hold the office of the President for a period of three years or till he attains the age of 67 years, whichever is earlier.
(4) Where a serving judge of a High Court is appointed as a member and President, he shall hold office as President for a period of three years from the date of his appointment or till he attains the age of 62 years.
whichever is earlier.
Provided that where a retired judge of a High Court above the age of 62 years is appointed as President.
he shall hold office for such period not exceeding, three 855 years as may he determined by the Central Govt.
At the time of appointment or reappointment.
The Jha Committee in its report in para 16(22) recommended to constitute an independent Tribunal for excise or customs taking away the appellate powers from the Board.
The Administrative Inquiry Committee in its report 1958 59 in para 4.15 also recommended that every effort should be made to enhance the prestige of the appellate tribunal in the eyes of the public which could be achieved by the appointment of a High Court Judge as the President.
They, therefore, recommended to appoint the serving or retired High Court Judge as President of the Tribunal for a fixed tenure.
In Union of India vs Pares Laminates Pvt.
Ltd. Court), this Court held that GEGAT is a judicial body and functions as court within the limits of its jurisdiction.
As a fact the Minister time and again during the debates when the Bill was under discussion assured both the Houses of Parliament that the CEGAT would be a judicial body presided over by a High Court Judge.
In Keshwa nand Bharti vs Union of India [1973] Supp.
SCR 1, Mathew and Chandrachud, JJ.
held that rule of law and judicial review are basic features of the Constitution.
It was reiterated in Waman Rao vs Union of India ; , As per directions therein the Constitution Bench reiterated in Sri Raghunathrao Ganpatrao vs Union of India ; In Krishna Swami vs Union of India at 649 para 66 one of us (K.R.S.J.) held that judicial review is the touchstone and repository of the supreme law of the land.
Rule of law as basic feature permeates the entire constitutional structure Independence of Judiciary is sine quo non for the efficacy, of the rule of law.
This court is the final arbiter of the interpretation of the constitution and the law.
In S.P. Sampat Kumar vs Union of India & Ors.[1987] 1 SCR 435.
this Court held that the primary duty of the judiciary is to interpret the Constitution and the laws and this would preeminently be a matter fit to be decided by the judiciary, as judiciary alone would be possessed of expertise in this field and secondly the constitutional and legal protection afforded to the citizen would become illusory, if it were left to the executive to determine the legality of its own action.
The Constitution has, therefore created an independent machinery i.e. judiciary to resolve the disputes which is vested with the power of judicial review to determine the legality of the legislative and executive actions and to ensure compliance with the requirements of law on the part of the executive and other authorities.
This function is discharged by the judiciary by exercising the power of judicial review which is a most potent weapon in the hands of the judiciary for maintenance of the rule of law.
The power of judicial review is an integral part of our constitutional system and without it, there will be no government of laws and the rule of law would become a teasing illusion and a promise of unreality.
The judicial review, therefore, is a basic and essential feature of the Constitution and it cannot be 856 abrogated without affecting the basic structure of the Constitution.
The basic and essential feature of judicial review cannot be dispensed with but it would be within the competence of Parliament to amend the Constitution and to provide alternative institutional mechanism or arrangement forjudicial review, provided it is no less efficacious than the High Court.
It must, therefore, be read as implicit in the constitutional scheme that the law excluding the jurisdiction of the High Court under articles 226 and 227 perrmissible under it, must not leave a void but it must set up another effective institutional mechanism or authority and vest the power of judicial review in it which must be equally effective and efficacious in exercising the power of judicial review.
The Tribunal set up under the Administrative Tribunal Act, 1985 was required to interpret and apply articles 14, 15, 16 and 311 in quite an large number of cases.
Therefore, the personnel manning the administra tive tribunal in their determinations not only require judicial approach but also knowledge and expertise in that particular branch of constitutional and administrative law.
The efficacy of the administrative tribunal and the legal input would undeniably be more important and sacrificing the legal input and not givino it sufficient weityhtage would definitely impair the efficacy and effectiveness of the Administrative Tribunal.
Therefore, it was held that the appropriate rule should be made to recruit the members; and consult the Chief Justice of India in recommending appointment of the Chairman, Vice Chairman and Members of the Tribunal and to constitute a committee presided over by judge of the Supreme Court to recruit the members for appointment.
In M.B. Majiundar vs Union of lndia ; , when the members of CAT claimed parity of pay and superannuation as is available to the Judges of the High Court, this court held that they are not on par with the judges but a separate mechanism created for their appointment pursuant to article 323 A of the Constitution.
Therefore, whatwas meant by this court in Sampath Kumar 's ration is that the Tribunals when exercise the power and function, the Act created institutional alternative mechanism or authority to adjudicate the service disputations.
It must be effective and efficacious to exercise the power of judicial review.
This court did not appear to have meant that the Tribunals are substitutes of ' the High Court under articles 226 and 227 of the Constitution.
J.B. chopra vs Union of lndia , merely followed the ratio of Sampath Kumar.
The Tribunals set up under articles 323A and 323B of the Constitution or under an Act of legislature are creatures of the Statute and in no case can claim the status as Judges of the High Court or parity or as substitutes.
However, the personnel appointed to hold those oft7ices under the State are called upon to dischargee judicial or quasi judicial power.
So they must have judicial approach and also knowledge 857 and expertise in that particular branch of constitutional, administrative and tax laws.
The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication.
It is, therefore, necessary that those who adjudicate upon these matters should have legal expertise, judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discussion and decision.
In Union of India vs Sankal Chand Himatlal Sheth & Anr. ; at 442, this court at p. 463 laid emphasis that, "independence of the judiciary is a fighting faith of our Constitution.
Fearless justice is the cardinal creed of our founding document.
It is indeed a part of our ancient tradition which has produced great judges in the past.
In England too, judicial independence is prized as a basic value and so natural and inevitable it has come to be reorded and so ingrained it has become in the life and thought of the people that it would be regarded an act of insanity for any one to think otherwise.
" At page 471 it was further held that if the beacon of the judiciary is to remain bright, court must be above reproach, free from coercion and from political influence.
At page 491 it was held that the independence of the judiciary is itself a necessitous desideratum of public interest and so interference with it is impermissible except where other considerations of public interest are so strong, and so exercised as not to militate seriously against the free flow of public justice.
Such a balanced blend is the happy solution of a delicate, complex, subtle, yet challenging issue which bears on human rights and human justice.
The nature of the judicial process is such that under coercive winds the flame of justice flickers, faints and fades.
The true judge is one who should be beyond purchase by threat or temptation, popularity or prospects.
To float with the tide is easy, to counter the counterfeit current is uneasy and yet the Judge must be ready for it.
By ordinary obligation for written reasoning, by the moral fibre of his peers and elevating tradition of his profession, the judge develops a stream of tendency to function 'without fear or favour, affection or ill will ', taking care, of course, to outgrow his prejudices and weaknesses, to read the eternal verities and enduring values and to project and promote the economic, political and social philosophy of the Constitution to uphold which his oath enjoins him.
In Krishnaswaini 's case in para 67 at p. 650, it was observed that "to keep the stream of justice clean and pure the judge must be endowed with sterling character, impeccable integrity and upright behaviour.
Erosion thereof would undermine the efficacy of rule of law and the working of the constitution itself.
In Krishna Sahai & Ors.v.
State of U.P. & Ors.[1990] 2 SCC 673, this court 858 emphasised its need in constitution the U.P. Service Tribunal that it would he appropriate for the State of Uttar Pradesh to change it manning and a sufficient number of people qualified in law should he on the Tribunal to ensure adequate dispensation of justice and to maintain judicial temper in the functioning of the Tribunal".
In Rajendra Singh Yadav & Ors vs State of U.P. & Ors.
[1990] 2 SCC 763, it was further reiterated that the Services Tribunal mostly consist of Administrative Officers and the judicial element in the manning part of the Tribunal is very small.
The disputes require judicial handling and the adjudication being, essentially judicial in character it is necessary that adequate number of judges of the appropriate level should man the Services Tribunals.
This would create appropriate temper and generate the atmosphere suitable in an adjudicatory Tribunals and the institution as well would command the requisite confidence of the disputants.
In Shri Kumar Padma Prasad vs Union of India & Ors. , this court emphasised that, "Needless to say that the independence, efficiency and integrity of the judiciary can only he maintained by selecting the best persons in accordance with the procedure provided under the Constitution.
The objectives enshrined in the constitution cannot be achieved unless the functionaries accountable for making appointments act with meticulous care and utmost responsibility".
In a democracy governed by rule of law surely the only acceptable repository of absolute discretion should be the courts.
Judicial is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary.
It cannot he dispensed with by creating tribunal under article 323A and 323B of the Constitution.
Any institutional mechanism or authority in negation of judicial review is destructive of basic structure.
So long as a the alternative institutional mechanism or authority set up by an Act is not less effective than the High court, it is consistent with constitutional scheme.
The faith of the people is the bed rock on which the edifice of judicial review and efficacy of the adjudication are founded.
The alternative arrangement must, therefore, be effective and efficient.
For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Govt.
To maintain independence and imperativity it,is necessary that the personnel should have at least modicum of legal training, learning and experience.
Selection of competent and proper people instill people 's faith and trust in the office and help to build up reputation and acceptability.
Judicial independence which is essential and imperative is secured and independent and impartial administration of justice is assured.
Absence thereof only may get both law and procedure wronged and wrong headed views of the facts and may likely to give rise to nursing grievance of injustice.
Therefore, functional fitness, 859 experience at the liar and aptitudinal approach are fundamental for efficient judicial adjudication.
Then only as a repository of the confidence.
as its duty, the tribunal would properly and efficiently interpret the law and apply the law to the given set of facts.
Absence thereof would be repugnant or derogatory to the constitution.
The daily practice in the courts not only gives training to Advocates to interrect the rules but also adopt the conventions of courts.
In built experience would play vital role in the administration of justice and strengthen and develop the qualities, of intellect and character, forbearance and patience, temper and resilience which are very important in the practice of law.
Practising Advocates from the Bar generally do endow with those qualities to discharge judicial functions.
Specialised nature of work gives them added advantage and gives benefit to broaden the perspectives.
"Judges " by David Pannick (1987 Edition), at page 50, stated that, "we would not allow a man to perform a surgical operation without a thorough training and certification of fitness.
Why not require as much of a trial judge who daily operates on the lives and fortunes of others".
This could be secured with the initial training given at the Bar and later experience in judicial adjudication.
No one should expect expertise in such a vast range of subjects, but famliarity with the basic terminology and concept coupled with knowledge of trends is essential.
A premature approach would hinder the effective performance of judicial functions.
Law is a serious matter to be left exclusively to the judges, because judges necessarily have an important role to play in making and applying the law There is every reason for ensuring that their selection, training and working practice facilitate them to render their ability to decide the cases wisely on behalf of the community.
If judges acts in injudicious manner, it would often lead to miscarriage of justice and a brooding sense of injustice rankles in an agrieved person.
The CEGAT is a creature of the statute.
yet intended to have all the flavour of judicial dispensation by independent members and President.
Sri Justice Y.V. Chandrachud, Chief Justice of India, in his letter dated October 5, 1982 stated that "Govt. had Created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court.
Added to that is the fact that selection of the members of the Tribunal is made by a Committee headed by a judge of the Supreme Court.
I am sure that the Tribunal will acquire higher reputation in the matter of its decision and that the litigants would look upon it as an independent forum to which they can turn in trust and confidence".
This court to elongate the above objective directed the Govt.
to show whether the convention is being followed in appointment of the President of 860 CEGAT and further directed to consider appointment of a Sr. Judge or a retired Chief Justice of the High Court as its President.
Admittedly Chief justice of India was not consulted before appointing Sri harish Chander as President.
Several affidavits filed on behalf of the Govt.
do not also bear out whether the directions issued by this court were even brought to the notice of the Hon 'ble Prime Minister before finalising the appointment of Sri Harish Chander.
The solemn assurance given to the Parliament that the Tribunal bears a judicious blend by appointment of a High Court Judge as President was given a go bye.
While making statutory rules the executive appears to have made the appointment of it sitting or retired High Court Judge as President unattractive and directory frustrating the legislature animation.
A sitting Judge when is entitled to continue in his office upto 62 years would he he willing to opt to serve as President, if his superannuation as President is conterminous with 62 years.
He would be attracted only it he is given extended three years more tenure after his superannuation.
But Rule 10(3) says that the total period of the tenure of the President by a sitting, or retired judge is "a period of three years or till he attains the age of 62 years, whichever is earlier", i.e. coterminus with superannuation as a Judge of the High Court.
The proviso is only discretionary at the whim of the executive depleting independence and as an exception to the rule.
Thereby practically tile spirit of the Act, the solemn assurance given by the Govt.
to the Parliament kindling hope in the litigant public to have a sitting or a retired judge appointed as President has been frustrated deflecting the appointment of a judicially trained judge to exercise judicial review.
We are constrained to observe that the rules, though statutory, were so made as to defeat the object of the Act.
The question then is: can and if yes, whether this court would interfere with the appointment made of Flarish Chander as President following the existing, rules.
Judicial review is concerned with whether the incumbent possessed of qualification for appointment and the manner in which the appointment came to be made or the procedure adopted whether fair, just and reasonable.
Exercise of judicial review is to protect the citizen from the abuse of the power etc.
by an appropriate Govt.
or department etc.
In our considered view granitic the compliance of the above power of appointment was conferred on the executive and confided to be exercised wisely.
When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of a tribunal.
we cannot sit over the choice of the selection, but it be left to tile executive to select the personnel as per law or procedure in this behalf.
In Sri Kumar Prasad case K.N. Srivastava, M.J.S., Legal Remembrance, Secretary to law and Justice.
of Mozoram did not possess the requisite qualifications for appointment as a Judge of the High Court prescribed under Art.217 of the Constitution, namely, that he was not a District Judge for 10 years in State Higher Judicial Service, which is a mandatory 861 requirement for a valid appointment.
Therefore, this Court declared that he was not qualified to be appointed as a judge of the High Court and quashed his appointment accordingly.
The facts therein are clearly glaring and so the ratio is distinguishable.
Sri Harish Chander, admittedly was the Sr. Vice President at the relevant time.
The contention of Sri Thakur of the need to evaluate the comparative merits of Mr. Harish Chander and Mr. Kalyansundaram a senior most Member for appointment as President would not be one into in a public interest litigation.
Only in a proceedings initiated by an aggrieved person it may be open to be considered.
This writ petition is also not a writ of quo warranto.
In service jurisprudence it is settled law that it is for the aggrieved person i.e. non appointee it) assail the legality of the offending action.
Third party has no locus stand it to canvass the legality or correctness of the action.
Only public law declaration would be made at the behest of the petitioner, a public spirited person.
But this conclusion does not give quietus at the journey 's end.
There are persistent allegations against malfunctioning of the CEGAT and against Harish Chander himself.
Though we exercised self restraint to assume the role of an Investigator to charter out the ills surfaced, suffice to say that the union Govt.
cannot turn a blind eye to the persistent public demands and we direct to swing into action, an indepth enquiry made expeditiously by an officer or team of officers to control the mal functioning of the institution.
It is expedient that the Govt.
should immediately take action in the matter and have fresh look.
It is also expedient to have a sitting or retired senior Judge or retired Chief Justice of a High Court to be the President.
The rules need amendment immediately.
A report on the actions taken in this behalf be submitted to this court.
Before parting with the case it is necessary to express our anguish over the ineffectivity of the alternative mechanism devised for judicial reviews.
The Judicial review and remedy are fundamental rights of the citizens.
The dispensation of justice by the tribunals is much to be desired.
We are not doubting the ability of the members or Vice Chairmen (non Judges) who may be experts in their regular service.
But judicial adjudication is a special process and would efficiently be administered by advocate Judges.
The remedy of appeal by special leave under article 136 to this Court also proves to be costly and prohibitive and far flung distance too is working as constant constraint to litigant public who could ill afford to reach this court.
An appeal to a Bench of two Judges of the respective High Courts over the orders of the tribunals within its territorial jurisdiction on questions of law would as usage a growing feeling of injustice of those who can ill effort to approach the Supreme Court.
Equally the need for recruitment of members of the Bar to man 862 the Tribunals as well as the working system by the tribunals need fresh look and regular monitoring is necessary.
An expert body like the Law Commission of India would make an indepth study in this behalf including the desirability to bring CEGAT under the control of Law and Justice Department in line with Income tax Appellate Tribunal and to make appropriate urgent recommendations to the Govt.
of India who should take remedial steps by an appropriate legislation to overcome the handicaps and difficulties and make the tribunals effective and efficient instruments for making Judicial review efficacious, inexpensive and satisfactory.
The writ petitions are disposed of with the above direction, but in the circumstances with no order as to costs.
T.N.A. Petitions disposed of.
[/INST]By a letter dated December 26, 1991 addressed to the Chief Justice of India, the petitioner, Editor, Excise Law Times, complained that ever since the retirement of president of the Customs, Excise and Gold control Appellate Tribunal (CEGAT) in 1985 no appointment of President was made as a result of which the functioning of the Tribunal was adversely affected.
He also alleged malfunctioning in the CEGAT and sought directions for immediate appointment of the President as well as an enquiry into the mal functioning of CEGAT.
The letter was treated as a Writ Petition in public interest litigation and on February 25,1992, this Court issued Rule Nisi to Union of India to make immediate appointment of the President of CEGAT, preferably a senior High Court Judge.
After the directions were issued by this Court, Respondent No. 3, who was initially appointed as judicial Member and subsequently as Senior Vice President of the Tribunal, was appointed as President.
The petitioner filed another petition challenging the appointment of President and sought to quash the same on the grounds that (1) the appointment was in breach of judicial order passed by this Court on February 25, 1992 because as per the convention a sitting or retired Judge of the High Court should have been appointed as President in consultation with the Chief Justice of India; even though High Court Judges were available no serious attempt was made to requisition the services of one of them for appointment as President; (2) before the Act was made a positive commitment was made time and again by the Government on the floor of the House that judicial independence of CEGAT is sine qua non to sustain the confidence of the 804 litigant public.
The appointment of any person other than sitting or a retired judge of the High Court as President would be in its breach; and (3) the appointment of Respondent No. 3 as a Judge of the Delhi High Court was turned down by Chief Justice of India doubting his integrity, therefore appointment (of such a person as President of CEGAT would undermine the confidence of the litigant public in the efficacy of judicial adjudication.
even though Rules may permit such appointment.
The petitioner also prayed that Rules 10(1)(3) and (4) of the CEGAT Members (Recruitment and Conditions of Service) Rules, 1987 should be struck down as violative of Article 43 of the Constitution.
the rules were ultra vires of the basic structure of the Constitution, namely independence of Judiciary.
On May 4,1992 this Court issued Rule Nisi and on the next date of bearing the relevant rile on which decision regarding the appointment of President was made produced in the Court but on behalf of the Union of India an objection was taken by the Additional Solicitor General that this Court cannot inspect the rile as he intended to claim privilege`.
Accordingly, pursuant to the directions given by this Court that a formal application may be made setting out the grounds on which the claim for privilege was founded, the Finance Secretary and the Minister of State for Finance filed affidavits claiming privilege under Sections 123 and 124 of the and Article 74 (2) of the Constitution stating that the Government had no (objection for the Court to peruse the rile but claimed privilege to disclose the contents of the rile to the petitioner.
On behalf of the Union of India it was contended that a Cabinet SubCommittee approved the appointment of Respondent No. 3 as President of CEGAT and by operation of Article 77(3) and 74(1), the appointment was made by the President.
The rile constitutes Cabinet documents forming part of the preparation (if the documents leading to the formation of the advice tendered to the President.
Section '123 of the Evidence Act and Article 74 (2) precluded this Court from enquiring into the nature of the advice tendered to the President and the documents were, therefore, immune from disclosure.
The disclosure would cause public injury preventing candid and frank discussion and expression of views by the bureaucrats at higher level and by the Minister/Cabinet Sub Committee causing serious injury to public service.
On behalf of Respondent No.3 it was contended that (1) he had an excellent and impeccable record of service without any adverse remarks and dropping of his recommendation for appointment as a Judge of Delhi High 805 Court could not be construed adverse 'to him; (2) the Government had prerogative to appoint any member, or Vice Chairman or Senior Vice President as President and Respondent No.3 being the Senior Vice President, was considered and recommended by the Cabinet Committee for appointment.
Hence he was validly appointed as President.
Disposing the petitions, this Court, HELD: Per Ramaswamy, J. 1.The claim in the affidavits of the State Minister for Finance and the Secretary for immunity of state documents from disclosure is unsustainable.
However, having perused the file and given anxious considerations,the Court is of the view that on the facts and circumstances of the case and in the light of the view taken, it is not necessary to disclose the contents of the records to the petitioner or his counsel.
1.1.Section 123 of the Evidence Act gives right to the Government to claim privilege, in other words immunity from disclosure of the unpublished official state documents in public interest.
The initial claim for immunity should be made through an affidavit generally by the Minister concerned, in his absence by the Secretary of the department or head of the Department indicating that the documents in question have been carefully read and considered and the deponent has been satisfied, supported by reasons or grounds valid and germance, as to why it is apprehended that public interest would be injured by disclosure of the document summoned or called for.
The claim for immunity should never he on administrative routine nor be a garb to avoid in convenience, embarrassment or adverse to its defence in the action, the latter themselves a ground for disclosure.
1.2.When a claim for public interest immunity has been laid for nondisclosure of the State documents, it is the Minister 's due discharge of duty to state on oath in his affidavit the grounds on which and the reasons for which he has been persuaded to claim public interest immunity from disclosure of the State papers and produce them.
He takes grave risk on insistence of oath of secrecy to avoid filing an affidavit or production of State documents and the Court may be constrained to draw such inferences as are available at law.
Accordingly the oath of office of secrecy adumbrated in Article 75(4) and Schedule III of the Constitution does not absolve the Minister either to state the reasons in support of the public interest immunity to produce the State documents or as to how the matter was dealt with or for their production when discovery order nisi or rule nisi was issued.
On the other hand it is his due 806 discharge of the duty as a Minister to obey rule nisi or discovery order nisi and act in aid of the Government.
Attorney General vs Jonathan Cape Ltd., ; Sankey vs Whitlan, and Whitlam vs Australian Consolidated Press, , referred to.
If the Court is satisfied from the affidavit and the reasons assigned for withholding production or disclosure, the Court may pass an appropriate order in that behalf If the Court still desired to peruse the record for satisfying itself whether the reasons assigned in the affidavit would justify withholding disclosure, the court would, in camera, examine the record and satisfy itself whether the public interest subserves withholding production or disclosure or making the documents as part of the record.
By operation of Section 162 of Evidence Act the final decision in regard to the validity of an objection against disclosure raised under Section 123 would always be with the Court.
The Court is not bound by the statement made by the Minister or the Head of the Department in the affidavit and it retains the power to balance the injury to the State or the public service against the risk of injustice.
The real question which the Court is required to consider is whether public interest is so strong to override the ordinary right and interest of the litigant that he shall he able to lay before a Court of justice the relevant evidence.
In balancing the competing interests it is the duty of the court to see that there is the public interest that harm shall not be done to the nation or the public service by disclosure of the document and there is a public interest that the administration of justice shall not be frustrated by withholding documents which must he produced if justice is to be done.
The basic question to which the court would, therefore, have to address itself for the purpose of deciding the validity of the objection would be, whether the document relates to affairs of State or the public service and if so, whether the public interest in its non disclosure is so strong that it must prevail over the private interest in the administration of justice and on that account, it should not be allowed to be disclosed.
State of U.P. vs Raj Narain & Ors., ; S.P. Gupta Ors.
807 etc.
vs Union of India & Ors. etc.
etc., 1982 (2) S.C.R. 365; relied on.
Conway vs Rimmer, ; ; D. vs National Society for the Prevention of Cruelty to Children, 1978 A.C. 171 (H.L.); Burmah Oil Co. Ltd. vs Governor and Company of the Bank of England, ; ; Butters Gas and Oil Co. vs Hammer, ; Air Canada vs Secretary of State for Trade, ; Council of Civil Service Unions vs Minister for the Civil Service, ; United State vs Reynolds, ; ; Environmental Agency, vs Pats), T Mink, ; (35) L. Ed.
2nd 11 9; Newyond Times vs U.S., ; ; U.S. vs Richard M. Nixon, ; = ; 1035; Robindon vs State of South Australia, ; Shankey vs Whitlan, ; ; FAI Insurances Ltd. vs The Hon Sir, Henn, Arthur Winneke and Ors., ; ; Whitlan vs Australian Consolidated Press Ltd., ; Minister for Arts Heritage and Environment and Ors.
vs Peko Wallsend Ltd. and Ors.
; Commonwealth of Australia vs Northern Land Council and Anr. ; R. vs Shinder, Gagnon vs Ouebec Securities Commission, ; Bruce vs Waldron, ; Re Tunstall, exhibit
P. Brown, [19661 84 W.N. (Pt2) (N.S.W.); Corbett vs Social Security Commission, ; Greednz Inc. vs Governor General, Apponhamy vs Illangarutute, [1964] 66 C.L.W. 17; Jamaica in Allen vs Byfields (No.2) [1964] 7 W.I.R.69 and Scotland in Glasgow Corporation vs Central Land Board, [1956] Scotland Law Time 4, referred to.
Mecormic on Evidence, 4th Edn.
by John w. Strong, referred to.
1.7.Every communication which proceeded from one of ricer of the State to another or the officers inter se does not necessarily per se relate, to the affairs of the State.
Whether they so relate has got to be determined by reference to the nature of the consideration, the level at which it was considered, the contents of the document or class to which it relates to and their indelible impact on public administration or public service and administration of justice itself.
The power to issue 'discovery order nisi ' is express as well as inherent as an integral power of judicial review and process in the Court to secure the attendance of any person or discovery or production of any document or to order investigation in that behalf.
However, in an appropriate case, depend 808 ing on facts on hand.
Court may adopt such other procedure as would be warranted.
The petitioner must make a strong prima facie case to order discovery order nisi, etc.
and it must not be a haunting expedition to fish out some facts or an attempt to cause embarrassment to the respondents nor for publicity.
But on issuance of rule nisi by this Court under Article 32 or a discovery order nisi the Government or any authority, constitutional, civil, judicial, statutory or otherwise or any person, must produce the record in their custody and disobedience thereof would be at the pain of contempt.
The Cabinet known as Council of Ministers headed by Prime Minister under Article 75 (3) is the driving and steering body responsible for the governance of the country.
Collective responsibility under Article 75(3) of the Constitution inheres maintenance of confidentiality as enjoined in oaths of office and of secrecy set forth in Schedule III of the Constitution that the Minister will not directly or indirectly communicate or reveal to any person or persons any matter which shall be brought under his consideration or shall become known to him as Minister except as may be required for the 'due discharge of his duty as Minister '.
The base and basic postulate of its significance is unexceptionable.
But the need for and effect of confidentiality has to be nurtured not merely from political imperatives of collective responsibility envisaged by Article 75(3) but also from its pragmatism.
Satwant Singh Sawhney vs D. Ramarathnam Asstt.
Passport Officer, ; Magnbhai Ishwarbhai Patel vs Union of India and Anr., ; ; Shamsher Singh vs State of Punjab, ; ; Rai Sabhib Ram Jawaya Kapur & Ors.
vs State of Punjab, and Commonwealth of Australia vs Northern Land Council & Anr., , referred to.
Sir Ivor Jennings, Cabinet Government; Patrick Gordon Walker, The Cabinet, 1973 Revised Ed.
P. 178; John P. Mackintosh, The British Cabinet, 2nd Edn. p.1 1; 0 Hood Phillips and Paul Jackson, Constitutional and Administrative Law, 7th Edn.
P. 301; Walker, The Cabinet, p. 183; Halsbury Laws of England, 4th Edn.
8 para 820; Bagehot and The English Constitution, 1964 Edn., referred to.
The Court would be willing to respond to the executive public interest immunity to disclose certain documents where national security or high policy, high sensitivity is involved.
Information relating to national security, diplomatic relations, internal security or sensitive diplomatic corre 809 spondence per se are class documents and that public interest demands total immunity from disclosure.
Even the slightest divulgence would endanger the lives of the personnel engaged in the services etc.
The maxim Salvs Populs Cast Suprema Lax which means that regard for public welfare is the highest law, is the basic postulate for this immunity.
Asiatic Petroleum vs Anglo Persian oil, ; Duncan vs Cammell Laird, 1942 A.C. 624; Council of Civil Service Union vs Minister for Civil Service, and Mark Hosemball R. vs Home Secretary exparte Hosenball, , referred to.
But it would be going too far to lay down that no document in any particular class or one of the categories of Cabinet papers or decisions or contents thereof should never, in any circumstances, be ordered to he produced.
Robinson vs State of South Australia, ; S.P. Gupta vs Union of India & Ors., [1982] 2 S.C.R. 365; State of U. P. vs Raj Narain & Ors., [1975] 2 S.C.R.333; Conway vs Rimmerl968A.C.910 (HL);Burmah Oil Co. Ltd. vs Governor and Company of the Bank of England, ; ; Reg.
vs Lewes Justices, Ex Parte Secretary of State for the Home Department, and D. V. National Society for the Prevention of Cruelty to Children; , ; Air Canada vs Secretary of State for Trade, [1983] 2 A.C. 394 (HL); Shankey vs Whitlan, [1979] 53 A.L.R. 1; Harbour Corp of Queensland vs Vessey Chemicals Pvt. Ltd., ; Manthal Australia Pvt. Ltd. vs Minister for Industry, Technology and Commerce, ; Koowarta vs Bjelke Petersen, ; United States vs Richard M. Nixon, ; Lawyers Ed.
2nd Ed. 1039; Attorney General vs Jonathan Cape Ltd. ; Minister for Arts Heritage and Environment and Ors.
vs Pekowallsend Ltd. and Ors., (1987) 75 A.L.R. 218; Commonwealth of Australia, vs Northern Land Council and Anr., ; Australian Community Party & Ors.
vs Commonwealth & Ors.
, ; and Queen vs Tohey, ; , referred to.
Undoubtedly, the Prime Minister is enjoined under Article 78 to communicate to the President all decisions of the Council of Minister relating to the administration of the affairs of the Union and proposals for legislation and to furnish such information relating to the administration or reconsideration by the Council of Minister if the President so requires and submit its 810 decisions thereafter to the President.
That by itself is not conclusive and does not get blanket public interest immunity from disclosure.
The Council of Ministers though shall be collectively responsible to the House of the people, their acts are subject to the Constitution; Rule of law and judicial review are parts of the scheme of the Constitution as basic structure and judicial review is entrusted to this Court (High court under Article 226).
3.3.1.The communication of cabinet decisions or policy to the President under Article 74(1) gives only limited protection by Article 74(2) of judicial review of the actual tendered to the President of India.
The rest of the file and all the records forming part thereof are open to in camera inspection by this Court.
Each case must be considered on its own facts and surrounding scenario and decision taken thereon.
Jyoti Prakash Mitter vs Chief Justice Calcutta High Court, ; and Union of India vs Jyoti Prakash, ; , referred to.
3.3.2.Article 74(2) is not a total bar for production of the records.
Only the actual advice tendered by the Minister or Council of Ministers to the President and the question whether any, and if so, what advice was tendered by the Minister or Council of Ministers to the President, shall not be enquired into by the Court.
In other words, the bar of judicial review is confined to the factum of advice, its extent, ambit and scope, but not the record i.e. the material on which the advice is founded.
S.P. Gupta vs Union of India & Ors., [1982] 2 S.C.R. 365, referred to.
4.Judicial review is concerned with whether the incumbent possessed of qualification for appointment and the manner in which the appointment came to made or the procedure adopted whether fair, just and reasonable.
Exercise of Judicial Review is to protect the citizen from the abuse of the power etc.
by an appropriate Government or department etc.
In Court 's considered view granting the compliance of the above power of appointment was conferred on the executive and confided to be exercised wisely.
When a candidate was found qualified and eligible and was accordingly appointed by the executive to hold an office as a Member or Vice President or President of Tribunal, this Court cannot sit over the choice of the selection, but it be left to the executive to select the personnel as per law or procedure in this behalf.
Shri Kumar Padma Prasad vs Union of India & Ors., , 811 distinguished.
In service jurisprudence it is settled law that it is for the aggrieved person i.e. non appointee to assail the legality of the offending action.
Third party has not locus standi to canvass the legality or correctness of the action.
Only public law declaration would be made at the behest of the petitioner, a public spirited person.
Therefore, the contention that there was need to evaluate the comparative merits of Respondent and the senior most Member for appointment as President would not be gone into in a public interest litigation.
Only in a proceedings initiated by an aggrieved person it may be open to be considered.
It is expedient to have a sitting or retired senior Judge or retired Chief Justice of a High Court to be the President.
The rules need amendment immediately.
Government had created a healthy convention of providing that the Tribunals will be headed by a President who will be a sitting or a retired judge of the High Court This Court to elongate the above objective directed the Government to show whether the convention is being followed in appointment of the President of CEGAT and further directed to consider appointment of a Senior Judge or a retired Chief Justice of the High Court as it President Admittedly Chief Justice of India was not consulted before appointing Respondent No.3 as President of CEGAT The solemn assurance given to the Parliament that the Tribunal bears a judicious blend by appointment of a High Court Judge as President was given a go bye.
6.1.While making statutory rules the executive appears to have made the appointment of a sitting or retired High Court Judge as President unattractive and Directly frustrating the legislative animation.
A sitting Judge, when he is entitled to continue in his office upto 62 years, would not he willing to opt to serve as President, if his superannuation as President is co terminus with 62 years.
He would he attracted only if he is given extended three years more tenure after his superannuation.
But Rule 10 (3) says that the total period of the enure of the President by a sitting or retired Judge is 'a period of three years or till he attains the age of 62 years, whichever is earlier ', i.e. co terminus with superannuation as a Judge of the High Court.
The, proviso is only discretionary at the whim of the executive depleting independence and is an exception to the rule.
Thereby, practically the spirit of the Act, the solemn assurance given by the Government to the Parliament kindling hope in the litigant public to have a sitting or a retired Judge appointed as President has been frustrated deflecting the appointment of a 812 judicially trained judge to exercise judicial review.
Court is constrained to observe that the rules, though statutory, were so made as to defeat the object of the Act.
7.There are persistent allegations against mal functioning of the CEGAT and against Respondent No. 3 himself.
Though this Court exercised self restraint to assume the role of an investigator to charter out the ills surfaced, suffice to say that the Union Government cannot turn a blind eve to the persistent public demands and 'the Court directs to swing into action, an indepth enquiry made expeditiously by an officer or team of officers to control the malfunctioning of the institution.
It is expedient that the Government should immediately take action in the matter and have fresh look.
The Tribunals set up under Articles 323A and 323B of the Constitution or under an Act of legislature are creatures of the Statute and in no case can claim the status as Judges of the High Court or parity or as substitutes.
However, the personnel appointed to hold the office under the State are called upon to discharge judicial or quasi judicial powers.
So they must have judicial approach and also knowledge and expertise in that particular branch of constitutional, administrative and tax laws.
The legal input would undeniably be more important and sacrificing the legal input and not giving it sufficient weightage and teeth would definitely impair the efficacy and effectiveness of the judicial adjudication.
It is, therefore, necessary that those who adjudicate upon these matters should have legal expertise, judicial experience and modicum of legal training as on many an occasion different and complex questions of law which baffle the minds of even trained judges in the High Court and Supreme Court would arise for discussion and decision.
M.B. Majumdar vs Union of India, ; ; Union of India vs Paras Laminates Ltd., ; Krishna Sahai & Ors.
vs State of U. P. & Ors.
, ; , and Rajendra Singh Yadav & Ors.v.
State of U.P. & Ors. [1990] 2 S.C.C. 763, referred to.
8.1.Equally the need for recruitment of members of the Bar to man the Tribunals as well as the working system by the Tribunals need fresh look and regular monitoring is necessary.
An expert body like the Law Commission of India should make an in depth study in this behalf including the desirability of bringing CEGAT under the control of Law and Justice Department in line with Income tax Appellate Tribunal and make appropriate urgent recommendations to the Government of India who should take remedial steps by an 813 appropriate legislation to overcome the handicaps and difficulties and make the Tribunals effective and efficient instruments for making judicial review efficacious, inexpensive and satisfactory.
For inspiring confidence and trust in the litigant public they must have an assurance that the person deciding their causes is totally and completely free from the influence or pressure from the Government.
To maintain independence imperativity it is necessary that the personnel should have at least modicum of legal training, learning and experience.
Selection of competent and proper people instill people 's faith and trust in the office and help to build up reputation and acceptability.
Judicial independence which is essential and imperative is secured and independent and impartial administration of justice is assured.
Absence thereof only may get both law and procedure wronged and wrong headed views of the facts and may likely to give rise to nursing grievance of injustice Therefore, functional fitness, experience at the Bar and aptitudinal approach are fundamental for efficient judicial adjudication.
Then only as repository of the confidence, as its duty, the Tribunal would properly and efficiently interpret the law and apply the law to the given set of facts.
Absence thereof would be repugnant or derogatory to the Constitution.
Union of India vs Sankal Chand Himatlal Sheth & Anr. ; , referred to.
Judicial review is the basic and essential feature of the Indian constitutional scheme entrusted to the judiciary.
It cannot be dispensed with by creating Tribunal under Articles 323A and 323B of the Constitution.
Any institutional mechanism or authority in negation of judicial review is destructive of basic structure, So long as the alternative institutional mechanism or authority set up by an Act is not less effective than the High Court, it Ls consistent with constitutional scheme.
The faith of the people is the bed rock on which the edifice of judicial review and efficacy of the adjudication are founded.
The alternative arrangement must, therefore, be effective and efficient.
Keshwanand Bharati vs Union of India, ; Waman Rao vs Union of India, ; Raghunathrao Ganpatrao vs Union of India ; ; Krishna Swathi vs Union of India, 1199214 S.C.C. 605; S.P. Sampat Kumar vs Union of India & Ors., ; and J.B. Chopra vs Union of India, , referred to.
814 9.1.
It is necessary tip express Court 's anguish over the ineffectivity of the alternative mechanism devised for judicial review.
The judicial review and remedy are fundamental rights of the citizens.
The dispensation of justice by the Tribunals is much to be desires.
Court is not doubting the ability of the members or Vice Chairman (non judges) who may be experts in their regular service.
But judicial adjudication is a special process and would efficiency be administered by advocate Judges.
The remedy of appeal by special leave under Article 136 to this Court also proves to be costly and prohibitive and far flung distance too is working as a constant constraint to litigant public who could ill afford to reach this Court.
An appeal to a Bench of two Judges of the respective High Courts over the orders of the Tribunals within its territorial jurisdiction on questions of law would assuage a growing feeling of iNjustice of those who can ill afford to approach the Supreme Court.
No one can suppose that the executive will never be guilty of the sins common to all people.
Sometimes they may do things which they ought not to do or will not do things they ought to do.
The Court must be alive to that possibility of the executive committing illegality in its process, exercising its powers, reaching a decision which no reasonable authority would have reached or otherwise abuse its powers, etc.
If the proceeding, decision (or order is influenced extraneous considerations which ought not to have been taken into account, it cannot stand and needs correction, no matter of the nature of the statutory body or status or stature of the constitutional functionary though might have acted in good faith.
It is, therefore, the function of the Court to see that lawful authority is not abused.
Under modern conditions of responsible Government, Parliament should not always be relied on as a check on excess of power by the Council (of Ministers or Minister.
Though the Court would not substitute its views to that of the executive on matters of policy, it is its undoubted power and duty to see that the executive exercises its power only for the purpose for which it is granted.
It is the constitutional, legitimate and lawful power and duty of this Court to ensure that powers, constitutional statutory or executive are exercised in accordance with the Constitution and the law.
This may demand, though no doubt only in limited number of cases, Yet the in networkings of government may be exposed to public gaze.
Per Ahmadi J. (For himself and Punchhi J.) (Concurring) 1.
This Court cannot sit in judgment over the wisdom of the Central 815 Government in the choice of the person to be appointed as a President so long as the person chosen possesses the prescribed qualification and is otherwise eligible for appointment.
Respondent No. 3 was a Senior Vice President when the question of filling up the vacancy of the President came up for consideration.
He was fully qualified for the post under the Rules.
No challenge is made on that count.
Under Rule 10 (1), the Central Government is conferred the power to appoint one of the Members to be the President.
Since the validity of the Rule is not questioned there can be no doubt that the Central Government was entitled to appoint Respondent No. 3 as President.
This Court cannot interfere with the appointment of Respondent No. 3 on the ground that his track record was poor or because of adverse reports on which account his appointment as a High Court Judge had not materialised.
Assuming that the allegations against Respondent No. 3 are factually accurate, this Court cannot sit in judgment over the choice of the person made by the Central Government over the choice of the person made by the Central Government for appointment as a President if the person chosen is qualified and eligible for appointment under the Rules.
However, to instill the confidence of the litigating public in the CEGAT, the Government must make a sincere effort to appoint a sitting Judge of the High Court as a President of the CEGAT in consultation with the Chief justice of India and if a sitting Judge is not available the choice must fall on a retired Judge as far as possible.
Sub rule (4) of Rule 10 of the CEGAT Members (Recruitment and Conditions of Service) Rules, 1987 needs a suitable change to make it sufficiently attractive for sitting High Court judges to accept appointment as the President of the CEGAT.
The rules empower the Central Government to appoint any member as the President of the CEGAT.
It is true that under subrule (4), a serving Judge and under the proviso thereto, a retired Judge, can also be appointed a Member and President simultaneously.
In the case of a serving Judge his age of superannuation is fixed at 62 years but in the case of the retired Judge he may be appointed for a period of three years at the most.
Insofar as a service High Court Judge is concerned, he holds office until he attains the age of 62 years, vide Article 217 of Constitution.
It, therefore, beats common sense why a sifting Judge of tile High Court would opt to serve as the President of the CEGAT if he is to retire at the same age without any benefit.
On the contrary, he would lose certain 816 perks which are attached to the office of a High Court Judge.
Even status wise he would suffer as his decisions would he subject to the writ jurisdiction of the High Court under Article 226,227 of the Constitution.
He may agree to accept the offer only if he had an extended tenure of at least three years.
The allegations made by Petitioner in regard to the working the CEGAT are grave and the authorities can ill aford to turn a Nelson 's eye to those allegations made by a person who is fairly well conversant with the internal working of the Tribunal.
Refusal to inquire into such grave allegations, some of which are capable of verification, can only betrays indifference and lack of a sense of urgency to tone up the working of the Tribunal.
It is high time that the administrative machinery which is charged with the duty to supervise the working of the CEGAT wakes up from its slumber and initiates prompt action to examine the allegations by appointing a high level team which would immediately inspect the CEGAT, identify the causes for the crises and suggest remedial measures.
This cannot brook delay.
The time is ripe for taking stock of the working of the various Tribunals set up in the country after the insertion of Articles 323A and 323B in the Constitution.
A sound justice delivery system is a sine qua non for the efficient governance of a country wedded to the rule of law.
An independent and impartial justice delivery system in which the litigating public has faith and confidence alone can deliver the goods.
After the incorporation of these two articles, Acts have been enacted where under Tribunals have been constituted for dispensation of justice.
Sufficient time has passed and experience gained in these last few years for taking stock of the situation with a view to finding out if they have served the purpose and objectives for which they were constituted.
Complaints have been heard in regard to the functioning of other Tribunals as well and it is time that a body like the Law Commission of India ha, a comprehensive look in with a view to suggesting measures for their improved functioning.
That body can also suggest changes in the different statutes and evolve a model on the basis where of Tribunals may be constituted or reconstituted with a view to ensuring greater independence.
An intensive and extensive study needs to be undertaken by the Law Commission in regard to the constitution of Tribunals under various statutes with a view to ensuring their independence so that the public confidence in such Tribunals may increase and the quality of their performance may improve.
It is strongly recommended to the Commission of India to undertake such an exercise 817 on priority basis.
On the facts of the case it is not necessary to disclose the contents of the records to the petitioner or his counsel.
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<s>[INST] Summarize the judgement(Civil) No. 71 of 1992.
WITH Writ Petition (Civil) No. 323 of 1993.
Under Article 32 of the Constitution of India.
J.P. Bhatacharjee, N.R. Choudhry and Somnath Mukherjee for the Petitioners in W.P.No. 71/93.
S.N. Mukherjee for the Petitioners in W.P. No. 323/93.
Ms. B. Sunita Rao for V.K. Verma for the Respondents.
The Judgment of the Court was delivered by R.M.SAHAI,J.
Casual labourers of South Eastern Railway, alleged to have been appointed between 1964 69 and retrenched between 1975 78 have approached this Court for a direction to opposite parties to include their names in the 753 live casual labourer register after due screening and give them reemployment according to their seniority.
Further prayer is to restrain the opposite parties from filling vacancies from open market.
Basis of their claim is two fold, one circulars issued by the Railway Board on 8th June and 18th June, 1981 laying guideline regarding recruitment, retrenchment and employment of the casual labourers, second Judgments delivered by this Court in 1985 and 1987 directing the opposite parties to prepare a scheme and absorb the casual labourers in accordance with their seniority.
Issuing of circulars by the Railway Board or decisions by this Court could not and has not been disputed.
Nor it is disputed that in pursuance of the orders passed by this Court the opposite parties framed a scheme in 1987 for employing retrenched casual labourers.
On 2.3.
1987 a letter was issued from the Railway Establishment addressed to the General Managers for employing casual labourer retrenched before 1981 if they satisfied the requirements mentioned therein which is extracted below: "Pursuant to directions given by the Hon 'ble Supreme Court in their order dated 23.2.1987, in W.P. No. 332 of 1986, the Ministry desire that the cases of project casual labour who had worked as such before 1. 1.81 and who were discharged due to completion of work or for want of further work, may also be considered for the purpose of implementation of the scheme contained in the Ministry 's letter of even No. dated 1.6.84 and 25.6.84 as modified in the letter dated 11.9.1986.
Representation along with documentary proof reaching the office mentioned above after 31.3.1987 of those which are incomplete and also those not made with reference to these instructions, will not be considered".
The petitioners who claim to have been retrenched due to completion of Halda project appear to have made a representation in 1990 to the authorities.
The representation runs as under "Respected sir, 1, on behalf of the Fetrenched Labour Congress Union I.O. 754 Tamluk Rly.
Station.
Midnaporoe, beg to humbly submit that the above quoted Circulars are not obeyed by DEN (Con).
TMZ DIZHA.
S.E. Rly.
KGP and they do not follow the orders of they Supreme Court, High Court of Calcutta and Central Administrative Tribunal, Calcutta Bench.
As a result of their indifference, the project casual labour who are retrenched from service on or before 1.1.1981 are in great difficulties and they are not getting scope of absorption.
All the applications deposited in the office of the DEN (CON) KGI in terms of Memo No. PD/E/A/579/A/837 in reference to CE/ C/GRC dated 25.5.1987 are to be approved.
In such circumstances, I beg to request you to intervene in the matter as expeditiously as humble.
Needless to say, if your grievances are not sympathetically admitted and the retrenched labour be not absorbed.
We shall have no alternative way except launching vigorous movement in the next stage.
Your faithfully, (BHUDEV JALUA)" The representation does not give any detail.
It is not mentioned if the scheme was given due publicity or not.
No explanation is given as to why the petitioners did not approach till 1990.
Nor it is stated if any of the casual labourer Not it is stated if any of the casual labourer of the project were reemployed or not.
It is vague and was lacking in material particulars.
Two questions arise, one, if the petitioners are entitled as a matter of law for reemployment and other if they have lost their right, if any, due to delay.
Right of casual labourer employed in projects, to be reemployed in railways has been recognized both by the Railways and this Court.
But unfortunately the petitioners did not take any step to enforce their claim before the Railways except sending a vague representation nor did they even care to produce any material to satisfy this Court that they were covered in the scheme framed by the Railways.
It was urged by the learned counsel for petitioners that they may be permitted to produce their identify cards etc.
, before opposite parties who may accept or reject the same after 755 verification.
We are afraid it would be too dangerous to permit this exercise.
A writ is issued by this Court in favour of a person who has some right.
And not for sake of roving enquiry leaving scope for maneuvering.
Delay itself deprives a person of his remedy available is law.
In absence of any fresh cause of action or any legislation a person who has lost his remedy by lapse of time loses his right as well.
From the date of retrenchment if it is assumed to be correct a period of more than 15 years has expired and in case we accept the prayer of petitioner we would be depriving a host of others who in the meantime have become eligible and are entitled to claim to be employed.
We would have been persuaded to take a sympathetic view but in absence of any positive material to establish that these Petitioners were in fact appointed and working as alleged by them it would not be proper exercise of discretion to direct opposite parties to verify the correctness of the statement made by the petitioners that they were employed between 1964 to 1969 and retrenched between 1975 to 1979.
The writ petitions accordingly fail and are dismissed.
But there shall be no orders as to costs.
U.R. Petitions dismissed.
[/INST]The petitioners claimed to he casual labourers of the South Eastern Railway appointed between 1964 69 and retrenched between 1975 78.
They prayed (1) for inclusion of their names in the live casual register and reemployment according to their seniority, and (2) for restraining the filling of vacancies from the open market.
They relied on two circulars issued by the Railway Board laying down guidelines for the recruitment, retrenchment and employment of casual labourers.
They also relied on two judgments of this court in 1985 and 1987 which directed the preparation of a scheme and absorption of casual labourers in accordance with their scheme.
A scheme was framed in 1987 for employing casual labourers retrenched before 1981 subject to demonstrating suitability before 31st March, 1987.
In 1990 the petitioners made their representation to be considered.
The questions before this court were (a) whether the petitioners were entitled as a matter of law to reemployment and (b) if they had lost their right, if any, due to delay.
752 Dismissing the petitions, this court, HELD 1.
Right of casual labourers employed in projects to be reemployed in railways has been recognised both by the Railways and this Court.
But the petitioners only sent in a vague representation, and there was absence of positive material that they were in fact appointed and working as claimed.
(754 G) 2.
A writ is issued by this court in favour of a person who has some right and not. for the sake of a roving enquiry leaving scope for manoeuver.
Delay itself deprives a person of big remedy available in law.
In the absence of any fresh cause of action of any legislation, a person who has lost his remedy by lapse of time loses his right as well.
(755 A) 4 In any event, more than 15 years have expired, and a host of others who have in the meantime become eligible and entitled to claim to be employed would he deprived if the petitioners ' claim were accepted.
(755 B)
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<s>[INST] Summarize the judgementivil Appeal No. 671 of 1985.
From the Judgment and Order dated 24th August, 1984 of the Calcutta High Court in Appeal from Appellate Decree No. 263 of 1979.
N.S. Nesargi and Dr. Meera Agarwal for the Appellant.
Rajan Mahapatra and Rathin Das for the Respondents.
The Judgment of the Court was delivered by K. JAYACHANDRA REDDY, J.
The matter arises under the West Bengal Premises Tenancy Act, 1956 ( 'Act ' for short).
The appellant is the tenant occupying the premises belonging to the respondent 612 on a monthly rent of Rs.475.
The respondent landlady filed a Suit No. T.S. 84/73 on the ground of default of rent for the period from May to August, 1973.
The appellant deposited the rent and made an application under Section 17(2) of the Act.
The trial court vide its order dated 27.2.74 held that the rent payable is only Rs.450 per month and directed the appellant to deposit the balance of arrears of rent within 15 days.
At this stage a compromise memo was filed and the suit was compromised in terms of the compromise memo.
In the memo it was mentioned that the default was of the first instance and that there would be no decree for khas posses sion.
It appears the appellant again committed default in payment of rent from June to December, 1975 (both months inclusive).
The respondent landlady filed Title Suit No. 3/76 after giving notice for eviction.
In that suit the appellant filed a petition under Section 17(2) and Section 17(2A) of the Act.
By Order No. 26 dated 23.3.77 the trial court decided that the rent payable was Rs.475 per month and the appellant was asked to deposit the arrears at the rate of Rs.3 15 per month by the 15th of each month commencing from April, 1977.
The appellant contested the suit and filed a written statement claiming benefit under Section 17(4) of the Act pleading that it was the first default.
The respond ent landlady contested the same stating that no such relief can be granted as per the proviso to the Section since such a relief was already granted once and that at any rate the appellant did not comply with the order while making the deposit of the arrears by 15th of each month and on that ground also no relief can be granted under Section 17(4).
The trial court decreed the suit and the first appellate court as well as the High Court dismissed the appeals pre ferred by the appellant.
In this appeal firstly it is contended that though there was delay in paying the installments as per Order dated 23.3.77 passed under Sections 17(2) and 17(2A) the Court did not order striking off the defence as provided under Section 17(3) and therefore the delay must be deemed to have been condoned and consequently it must be held that the appellant made the deposits as required by sub sections (2) and (2A) of Section 17 and hence he is entitled to claim relief under Section 17 (4).
The second contention is that the default which is the subject matter of Title Suit No. 3/76 should be treated as the first default inasmuch as the relief granted in Title Suit No. 84/73 in respect of the default for the period from May to August, 1973 was not one under Section 17(4) since the suit was decreed by way of compromise.
When this matter came up before another Bench of this Court consisting of two Hon 'ble Judges, in support of the second contention, 613 reliance was placed on Jagan Nath vs Ram Kishan Das & Anr., ; , (a decision of three Judges) where a similar provision in the Delhi Rent Control Act, 1958 was considered in a case where the earlier suit was withdrawn.
The Bench felt that the provision was construed in a narrow and technical sense and referred this matter to a Bench of three Judges and that is how this matter has come up before us.
All the three courts below have held that the appellant did not make the deposits before 15th day of each month as per the order dated 23.3.77 passed under Section 17(2) and Section 17(2A).
Unless such a deposit is duly made no relief can be granted under Section 17(4) of the Act.
At this stage it becomes relevant to refer to the provisions of Section 17.
Section 17 reads as under: "section 17.
When a tenant can get the benefit of protection against eviction (1) On a suit or proceeding being insti tuted by the landlord on any of the grounds referred to in Section 13, the tenant shall, subject to the provisions of sub section (2) within one month of the service of the writ of summons on him or where he appears in the suit or pro ceeding without the writ of summons being served on him, within one month of his appearance deposit in court or with the Controller or pay to the landlord an amount calculated at the rate of rent at which it was last paid, for the period for which the tenant may have made default including the period subsequent thereto up to the end of the month previous to that in which the deposit or payment is made together with interest on such amount calculated at the rate of eight and one third per cent, per annum from the date when any such amount was payable up to the date of deposit, and shall thereafter continue to deposit or pay, month by month, by the 15th of each succeeding month a sum equivalent to the rent at that rate.
(2) If in any suit or proceeding referred to in subsection (1) there is any dispute as to the amount of rent payable by the tenant, the tenant shall within the time specified in sub section ( 1), deposit in court the amount admitted by him to be due from him together with an applica tion to the Court for determination of the rent payable.
No such deposit shall be accepted unless it is accompanied by an application for determination of the rent payable, On receipt of such application, the Court shall 614 (a) having regard to the rate at which rent was last paid, and the period for which default may have been made, by the tenant, make, as soon as possible within a period not ex ceeding one year, a preliminary order, pending final deci sion of the dispute, specifying the amount, if any, due from the tenant and thereupon the tenant shall, within one month of the date of such preliminary order, deposit in court or pay to the landlord the amount so specified in the prelimi nary order; and (b) having regard to the provisions of this Act, make, as soon after the preliminary order as possible, a final order determining the rate of rent and the amount to be deposited in Court or paid to the landlord and either fixing the time within which the amount shall be deposited or paid or, as the case may be, directing that the amount already deposited or paid be adjusted in such manner and within such time as may be specified in the order.
(2A) Notwithstanding anything contained in subsec tion (1) or sub section (2), on the application of the tenant, the Court may, by order, (a) extend the time specified in sub section (I) or sub section (2) for the deposit or payment of any amount re ferred to therein; (b) having regard to the circumstances of the tenant as also of the landlord and the total sum inclusive or interest required to be deposited or paid under subsection (1) on account of default in the payment of rent, permit the tenant to deposit or pay such sum in such installments and by such dates as the Court may fix; Provided that where payment is permitted by in stallments such sum shall include all amounts, calculated at the rate of rent for the period of default including the period subsequent thereto upto the end of the month previous to that in which the order under this sub section is to be made with interest on any such amount calculated at the rate 615 specified in sub section (1) from the date when such amount was payable upto the date of such order.
(2B) No application for extension of time for the deposit or payment of any amount under clause (a) of subsec tion (2A) shall be entertained unless it is made before the expiry of the time specified therefore in sub section (1) or sub section (2), and no application for permission to pay in installment under clause (b) or sub section (2A) shall be entertained unless it ' is made before the expiry of the time specified in sub section (1) for the deposit or payment of the amount due on account of default in the payment of rent.
(3) If a tenant fails to deposit, or pay any amount referred to in sub section (1) or sub section (2) within the time specified therein or within such extended time as may be allowed under clause (a) of sub section (2A), or fails to deposit or pay any installment permitted under clause (b) of sub section (2A) within the time fixed therefore, the Court shall order the defence against delivery of possession to be struck out and shall proceed with the hearing of the suit.
(4) If a tenant makes deposit or payment as re quired of sub section (1), sub section (2) or sub section (2A) no decree or order for delivery of possession of the premises to the landlord on the ground of default in payment of rent by the tenant shall be made by the Court but the Court may allow such costs as it may deem fit to the land lord: Provided that a tenant shall not be entitled to any relief under this sub section if, having obtained such relief once in respect of the premises, he has again made default in the payment of rent for four months within a period of twelve months.
" The learned counsel for the appellant submits that assuming that there was delay in making the deposit of installments of the rent as per the said order, the follow up action by the Court as contemplated under Section 17(3) namely strik ing off the defence has not been ordered and therefore it should be presumed that the delay was condoned or deemed to have been condoned.
We are unable to agree with this submis sion of the learned counsel for the appellant.
As already 616 mentioned, the appellant filed petition under Sections 17(2) and 17(2A) pending the present suit disputing the amount of rent and also seeking permission to deposit the rent by way of installments.
The rent was held to be Rs.475 per month and the same was directed by the Court to be paid by monthly installments before 15th of each month but the appellant did not make the deposits duly.
Admittedly no application was made for extension of time.
Section 17(2) provides that if in any suit there is dispute as to the amount of rent pay able the tenant within the time specified shall deposit in court the amount admitted by him to be due from him with an application for determination of rent.
Section 17(2A) pro vides for extension of the specified time and also to depos it the rent by way of installment under the orders of the Court.
Section 17(2B) lays down that no application for extension of time shall be entertained unless it is made before the expiry of the specified time under sub section(1) or sub section (2) and it further lays down that no applica tion for permission to pay in installments under clause (b) of sub section (2A) shall be entertained unless it is made before the expiry of the time specified.
Section 17(3), on which reliance is placed by the appellant lays down that if a tenant fails to deposit, or pay any amount referred to in sub section (1) or sub section (2) ' within the time speci fied therein or within such extended time as may be allowed under clause (a) of sub section (2A), or fails to deposit or pay any installment permitted under clause (b) of sub sec tion (2A), the Court shall order the defence against deliv ery of possession to be struck out shall proceed with the hearing of the suit.
We have already noted that no applica tion for extension of time was made.
The mere fact that the court has not passed an order striking off the defence as contemplated under Section 17(3) because of the tenant 's failure to deposit within the time specified in the order passed under Sections 17(2) and 17(2A) does not necessarily lead to a presumption that the time was extended.
On the other hand Section (2B) which is a mandatory provision laid down that no application for extension of time for the deposit or payment of any amount under clause (a) of sub section (2A) shall be entertained unless it is made before the expiry of the time specified in sub section (1).
There fore in the absence of such application it be contended that the Court is deemed to have condoned the delay.
That being the position it must be held that the appellant tenant to make the deposit of the rent as per Order No. 26 dated 25, 3.77 passed under Section 17(2) and 17(2A).
Since such a deposit is the condition precedent for seeking relief under Section 17(4) the appellant who has not fulfilled the same cannot claim the said relief.
On this ground alone the orders of the courts below have to be confirmed.
In this view of the matter we do not propose to go into the 617 second contention in this appeal.
It may be decided in any other appropriate case where the question directly arises.
The premises in question is in Calcutta City where accommo dation problem is very acute.
Therefore the appellant is given time till 31st March, 1991 to vacate the premises on filing the usual undertaking within three weeks from today.
The appeal is accordingly dismissed.
In the circumstances of the case there will be no order as to costs.
T.N.A. Appeal dis missed.
[/INST]The respondent landlady filed a suit for eviction of the appellanttenant on the ground of default in payment of rent.
The appellant deposited the rent and made an application under section 17(2) of the West Bengal Premises Tenancy Act, 1956.
The Trial Court determined the rent payable and di rected deposit of the arrears of rent.
The suit was subse quently compromised.
The appellant again committed a default in payment of rent and the respondent filed another suit for eviction.
The appellant filed petition under section 17(2) and (2A), disputing the amount of rent and also seeking permission to deposit rent by installments.
The Trial Court decided the rent payable and directed the appellant to deposit the arrears of rent in monthly installments by the 15th of each month.
Thereupon the appellant tenant claimed protection under section 17(4) which was resisted by the landlady on the ground that (i) the protection cannot be granted as per the proviso to section 17(4), since he has already been granted relief once in the earlier suit, and (ii) Appel lant 's non compliance with the Court 's order in depositing the rent disentitled him from claiming relief under section 17(4).
The Trial Court decreed the respondent 's suit and the first appellate Court as well as the High Court confirmed the same by dismissing the appeals preferred by the appel lant.
611 In the appeal to this Court it was contended on behalf of the appellant that since the follow up action of the Court under section 17(3) viz. striking off the defence has not been ordered, it should be presumed that the delay in depositing the rent was condoned thereby entitling the appellant to relief under section 17(4).
Dismissing the appeal, this Court, HELD: The mere fact that the Court has not passed an order striking off the defence as contemplated under Section 17(3) because of the tenant 's failure to deposit within the time specified in the order passed under Section 17(2) and 17(2A), does not necessarily lead to a presumption that the time was extended.
On the other hand Section 17(2B) which is a mandatory provision lays down that no application for extension of time for the deposit or payment of any amount under clause (a) of sub section (2A) shall be entertained unless it is made before the expiry of the time specified in sub section (1).
[615H; 616C] In the instant case no application for extension of time was made by the appellant.
Therefore, in the absence of such application it cannot be contended that the Court is deemed to have condoned the delay.
[616G] Since deposit of rent as per Court 's order under Section 17(2) and (2A) is the condition precedent for seeking relief under section 17(4) the appellant who has not fulfilled the same cannot claim the said relief.
The orders of the Court below are therefore confirmed.
[616H]
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<s>[INST] Summarize the judgementION: Criminal Appeals Nos. 75 and 77 of 1961.
Appeal by special leave from the judgment and order dated December 22 23, 1960, and from the order dated March 17, 1961 of the Calcutta High Court in Cr.
Revision Nos. 1019 and 681 of 1959.
C.K. Daphtary, Solicitor General of India, and I. N. Shroff, for the appellant (in Cr. A. No. 75/61).
Purushottam Trikamdas, Prasunchandra Ghosh, S.C. Mitter and I. N. Shroff, for the appellant (in Cr. A. No. 77 of 1961).
M. C. Setalvad, Attorney General of India, Alak Gupta, S.N. Andley, Rameshwar Nath and P.L. Vohra for the respondents.
December 21.
The judgment was delivered by S.K. Das, J. I regret that I have come to a conclusion different from that of my learned brethren in these appeals.
I proceed now to state the necessary facts, the arguments advanced before us and my conclusions on the various questions urged.
By an order dated April 10, 1961 this Court granted special leave asked for by the two appellants herein, Pramatha Nath Talukdar and Saurindra Mohan Basu, to appeal to this Court from two orders made by the High Court of Calcutta, one dated December 22/23, 1960 and the other dated March 17, 1961.
By the first order a Special 301 Bench of the Calcutta High Court dismissed two applications in revision which the appellants had made to the said High Court against an order of the Chief Presidency Magistrate of Calcutta dated April 11, 1959 by which the said Magistrate issued processes against the two appellants for offences alleged to have been committed by them under sections 467 and 471 read with section 109 of the Indian penal Code on a complaint made by Saroj Ranjan Sarkar, respondent herein.
By the second order a Division Bench of the said High Court refused the prayer of the appellants for a certificate under article 134(1)(c) of the Constitution of India that the case was a fit one for appeal to this Court.
This refusal was based primarily on the ground that the order sought to be appealed from was not a final order within the meaning of the Article aforesaid.
In pursuance of the special leave granted by this Court four appeals were filed, two against the order dated December 22/23, 1960 and the other two against the order dated March 17, 1961.
The two appeals numbered 76 and 78 of 1961 from the order dated March 17, 1961 were withdrawn on the ground that special leave having been granted against the order of the Special Bench dated December 22/23, 1960, the appellants did not wish to press the appeals from the later order dated March, 17, 1961.
Therefore, the present judgment relates to the two appeals numbered 75 and 77 of 1961 which are from the judgment and order of the Special Bench dated December 22/23, 1960.
The principal question which arises for decision in these two appeals is whether a second complaint can be entertained by a Magistrate who or whose predecessor had, on the same or similar allegation, dismissed a previous complaint, and if so in what circumstances should such a second complaint be entertained.
The question is one of 302 general importance and has given rise to some divergence of opinion in the High Courts.
Let me first state the facts which have led to the filing of the second complaint in the present case.
Saroj Ranjan Sarkar, who is the youngest brother of the late Nalini Ranjan Sakar a well known public man, financier and industrialist of Bengal filed a petition of complaint in the court of the Chief Presidency Magistrate, Calcutta.
On April 3, 1959, I do not pause here to state the allegations made in that petition, a shall have occasion to refer to them in detail later on.
The complaint was filed against four persons the appellants herein and two other persons, Narendra Nath Law and Amiya Chakravarty.
A previous complaint on more or less the same allegations was made by Promode Ranjan Sarkar, second brother of the late Nalini Ranjan Sarkar.
That complaint was made on March 17, 1954 and was dismissed under section 203 of the Code of Criminal Procedure by the then Chief Presidency Magistrate, Shri N. C. Chakravarti, on August 6, 1954.
Thereafter, an application in revision was made by Promode Ranjan Sarkar to the High Court of Calcutta, which gave rise to Revision Case No. 1059 of 1954.
This application in revision was dismissed on July 8, 1955 by Debabrata Mookerjee, J. Promode Ranjan Sarkar then applied for a certificate under article 134(1)(c) of the Constitution, but such a certificate was refused by a Bench of the Calcutta High Court on September 1, 1955.
Promode Ranjan Sarkar applied for special leave from this Court and obtained such leave on February 13, 1956.
An appeal was filed in pursuance of that special leave, but ultimately Promode Ranjan Sarkar withdrew his appeal by filing a petition on February 3, 1959.
In that petition he stated that at the intervention of Common friends and well wishers of the parties, he had settled his disputes with the respondents therein and did not want to proceed with the appeal 303 The appeal was accordingly withdrawn on March 12, 1959.
Then, within about 22 days of that order, Saroj Ranjan Sarkar filed the complaint which has given rise to the present proceedings.
For convenience and brevity, I shall refer to Promode Ranjan Sarkar 's complaint as the first complaint and Saroj Ranjan Sarkar 's as the second complaint.
It is necessary here to give a little more of the background history of the second complaint.
As stated earlier, the late Nalini Ranjan Sarkar was a well known person in Bengal.
He was the Governing or Managing Director of N. R. Sarkar & Co. Ltd., which managed several public limited companies, such as, Hindustan Development Corporation Ltd., Hindustan Heavy Chemicals Ltd., and Hindusthan Pilkington Glass Works Ltd. He was also closely connected with the Hindusthan Co operative Insurance Society Ltd., of which he held a large number of shares.
On January 4, 1948 he obtained leave of absence from the Directors of N. R. Sarkar & Co. Ltd. for a period of one year with a view to joining the Ministry in West Bengal and he assumed office as Finance Minister of the West Bengal Government on January 23, 1948.
Later, the leave granted to him for one year was extended.
He owned 4649 shares of N. R. Sarkar & Co. Ltd. Pramatha Nath Talukdar, who was a paid employee of the Hindusthan Co operative Insurance Society Ltd. up to the end of July, 1953 was also a Director of N. R. Sarkar & Co. Ltd. He held 299 shares of the said company.
Promode Rajan Sarkar held 50 shares.
Santi Ranjan Sarkar; son of a deceased brother of Nalini Ranjan Sarkar, held one share.
Thus, it would appear that Nalini Ranjan Sarkar was the owner of the largest number of shares of N. R. Sarkar & Co., Ltd., and for all practical purposes he controlled the affairs of that company.
On July 31, 1951 Nalini Ranjan Sarkar executed a deed of trust in respect of 3649 shares out of the 304 shares held by him in N. R. Sarkar & Co. Ltd. By the said trust deed he appointed Promode Ranjan Sarkar, Pramatha Nath Talukdar and Narendra Nath Law as the trustees; but the beneficiaries under the trust deed were his four brothers, namely, Promode Ranjan Sarkar, Pabitra Ranjan Sarkar, Prafulla Ranjan Sarkar and Saroj Ranjan Sarkar, as also Santi Ranjan Sarkar, the son of a deceased brother.
It was alleged that the balance of 1000 shares held by Nalini Ranjan Sarkar was kept in custody with Pramatha Nath Talukdar and according to the case of the complainant these shares were kept in deposit with Pramatha Nath Talukdar for the benefit of the complainant and this brothers.
Nalini Ranjan Sarkar died on January 25, 1953.
It was alleged that a few days after the funeral ceremony had been performed, Saurindra Mohan Basu casually informed Promode Ranjan Sarkar that his brother Nalini Ranjan Sarkar had executed two documents to wit, an unregistered deed of agreement dated January 19, 1948 by which Pramatha Nath Talukdar was appointed Managing Director of N.R. Sarkar & Co. Ltd. and a deed of transfer of 1000 shares dated February 5, 1951 in favour of Pramatha Nath Talukdar.
Promode Ranjan Sarkar and his brothers did not give credence to the information conveyed, and wanted to see the documents.
It was alleged that this request was not complied with.
On July 31, 1953, i.e. about six months after the death of Nalini Ranjan Sarkar Pramatha Nath Talukdar resigned from his salaried post under the Hindusthan Co operative Insurance Society Ltd. and sought to assume control of N. R. Sarkar & Co. Ltd. as its Managing Director.
This led to some trouble between Promode Ranjan Sarkar and the appellants and also to some correspondence between Promode Ranjan Sarkar on one side and N. R. Sarkar & Co. Ltd. on the other, details whereof are not necessary for our purpose.
305 On September 22, 1953 a meeting of the Board of Directors of N.R. Sarkar & Co. Ltd. was held.
It was alleged that the meeting was held irregularly without any agenda and a resolution was adopted, despite Promode Ranjan Sarkar 's protest, by which the appointment of Pramatha Nath Talukdar as Managing Director of N. R. Sarkar & Co. Ltd. was renewed for seven years.
In September, 1953 Promode Ranjan Sarkar formally wrote to N.R. Sarkar & Co. Ltd. for inspection of the alleged deeds of agreement and transfer.
On October 1, 1953 an inspection was taken, and on October 13, 1953 Promode Ranjan Sarkar was allowed to take photographs of the relevant portions of the documents.
On this occasion Promode Ranjan Sarkar also inspected the minutes of the proceedings of N. R. Sarkar & Co. Ltd. and it was alleged that the proceedings dated January 16, 1948 purporting to bear the signature of Nalini Ranjan Sarkar were forged.
The main allegations in the first and second complaints related to three documents and were to the effect "that in order to assume complete control over N. R. Sarkar & Co. Ltd. and the concerns under its managing agency, the accused persons entered into a criminal conspiracy with one another and others unknown, to dishonestly and fraudulently forge a deed of agreement, a deed of transfer and make a false document, to wit, minute book of N. R. Sarkar & Co. Ltd. and in pursuance thereof dishonestly and fraudulently forged and or caused to be forged and used as genuine the said documents".
It will be noticed that three documents were stated to have been forged, and they were (1) An unregistered deed of agreement purporting to have been executed by the late Nalini Ranjan Sarkar as Governing Director of N. R. Sarkar & Co. Ltd. on January 19, 1948 appointing Pramatha Nath Talukdar as the Managing Director of N. R. Sarkar & Co. Ltd. on a remuneration of Rs. 1500 100 2000 per month.
This document bore 306 the signature of Saurindra Mohan Basu as a witness attesting the signature of Nalini Ranjan Sarkar, which signature was stated to have been forged.
(2) A transfer deed in respect of 1000 shares of N. R. Sarkar & Co. Ltd. which were said to have been entrusted to Pramatha Nath Talukdar, transfering them to the latter for and alleged consideration of rupees one lac purporting to have been executed by the late Nalini Ranjan Sarkar on February 5, 1951 with Saurindra Mohan Basu as the attesting witness both for the transferor and the transferee.
(3) Minutes of the proceedings of the Board meeting of N.R. Sarkar & Co. Ltd. dated January 16, 1948 purporting to bear the signature of the late Nalini Ranjan Sarkar and containing a resolution to the effect that the Governing Director approved of a draft agreement of appointment between the Company and Pramatha Nath Talukdar for appointing the latter as Managing Director of the Company and that the Board of Directors approved of the said draft agreement.
Of the aforesaid three documents the one relating to the alleged transfer of 1000 shares referred to as (2) above, is the subject of a separate suit stated to be now pending in the Calcutta High Court.
That document is not, therefore, directly the subject matter of the second complaint.
As to the unregistered deed of agreement referred to as (1) above, it may be stated that the original document could not be later found, and on behalf of the appellants and other accused persons it was stated that the document was not in their possession or control.
As stated earlier, Promode Ranjan Sarkar had obtained a photostatic copy of the relevant portions of the document.
As to this document the main allegation of the complainant was that it was engrossed on a rupee stamp paper which had been issued, on renewal, in the name of P.D. Himatsinghka & Co., a firm of solicitors in Calcutta 307 and evidence was led at the enquiry into the first complaint that the paper was stolen from that firm and furthermore that the signature on the document purporting to be that of Nalini Ranjan Sarkar was not his signature at all.
With regard to the minutes of the proceedings dated January 16, 1948 the allegation was that the minutes were typed on a sheet of paper bearing the letter head N.R. Sarkar & Co. Ltd. with telephone number "City 6091" printed thereon; but the City Exchange did not come into existence until December, 1948 and the telephone connection relating to number "City 6091" was obtained for the first time by the Hindusthan Co operative Insurance Society Ltd. on or about March 18, 1949; and therefore the paper with the letter head N. R. Sarkar & Co. Ltd. with telephone number "City 6091" printed thereon could not have been in existence on the alleged date of the proceeding of the Board of Directors, namely January 16, 1948.
In the second complaint certain other circumstances were also alleged in support of the allegation that the unregistered deed of agreement dated January 19, 1948 and the minutes of the proceedings dated January, 16, 1948 were forged.
It is, however, unnecessary to refer to those circumstances in detail here.
The learned Chief Presidency Magistrate, Shri Bijayesh Mukherjee, who dealt with the second complaint considered all the relevant materials and came to the following conclusions: (1) there was no delay in making the second complaint, if one had regard to the circumstances which led to the first complaint and the withdrawal of the appeal in the Supreme Court on March 12, 1959 arising out of the order made on the first complaint; (2) the dismissal of the first complaint and the application in revision arising therefrom by Debabrata Mookerjee, J. did not, as a matter of law, 308 operate as a bar to the entertainment of the second complaint.
(3) the second complaint was not an attempt at blackmail; and (4) the relevant materials in the record showed prima facie that the minutes of the proceedings dated January 16, 1948 were forged and so also the unregistered deed of agreement dated January, 19, 1948.
The learned Chief Presidency Magistrate then said: "Prima facie, I am satisfied about the truth of the allegations the complaint makes.
That apart, the complaint is for an offence triable by a Court of sessions.
And the materials I see before me are such as in my opinion may lead a reasonable body of men to believe the truth thereof.
Judged so, there is in my opinion sufficient ground for proceeding within the meaning of section 204 of the procedure Code.
On the question as to which of the four accused persons against whom process should issue, the learned Chief Presidency Magistrate came to the conclusion that there was a prima facie case against two of the accused persons only, namely, Pramatha Nath Talukdar and Saurindra Mohan Basu.
Saurindra Mohan Basu, it may be stated here, was a solicitor of N.R. Sarkar & Co. Ltd. and had attested the signature of Nalini Ranjan Sarkar on the unregistered deed of agreement.
The learned Chief Presidency Magistrate held that there was no sufficient ground for proceedings against the other two accused persons, namely, Narendra Nath Law and Amiya Chakravarty.
Against the aforesaid order of the Chief Presidency Magistrate two applications in revision were filed by the appellants herein.
These applications 309 in revision were first heard by a division Bench of two Judges of the Calcutta High Court, P. B. Mukherjee and H. K. Bose, JJ.
In view of the importance of the questions raised in the two applications in revision and some earlier decisions of the Calcutta High Court bearing on those questions to which I shall presently refer, P.B. Mukherjee, J. came to the conclusion that the applications should be referred to a larger Bench to be constituted by the Chief Justice under the rules of the Court.
H.K. Bose.
J. (as he then was) was inclined to take the view that the applications in revision must fail, but in deference to the views expressed by P.B. Mukherjee, J. agreed that the applications should be referred to the Chief Justice for constituting a larger Bench.
The matter was then referred to the learned Chief Justice, who constituted a Special Bench of three Judges to hear the two applications in revision.
This Special Bench heard the two applications in revision and dismissed them by its order dated December 22/23, 1960.
Three questions were agitated before the Special Bench.
The first was whether the Special Bench was lawfully in seizin of the case and was competent to deal with the applications in revision.
The second was whether the learned Chief Presidency Magistrate had jurisdiction to take cognizance of the offences alleged, in the absence of a sanction under section 196A of the Code of Criminal Procedure.
The third and the principal question was whether it was open to the learned Chief Presidency Magistrate to entertain a second complaint on the same allegations when his predecessor had dismissed the first complaint; and if it was open to him to entertain the second complaint should he have entertained it in the circumstances of the present case ? The Special Bench unanimously decided these three questions against the appellants and further came to the conclusion that there was no undue delay in making the second 310 complaint; neither was it frivolous nor made in bad faith.
It further expressed the view that it saw no reasons to differ from the finding of the learned Chief Presidency Magistrate that there was a prima facie case against the two appellants.
Now, as to the first question.
Chapter II of Rules of the High Court at Calcutta (Appellate Side) deals with the constitution and powers of the Benches of the Court.
Rule 1 of the said chapter says in effect that a Division Bench for the hearing of appeals from decrees or orders of the Subordinate Civil Courts shall consist of two or more Judges as the Chief Justice may think fit; there is a proviso [proviso (ii)] to the rule which says that on the requisition of any Division Bench, or whenever he thinks fit, the Chief Justice may appoint a special Division Bench to consist of three or more Judges for the hearing of any particular appeal, or any particular question of law arising in an appeal, or of the any other matter.
It is clear that the rule and the proviso deal with the hearing of appeals from decrees or orders of the Subordinate Civil Courts; in other words, they deal with civil matters.
Rule 9 of the same chapter deals with criminal matter and sub r.
(1) of the said rule says that a Division Bench for the hearing of cases on appeal, reference, or revision in respect of the sentence or order of any Criminal Court shall consist of two or more Judges.
There is no proviso to this rule similar to the proviso to r. 1, referred to earlier, and the argument is that in the absence of such a proviso it was not open to the Division Bench consisting of Mukherjee and Bose, JJ.
to refer the case back to the Chief Justice for the constitution of a larger Bench (though it was open to the Chief Justice to constitute originally a Division Bench of three Judges to hear the case), and if the Judges were equally divided in opinion, section 429 of the Code of Criminal procedure would apply and the case had to be laid before another Judge and judgment given according to the 311 opinion of the third Judge.
I am unable to accept this argument as correct.
It is clear from the rules in Chapter II that the constitution of Benches is a matter for the Chief Justice and r. 13 in Chapter II says that a Full Bench appointed for any of the purposes mentioned in Chapter VII, rr. 1 to 5, shall consist of five Judges or three Judges as the Chief Justice may appoint.
Now, r. 1 in Ch.
VII says inter alia that whenever one Division Bench shall differ from any other Division Bench upon a point of law or usage having the force of law, the case shall be referred for decision by a Full Bench and r. 5 says that if any such question arises in any case coming before a Division Bench as Court of Criminal Appeal, Reference or Revision, the Court referring the case shall state the point or points on which they differ from the decision of a former Division Bench, and shall refer the case to a Full Bench, for such orders as to such Bench seem fit.
In his judgment P.B. Mukherjee, J. referred to two earlier decisions of the Calcutta High Court, Nilratan Sen vs Jogesh Chandra Bhattacharia(1) and Kamal Chandra Pal vs Gourchand Adhikary (2) and observed that the question as to whether those decisions were good law arose in the case and he gave that as a reason for referring the case to the Chief Justice for the constitution of a larger Bench.
Even if rr. 1 and 5 in Chapter VII may not, strictly speaking, apply to the present case because the Division Bench consisting of Mukerjee and Bose JJ.
did not formulate the point or points on which they differed from the earlier Division Bench decisions referred to by Mukherjee, J., I think that the principle of those rules would apply and it was open to the Chief Justice, on a reference by the Division Bench, to constitute a larger Bench to consider the case.
I am also in agreement with the view expressed by the Special Bench that the absence of a proviso to r. 9 in Chapter II correspon 312 ding to the proviso to r.
I does not take away the inherent power of the Chief Justice to refer any matter to Bench of three Judges.
Sub rule(1) of r. 9 itself provides that a Division Bench for the hearing of cases on appeal, reference, or revision in respect of the sentence or order of any Criminal Court shall consist of two or more Judges.
Therefore, it was open to the Chief Justice to constituted Bench of three Judges for the hearing of the case and in my view it made no difference whether he constituted such a Bench originally or on a reference back by the Division Bench.
I further think that the Chief Justice must have the inherent power to constitute a larger Bench in special circumstances.
Take, for instance, a case where one Judge of the Division Bench feels, for a sufficient and good reason, that he should not hear the case.
It is obvious that in such a case the matter must be referred back to the Chief Justice for the constitution of another Bench.
The Chief Justice, I think, must possess such an inherent power in the matter of constitution of Benches and in the exercise thereof he can surely constitute a larger Bench in a case of importance where the Division Bench hearing it considers that a question of the correctness or Otherwise of earlier Division Bench decisions of the same Court will fall for consideration in the case.
Section 229 of the Code of Criminal Procedure does not apply to such a case because it is not a case where the Judges composing the Court are equally divided in opinion.
Rather it is a case where the Judges composing the Division Bench consider that the case is one of such importance that it should be heard by a larger Bench.
My conclusion, therefore, is that there was nothing illegal in the Division Bench consisting of Mukherjee and Bose.
referring the case back to the Chief Justice; nor was there anything illegal in the Chief Justice constituting a special Bench of 313 three Judges to hear the applications in revision.
The special Bench constituted by the Chief Justice was lawfully in seizin of the case and was competent to deal with it.
The objection as to the jurisdiction of the special Bench to hear the case was, in my opinion, rightly overruled by it.
Now, as to section.
Section 196A of the Code of Criminal Procedure may be read first.
That section is in these terms: "196A. No Court shall take cognizance of the offence of criminal conspiracy punishable under section 120B of the Indian Penal Code.
(1) in a case where the object of the conspiracy is to commit either an illegal act other than an offence, or a legal act by illegal means, or an offence to which the provisions of section 196 apply, unless authority from the "State Govern upon complaint made by order or under authority from the "State Government" or some officer empowered by the "State Government" in this behalf, or (2) in a case where the object of the conspiracy is to commit any non cognizable offence, or a cognizable offence not punishable with death, imprisonment for life or rigorous imprisonment for a term of two years or upwards, unless the "State Government", or a Chief Presidency Magistrate or District Magistrate empowered in this behalf by the "State Government", has, by order in writing, consented to the initiation of the proceedings: Provided that where the criminal conspiracy is one to which the provisions of subsection (4) of section 195 apply no such consent shall be necessary." 314 The argument before us on behalf of the appellants has proceeded on the footing that in para 5 of the second complaint Saroj Ranjan Sarkar had alleged that the accused persons had entered into a criminal conspiracy with one another and other persons unknown, to dishonestly and fraudulently forge certain documents and in pursuance thereof either forged or caused to be forged those documents and used them as genuine.
This allegation, it is argued attracted cl.
(2) of section 196A inasmuch as the object of the conspiracy was to commit non cognizable offences under sections 467 and 471 of the Indian Penal Code; therefore, it was necessary to obtain, by order in writing, the consent of the State Government or of the Chief Presidency Magistrate to the initiation of the proceedings and such consent not having been obtained, the issue of processes by the Chief Presidency Magistrate violated the provisions of section 196A of the Code of Criminal procedure.
The special Bench repelled this argument on the following grounds.
It pointed out the distinction between the offence of criminal conspiracy as defined in section 120A and punishable by section 120B and the offence of abetment by conspiracy as defined in the clause, secondly, in section 107 of the Indian Penal Code.
It then pointed out that the Chief Presidency Magistrate did not take cognizance of the offence of criminal conspiracy to commit forgery which would be punishable under section 120B read with section 467 of the Indian Penal Code, but he took cognizance of the offence of abetment of forgery punishable under section 467 read with section 109 of the Indian Penal Code and for this offence no sanction under section 196A of the Code of Criminal Procedure was necessary.
The special Bench further expressed the view that the primary offences which the second complaint disclosed where the offence of forgery, of using forged documents as genuine, and of abetment of the said offences and as cognizance of these offences did not require sanction or 315 prior consent of the authorities mentioned in section 196A, the order of the Chief Presidency Magistrate could not be said to have violated the provisions of that section.
The correctness of these views of the special Bench has been very seriously contested.
I may make it clear at the very outset that the mandatory provisions of section 196A of the Code of Criminal Procedure cannot be evaded by resorting to a mere device or camouflage.
The test whether sanction is or is not necessary does not depend on mere astuteness of drafting the petition of complaint.
For example, in the second petition of complaint under consideration before us the heading indicated that the offences in respect of which the petition of complaint was filed were offences under sections 467, 471 and 109 of the Indian Penal Code; but in para.
5 of the petition the allegation was that the accused persons had entered into a criminal conspiracy with one another and others unknown, to forge certain documents.
It would not be proper to decide the question of sanction merely by taking into consideration the offences mentioned in the heading or the use of the expression "criminal conspiracy" in para.
The proper test should be whether the allegations made in the petition of complaint disclosed primarily and essentially an offence or offences for which a consent in writing would be necessary to the initiation of the proceedings within the meaning of section 196A(2) of the Code of Criminal Procedure.
It is from that point of view that the petition of complaint must be examined.
There is another principle laid down by this Court which should be kept in mind.
The allegations made in the complaint may have more than one aspect; and may disclose more than one offence.
What would be the position when some of the offences disclosed do not require any sanction while others require sanction ? This question was considered by this Court in 316 Basir ul huq vs State of West Bengal(1).
That was case in which the accused person lodged information at a police station that X had beaten and throttled his mother to death and when the funeral pyre was in flames, he entered the cremation ground with police; the dead body was examined and the complaint was found to be false.
On the complaint of X the accused person was charged with offences under section 297, Indian Penal Code (trespass to wound religious feelings) and section 500, Indian Penal Code (defamation).
It was contended that as the complaint disclosed offences under section 182 and 211, Indian Penal Code, the Court could not take cognizance of the case except on a complaint by the proper authority under section 195 of the Code of Criminal Procedure.
It was held that the facts which constituted the offence under section 297 where distinct from those which constituted an offences under section 182, as the act of trespass was alleged to have been committed after the making of the false report, so section 195 was no bar to the trial of the charge under section 297.
It was further held that as regards the charge under section 500 where the allegations made in a false report disclose two distinct offences, one against a public servant and the other against a private individual, the latter is not debarred by provisions of section 195 of the Code of Criminal Procedure from seeking redress for the offence committed against him.
Referring to section 195 of the Code of Criminal Procedure Mahajan, J. who delivered the judgment of the Court said: "The statute thus requires that without a complaint in writing of the public servant concerned no prosecution for an offence under section 182 can be taken cognizance of.
It does not further provide that if in the course of the commission of that offence other distinct offences are committed, the magistrate is debarred from taking cognizance in respect of those offences as well.
The allegation made 317 in a complaint may have a double aspect, that is on the one hand these may constitute an offence against the authority of the public servant or public justice, and on the other hand, they may also constitute the offence of defamation or some other distinct offence.
The section does not per se bar the cognizance by the magistrate of that offence, even if no action is taken by the public servant to whom the false report has been made.
x x x x As regards the charge under section 500, Indian Penal Code, it seems fairly clear both on principle and authority that where the allegations made in a false report disclose two distinct offences, one against the public servant and the other against a private individual, that other is not debarred by the provisions of section 195 from seeking redress for the offence committed against him.
" Keeping the aforesaid two principles in mind let me examine the second complaint in this case in order to find out what essential offences the allegations made therein disclosed.
Paragraph 5 of the petition of complaint on which much reliance has been placed on behalf of the appellant alleges (1) that the accused persons entered into a criminal conspiracy with one another and others unknown, to forge certain documents; (2) that in pursuance of the conspiracy those documents were forged; or caused to be forged; and (3) that the documents so forged were used as genuine.
The paragraph then recited three documents which were said to have been forged.
It is thus clear that apart from the conspiracy, the second complaint alleged that offences under sections 467 and 471 of the Indian Penal Code had also been committed.
The special Bench rightly pointed out that the offences under sections 467 and 471 of the Indian Penal Code were distinct from the offence of criminal conspiracy and did not require any prior consent for the initiation of 318 Proceedings therefor under section 196A(2) of the Code of Criminal Procedure.
The question, of therefore, boils down to this: in view of the allegation that there was a criminal conspiracy, was the chief Presidency Magistrate debarred from taking cognizance of the case even though certain other distinct offences were alleged which did not require sanction ? I am in agreement with the special Bench that the answer to the question must be in the negative.
Furthermore, it appears to me that though the expression "criminal conspiracy" occurs in para.
5 of the complaint, the facts alleged in the petition of complaint essentially disclose an offence of abetment by conspiracy.
This brings us to the distinction between the offence of criminal conspiracy as defined in section 120A and the offence of abetment by conspiracy as defined in section 107 of the Indian Penal Code.
Section 120A which defines the offence of criminal conspiracy and section 120B which punishes the offence are in Ch.
VA of the Indian Penal Code.
This Chapter introduced into the criminal law of India a new offence, namely, the offence of criminal conspiracy.
It was introduced by the criminal Law Amendment Act, 1913 (VIII of 1913).
Before that, the sections of the Indian Penal Code which directly dealt with the subject of conspiracy were these contained in Ch.
V and section 121 (Ch.
VI) of the Code.
The present case is not concerned with the kind of conspiracy referred to in section 121A.
The point before us is the distinction between the offence of abetment as defined in section 107 (Ch. V) and the offence of criminal conspiracy as defined in section 120A (Ch. VA).
Under section 107, second clause, a person abets the doing of a thing, who engages with one or more other person or persons in any conspiracy for the doing of that thing, if an act or illegal omission takes place in pursuance of that conspiracy, and an order to the doing of that thing.
Therefore, in order to constitute the offence of abetment by conspiracy, there 319 must first be a combining together of two or more persons in the conspiracy; secondly, an act or illegal omission must take place in pursuance of that conspiracy, and in order to the doing of that thing.
It is not necessary that the abettor should concert the offence with the person who commits it.
It is sufficient if he engages in the conspiracy in pursuance of which the offence is committed.
It is worthy of note that a mere conspiracy or a combination of persons for the doing of a thing does not amount to an abetment.
Something more is necessary, namely, an act or illegal omission must take place in pursuance of the conspiracy and in order to the doing of the thing for which the conspiracy was made.
Before the introduction of Ch.
VA conspiracy, except in cases provided by sections 121A, 311, 400, 401 and 402 of the Indian Penal Code, was a mere species of abetment where an act or an illegal omission took place in pursuance of that conspiracy, and amounted to a distinct offence.
Chapter VA, however, introduced a new offence defined by section 120A.
That offence is called the offence of criminal conspiracy and consists in a mere agreement by two or more persons to do or cause to be done an illegal act or an act which is not illegal by illegal means; there is a proviso to the section which says that no agreement except an agreement to commit an offence shall amount to a criminal conspiracy unless some act besides the agreement is done by one or more parties to such agreement in pursuance thereof.
The position, therefore comes to this.
The gist of the offence of criminal conspiracy is in the agreement to do an illegal act or an act which is not illegal by illegal means.
When the agreement is to commit an offence, the agreement itself becomes the offence of criminal conspiracy.
Where, however, the agreement is to do an illegal act which is not an offence or an act which is not illegal by illegal means, some act besides the agreement is necessary.
320 Therefore, the distinction between the offence of abetment by conspiracy and the offence of criminal conspiracy, so far as the agreement to commit an offence is concerned, lies in this.
For abetment by conspiracy mere agreement is not enough.
An act or illegal omission must take place in pursuance of the conspiracy and in order to the doing of the thing conspired for.
But in the offence of criminal conspiracy the very agreement or plot is an act in itself and is the gist of the offence.
Willes, J. observed in Mulcahy vs The Queen (1): "When to agree to carry it into effect, the very plot is an act in itself, and the act of each of the parties, promise against promise, actus contra actum, capable of being enforced, if lawful, punishable if for a criminal object or for the use of criminal means.
" Put very briefly, the distinction between the offence of abetment under the second clause of section 107 and that of criminal conspiracy under section 120A is this.
In the former offence a mere combination of persons or agreement between them is not enough.
An act or illegal omission must take place in pursuance of the conspiracy and in order to the doing of the thing conspired for; in the latter offence the mere agreement is enough, if the agreement is to commit an offence.
So far as abetment by conspiracy is concerned the abettor will be liable to punishment under varying circumstances detailed in sections 108 to 117.
It is unnecessary to detail those circumstances for the present case.
For the offence of criminal conspiracy it is punishable under section 120B. Having regard to the distinction pointed out above, I am of the opinion that para.
5 of the second complaint, though it used the expression "criminal conspiracy" really disclosed an offence of abetment by conspiracy.
It made no allegation 321 of any agreement between the several persons at a particular place or time.
It said that the accused persons complained against entered into a conspiracy to forge certain documents were forged or caused to be forged.
In other words, an illegal act was done in pursuance of the conspiracy and furthermore the documents so forged were used as genuine.
Having regard to these allegations in para.
5 of the second complaint, I am unable to hold that the learned 'Chief Presidency Magistrate was wrong in taking cognizance of the offence of abetment by conspiracy, for which offence no consent or sanction under section 196A of the Code of Criminal Procedure was necessary.
Therefore, there was violation of the provisions of that section.
In this view of the matter it is unnecessary to consider the correctness or otherwise of the further view expressed in some of the decisions (see, for example, State of Bihar vs Srilal Kejriwal (1) to which the special Bench has referred) that there the matter has gone beyond a mere conspiracy and substantive offences are alleged to have been actually committed in pursuance thereof, sections 120A and 120B are wholly irrelevant.
That view has not been accepted as correct by some of the other High Courts.
In the State of Andhra Pradesh vs Kandimalla Subbaiah (2) this Court held that offences created by sections 109 and 120B, Indian Penal Code were distinct offences, though for a reason stated somewhat differently from what I have stated.
It further held that where a number of offences were committed by several persons in pursuance of a conspiracy, it was not illegal to charge them with those offences as well as with the offence of conspiracy to commit those offences, though it was not desirable to charge the accused persons with conspiracy with the ulterior object of letting in evidence which would otherwise be inadmissible and furthermore, it was undesirable to complicate a 322 trial by introducing a large number of charges spread over a long period.
The question was treated as one of propriety rather than of legality.
The question of sanction was also considered in that case, but in view of the order of remand passed, no opinion was expressed thereon.
The special Bench expressed the view that it was not necessary to go to the extent of saying that in a case of this nature sections 120A and 120B became wholly irrelevant.
The special Bench proceeded on the footing that irrespective of whether sections 120A and 120B became wholly irrelevant or not the second complaint undoubtedly disclosed an offence of abetment by conspiracy and it was open to the Chief Presidency Magistrate to take cognizance of that offence.
I think that there are no good reasons for holding that the view taken by the special Bench is not correct.
In my opinion, the special Bench rightly overruled the objection as to the alleged violation of the provisions of section 196A of the Code of Criminal Procedure.
Now, I come to the third and principal question agitated in these appeals.
On behalf of one of the appellants, Saurindra Mohan Basu, Mr. Purushottam Trikumdas has argued before us that when the first complaint containing more or less the same allegations was dismissed under section 203 of the Code of Criminal Procedure by the Chief Presidency Magistrate, it was not at all open to his successor to entertain the second complaint.
He has put the matter as one of law and has argued that the only way of getting rid of an order of dismissal under section 203 of the Code of Criminal Procedure known to the Code of Criminal Procedure is to have it act aside in accordance with the procedure laid down in sections 436 and 439 of the Code.
He has further argued that, as a matter of law, a second complaint is not entertainable as long as the order of dismissal under section 203 of the Code 323 of Criminal Procedure is not set aside by a competent authority.
His argument is that the two decisions in Nilratan Sen vs Jogesh Chandra Bhattacharjee(1) and Kamal Chandra Pal vs Gourchand Adhikary (2) should be held as good law.
Section 403 of the Code of Criminal Procedure is relevant to this argument.
It embodies the well established rule of common law that a man may not be put twice in peril for the same offence and that no man should be vexed with several trials for offences arising out of identical acts.
An Explanation appended to the section says inter alia that the dismissal of complaint or the discharge of accused person is not an acquittal for the purposes of the section.
If the Legislature had intended that the dismissal of complaint or the discharge of an accused person would be a bar to fresh proceeding on the same allegations unless the order of dismissal or discharge were set aside by a higher court, it would have said so either explicitly or by omitting the Explanation altogether.
Therefore, the effect of the Explanation is that under section 403 a fresh trial is barred only in cases of acquittal or conviction by a court of competent jurisdiction, coming within the purview of sub section
(1) thereof.
This aspect of the question was considered in Queen Empress vs Dolegobind Dass (3), which was a case dealing with a previous order of discharge of the accused person.
In that case, Maclean, C. J. referred to the decision in Nilratan Sen 's case and said: "There is no express provision in the Code to the effect that the dismissal of a complaint shall be a bar to a fresh complaint being entertained so long as the order of dismissal remains unreversed ' (see per Benerjee, J. in Nilratan Sens ' vs Jogesh Chandra Bhattacharjee (supra).
I agree in that.
If, then there be no express provision 324 in the Code, what is there to warrant us in implying or in effect introducing into the Code a provision of such serious import x x x? In the absence of any other provision in the Code to justify such an implication x x x x I can appreciate no sound ground for the Court so acting; were it to do so it would go perilously near to legislating, instead of confining itself to construing the Acts of the Legislature.
" The question was then considered by a Full Bench of the Calcutta High Court in Dwarka Nath Mondul vs Beni Madhab Banerjee (1) and it was held by the Full Bench (Ghose, J. dissenting) that a Presidency Magistrate was competent to rehear a warrant case triable under Ch.
XXI of the Code of Criminal Procedure in which he had earlier discharged the accused person.
Nilratan Sen 's case(2) and Kamal Chandra Pal 's case(3) were referred to in the arguments as summarised in the report, but the view expressed therein was not accepted.
Dealing with the question Princep, J. said: "There is no bar to further proceedings under the law, and, therefore, a Magistrate to whom a complaint has been made under such circumstances, is bound to proceed in the manner set out in section 200, that is, to examine the complaint, and, unless he has reason to distrust the truth of the complaint, or for some other reason expressly recognised by law, such as, if he finds that no offence had been committed, he is bound to take cognizance of the offence on a complaint, and, unless he has good reason to doubt the truth of the complaint, he is bound to do justice to the complainant, to summon his witness and to hear them in the presence of the accused." 325 The same view was expressed by the Madras High Court in In re.
Koyassan Kutty (1) and it was observed that there was nothing in law against the entertainment of a second complaint on the same facts on which a person had already been discharged, inasmuch as a discharge was not equivalent to an acquittal.
This view was reiterated in Kumariah vs Chinna Naicker (2), where it was held that the fact that a previous complaint had been dismissed under section 203 of the Code of Criminal Procedure was no bar to the entertainment of a second complaint.
In Hansabai Sayaji vs Ananda Ganuji (3) the question was examined with reference to a large number of earlier decisions of several High Courts on the subject and it was held that there was nothing in law against the entertainment of a second complaint on the same facts.
The same view was also expressed in Ram Narain vs Panachand Jain (4), Ramanand vs Sheri (5), and Allah Ditta vs Karam Baksh (6).
In all these decisions it was recognised further that though there was nothing in law to bar the entertainment of a second complaint on the same facts, exceptional circumstances must exist for entertainment of a second complaint when on the same allegations a previous complaint had been dismissed.
The question of the existence of exceptional circumstances for the entertainment of a second complaint is a question to which I shall come later.
At the present moment, I am considering the argument of Mr. Purshottam Tricumdas that the law prohibits altogether the entertainment of a second complaint when a previous complaint on the same allegations had been dismissed under section 203 of the Code of Criminal Procedure.
On this question the High Courts appear to me to be almost unanimously against the contention of Mr. Purshottam Tricumdas, and for the reasons given in the decisions to which I have earlier referred, I 326 am unable to accept his contention.
I accept the view expressed by the High Courts that there is nothing in law which prohibits the entertainment of a second complaint on the same allegations when a previous complaint had been dismissed under section 203 of the Code of Criminal Procedure.
I also accept the view that as a rule of necessary caution and of proper exercise of the discretion given to a Magistrate under section 204(1) of the Code of Criminal Procedure, exceptional circumstances must exist for the entertainment of a second complaint on the same allegations; in other words, there must be good reasons why the Magistrate thinks that there is "sufficient ground for proceeding" with the second complaint, when a previous complaint on the same allegations was dismissed under section 203 of the Code of Criminal Procedure.
The question now is, what should be those exceptional circumstances ? In Queen Empress vs Dolagobind Dass (1), Maclean, C. J. said: "I only desire to add that no Presidency Magistrate ought, in my opinion, to rehear a case previously dealt with by a Magistrate of coordinate jurisdiction upon the same evidence only, unless he is plainly satisfied that there has been some manifest error or manifest miscarriage of justice." Thus, according to this decision, the exceptional circumstance must be such as would lead the Magistrate to think that the previous order of dismissal was due to a manifest error or resulted in a manifest miscarriage of justice.
In re.
Koyassan Kutty (2) Sadasiva Aiyar, J. formulated the test of exceptional circumstances in the following words: "Taking it then that the discharge was proper and legal, there is no doubt nothing in law against the entertainment of a second 327 complaint on the same facts as a discharge is not equivalent to an acquittal; but I think that unless very strong grounds are shown a person who has been charged once and discharged ought not to be harassed again on the same charge.
It is not alleged that new facts have been discovered which the police did not know when they brought the first charge.
" In this decision the test formulated was the discovery of new facts which were not known when the first charge of complaint was made.
In Kumariah vs Chinna Naicker(1) the same test was again applied when it was observed: "There is nothing to indicate that there was no proper investigation on the previous complaint or that there was any necessity for investigating the second complaint.
x x x No additional witness had been cited in the second complaint, nor, as pointed out by the Additional Magistrate, was it alleged that any other kind of evidence had been discovered or was likely to be forthcoming.
" It is worthy of note, however, that Kuppuswami Aiyar, J. did not say that the discovery of a new fact or new evidence must be of such a character that it was not known to the complainant when the prior complaint was brought and dismissed.
In Hansabai Sayaji vs Ananda Ganuji (2) it was pointed out that the circumstance that the second complaint was filed by a person other than the one who made the first complaint made no difference and the test laid down in some early Rangoon High Court decisions [Ma The Kin vs Nga E Tha (3) and U Shwe vs Ma Sein Bwin (4) ], was accepted as the correct test.
In Ma The Kin 's case (supra) the test was thus expressed: 328 "It is the duty of a Magistrate, therefore, who receives a complaint in a case where there has been a previous order of dismissal or discharge, not to issue process, unless he is plainly satisfied that there has been some manifest error or manifest miscarriage of justice, or unless new facts are adduced which the complainant had not knowledge of or could not with reasonable diligence have brought forward in the previous proceedings.
" It will be noticed that in the test thus laid down the exceptional circumstances are brought under three categories; (1) manifest error, (2) manifest miscarriage of justice, and (3) new facts which the complainant had no knowledge of or could not with reasonable diligence have brought forward in the previous proceedings.
Any exceptional circumstances coming within any one or more of the aforesaid three categories would fulfil the test.
In Ram Narain vs Panachand Jain (1) it was observed that an exhaustive list of the exceptional circumstances could not be given though some of the categories were mentioned.
One new category mentioned was where the previous order of dismissal was passed on an incomplete record or a misunderstanding of the nature of the complaint.
This new category would perhaps fall within the category of manifest error or miscarriage of justice.
It appears to me that the test laid down in the earliest of the aforesaid decisions.
Queen Empress vs Dolegobind Dass (2), is really wide enough to cover the other categories mentioned in the later decisions.
Whenever a Magistrate is satisfied that the previous order of dismissal was due to a manifest error or has resulted in a miscarriage of justice, he can entertain a second complaint on the same allegations even though an earlier complaint was dismissed under section 203 329 of the Code of Criminal Procedure.
I do not think that in a matter of this kind it is either possible or even desirable that the exceptional circumstances must be stated with any more particularity or precision.
The learned Advocate for the respondent argued before us that a new category should be added and he called it "frustration of justice".
I am of the view that apart from any question of felicity of this new expression, this new category does not give any more assistance towards explaining the exceptional circumstances which must exist before a second complaint on the same allegations can be entertained.
I am content in this case to proceed on the footing that, the Magistrate must be satisfied that there was a manifest error or a miscarriage of justice before he can entertain a second complaint on the same facts.
In this case, two exceptional circumstances were adverted to before us.
One is that the learned Chief Presidency Magistrate who dealt with the first complaint completely misdirected himself as to the true scope and effect of sections 203 and 204 of the Code of Criminal Procedure and this, it is contended, resulted in a manifest miscarriage of justice when he dismissed the first complaint under section 203 of the Code of Criminal Procedure.
I am of the view that there is substance in this contention.
Section 203 of the Code of Criminal Procedure states that the Magistrate may dismiss the complaint, if, after considering the statement on oath, if any, of the complainant and the witnesses and the result of the investigation or enquiry, if any, under section 202, there is in his judgment no sufficient ground for proceeding.
Section 204 lays down that if in the opinion of the Magistrate taking cognizance of an offence there is sufficient ground for proceeding, he shall issue a summon or a warrant, as the case may require.
What is the true scope and effect of the expression 330 "sufficient ground for proceeding" occurring in the aforesaid two sections ? This was considered by this Court in Vadilal Panchal vs Dattatraya Dulaji Ghadigaonker (1).
With reference to sections 200, 202 and 203 of the Code of Criminal Procedure it was there observed: "The inquiry is for the purpose of ascertaining the truth or falsehood of the complaint; that is, for ascertaining whether there is evidence in support of the complaint so as to justify the issue of process and commencement of proceedings against the person concerned.
The section does not any that a regular trial for adjudging the guilt or otherwise of the person complained against should take place at that stage; for the person complained against can be legally called upon to answer the accusation made against him only when a process has issued and he is put on trial.
" It was further observed that if the Magistrate had not misdirected himself as to the scope of an enquiry under section 202 and had applied his mind judicially to the materials before him, it would be erroneous in law to hold that a plea based on an exception could not be accepted by in arriving at his judgment.
In another decisions of this Court Ramgopal Genapatria Ruia vs State of Bombay (2) the expression "sufficient grounds" occurring in sections 209, 210 and 213 of the Code of Criminal Procedure was considered and it was held that the expression did not mean sufficient grounds for the purpose of conviction but meant such evidence as would be sufficient to put the accused upon trial by the jury dealing with the first complaint the learned Chief Presidency Magistrate proceeded to consider not whether there was 331 sufficient ground for proceeding within the meaning of sections 203 and 204 of the Code of Criminal Procedure but whether there was sufficient evidence for conviction of the accused persons.
In my opinion, this approach was completely wrong and resulted in a manifest miscarriage of justice.
The learned Chief President Magistrate said: "In cases depending on circumstantial evidence in order to justify any inference that an offence has been committed the incriminating facts must be incompatible with innocence of the person accused and incapable of explanation upon any other reasonable hypothesis than that of his guilt.
If the circumstances are found to be as consistent with the guilt of the accused, no inference of guilt can be drawn.
In the present case the circumstances above equally may lead to the inference that the document was ante dated and might or might not have been forged.
Therefore the circumstances are not precise to be of any value as evidence.
" These observations clearly show that the learned Chief Presidency Magistrate misdirected himself as to the true scope and effect of sections 203 and 204 of the Code of Criminal Procedure.
He did not keep in mind the true purpose of the enquiry before him which was to ascertain whether there was evidence in support of the complaint so as to justify the issue of process and commencement of proceedings against the accused persons.
He further failed to keep in mind that sections 203 and 204 of the Code of Criminal Procedure did not say that a regular trial for judging the guilt or otherwise of the person complained against should take place at that stage.
It was not for learned Chief Presidency Magistrate to apply the test whether the circumstances were or were not incompatible with the, innocence of the accused persons.
The 332 purpose of the enquiry before him was merely to ascertain prime facie the truth or falsehood of the complaint.
Instead of holding an enquiry into the complaint, the learned Chief Presidency Magistrate proceeded as though he was trying the ease itself on merits.
I consider that this mistake on the part of the learned Chief Presidency Magistrate gave a wrong direction to the whole proceedings on the first complaint and the order of dismissal passed by him was due to a manifest error and resulted in miscarriage of justice.
The second exceptional circumstance is as to the presence of the telephone number "City 6091" printed on the sheet of paper on which were typed the minutes of the proceedings dated January 16, 1948.
When the first complaint was dealt with by the Chief Presidency Magistrate no evidence was led to show that the City Exchange did not come into existence until December, 1948 and that the telephone connection relating to that particular number was obtained for the first time by the Hindusthan Co operative Insurance Society Ltd. on or about March 18, 1949.
This I think, would be a new matter which was not considered when the first complaint was dismissed under section 203 of the Code of Criminal Procedure.
There was a good deal of argument as to whether this matter relating to the City Exchange was known to the complainant and his brothers from before, and if so, why they did not bring it to the notice of the learned Chief Presidency Magistrate who dealt with the first complaint.
it appears that an application dated June 7, 1955 was made before Debabrata Mookerjee J. who heard the application in revision with regard to the first complaint.
In that application certain statements were made with regard to the City Exchange.
Those statements did not, however, include any averment as to the knowledge of the complainant, Promode Ranjan Sarkar, about 333 the facts relating to the City Exchange and telephone number "City 6091".
The application merely stated that the facts stated therein were matters of public history and it was essential in the ends of justice to take judicial notice thereof.
Debabrata Mookerji, J. apparently rejected this application but did not record any formal orders on that date.
He recorded formal orders after he had dismissed the application in revision.
He said therein that he was not prepared to take into consideration the facts alleged in the application dated June 7, 1955 as they related to new matters.
The argument on behalf of the appellants before us is that the facts relating to the City Exchange were not new matters, because the complainant, Saroj Ranjan Sarkar, nowhere said that he did not know them before.
The argument, therefore is that it does not fulfil the test of "new facts which the complainant have no knowledge of or could not with reasonable diligence have brought forward in the previous proceedings".
The learned Advocate for the respondent has, in my opinion, rightly submitted that it is somewhat illogical to say at one stage of the proceedings that the matter was a new matter and could not, therefore, be taken into consideration and at a later stage to say that it is not a new matter and therefore could not be taken into consideration.
This much, however, is clear that the matter relating to the City Exchange and in particular telephone number "City 6091" was not at all considered when the first complaint was dismissed under section 203 of the Code of Criminal Procedure.
This matter is of some importance because if there was no such telephone number on January 16, 1948, the minutes of the proceedings purporting to be of that date must have come into existence on a later date.
This would have great relevance and bearing on the allegation of forgery made with regard to the minutes of the proceedings dated January 16, 1948.
334 On behalf of Saurindra Mohan Basu it was further contended that there was not even prima facie evidence against him and the learned Chief Presidency Magistrate was wrong in issuing process against him.
It is only necessary to point out that the learned Chief Presidency Magistrate found that there was a prima facie case against Saurindra Mohan Basu.
He had attested the signature of the late Nalini Ranjan Sarkar and if that signature was forged, then that would be prima facie evidence against Saurindra Mohan Basu also.
My learned brethren have taken the view that the entertaining of the second complaint in the circumstances of this case is a gross abuse of the processes of the Court.
I find myself unable to subscribe to that view.
My conclusion is just the opposite, namely, that the entertaining of the second complaint fully serves the interests of justice.
I am further of the opinion that its dismissal would defeat the ends of justice.
In this connection, I have already referred to the two exceptional circumstances which exist: one is that the learned Chief Presidency Magistrate who dealt with the first complaint completely misdirected himself as to the true scope and effect of sections 203 and 204 of the Code of Criminal Procedure; the second is that Debabrata Mookerjee, J. wrongly refused to take into consideration the circumstances relating to the installation of the City Exchange and telephone number "City 6091", circumstances which had a decisive bearing on the allegation of forgery made with regard to the minutes of the proceedings dated January 16, 1948.
Even a cursory perusal of the order of the Chief President Magistrate (Shri N. C. Chakravarti) dated August 6, 1954 with regard to the first complaint shows that the learned Chief Presidency Magistrate proceeded on the footing as though he was trying a case based entirely on circumstantial evidence; he formulated 335 the tests for drawing conclusions from circumstantial evidence and applying those tests, he came to the conclusion that the complaint was not true.
He rejected the evidence of the hand writing expert as though it was his function to try the case.
He rejected the enquiry report of Shri A. B. Syam (who held that there was a prima facie case for the issue of process) on very insufficient grounds.
He even went to the length of judging for himself the peculiar characteristics of Nalini Ranjan Sarkar 's hand writing depending on the personality of the writer.
In my view, in all these matters the learned Chief Presidency Magistrate misdirected himself as to the true scope of the enquiry before him and he forgot that what he had to find was whether prima facie there was believable evidence in support of the allegations made in the complaint.
This does not necessarily mean that a Magistrate dealing with a complaint is obliged "to bind himself to a mere mechanical or a wholly uncritical acceptance of the complainant 's story".
Indeed, it is the duty of the Magistrate to judge the materials on which he has to make up his mind as to the sufficiency or otherwise of the ground for proceeding further with the complaint and in judging the materials he must sift them and submit them to a critical examination.
This aspect of the question was argued before Debabrata Mookerjee, J. and he referred to it in his judgment.
I say this without meaning any disrespect to the learned Judge, but it appears to me that he missed the distinction which was pointed out by this Court in Ramgopal Ganpatrai Ruia vs The State of Bombay(1) namely that the expression "sufficient grounds" occuring in sections 209, 210 and 213 of the Code of Criminal Procedure does not mean sufficient grounds for the purpose of conviction, but means such evidence as is sufficient to put the accused person upon trial by the jury.
In sections 203 and 204, Criminal Procedure Code, the expres 336 sion is "sufficient ground for proceeding" which really means sufficient ground for proceeding with the complaint.
Sufficient ground for proceeding with the complaint is one matter and sufficient ground for convicting an accused person is quite a different matter.
It is this distinction which has to be kept in mind and the failure to keep such a distinction in mind in the present case has resulted in a manifest error.
Debabrata Mookerjee, J. detailed seven circumstances as those on which the complainant relied in support of the allegation of forgery.
He then went on to deal those circumstances as though the function of the Court then was to find out whether there was sufficient ground for convicting the accused person.
I refer particularly to the view expressed by the learned Chief Presidency Magistrate to the effect that one of the documents in question might have been ante dated by Nalini Ranjan Sarkar himself.
This was a suggestion made on behalf of the accused persons as a possible defence to the charge of forgery and it was not the function of the Chief Presidency Magistrate to consider the defence at that stage.
Debabrata Mookerjee, J. himself said: "If, on the other hand, the Magistrate has met the facts alleged by the complainant by anticipating possible defences to the charge, thus travelling beyond the facts themselves and the inferences and the probabilities legitimately raised by them, he must be held to have exceeded the allowable limits of an initial test of the complainant 's story." Yet, the possible defence that Nalini Ranjan Sarkar might have himself ante dated the document was not only considered by the learned Chief Presidency Magistrate but was accepted by Debabrate Mookerjee J. This, in my opinion, clearly demonstrates the manifest error or injustice which has taken place in this case, though in the concluding part of his 337 judgment Debabrata Mookerjee, J. expressed the view that he did not consider that the learned Chief Presidency Magistrate had over stepped the permissible limits of a preliminary probe into the truth or otherwise of the complainant 's story.
He further said that in his view the learned Chief Presidency Magistrate in sifting the materials offered did not dispose of them by anticipating a possible defence of the parties; yet the one possible defence to the charge of forgery was that Nalini Ranjan Sarkar might himself have antedated the document in question and that very defence was considered and accepted not only by the learned Chief Presidency Magistrate but by Debabrata Mookarjee, J. also.
The second mistake which led to a manifest injustice was the refusal to take into consideration the circumstances relating to the installation of the City Exchange and the telephone number "City 6091".
Debabrata Mookerjee, J. made no orders on the application dated June 7, 1955.
In his final order he said: "The application speaks for itself.
I was not prepared on that date to take any notice of the new matters mentioned in that application and I adhere to my decision.
" In my view Debabrata Mookerjee, J. was grievously in error in rejecting the application.
As I have said earlier, the circumstances relating to the installation of the City Exchange and telephone number "City 6091" had a decisive bearing on the truth or otherwise of the allegation of forgery and to reject the application to take those circumstances into consideration really amounted to a denial of justice.
Debabrata Mookerjee, J. took the view that it was a new matter which could not be taken into consideration and, pradoxically enough, the argument before us is that not being a new matter, it should not have been taken into consideration 338 in connection with the second complaint.
This paradox clearly demonstrates the injustice that will result from a failure to take into consideration circumstances which are decisive of the allegations made in the complaint.
When the complainant made an application for a certificate for appeal to the Supreme Court against the order passed by Dababrata Mookerjee.
J., he forcefully contended that the refusal to take notice of the circumstances relating to the installation of the City Exchange amounted to a denial of justice.
This application was dealt with by a Bench of two Judges of the Calcutta High Court (Das Gupta and Bachawat, JJ.).
The learned Judges expressed the view that if they were dealing with the matter, they would have thought it right to refer to the appropriate books for ascertaining the date on which the City Exchange came into existence.
They, however, felt that the matter was within the discretion of Debarata Mookerjee, J. and they were not prepared to give a certificate in a matter of discretion.
Another point which was urged before that Bench was this.
The complaint was for offences triable by the Court of sessions and the question which the learned Chief Presidency Magistrate had to put himself was not whether he, for himself, believed the allegations to be true but whether the materials before him were such that thereupon a reasonable body of men might believe the allegations to be true.
The learned Judge said: "In our judgment there is considerable force in this argument, but at the same time we have to take notice of the fact that this question does not appear to have been decided by the courts." Since those observations were made, a decision has been given by this Court and that decision supports the contention urged on behalf of the complainant.
The matter then came to this Court on an applica 339 tion for special leave, and special leave was granted by this Court on February 13, 1956.
An appeal was filed in pursuance of that special leave, but ultimately Promode Ranjan Sarkar withdrew his appeal by filing a petition on February 3, 1959.
In that petition he stated that at the intervention of common friends and well wishers of the parties, he had settled his disputes with the respondents therein and did not want to proceed with the appeal a statement which, in the circumstances of this case, amounts almost to compounding a felony.
The appeal was accordingly withdrawn on March 12, 1959.
The present complaint, Saroj Ranjan Sarkar, alleged in his petition of complaint that the withdrawal of the appeal filed in this Court in the circumstances stated above was due to undue influence exercised by the accused persons.
Whether that allegation is correct or not can only be determined after evidence has been led.
There are, however, circumstances which seem to me indicate that the withdrawal of the appeal in this Court was for the purpose of defeating the ends of justice.
The accused persons must have realised that if the evidence relating to the installation of the City Exchange and telephone No. "City 6091" was available and considered, then there would be no escape from the position that the minutes of the proceedings of the Board meeting of N.R. Sarkar and Co. Ltd., dated January 16, 1948 must have been forged and this aspect of the matter was very rightly emphasised by the learned Chief Presidency Magistrate (Shri Bijayesh Mukherjee) who dealt with the second complaint as also by the Special Bench of three Judges who dealt with the matter on the revision applications made against the order of the learned Chief Presidency Magistrate on the second complaint.
It is also worthy of note that this Court must have granted special leave in respect of the order passed on the first complaint, because it felt that there were arguable points in support of the 340 application for special leave, one of such points apparently being the refusal to consider the circumstances relating to the installation of the City Exchange.
On the second complaint the learned Chief Presidency Magistrate, as also the High Court, took those circumstances into consideration and rightly held that those circumstances clearly indicated that the allegations made in the complaint were prima facie true.
The learned Chief Presidency Magistrate further held that having regard to the antecedent circumstances, there was no undue delay in filing the second complaint.
He further held that there was no intention to blackmail, in the sense that one brother having failed on the first complaint, another brother was fraudulently trying to start afresh the criminal law in motion.
These findings of the learned Chief Presidency Magistrate were accepted by a Special Bench of three Judges of the Calcutta High Court.
I have heard nothing in the course of the arguments addressed before us which would justify me to go behind those findings, particularly in an appeal filed by special leave under article 136 of the Constitution.
The learned Chief Presidency Magistrate and a Bench of three Judges of the Calcutta High Court held specifically on the second complaint that there was a prima facie case and the dismissal of the first complaint resulted in manifest injustice.
I see no reasons to differ from the view thus expressed by the learned Chief Presidency Magistrate and the High Court.
For these reasons I have come to the conclusion that there are no good grounds for interfering with the judgment and order of the Special Bench dated December 22/33, 1960.
I would accordingly dismiss the two appeals.
The Judgment of Kapur and Hidayatullah, JJ., was delivered by KAPUR, J. There are two appeals against the judgment and order of the High Court of 341 Calcutta which raise the question of competency of a second complaint in regard to the same matter after the first complaint has been dismissed under section 203 of the Code of Criminal Procedure.
The respective appellants in the two appeals are P. N. Taluqdar and Sourindra Mohan Basu an attorney of Calcutta against whom process has been issued by the Chief Presidency Magistrate Calcutta on a complaint filed by the respondent Saroj Ranjan Sarkar.
The facts of these appeals are these: In 1944 a private limited company N. R. Sarkar & Co., Ltd. was formed by the late Mr. N. R. Sarkar, who was a well known financier and industrialist and a public man of Bengal.
This company was the Managing Agent of several public limited companies such as Hindusthan Development Corporation Ltd., Hindusthan Chemicals Limited, Hindusthan Pilkington Glass Works Limited etc.
Mr. N. R Sarkar was the Managing Director of N. R. Sarkar & Co., Ltd. Out of the share capital of this company he held 4649 shares.
His younger brother Promode Ranjan Sarkar held 50 shares.
Appellant P. N. Taluqdar who was a paid employee of the Hindusthan Cooperative Insurance Co., Ltd. held 300 shares and was a director of the Company and Shanti Ranjan Sarkar, a son of N. R. Sarkar 's deceased brother, held one share.
As Mr. N. R. Sarkar became the Finance Minister in the West Bengal Government, he obtained leave of absence on January 4, 1948, from the directors of N. R. Sarkar & Co. Ltd. for a period of one year which was subsequently extended for another year.
This was by a resolution passed on March 10, 1948.
Mr. N. R. Sarkar joined the Government on January 23, 1948 and in August 1948 Dr. N. N. Law became a director of N. R. Sarkar & Co., Ltd. On July 31, 1951 Mr. N. R. Sarkar executed a deed of trust in respect of 2920 shares out of his 342 holding in Hindusthan Cooperative Society Ltd. and 3649 shares out of the shares held by him in N. R. Sarkar & Co. Ltd. By this deed he appointed as trustees his younger brother Promode Ranjan Sarkar, appellant P. N. Taluqdar and Dr. N. N. Law and the beneficiaries under the trust deed were his four younger brothers including the complainant and Shanti Ranjan Sarkar, his nephew.
It is alleged that the balance of 1,000 shares was to be kept in trust by the appellant P. N. Taluqdar for the benefit of his brothers and nephew.
N. R. Sarkar died on January 25, 1953.
It is alleged that a few days after the death of Mr. N. R. Sarkar, the appellant, Sourindra Mohan Basu in a casual manner informed Promode Ranjan Sarkar that his brother N. R. Sarkar had executed two documents one an unregistered deed of agreement dated January 19, 1948, appointing the appellant P. N. Taluqdar as the Managing Director of N. R. Sarkar & Co., Ltd. and a deed of transfer dated February 5, 1951, transferring 1,000 shares in N. R. Sarkar & Co. Ltd., in his P. N. Taluqdar 's) favour.
Promode Ranjan Sarkar and his brothers without giving much credence to this information wanted to see the documents but they were not allowed to do so.
On July 31, 1953, appellant P. N. Taluqdar resigned from the Hindusthan Cooperative Insurance Society Ltd., in order to take control of N. R. Sarkar & Co Ltd., as it Managing Director.
This led to trouble between Promode Ranjan Sarkar and the appellant P. N. Taluqdar and there was some correspondence between Promode Ranjan Sarkar and the appellant P. N. Taluqdar which it is unnecessary to refer to.
At a meeting of the Board of Directors of N. R. Sarkar & Co., held on September 22, 1953, the appointment of appellant P. N. Taluqdar as Managing Director of N. R. Sarkar & Co. Ltd., was renewed for a period of seven years.
This in spite of the 343 protest of Promode Ranjan Sarkar and in spite of the fact that that item was not on the agenda of the meeting.
On October 1,1953, Promode Ranjan Sarkar took inspection of the agreement.
On October 13, 1953, he took inspection of the Minute book and took photostat copies of some of the documents but not of the resolution of January 16, 1948.
It is alleged that the appellants and other entered into a criminal conspiracy and fraudulently forged certain documents which in the complaint are described thus: (a) "An unregistered deed of agreement purporting to have been executed by the late Sri Nalini Ranjan Sarkar as Governing Director of N. R. Sarkar & Company Limited on 19th January 1948, (while he was on leave as stated above) appointing accused No. 1 (P. N. Taluqdar) as the Managing Director of N. R. Sarkar & Company Limited on a remuneration of Rs. 1,500 100 2,000/ per month and the deed bears the signature of accused No. 2 (section N. Basu) as the sole attesting witness.
(b) A transfer deed in respect of 1000 shares of N. R. Sarkar & Co. Ltd., which has been entrusted to accused No. 1 as stated before, transferring them to accused No. 1 for an alleged consideration of Rs. 1,00,000(Rupees One Lakh) also purporting to have been executed by the late Sri Nalini Ranjan Sarkar on 5th February, 1951, with accused No. 2 as attesting witness both for the transferor and transferee.
344 (c) Minutes of the proceedings of the Board.
Meetings of the said N. R. Sarkar & Company Limited including those of a meeting dated 16th January, 1948, purporting to bear the signature of the aforesaid late Sri Nalini Ranjan Sarkar.
" These documents, it is alleged, are forged and have been used and by the use of these forged documents a fraud has been perpetrated.
On April 3, 1959, respondent filed in the Court of the Chief Presidency Magistrate, Calcutta, a complaint under sections 467, 471 read with section 109 of the Indian Panel Code against the two appellants, Dr. N. N. Law and A. Chakravarti.
Document No. (b) above is not the subject matter of the complaint because a suit in regard to it has been filed and is pending in the Calcutta High Court.
On May 7, 1959, process was issued against the appellants by the Chief Presidency Magistrate.
Before dealing with the allegations in this complaint it is necessary to give some further facts of the case.
On December 12, 1953 Pramode Rajan Sarkar laid an information with the Commissioner of Police, Calcutta, against the persons against whom the above mentioned complaint was later filed.
It appears that the matter was investigated by the police and by a letter dated February 16, 1954, the Police Commissioner expressed the opinion that there was no substance in the allegations which were being made by Pramode Ranjan Sarkar against the appellants and two others.
He stated ".
I have given this matter very careful consideration gone through various reports and papers and even examined an important witness myself.
My examination has led me to conclusion that allegations are false and vexations.
" On March 17, 1954, Pramode Ranjan Sarkar filed a complaint under sections 467, 471 and ss.457, 471 read with section 109.
After setting out the facts which have 345 been given above and after referring to the three documents which were alleged to have been forged it was stated that the deed of agreement was engrossed on a stamp paper purchased in the name of P.D. Himmatsinghka & Co., a firm of solicitors, instead of in the name of the parties; that the resolution of January 16, 1948, which purported to bear the signature of the deceased was in fact not signed by him; that during the lifetime of Nalini Ranjan Sarkar and after a considerable period after his death the appellant, P. N. Taluqdar, never alleged that he had been appointed the Managing Director of N. R. Sarkar & Co. Ltd., nor did even appear from any resolution of the Board of N. R. Sarkar & Co., that he was appointed the Managing Director until September, 1953.
Certain other allegations which need not be set out at this stage were also made in this complaint for the purpose of showing that the appellants had been guilty of forgery and for using forged documents and for conspiracy.
The matter was heard by the Chief Presidency Magistrate Mr. N. C. Chakraborty who after examining all the witnesses who were produced before him dismissed the complaint by an order dated August 6, 1954.
The learned Chief Presidency Magistrate examined the handwriting expert and after taking all the facts into consideration he held: "that the evidence on handwriting including the opinion of the Handwriting Expert does not support the complainant 's version." Against this order the complainant Pramode Ranjan Sarkar took a revision to the Calcutta High Court which was heard by Debabrata Mookerjee, J. Before him three contentions were raised (1) that the Chief Presidency Magistrate erred in examining the witnesses himself after he had received the result of the enquiry held by Mr. A. B. Shyam, 346 another Magistrate, under section 202, Code of Criminal Procedure; (2) the learned Magistrate misunderstood the scope of sections 202 and 203 and misdirected himself by insisting upon a standard of proof which the law did not require at the initial stage when the only question was whether the process should issue or not and the third contention related to the power of revision of High Court under section 439 when dealing with orders of a Chief Presidency Magistrate.
The learned Judge held against the complainant, Pramode Ranjan Sarkar on the points that were raised before him.
He held that it was open to the Chief Presidency Magistrate to examine witnesses; (2) the learned Magistrate had not misdirected himself in regard to the scope of sections 202 and 203 and that he could dismiss the complaint if in his judgment there was no sufficient ground for proceeding.
He also held that the order of Magistrate was liable to be interfered with if it was made in disregard of the rules of procedure or it was so grossly improper or so palpably incorrect as to require a revision in the interest of justice.
The learned judge then examined the evidence which had been produced before the Magistrate and taking the various circumstances into consideration discharged the rule and dismissed the revision, holding that the complainant Pramode Ranjan Sarkar was guilty of undue delay in taking action against the appellants, because he came to know on October 13, 1953, as to the forged nature of the documents and did not take any action till he wrote to the Police Commissioner to which he got reply on February 16, 1954, and he did not file any complaint or take any action till march 17, 1954, and this delay was unexplained.
He also held that the complainant Pramode Ranjan Sarkar 's belief in regard to forgery was not established by the evidence which had been produced because (1) he came to know about the agreement complained of in February, 1953, but he discredited it and did 347 not take any action; (2) that when the agreement came up for renewal on September 22, 1953, for another term of the 7 years he did not oppose it on the ground that it was a forgery but on legal grounds.
The learned judge did not believe the evidence of Pramode Ranjan Sarkar that up to February, 1954, he considered it absurd that there could be such a document.
He referred to the correspondence which passed between the complainant and the appellant P. N. Taluqdar.
He also considered the evidence relating to the watermark and the circumstances in support of the allegation of the theory of forgery and not being satisfied with the evidence he dismissed the revision petition and thus the order of the Chief Presidency Magistrate Mr. Chakraborti was upheld.
It may be pointed out that on behalf of complainant Pramode Ranjan Sarkar an application was made on June 6, 1955, drawing the attention of the Court to the fact that on the sheet of a paper on which the minutes of the meeting held on January 16, 1948, had been typed there was printed Telephone "City 6091" and that Exchange had not come into existence till December, 1948.
It was not stated when the complainant came to know of this fact.
The learned Judge did not pass any separate order on this application and did not take it into consideration in his judgment.
Against this order an application was made for a certificate under article 134(1)(c) which was dismissed but in that order this fact as to the City Exchange coming into existence in December, 1948, has been taken note of.
Pramode Ranjan Sarkar then applied to this Court for Special Leave which was granted on February 13, 1956, but the appeal was withdrawn and was therefore dismissed or March 2, 1959.
The present respondent Saroj Ranjan Sarkar then brought a complaint under the same sections 348 on April 3, 1959, making the same allegations as were made by his elder brother Pramode Ranjan Sarkar but there is one further allegation as to the Telephone City Exchange which did not find place in the previous complaint, In this complaint after referring to the facts which have been set out above it was alleged in paragraph 5 as follows : "That in order to assume complete control over N. R. Sarkar & Co., Ltd. and the concerns under its Managing Agency, the accused, entered into a criminal conspiracy with each other and others unknown, to dishonestly and fraudulently forged a Deed of Agreement, a Deed of Transfer and make a false document, to wit, minute book of N. R. Sarkar & Co. Ltd., and in pursuance thereof dishonestly and fraudulently forged and/or caused to be forged and used as genuine the said documents.
" The grounds for forgery were that the unregistered deed dated January 19, 1948, was engrossed on a stamp paper purchased in the name of M/s. P. D. Himmatsinghka & Co; that the late N. R. Sarkar was on leave granted by the company and he never attended any meeting of the Board for more than four years as long as he was a Finance Minister; that the signature of Mr. N. R. Sarkar on the resolution dated January 16, 1948, was forged; that during the lifetime of N.R. Sarkar it was never given out by the appellant P. N. Taluqdar that he had been appointed a Managing Director, that in none of the papers and correspondence and resolutions of the Board until September, 1953, does it appear that the appellant, P. N. Taluqdar, was its Managing Director; that the appellant, P. N. Taluqdar continued to hold his post in the Hindusthan Cooperative Insurance Society Ltd. up to the end of July, 1953; that the signature in the deed of appointment was halting and appeared to be a forgery even to the naked eyes; that the resolution 349 for renewal for seven years was passed in spite of the protest of Pramode Ranjan Sarkar who was a director of N. R. Sarkar & Co. Ltd., and inspection of the deed of appointment was not given to Pramode Ranjan Sarkar in spite of his demands.
It was further alleged that the resolutions of the Board of Directors were all on loose sheets of paper, that the signature on the resolutions were forged; that there was internal evidence to show that the genuine minutes book had been dishonestly changed; that the minutes of the proceeding of the Board of Directors said to have been held on January 16, 1948, were on a typed sheet; that the Telephone No. "City 6091" was printed thereon and the City Exchange was not in existence in January, 1948, but came into existence in December, 1948.
It was prayed that the accused named therein which included the two appellants be proceeded against under sections 467, 471 read with section 109 of the Indian Penal Code.
It will be noticed therefore that all the allegations made by Saroj Ranjan Sarkar are the same as those made by Pramode Ranjan Sarkar except in regard to the City Exchange Telephone Number.
This complaint was accompanied by an affidavit not of complainant Saroj Ranjan Sarkar but of Shanti Ranjan Sarkar, his nephew.
In paragraphs 1 to 7 of this affidavit he stated that the facts in regard to the Calcutta City Exchange were matters of public history as they were duly published in the columns of "statesman" dated December 29, 1948, and he also stated "that I am aware of the facts and circumstances stated above," but he did not say as to when he came to know about the City Exchange matter.
It may also be noted that in the application which was made by the complainant Pramode Ranjan Sarkar in the High Court before Debabrata Mookarjee J., it was submitted that judicial notice be taken of the new 350 telephone exchange under section 57 but it was not stated as to when that complainant came to know about the new Telephone Exchange Number.
That fact has been stated in the affidavit of Shanti Ranjan Sarkar in almost the same vague manner.
The learned Chief Presidency Magistrate, who took cognizance of the second complaint, Mr. Bijoyesh Mookerjee, after considering the whole material placed before him issued process against the appellants only.
He held that there was no delay on the part of the respondent in making the complaint that the previous complaint and the result thereof was no bar to the filing of the second complaint; that the complaint was not brought with a view to blackmail the accused including the appellants, that what the brother of the respondent did, did not lay the respondent open to the charge of blackmail.
On the merits he took into consideration the fact in regard to the City Exchange of which according to the learned Magistrate he could take judicial notice under section 57 of the Evidence Act.
He compared various signatures of the late N. R. Sarkar and after considering the elaborate order of his predecessor he said : "I have read and re read it and with respect too due to one of his eminence, but it is my misfortune that I have not been persuaded.
There are various other considerations which point to the ineluctable prima facie conclusion of forgery.
But it is not proper that I burden my order with all that at this stage." He held that he was satisfied about the truth of the allegations and there was sufficient ground for proceeding against the appellants under section 204, Criminal Procedure Code and he therefore issued process against them but did not issue any process against Dr. N. N. Law and Amiya Chakravarty who were accused Nos. 3 and 4. 351 Against this order a revision was taken by the appellants to the High Court and rule was issued against the Chief Presidency Magistrate to show cause why his order should not be set aside.
He showed cause and the matter was heard by a Division Bench consisting of P. B. Mukerjee and H. K. Bose, JJ., and the matter was referred to a larger Bench because of the importance of the questions of law which arose in the case.
Three questions were raised before the Special Bench, (1) whether under the appellate side rules of the High Court it was competent for a Division Bench consisting of two judges to refer any matter to a larger bench for decision in a criminal matter; (2) whether a second complaint could be entertained on the same facts after a previous complaint had been dismissed; and (3) whether the complaint could be taken cognizance of by the Magistrate in the absence of a sanction under section 196A of the Criminal Procedure Code.
On all these three points the finding of the Special Bench was against the appellants.
It held that the attention of the Chief Justice having been drawn to the fact that the case involved questions of importance it was open to him in the exercise of his inherent jurisdiction to refer the case to a larger bench and therefore the reference was not illegal.
In regard to the filing of a second complaint it held that a fresh complaint could be entertained after the dismissal of previous complaint under section 203 Criminal Procedure Code when there was manifest error or manifest miscarriage of justice or when fresh evidence was forthcoming.
The Bench was of the opinion that the fact in regard to the City Telephone Exchange was a new matter and because Pramode Ranjan Sarkar was not permitted to take a photostat copy of the Minutes Book, it was possible that his attention was not drawn to the City Telephone Exchange which was not in existence at the relevant time and that there was sufficient reason for Pramode 352 Ranjan Sarkar for not mentioning the matter of City Exchange in his complaint.
It also held that the previous Chief Presidency Magistrate Mr. Chakraborty had altogether ignored the evidence of a large number of witnesses who were competent to prove the handwriting and signature of N. R. Sarkar and he had no good reasons for not accepting their evidence.
It could not be said therefore that there was a judicial enquiry of the matter before the previous Chief Presidency Magistrate; the decision was rather arbitrary and so resulted in manifest miscarriage of justice.
The Court was of the opinion therefore that there was no reason to differ from the finding of the Chief Presidency Magistrate Mr. Bijoyesh Mukerjee and that there was a prima facie case against the appellants.
The rules were therefore discharged.
It is against this judgment and that the appellants have come in appeal to this court by Special Leave.
Four appeals were filed by the two appellants, two against the order of the High Court of Calcutta dismissing the revision petition and two against the order of the High Court refusing a certificate under article 134 (1) (c) of the Constitution.
As this Court granted special leave against the order of the High Court dismissing the Revision Petition the two appeals against the order refusing a certificate under article 134 (1) (c) became infructuous and therefore were not pressed.
It is only the appeals against the judgment and order of the High Court refusing to quash the order of the learned Chief Presidency Magistrate, Mr. Bijoyesh Mukerjee, which survive for decision.
The first question to be decided and that is the most vital question in the case is, whether the second complaint filed by Saroj Ranjan Sarkar respondent should have been entertained ? This complaint was brought on April 3, 1959, the appeal in this Court brought by Pramode Ranjan Sarkar 353 the complainant in the previous complaint, having been withdrawn on March 2, 1959.
The respondent holds no shares in N. R. Sarkar & Co. Ltd. He is a beneficiary under the deed of trust in trust in regard to certain number of shares.
In regard to the unregistered deed of agreement appointing P. N. Taluqdar as Managing Director of N.R. Sarkar & Co. Ltd., he can have no interest.
As regards the transfer deed of 1,000 shares of N. R. Sarkar & Co. Ltd., which it is claimed were entrusted to P. N. Taluqdar appellant for the benefit of the respondent and his brothers, a separate suit has been brought and is not the subject matter of the criminal complaint.
There then remains the resolution of the Board dated January 16, 1948, which stands on the same footing as the appointment to Managing Directorship and is connected with that matter and relates to it.
Under the Code of Criminal Procedure the subject of "Complaints to Magistrates" is dealt with in Chapter XVI of the Code of Criminal Procedure.
The provisions relevant for the purpose of this case are ss.200, 202 and 203.
Section 200 deals with examination of complainants and sections 202, 203 and 204 with the powers of the Magistrate in regard to the dismissal of complaint or the issuing of process.
The scope and extent of sections 202 and 203 were laid down in Vadilal Panchal vs Dattatraya Dulaji Chadigaonker(1).
The scope of enquiry under section 202 is limited to finding out the truth or otherwise of the complaint in order to determine whether process should issue or not and section 203 lays down what materials are to be considered for the purpose.
Under section 103 Criminal Procedure Code the judgment which Magistrate has to form must be based on the statements of the complainant and of his witnesses and the result of the investigation or enquiry if any.
He must apply his mind to materials and from his judgment whether or 354 not there is sufficient ground for proceeding.
Therefore if he has not misdirected himself as to the scope of the enquiry made under section 202, Criminal Procedure Code, and has judicially applied him mind to the material before him and then proceeds to make his order it cannot be said that he has acted erroneously.
An order of dismissal under section 203, Criminal Procedure Code, is, however, no bar to the entertainment of a second complaint on the same facts but it will be entertained only in exceptional circumstances, e.g, where the previous order was passed on an incomplete record or on a misunderstanding of the nature of the complaint or it was manifestly absurd, unjust or foolish or where new facts which could not, with reasonable diligence, have been brought on the record in the previous proceedings have been adduced.
It cannot be said to be in the interests of justice that after a decision has been given against the complainant upon a full consideration of his case, he or any other person should be given another opportunity to have his complaint enquired into Allah Ditta vs Karam Baksh(1), Ram Narain Chaubey vs Panachand Jain(2), Hansabai vs Ananda(3), Doraisami vs Subramania (4).
In regard to the adducing of new facts for the bringing of a fresh complaint the Special Bench in the judgment under appeal did not accept the view of the Bombay High Court or the Patna High Court in cases above quoted and adopted the opinion of Macleam, C. J. in Queen Empress vs Dolegobinda Das (5) affirmed by a full Bench in Dwarka Nath Mandal vs Benimadhab Banerji (6).
It held therefore that a fresh complaint can be entertained where there is manifest error, or manifest miscarriage of justice in the previous order or when fresh evidence is forthcoming.
The Chief Presidency Magistrate in the complaint filed by respondent, held that the second complaint was not unduly delayed; that section 203 is not a bar to the second complaint and that the 355 complaint was not with a view to blackmail the persons accused.
On the merits he held that the minutes of the proceedings of January 16, 1948 were typed on a sheet of paper with Telephone No. "City 6091" and the City Exchange case into existence later in the year and that on his comparing the signatures of N. R. Sarkar it appeared that the signature was a forgery.
He said: "And governing myself by this test, I held that forgery is there prima facie and only prima facie.
" These then were to facts on which the learned Presidency Magistrate Mr. B. Mukherjee came to a conclusion different from that of his predecessor Mr. Chakravorti, who had inquired into the complaint of Pramode Ranjan Sarkar, as to the forged nature of the signatures of Mr. N. R. Sarkar.
Taking first the question of fresh evidence, the view of some of the High Courts that it should be such that it could not with reasonable diligence have been adduced is, in our opinion, a correct view of the law.
It cannot be the law that the complainant may first place before the Magistrate some of the facts and evidence in his possession and if he fails he can then adduce some more evidence and so on.
That in our opinion, is not a correct view of the law.
The next point to be considered is, was the mention of the telephone number "City 6091" on the note paper on which the resolution was typed a matter of which the previous complainant Pramode Ranjan Sarkar was unaware and was it a fact which with reasonable diligence he could not place before the Magistrate.
In the complaint filed by Pramode Ranjan Sarkar no reference was made to the City Exchange.
It is true that the question was sought to be raised as a fresh piece of evidence before Debabrata Mookerjee, J. and it was not 356 considered by him but it was not stated before him when the then complainant came to know of this fact.
According to a copy of the Day Book entry by Mr. Bimal Chandra Chakravarty, Solicitor for the previous complainant Pramode Ranjan Sarkar, dated October 13, 1953, photostat copies were taken of the share transfer deed and portions of the agreement dated January 19, 1948 and inspection of the Minutes Book was also taken but the request of the complainant to take photostat copies of certain resolutions was refused, by the appellant section M. Basu.
It is significant that according to this entry, Santi Ranjan Sarkar was acting as the agent of Pramode Ranjan Sarkar and was present at the time of the inspection.
After this inspection was taken, Pramode Ranjan Sarkar discussed with his Legal Advisers the peculiarities noted in the impugned documents.
This is what he (Pramode Ranjan Sarkar) stated as a witness before the Chief Presidency Magistrate.
His evidence also shows that he inspected the Minutes Book though after much "recriminations." Witness Shibakali Bagchi stated that Minutes Book of N. R. Sarkar & Co. Ltd., was examined by him and that it appeared to him that the book was not genuine and Pramode Ranjan Sarkar complained that some of the signatures were forged.
It appears from the statement of Pramode Ranjan Sarkar that the appellant section N. Basu, did not let them take photographs of some of the pages of the Minutes Book.
It is not stated by either Bagchi or Pramode Ranjan Sarkar of what documents they wanted to take photographs which were refused.
In the statement of Bimal Chandra Chakrabarty, the Solicitor, the same statement is made i. e, they wanted to take photographs of some documents which were not allowed to be taken.
The correspondence produced by Pramode Ranjan Sarkar in his complaint proceedings shows that the Minutes Book was produced for his inspection and was inspected.
Debabrata Mookarjee, J., in dealing with the 357 resolution of January 16, 1948, said that it was not possible on the materials available considered prima facie that the Magistrate 's finding suffered from such a grave impropriety as to require interference by the Court.
He was of the opinion that the complainant could not have been unaware of the resolution of January 16, 1948.
This he concluded from the following; that on his own case Pramode Ranjan managed the affairs of the Company along with the appellant P. N. Taluqdar; that although the proceedings of the Board dated September 22, 1953, referred to the resolution of January 16, 1948 yet the only protest made against it by Pramode Ranjan Sarkar was the alleged legal difficulties consequent on renewal of the appointment but its genuineness was not then questioned and it was questioned for the first time on March 17, 1954, when the complaint was lodged.
Against the judgment and order of Debabrata Mookerjee J., Special Leave to appeal to this Court was obtained and one of the points taken in the application was that the resolution was typed on a sheet of paper bearing Telephone No. City 6091 although this Telephone Exchange did not come into existence till December 28, 1948.
It is significant that Pramode Ranjan Sarkar did not mention when he came to know about the existence of this new fact.
It was not, therefore, made clear to the learned Judge at least upto that stage as to when, before or after the filing of the first complaint Pramode Ranjan Sarkar came to know about the existence of this piece of evidence to which so much importance is attached.
Debabrata Mookerjee, J., also said in his judgment that the affairs of the Company were managed by Pramode Ranjan Sarkar and the appellant P. N. Taluqdar and that it was difficult to believe that he (Pramode Ranjan) had no access to the Minutes Book which showed that he himself 358 had presided over several meetings and also that there was nothing extraordinary about the proceedings being typed on separate sheets of paper and the sheets of paper being pasted in that Minutes Book because on some of them there were his own signatures and it was, difficult to believe that tampering with the records went on "systematically" for several months without Pramode Ranjan Sarkar having seen the book or detected the tampering.
It was, therefore, impossible to blame the previous Chief Presidency Magistrate if he held in those circumstances that there was no forgery in the Minutes Book or tampering with it.
The following passage from the learned Judge 's judgment is significant: "Photographs of the impugned documents were taken on the 13th October when the Minutes Book was inspected.
On the last mentioned date the complainant was certain about the entire book having been tampered with; but nothing appears to have been said about it, no challenge made, no protest entered until full five months passed when at last the silence was broken and the complaint was lodged on the 17th March, 1954.
It is of course not known what was said about it in the information to the police.
These circumstances are explicit in the complainant 's case.
That case has only to be presented for these features to be seen, and the Magistrate could not possible have overlooked them.
His clear finding is that the Minute Book is genuine.
I am not in a position to say it is improper on a prima facie consideration of the evidence offered.
" Dealing with the question whether the signatures of N. R. Sarkar were forged, the learned Judge agreed after considering the whole evidence that the signatures were not forged.
359 The complaint of the present complaint Saroj Rajan Sarkar specifically mention the City Exchange and that it came into existence later.
He also alleges that this fact was not known to the previous complaint, Pramode Ranjan Sarkar, and in support there is the affidavit of Santi Ranjan Sarkar.
Significantly enough in that affidavit also it is not stated as to when the deponent came to know about this alleged new fact of the Telephone City Exchange.
All that the affidavit says is that it is a matter of history and was published in the Statesman of December 29, 1948.
There is no evidence on the record to show as to when the matter of "City Exchange" came to be known to the persons who were then and two those who are now prosecuting the criminal complaints.
The document which we have referred to above i.e., the letter written by the Solicitor dated October 13, 1953 shows that Santi Ranjan Sarkar was present as agent of Pramode Ranjan Sarkar at the time of the inspection.
The complaint filed by Saroj Ranjan Sarkar states: "That with great difficulty the documents in question were inspected, certified true copies of the alleged resolutions of the Board meetings were obtained and photostatic copies of material portions including alleged signatures of late Sri Sarkar on the said Deed of Agreement and on the Deed of Transfer could be obtained, as will appear from correspondence in this respect.
" In the complaint filed by Pramode Ranjan Sarkar exactly the same language was used in paragraph 10 of the previous complaint.
If certified copies were obtained by the complainant Pramode Ranjan Sarkar and inspection was taken by Santi Ranjan Sarkar for Pramode Ranjan Sarkar and by his Solicitor and the facts are as they are 360 stated above, it is difficult to hold that the fact in regard to the City Exchange was not know to the complainant in the first complaint and was a new fact which could not, with reasonable diligence, be adduced by him.
The next question which arises is whether the order of the previous Chief Presidency Magistrate who decided Pramode Ranjan 's complaint, was manifestly absurd or unjust and resulted in a manifestly unjust order.
The Special Bench of the High Court has held that it was so because (1) the Magistrate ignored the evidence of a large number of witnesses who were competent to prove the handwriting and signature of the late Mr. N. R. Sarkar; (2) he "set aside" the report of the enquiring Magistrate, Mr. A.B. Syam for reasons which cannot be held to be proper and judicial reasons; (3) He said in his order that Mr. N. R. Sarkar might himself have ante dated the documents thus accepting a possible defence for which there was no basis before him; and (4) he relied upon his own comparison of the disputed signatures of Mr. N. R. Sarkar.
On these grounds the Special Bench was of the opinion that the decision of the first Magistrate was rather arbitrary and so resulted in manifest miscarriage of justice.
The question is whether Mr. N. C. Chakrabarti, the previous Presidency Magistrate had applied his mind to the evidence which was produced before him and keeping in view his functions as a Magistrate, he gave his decision.
It is not necessary to refer to the various findings given by him.
Thy are set out and considered in the judgment of Debabrata Mookerjee, J. and he (that learned Judge) has commented upon all the infirmities in that order which were brought to his notice.
The previous Chief Presidency Magistrate found that the Deed of Agreement dated January 19, 1948 was not a forged document.
He referred 361 to the evidence without analyzing it.
He said that the complainant examined persons who know the signature of the late Nalini Ranjan Sarkar and they deposed as to the manner in which Nalini Ranjan Sarkar used to sign.
After making a reference to the gist of the evidence submitted before him and to the report of Mr. A. B. Syam, Presidency Magistrate, he (the learned Chief Presidency Magistrate) came to the conclusion: "For the reasons above, I find that the evidence on handwriting including the opinion of the Handwriting Expert does not support the complainant 's version.
" Again in a later part of his order he found that the resolution of the Board of Directors dated January 16, 1948 also was not forged and that the endorsement of the appellant section M. Basu, was nothing more or less then the authentication of the common seal of the Co., and he, therefore, agreed with the finding of Mr. A.B. Syam that there was no case against section M. Basu, appellant but disagreed with him in regard to the other appellant, P. N. Talukdar.
When the matter went to the High Court, Debabrata Mookerjee, J., first considered as to when the revisional power of Court to interfere should be exercised.
Then he discussed the seven circumstances which were relied upon by the then complainant Promode Ranjan Sarkar in support of the allegations of forgery.
After dealing with these various points raised he held: "It may be that one or two items of evidence were not specifically referred to in the Order but that does not necessarily imply that those items of evidence were not present to the mind of the Magistrate.
After all a Magistrate is only required to record briefly his reasons for dismissing 362 a complaint.
The Magistrate 's order, I think, is fairly well.
" The learned Judge then discussed the question of delay and held that Pramode Ranjan Sarkar had considerably delayed the bringing of the complaint.
He also held that the Deed of Agreement which was alleged to be a forgery had not been so proved and he gave various reasons, one of them being that at the meeting of the Board of Directors dated September 22, 1953, the then complainant did not oppose the renewal on the ground that the Agreement was forged or did not exist, but on legal grounds.
Then the learned Judge referred to the correspondence which had passed between the then complainant Pramode Ranjan Sarkar and the appellant P.N. Talukdar and said: "It is therefore clear that the evidence which the complainant offered in support of his case contained prima facie on the first aspect sufficient materials for distrusting the truth of the story and I cannot see how the Magistrate 's order can be challenged in revision on the ground of impropriety as respects the Deed of Agreement.
The learned Judge then referred to other aspects of the case i.e., the evidence of the Deputy Controller of Stationery, P.W. 15.
He also referred to finding of the previous Chief Presidency Magistrate that it was difficult to believe that the complainant should have been unaware of the resolution of January 16, 1948 and after referring to all these various questions raised, he dismissed the petition.
Can it be said in these circumstances that there has been a manifest error resulting in the passing of an unjust order ? That in our opinion, has not been made out.
The order of Debabrata Mookerjee J., who reviewed the findings of the previous Chief Presidency Magistrate, shows that the criticism that that the learned Magistrate did not 363 consider the whole evidence is not justified.
Taking the evidence into consideration he came to the conclusion that there was no ground to proceed and, therefore, refused to issue process.
In his opinion the evidence was not worthy of credit and he was not satisfied with the correctness of the complaint and dismissed it as he was entitled to do on those findings.
See Gulab Khan vs Gulam Mohammad Khan (1) which was approved in Vadilal Panchal v Dattatraya Dulaji Chadigaonker(2).
In the circumstances the order made by the previous Chief Presidency Magistrate was not any manner manifestly absurd unjust or foolish, nor can it be said that the Magistrate ignored in any principles which were necessary to apply under sections 202 and 203 of the Criminal Procedure Code nor is the order contrary to what was said in Ramgopal Ganpatrai Ruia vs State of Bombay (3).
That was a case in which the rule in regard to the commitment proceedings and the power of the Committing Magistrate to commit was discused and the expression "sufficient grounds" in sections 209, 210 and 213 of the Code of Criminal Procedure was interpreted.
That was not a case dealing with the powers of the Magistrate under sections 202 and 203 which was specifically raised and decided in Vadilal Panchal 's case (3).
In Ramgopal Ganpatrai Ruia 's case (3) the following observations of Sinha J., (as he then was) in regard to the expression "sufficient grounds" are pertinent: "The controversy has centred round interpretation of the words "sufficient ground", occurring in the relevant sections of the Code, set out above.
In the earliest case of Lachman vs Juala All. 161, decided by Mr. Justice Mahmood in the Allahabad High Court, governed by section 195 of the Criminal Procedure Code of 364 1872 (Act No. X of 1872), the eminent judge took the view that the expression "sufficient grounds" has to be understood in a wide sense including the power of the magistrate to weigh evidence.
In that view of the matter, he ruled that if in the opinion of the magistrate, the evidence against the accused "cannot possibly justify a conviction" there was nothing in the Code to prevent the Magistrate from discharging the accused even though the evidence consisted of statements of witnesses.
who claimed to be eye witnesses, but whom the magistrate entirely discredited.
He also held that the High Court could interfere only if it came to the conclusion that the Magistrate had committed a material error in discharging the accused or had illegally or improperly underrated the value of the evidence.
Thus, he overruled the contention raised on behalf of the prosecution that the powers of the committing Magistrate did not extent to weighing the evidence and that the expression "sufficient ground" did not include the power of discrediting eye witnesses.
Though the Code of Criminal Procedure was several times substantially amended after the date of that decision, the basic words "sufficient grounds" have continued throughout.
That decision was approved by a Division Bench of the Bombay High Court In re Bai Parvati Bom.
163 and the observations aforesaid in the Allahabad decision were held to be an accurate statement of the law as contained in section 201 of the Code, as it now stands.
The High Court of Bombay held in that case where the evidence tendered for the prosecution is 365 totally unworthy of credit, it is the duty of the Magistrate to discharge the accused.
It also added that where the magistrate entertains any doubt as to the weight or quality of the evidence, he should commit the case to the Court of Session which is the proper authority to resolve that doubt and to assess the value of that evidence." Debabrata Mookerjee J., in the revision against the order of the previous Chief Presidency Magistrate accepted the finding of that Magistrate in regard to the delay.
The present complaint out of which this appeal has arisen was filed after the appeal in this Court arising out of this complaint was withdrawn by Pramode Ranjan Sarkar.
Can it be said that this is not an abuse of the process of tho Court one brother who was a director of the Company and who would be interested in the Managing Directorship of the Company and the resolutions passed in regard to that office, brought a complaint in 1954 which was dismissed both by the Magistrate and the High court.
Appeal against the order of dismissal brought in this court was withdrawn on March 12, 1959.
It was alleged in his complaint by Pramode Ranjan Sarkar that the present respondent was celluding with appellant, P. N. Talukdar, who had offered his some kind of monetary inducement and that fact was deposed to by the present respondent himself as a witness in the previous complaint.
He waited all this time although he knew about the forged signatures of his late brother on various documents and after at least the lapse of five years he brought a fresh complaint on the same facts.
Neither he has disclosed as to when he came to know about the City Exchange nor have Santi Ranjan Sarkar and Pramode Ranjan Sarkar, which cannot therefore be said to be a fact which could not with reasonable diligence be adduced at the time of the previous complaint.
366 The argument that this Court gave Special Leave in the case of Pramode Ranjan Sarkar and therefore there were points of importance is, in the circumstances of this case, a neutral circumstance and that fact cannot be used as a point in favour of the respondent.
In these circumstances, we are of the opinion that the bringing of the fresh complaint is a gross abuse of the process of the Court and is not with the object of furthering the interests of justice.
In regard to the power of reference to a larger Bench, we are in agreement with section K. Das, J, and in the circumstances it is unnecessary to express an opinion as to the applicability of section 196A Criminal Procedure code to the facts of this case.
For these reasons we allow the appeals, set aside the order of the High Court and of the learned Chief Presidency Magistrate and dismiss the complaint.
BY COURT: In accordance with the judgment of the majority, the appeal is allowed.
Appeal allowed.
[/INST]On March 17, 1954, Promode Ranjan a brother of N. R. Sarkar filed a complaint under section 200 Code of Criminal Procedure against Pramathanath and section M. Basu alleging offences punishable under sections 467, 471 and 109 of the Indian Penal Code, before the Chief Presidency Magistrate in respect of a document appointing Pramathanath as the Managing Director of N. R. Sarkar & Co. and the minutes of the Board meeting resolving the same.
It was alleged therein that the signatures of N. R. Sarkar on those documents were forgeries.
After considering the evidence of the Handwriting Expert the Magistrate dismissed the complaint.
Promode Ranjan preferred a revision petition to the High Court.
The High Court dismissed the revision Petition.
By an application dated January 6, 1956, when the revision petition was pending, attention of the High Court was drawn to the fact that the minutes dated January 16, 1948, had been typed on a letter bearing at the top in print "Telephone City 6091" where as the City Exchange had not come into existence till December 1948.
The Supreme Court granted special leave against the dismissal of the revision petition by the High Court but the appeal was withdrawn.
On April 3, 1959, Saroj Ranjan, another brother of N.R. Sarkar, laid a complaint on the same facts and allegations 298 against the appellants, in addition alleging the further fact about the City Exchange in support of the allegation that the minutes were forged dishonestly and fraudulently and used as genuine.
Neither in this complaint nor before the High Court had it been stated as to when it came to be known that on the purported date of the minutes the City Exchange was not in existence.
The Presidency Magistrate issued process against the appellants.
The appellants went up in revision to the High Court.
The matter was first heard by a Division Bench and was later referred to a larger Bench of three Judges which dismissed the revision petition.
In these appeals on special leave it was contended by the appellants that the second complaint ought not to have been entertained, that the constitution of the special Bench was illegal and that as the complaint alleged criminal conspiracy sanction under section 196A of the Code of Criminal Procedure was required.
^ Held, that the enquiry contemplated by sections 200 to 204 Code of Criminal Procedure is for the purpose of enabling the Magistrate to find out if sufficient grounds exist for issuing process.
Vadilal Panchal vs Daltaraja Dulaji Chandigaonkar, , Gulab Khan vs Gulab Mohammad Khan A.I.R. 1927 Lah.
30 and Ram Gopal Ganpat Ruia vs State of Bombay, referred to.
Per section K. Das, J.
The law does not prohibit altogether the entertainment of a second complaint when a previous complaint on the same allegations has been dismissed under section 203 of the Code of Criminal Procedure.
But a second complaint containing more or less the same allegations can be entertained only in exceptional circumstances.
It is not possible nor desirable that the exceptional circumstances must be stated with particularity or precision.
Generally speaking, the exceptional circumstances may be classified under three categories: (1) manifest error in the earlier proceeding, (2) resulting miscarriage of justice, and (3) new facts which the complainant had no knowledge of or could not with reasonable diligence have brought forward in the previous proceedings.
Where the previous order of dismissal was passed on an incomplete record or on a misunderstanding of the nature of the complaint, a second complaint may be entertained.
Where a Magistrate misdirects himself as to the scope of an enquiry under s 202, Code of Criminal Procedure, and the mistake, made gives a wrong direction to the whole proceeding on the first complaint, the order of dismissal passed thereon would be due.
to a manifest error resulting in a miscarriage of justice.
In such a case, a second complaint is entertainable.
299 Per Kapur and Hidayatullah, JJ.
There is no legal bar to the entertainability of a second complaint.
It is only when the Magistrate had misdirected himself, with regard to the scope of the enquiry under section 203, Code of Criminal Procedure, or has passed an order misunderstanding the nature of the complaint or the order is manifestly unjust or absurd or the order is based on an incomplete record can it be said that there is such a manifest error or a manifest miscarriage of justice that a second complaint on the same allegations may be entertained.
The other exceptional circumstances in which a second complaint may be entertained is when it is supported by fresh and further evidence.
Case law referred to.
In the case of fresh evidence it must be such as could not have been with due diligence on the part of the complaint adduced on the earlier occasion.
Queen Empress vs Dole Gobinda Das I.L.R , Dwarkanath Mandal vs Daniradha banerjee, I.L.R. disapproved.
Allah Ditta vs Karam Bakshi, Ram, Narain Chowdhary vs Punachand Jain, AIR 1949 Pat. 255, Hansabai vs Ananda, A.I.R. 1949 Bom.
384 and Doraiswami vs Subramania, A I. R. , approved.
In the present case permitting the second complaint to proceed would be a gross abuse of process.
Held, further, concurring with S.K. Das, J., that the Special Bench was properly constituted.
Per section K. Das, J.
On the first complaint the Presidency Magistrate had misdirected himself regarding the scope of the enquiry under sections 203 and 204 of the Code of Criminal Procedure and it was a manifest error.
The facts about the City Exchange urged and fresh evidence were decisive of a prima facie case for issuing process and it was an exceptional circumstance justifying entertaining the second complaint and not to permit the trial of the case in such circumstances would be a denial of justice.
Kumariah vs C. Naicker, A.I.R. 1946 Mad, 167 and Ramanand vs Sheri, I.L.R. 1. 56 All 425, referred to.
Though Chapter II of the Rules of the High Court (Appellate Side) in terms applies to Civil cases, their substance could be applied to criminal cases by the Chief Justice in constituting a larger bench.
The substance of the allegations in the complaint amounted to an offence of abetment by conspiracy under 300 section 107 Indian Penal Code and not the offence of Criminal Conspiracy as defined by section 120A and therefore sanction under section 196A of the Code of Criminal Procedure was not necessary.
The distinction between the two offences lies in that the first requires an overt act in pursuance of the agreement whereas the second makes the agreement to do the unlawful act itself punishable.
Basirul Hag vs State of West Bengal and Mulachy vs The Queen, , referred to.
</s> |
<s>[INST] Summarize the judgementAppeal No. 92 of 1954.
Appeal from the judgment and order dated January 28, 1953, of the ' Calcutta High Court in Award Case No. 105 of 1952.
M. C. Setalvad, Attorney General for India, B. Sen, P. D. Himatsinghka and B. P. Maheshwari, for the appellant.
N. C. Chatterjee, M. 0.
Poddar and Ganpat Rai, for the respondent.
January 20.
The Judgment of the Court was delivered by DAS, C. J.
This is an appeal filed upon a certificate of fitness granted by the High Court of Calcutta impugning the judgment pronounced by the said High Court on January 23, 1953, declaring null and void an award (No. 209 of 1952) made by the Bengal Chamber of Commerce in case No. 855 of 1951, whereby they ordered the respondent company to pay to the appellant company a sum of Rs. 1,95,000 besides interest and costs.
The facts giving rise to the present appeal are simple and may briefly be summarised as follows: On April 6, 1951, the appellant company entered into a contract with the respondent company for the supply of 5,000 maunds of Nikhli and/or Ashuganj Jute on certain prices according to quality, " shipment during July and/or August, 1951, guaranteed ".
That contract, which was entered into by bought and sold notes exchanged between the parties through brokers, con tained a very wide arbitration clause.
When shipping documents were presented to the respondent company by the bankers of the appellant company, they were not honoured on the plea that the same were not in order and the respondent company failed to take delivery of the goods.
The last date on which the 81 documents were so presented was September 17, 1951.
On September 26, 1951, the appellant company, through their solicitors, wrote to the respondent company intimating that they had exercised their option of cancelling the contract and demanding the payment of the sum of Rs. 1,95,000 as damages on the basis of the difference between the contract price and the market price of the goods as on September 17, 1951.
The respondent company having by their letter dated October 25, 1951, denied their liability to pay any amount, the appellant company on November 2, 1951, referred the dispute to the arbitration of the Bengal Chamber of Commerce in terms of the arbitration clause contained in that contract.
The respondent company submitted to the jurisdiction of the Tribunal of arbitration by appearing and adducing evidence before it.
On February 29, 1952, the arbitrators made their award by which they allowed the claim of the appellant company in full with interest and costs.
The award having been filed in the Calcutta High Court on April 23, 1952, the respondent company on June 9,1952, filed an application in that Court praying, inter alia, that the award be declared null and void and be set aside.
The main ground urged in that application was that the award was a nullity in that the contract containing the arbitration clause was void under the provisions of the Raw Jute (Central Jute Board and Miscellaneous Provisions) Act, 1951, (W. Ben.
VI of 1951) which was then in force.
In order to appreciate the points raised before the High Court and before us it is necessary at this stage to refer to some of the statutory provisions bearing on the question.
To regulate the prices of jute and to empower the Government to fix its maximum prices, the West Bengal Legislature passed an Act called the West Bengal Jute (Control of Prices) Act, 1950, (W. Ben.
VI of 1950) which came into force on March 15,1950.
On December 14,1950, the Government of West Bengal promulgated an Ordinance called the Raw Jute (Central Jute Board and Miscellaneous Provisions) 82 Ordinance, 1950 (XVII of 1950) for the better regulation of the jute trade.
The preamble to that Ordinance recited that, as the owners of jute mills were not being able to secure adequate supplies of jute on the maximum prices fixed under the West Bengal Jute (Control of Prices) Act, 1950, it had become expedient to set up a Central Jute Board in West Bengal for ensuring an equitable supply of raw jute to the owners of the jute mills.
That Ordinance consisted of only 15 sections.
Section.4 of that Ordinance provided for the constitution of the Central Jute Board.
Section 5 was expressed in the following terms : " 5.
(1) No person shall sell or agree to sell raw jute to the owner of a jute mill and no owner of a jute mill shall buy or agree to buy raw jute save and except in pursuance of a contract for the sale or the supply of raw jute entered into in the manner provided in section 6.
(2) Any contract entered into for the sale or the supply of raw jute with the owner of a jute mill save and except in the manner provided in section 6 shall be void and of no effect.
(3) Any person contravening the provisions of sub section (If shall be guilty of an offence under this Ordinance and shall be punishable with imprisonment which may extend to six months or with fine or with both.
" Section 6 laid down the manner in which all contracts for the sale or supply of raw jute with the owners of jute mills were to be entered into.
Section 7 ran as follows: " 7.
(1) No person shall deliver or cause to be delivered to the owner of a jute mill and no owner of a jute mill shall accept or cause to be accepted any raw jute save and except in pursuance of a contract for the sale or the supply of raw jute entered into in the manner provided in section 6.
(2) Any person contravening the provisions of sub section (If shall be guilty of an offence under this Ordinance and shall be punishable with imprisonment which may extend to six months or with fine or with both.
83 (3) The provisions of section 5, section 6, and this section shall have effect on and from the appointed day.
" The expression " appointed day " occurring in section 7 (3) quoted above was thus defined in section 2 (1) of that Ordinance : " 2 (1) I appointed day ' means the date specified by the State Government by notification in the Official Gazette as the appointed day for the purpose of this Ordinance; " By a notification dated December 29, 1950, published in an extraordinary issue of the Calcutta Gazette of the same date, December 30, 1950, was specified as " the appointed day for the purposes of sections 5, 6 and 7 of the said Ordinance.
" The said Ordinance was subsequently replaced by an Act called the Raw Jute (Central Jute Board and Miscellaneous Provisions) Act (W. Ben.
Act VI of 1951), hereinafter referred to as " the Act ", which came into force on March 21., 1951.
The first fifteen sections of the Act were almost verbatim reproductions of the fifteen sections of the Ordinance and only one new section was added as the sixteenth section reading as follows: " 16.
The Central Jute Board constituted, any rule made, any notification or licence issued, any direction given, any contract entered into, any minimum price fixed, anything done or any action whatsoever taken under the Raw Jute (Central Jute Board and Miscellaneous Provisions) Ordinance, 1950, shall, on the said Ordinance ceasing to operate, be deemed to have been constituted, made, issued, given, entered into, fixed, done or taken under this Act as if this Act had commenced on the 14th day of December, 1950.
" The Act was in force at all times material to these proceedings though the same was subsequently repealed on August 5, 1952.
It may be mentioned here that both when the Ordinance was in force and after the Act had come into operation, the Central Jute Board issued a, series of circulars by which it authorised the owners of jute mills to purchase raw jute up to the extent of quotas 84 respectively allotted to them through " normal trade channels " subject to their furnishing particulars of the contracts and of deliveries under them to the Board.
The contract in question was entered into through " normal trade channels " and not in the manner specified in the said Act or the rules framed thereunder.
Indeed, it is conceded that no application had been made by the appellant company to the Board under section 6(1) of the Act, that the Board did not, under section 6(2) of the Act select any jute mills as buyers of these goods, that the respondent company had not signified in writing to the Board its intention to buy the raw jute in question, that the Board did not specify a date within which the contract was to be entered into and that, finally, the delivery period fixed in the contract was in contravention of the provisions of the Act and the rules and, therefore, the contract was void under section 5(2) of the Act, if sections 5, 6 and 7 were in force at the date of the contract.
The respondent company 's aforesaid application for setting aside the award having come on for hearing, the learned Single Judge sitting, on the Original Side reported the matter, under r. 2 of ch.
V of the Original Side Rules, to the Chief Justice for forming a larger Bench for hearing of the said application.
A Special Bench was accordingly constituted by the Chief Justice and the application came up for hearing before that Bench.
Three points were urged before the High Court, namely, (1) that the Act was ultra vires the Bengal Legislature; (2) that even if the Act were intra vires sections 5, 6 and 7 of the Act were never brought into force and (3) that there was a subsequent independent agreement to refer the disputes to the arbitration of the Bengal Chamber of Commerce.
The High Court negatived all the contentions raised by the appellant company and by its judgment dated January 23, 1953, allowed the application and declared the award to be null and void, but directed the parties to bear their own costs.
This appeal, as already stated, has been filed against the judgment of the High Court upon a certificate of fitness granted by the High Court.
85 The learned Attorney General appearing in support of this appeal has urged before us only the second point urged before the High Court, namely, that even if the Act were intra vires sections 5, 6 and 7 had never been brought into force and, therefore, the contract in question containing the arbitration clause was valid and consequently the award was binding and enforceable.
He does not dispute that, by virtue of section 16 of the Act, the notification issued on December 19, 1950, under section 2(1) of the Ordinance has to be deemed to have been issued under the Act, but he contends that even so the notification dated December 29, 1950, cannot be read as having brought sections 5, 6 and 7 of the Act into force, for it, in terms, specified December 30, 1950, as the appointed day " for the purposes of sections 5, 6 and 7 of the Ordinance ".
He urges that this Court has to take the notification made under the Ordinance as it finds it and then, under section 16 of the Act, to deem it to have been made under the Act.
According to him the fiction created by section 16 ends as soon as the notification is deemed to have been made under the Act and goes no further.
He concludes, on the authority of the decisions in Hamilton and Co. vs Mackie and Sons (1) and T. W. Thomas & Co. Limited vs Portsea Steamship Company Limited (2), that, on a plain reading of it, the notification, when it is deemed to have been made under the Act, makes no sense, for it does not purport to bring any of the sections of the Act into force but expressly brings sections 5, 6 and 7 of the Ordinance into force.
He submits that it is not for the court to alter the terms of the notification so as to make it possible to read it as a notification made under the Act.
We are unable to accept this line of argument.
The decisions relied on by the learned Attorney General can have no application to the pre sent case.
In those cases there was no statutory provision for deeming the provision of the charter party referring all disputes under the charter party to arbitration as an integral part of the provisions of the bill of lading and, therefore, the only thing to be done in those cases was to lift bodily the relevant provision (1) (2) 86 of the charter party and to insert it in and to read it as a part of the bill of lading.
It was held that so read it became insensible, for an arbitration clause referring all disputes arising out of the charter party was wholly out of place and meaningless as a term of the bill of lading.
A cursory perusal of section 16 will, however, show that there are two fictions created by that section: One is that the Act shall be deemed to have commenced on December 14, 1950, and the other is that the notification issued under the Ordinance shall be deemed to have been issued under the Act.
If the Act fictionally commenced on December 14, 1950, then the Ordinance would have to be treated as not promulgated at all, for the two could not have coexisted and when the Act provided that the notification, which, for identification, is described as having been issued under the Ordinance, should be deemed to have been made under the Act then, unless we read the word " Ordinance " 7 as " Act ", we do not give full effect to the twin fictions created by the Act.
In other words the creation of the statutory fictions compels us to adopt the principle of mutatis mutandis and to substitute the word " Act " for the word " Ordinance " used in the notification, so as to give full effect to the fictions created by the statute.
We see no reason in support of the contentions of the Attorney General that the fiction raised by section 16 stops short at mere issuing of the notification.
The ambit of the fiction appears to us to cover not only the issuance of the notification but to extend to our reading it as having been one issued under the Act.
We cannot read it as having been issued under the Act unless we read the word " Ordinance " used in the notification as " Act ".
No other point has been urged before us and for reasons stated above this appeal must be dismissed.
In view of the circumstances referred to in the judgment of the High Court and appearing in the record we make no order for costs of this appeal.
Appeal dismissed.
[/INST]Can the Full Bench formula for calculation of bonus apply to a claim of bonus made by workmen engaged in electricity con cerns and undertakings ? That was the question raised for decision in this appeal.
A Special Bench of the Labour Appellate Tribunal held in the affirmative and the correctness of its decision was challenged in this appeal.
It was contended on behalf of the appellant company that the Electricity Supply Act, 1948 (54 Of 1948) was a self contained code intended to regulate the business and affairs of electricity concerns and that Act and not the formula applied to a claim of bonus by the workmen in an electricity concern.
(1) (1933] , 201.
69 Held, that the Special Bench had taken a correct view of the matter and its decision must be upheld.
It is evident from the provisions of the Electricity Supply Act, 1948, and its schedules that the respective fields of operation of the Act and of the principles of industrial adjudication are wholly different, and so there can be no conflict between them and their relevance and validity in their own spheres are beyond question.
While the Full Bench formula seeks to ensure social justice to workmen by apportioning a share of the profits to them and thus minimise the gap between the actual and the living wages, the Act does not provide for wages at all.
But it is improper to suggest on that basis that the workmen in electricty undertakings can be denied social justice.
just as the relevant industrial principles have to be applied for framing a wage structure for such workmen so also must the problem of bonus be solved in a like manner.
The working sheet prepared under the method of accounting required by the Act can be no basis for calculation of the amount of bonus since it is not possible to ascertain the gross profit therefrom and the Full Bench Formula has to be applied on the basis of the profit and loss account which a company has to keep under the Companies Act.
Bayoda Boyough Municipality vs Its Workmen.
[1957] S.C.R. 33, referred to.
Moreover, the intention of the Legislature in enacting cl.
(vi) of paragraph 17(2)(b) of Sixth Schedule to the Act clearly 'was to include a claim of bonus is within the expenses covered by it and it was to set at rest any possible doubt on that score that cl.
(xiii) was added by a subsequent amendment.
</s> |
<s>[INST] Summarize the judgementminal Appeal No. 236 of 1969.
Appeal by special leave from the judgment and Order dated March 13, 1969 of the Madhya Pradesh High Court in Miscella neous Criminal Case No. 268 of 1967.
Ram Punjwani and P. C. Bhartari, for the appellant.
R. P. Kapur and I. N. Shroff, for the respondent.
393 The Judgment of the Court was delivered by Mitter J.
, This appeal by special from a judgment and order of the High Court of Madhya, Pradesh dismissing the ' writ petition of the appellant challenging the, order of the State Government under section 5 of the (Act XXIII of 1961) forfeiting the copies of a book published by the appellant under section 4(1) of the Act, can be disposed of on the short ground that the order did not disclose the grounds of the opinion formed by the State Government.
The Criminal Law (Amendment) Act, 1961 (hereinafter referred to as the 'Act ') empowered the State Governments by section 4 to make order declaring any newspaper or book as defined in the Press and Registration of Books Act, 1867 or any other document wherever printed, to be forfeited to the Government if it appeared to the Government that the said book etc.
questioned the territorial integrity or frontiers of India in a manner which was or was likely to be prejudicial to the interests of the safety or security of India.
The relevant provisions of the Act are as follows : " section 2.
Whoever by words either spoken or written, or by signs, or by visible representation or otherwise, questions the territorial integrity or frontiers of India in a manner which is, or is likely to be prejudicial to the interests of the safety or security of India, shall be punishable with imprisonment for a term which may extend to three years, or with fine, or with both.
(1) Where any newspaper or book as defined in the Press and Registration of Books Act, 1867, or an other document,_ wherever printed, appears to the State Government to contain an matter the publication of which Is punishable under section 2 or sub section (2) of section 3, the State Government may, by notification in the Official Gazette, stating the grounds of its opinion, declare every copy of the issue of the newspaper containing such matter and every copy of such book or other document to be forfeited to the Government, and thereupon any police officer may seize the same wherever found and any Magistrate may, by warrant authorise any police officer not below the rank of Sub Inspector to enter upon and search for the same in any premises where any copy of such issue or any copy of such book or other document may be or may be reasonably suspected to be.
(1) Any person having any interest in any news book or other document in respect of which an forfeiture has been made under section 4 may, within two months from the date of such order, apply to 394 the High Court to set aside such order on the ground that the issue of the newspaper, or the book or other document in respect of which the order was made did not contain any matter of such a nature) as is referred to in sub section (1) of section 4.
(2) The provisions of sections 99 C to 99 F of the Code of Criminal Procedure, 1898, shall apply in relation to an application under sub section (1) as they apply in relation to an application under section 99 B of that Code and the reference in section 99 D to seditious or other matter of such a nature as is referred to in subsection (1) of section 99 A of that Code shall be construed as reference to any matter of such a nature as is referred to in sub section (1) of section 4 of this Act.
(3) No order passed or action taken under section 4 shall be called in question in any Court otherwise than in accordance with the provisions of this section.
" The appellant who was admittedly the proprietor of the Narmada Printing Works, Jabalpur had published a book under the name and style of "Madhyamic Bhoogol (Part I for Classes IX and X) written by C. P. Saxena.
On 1St July, 1967 the State Government passed the order which is impugned in this case: "Whereas the books specified in the Schedule below question the territorial integrity and frontiers of India in a manner which is likely to be prejudicial to the interest of the safety and security of India; And whereas it appears to the State Government that the said three books contain matter the publication of which is punishable under section 2 of the (No. 23 of 1961); Now therefore in exercise of the powers conferred by, sub section (1) of section 4 of the Act, the State Government hereby declares every copy of the said three books and all other documents containing copies, reprint and repro duction of the said books to be forfeited in favour of the Government.
" The second item in the Schedule relates to the appellant 's publication From the communication of the Deputy Secretary to the Government of Madhya Pradesh dated 5th August 1967 it would appear that the State Government took objection to pages 138, 147 and 149 of the said book as containing wrong maps.
395 According, to the said communication : "These books contain maps of India, part of India, maps of countries adjacent to India and maps of Asia.
All these maps involve the external boundary of India which has been found to be grossly incorrect.
Besides this, the island territories of 'Laccadive, Minicoy and Amindivi Islands ' which form an integral part of India are omitted together from every map of India.
In some of the maps the territory of Bhutan has been omitted while in other Indo Pakistan boundary is ignored.
" The communication refers not only to the publication with which we are concerned in this case but also two other publications both of which appear to be books on geography for school students.
The appellant filed his writ petition on August 29, 1967 before High Court challenging the order of the 1st July 1967 inter alia on the ground That the grounds for the opinion of the State Government which had to be given in terms of section 4 of the Act were non existent in the order.
He therefore filed the petition, within two months of the date of the order forfeiting the book in terms of section 5 of the Act.
In the counter affidavit of the State the stand taken was that the State Government was not bound to place details of information on the basis of which its satisfaction was arrived at.
Reference was however made 'in the counter affidavit to a communication of the Director of Map Publications to the Director of Public Instruction dated 21st March 1967 in which it was stated with regard to all the three alleged offending books that "they contain maps of India, part of India, maps of countries adjacent to India and maps of Asia.
All these maps involve the external boundary of India which has been found to be grossly incorrect.
Besides this, the island territories of 'Laccadive, Minicoy and Amindivi islands ' which form an integral part of India are omitted together from every map of India.
In some of the maps the territory of Bhutan has been omitted while in other Indo Pakistan boundary is ignored.
" The High Court of Madhya Pradesh took the view that the impugned order could not be said to have omitted to state the grounds for the opinion of the State Government.
According to the High Court : "the grounds on which the said opinion was based were that the books contained matter which questions the territorial integrity and frontiers of India in a manner which is likely to be prejudicial to the interest of the safety and security of India." 8 L1286SupCI/72 396 In our view the High Court had clearly gone wrong in this view of the law on the subject.
According to the Oxford Dictionary the meaning of the word 'ground ', in this connection must be "base, foundation, motive, valid reason.
" what the State Government did in this case in the opening paragraph of the order was merely to quote a portion of the words of section 2 namely, that the books "questioned the territorial integrity and frontiers of India in a manner which is likely to be prejudicial to the interest of the safety or security of India".
The order gives no indication of the facts or the statements or the representations contained in the book which according to the State Government offended section 2.
In the order itself there is no reference to any map or any text in the book which would come within the mischief of the said section.
A book may contain matter questioning the territorial integrity and frontiers of India in many ways one of which may be a wrong map which does not show the proper boundaries of India, either by omitting a portion of the Indian territory therefrom or by depicting a portion of what is really Indian territory as belonging to some other State.
A book may also come within the mischief of section 2 if there is any express reference in the text containing suggestions based on historical or political or other reasons that some portion of what is generally known to the public as Indian territory is not so.
There is a considerable body of statutory provisions which enable the State to curtail the liberty of the subject in the interest of the security of the State or forfeit books and documents when in the opinion of the Government, they promote class hatred, religious intolerance, disaffection against the State etc.
In all such cases, instances of some whereof are given below the State Government has to give the grounds of its opinion.
Clearly the grounds must be distinguished from the opinion.
Grounds of the opinion must mean the conclusion of facts on which the opinion is based.
There can be no conclusion of fact which has no reference to or is not ex facie based on any fact.
The provisions of the Act have a close parallel in section 99 A of the Code of Criminal Procedure, 1898 in which a large number of matters are mentioned which according to the Government may lead it to form the opinion that the publication offended the said section.
There are also decisions under the Indian Press Act which illustrate what the grounds in a case like this must be.
In re.
Mahomed Ali(1), a case of an order of forfeiture of a pamphlet under the Press Act of 1910, the order of Government went to show that the pamphlet "Come over to Macedonia and help us" contained words of the nature described in section 4 sub section
(1) of the (1) 41 Calcutta 466.
397 Indian Press Act, 19 1 0 inasmuch as they are likely to bring into hatred or contempt certain classes of His Majesty 's subjects in British India.
According to Jenkins C.J. (p. 476): "Those responsible for this Act foresaw this, and so they specifically provided that the forfeiting notification should state the grounds of the Local Government 's opinion.
But when we turn to the notification no such grounds are stated; nothing in the nature of a fact is set forth, there is merely a citation of those words of the section which are invoked.
But the repetition of an opinion cannot be its grounds, and yet that is all that the notification furnishes in the shape of grounds.
This is obviously insufficient and not a compliance with the terms of the Act.
" According to the other learned Judge Stephen, J. (p. 487) "The ground of an opinion must in this case, if not always, be a fact or facts, and no fact is disclosed merely by a specific relation of the elements that the law requires to be present in order for legal consequence to follow.
" In Arun Ranjan Ghose vs State of West Bengal(1) a case under sections 99 A and 99 D of the Code of Criminal Procedure it was stated by Chakravartti, C.J. (p. 497): "It is useful to consider here what is meant by grounds of opinion.
The formation of an opinion by Government is undoubtedly the ground for the action taken by them, but the grounds for the opinion are obviously different.
The opinion, after it has been formed, furnishes a ground to Government for taking action contemplated, but the grounds on which the opinion itself is formed are and must be other grounds ' Those grounds must necessarily be the import or the effect or the tendency of matters contained in the offending publication, either as a whole or in portions of it, as illustrated by passages which Government may choose.
" In Harnam Das vs State of Uttar Pradesh (2 ) the order under section 99 A of the Code of Criminal Procedure which was made went to show that the State Government declared the books forfeited on the ground that the said books contained matter the publication of which was Punishable under section 153 A and 295 A of the Penal Code.
The two sections of the Indian Penal Code have little in common inasmuch as section 153 A relates to an offence of (1) (2) 398 promotion or attempt to promote feelings of enmity or hatred between different classes of citizens of India and section 295 A relates to an offence maliciously intended to outrage he religious feelings of any such class by insulting the religion or the religious belief of that class.
The order which was considered by the court in that case gave no indication which formed the reason for Government taking the view that the book should be forfeited.
The Court held that the order did not as it should have stated the rounds of opinion.
It is not known which communities were alienated from each other or whose religious beliefs were wounded.
We may also refer to article 22(5) of the Constitution which lays down that when any person is detained in pursuance of an order made under any law providing for preventive detention, the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.
In considering the question as to what the grounds of detention meant when an order under Preventive Detention Act was made this Court said in Naresh Chanra, Ganguli vs The State of West Bengal & others(1): " .
the grounds for making an order of detention, which have to be communicated to the detenu as soon as practicable, are conclusions of facts, and those conclusions of facts have to be communicated to the detenu as soon as may be.
" We may also refer to the judgment of this Court in State of Bombay vs Atma Ram Sridhar Vaidya(2), a case under the Pre ventive Detention Act, Kania C.J. said (p. 178): "By their very nature the grounds are conclusions of facts and not a complete detailed recital of all the facts .
These conclusions are the "grounds" and they must be supplied. ' ' All the above decisions in our opinion clearly show what the requirements of the are and it appears to us that the State Government merely gave it 's opinion and not the grounds for its opinion.
As such the judgment of the High Court must be set aside and the order of Government dated July 1, 1967 must be quashed.
The appellant will be entitled to return of all the books forfeited.
V.P.S. Appeal allowed.
(1) at 421.
[/INST]Differences having arisen among members of a family governed by the Aliyasantana Law, all the major members of the family except one referred the disputes to arbitration.
As per the authority given to the arbitrators the arbitrators had to decide the disputes in accordance with the Aliyasantana Law of inheritance, according to which, partition was impermissible except with the consent of all the adult members of the family.
The arbitrators were not required to divide the Kutumba properties on Kavaru basis; but the arbitrators divided the properties between the two Kavarus, which were then in existence in the family, in order to avoid disputes and to fix the responsibility for income, and loss.
There was an award decree in terms of the award, Thereafter, the members of one Kavaru filed a suit for partition under section 35 of the Madras Aliyasantana Act, 1949, and the appellants and some other members of the other Kavaru, contended that the Kutunba had been partitioned by the award, decree or, that the arrangement thereunder was a deemed partition under section 36(6) of the Act.
The trial court dismissed the suit, but the High Court, in appeal, held that the award decree did not evidence partition, and that it was not covered by section 36(6) as it was an award decree and not a mere award.
Dismissing the appeal to this Court, HELD : (1) When the Act came into force, in addition to joint living by the members of the Kutumba, three types of arrangements were in existence in various Kutumbas, namely, (a) When the senior most member of the family (Yejman) or (Yejmanthi) made maintenance allotments which were purely temporary in character, (b) a permanent arrangement for maintenance, and (e) partition with the consent of all adult members.
In the ease of a permanent, arrangement for maintenance it was usually done on Kavairu basis, the jointness of the family was kept intact, but arrangement was made for separate living and separate management of Kutumba properties on a permanent basis which; could not be disturbed without the consent of all the adult members of the Kutumba.
Such of these permanent arrangements which came within the scope of section 36(6) are deemed to be partitions despite the fact that under those arrangements the jointness of the Kutumba was kept intact.
[386A F] (2) The conditions to be satisfied before a document can be considered as coming within the scope of section 36(6) are : (a) there is a registered family settlement or award (b) all the major members of the Kutumba are parties to it; (c) the whole of the kutumba properties have been or were intended to have been distributed; and (d) the distribution is among all the Kavarus of the Kutumba for the separate and absolute enjoyment in perpetuity.
[387 A D] 384 Gummanna Shetty vs Nagaveniamma, ; , followed.
(3) In the present case, the award decree did not evidence a partition; because it contained clauses inconsistent with an out and out partition.
The award decree recited that 'proper arrangements were made for the maintenance of the Kutumba Without disrupting its oneness '; that both Kavarus should together conscious functions; and the members of one of the Kavarus were to show accounts to the senior most member who continued to be the yejman of thee entire kutumba.
[388G H] Ammalu Amma vs Vasu Menon, A.I.R. 1944 Mad.
108, approved.
(4) (6) Award decrees have to be considered as awards for purposes of section 36(6).
[391B C] (a) The principle underlying section 36(6) is not to disturb the finality of, arrangements made.
If that were so, such permanency should be available, in a larger measure to an award decree, for otherwise, parties could enforce partition ignoring award decrees while they would be bound by awards.
[390 G H] (b) After the coming into force of the , all awards had to be compulsorily made decrees of courts if they were to have force.
The Akiyasahntana Act came into force in 1994 and the legislature would not have denied to the awards passed after 1940 (in terms of which decrees would have been passed) the benefit of section 36(6) of the Aliyasanatana Act.
The Legislature, by using the expression 'award ' intended to include both awards simpliciter as well as awards which had been made decrees of Courts.
[391A B] Parameshwari Hengsu vs Venkappa Shetty and ors., (1961) Mys.
L.J. 686 on the interpretation if section 36(6), overruled.
(5) (a) But the second condition for the application of the section is not satisfied in the present case, as one of the major members of the Kutumba was not a party to the award.
[392D] (b) Even though he acquiesced in the arrangements made under the award decree he would not be a party to the arrangement.
Before the arrangement can be deemed to be a partition under section 36(6), all the conditions should be fully satisfied, and substantial compliance is not sufficient, since, it is a case of a deemed partition and not an actual partition.
[392E F]
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<s>[INST] Summarize the judgementCivil Appeal No. 2321 of 1968.
Appeal by Special Leave from the Judgment and Order dated the 1st November, 1968 of the Madhya Pradesh High Court, Indore Bench in Civil Miscellaneous Appeal No. 111 of 1967.
C.K. Daphtary and B. Dutta for the Appellant.
P.C. Khanna for Respondent No. 1.
The Judgment of the Court was delivered by J.
C. SHAH, AG.
C.J. Pratap Singh, Preetam Singh and Diwan Singh are three brothers.
Pratap Singh and Preetam Singh carried on business in partnership, at three places (1) Pipliya in Madhya Pradesh, in the name of the Jaora Slate Pencil Works; (2) Bombay, in the name of Partap Brothers; and (3) Nagpur, in the name of Nice Tiles and Marble, Nagpur.
By an agreement dated December 18, 1965 disputes between Pratap Singh and Preetam Singh relating to the partnership business were referred to the arbitration of their brother Diwan Singh.
The arbitrator entered upon the reference, but he was unable to complete the reference within four months.
Diwan Singh applied to the Court of the Subordinate Judge, Delhi, under section 28 of the Arbitration Act for extension of time.
Preetam Singh objected to the jurisdiction of the Subordinate Judge at Delhi to entertain the application.
The Subordinate Judge overruled the objection and granted extension of time for making the award.
A revision application preferred against the order is pending before the High Court of Delhi.
778 In the meanwhile Preetam Singh filed an action in the Court of the Additional District Judge, Mandsaur against Pratap Singh and Pritipal Singh (brother in law of Preetam Singh) for a decree for rendition of account of the dealing in respect of the Jaora Slate Pencil Works and for appointment of a receiver.
By amendment of the plaint a claim for dissolution of partnership was also made.
Pratap Singh applied under section 34 of the for stay of the suit, and the application was granted.
But the Additional District Judge directed that a receiver be appointed of the properties of the Jaora Slate Pencil Works at Pipliya.
Against that order an appeal was carried to the High Court of Madhya Pradesh.
The High Court was of the view that a case was made out for the appointment of the receiver.
The Court further held that having regard to the proceedings pending in the High Court at Delhi it was a case in which without adjudicating upon the jurisdiction of the Subordinate Judge at Delhi, the application for appointment of the receiver was maintainable.
Against that order, with special leave, this appeal has been preferred.
The only question argued in this appeal is about the jurisdiction of the Additional District Judge, Mandsaur to entertain the suit and to appoint a receiver.
The relevant statutory provisions may in the first be noticed.
By cl. 3 of Sch. 1 of the the arbitrator is required to make an award within four months after entering on the reference.
Section 28 of the Act provides that the Court may, if it thinks fit, whether the time for making the award has expired or not and whether the award has been made or not, enlarge from time to time the time for making the award, and the expression "Court" is defined in section 2 (c) as meaning "a Civil Court having jurisdiction to decide the questions forming the subject matter of the reference if the same had been the subject matter of a suit, but * * * * * Section 31 of the Act provides.
(1) . . (2) . . (3) All applications regarding the conduct of arbitration 779 proceedings or otherwise arising out of such proceedings shall be made to the Court where the award has been, or may be, filed, and to no other Court.
(4) Notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force, where in any reference any application under this Act has been made in a Court competent to entertain it, that Court alone shall have jurisdiction over the arbitration proceedings and all subsequent applications arising out of that reference and the arbitration proceedings shall be made in that Court and no other Court.
" Section 34 of the Act provides for stay of a suit.
In so far as it is material it enacts.
"Where any party to an arbitration agreement . commences any legal proceedings against any other party to the agreement . in respect of any matter agreed to be referred, any party to such legal proceedings may, at any time before filing a written statement or taking any other steps in the proceedings, apply to the judicial authority before which the proceedings are pending to stay the proceedings; and if satisfied that there is no sufficient reason why the matter should not be referred in accordance with the arbitration agreement and that the application was, at the time when the proceedings were commenced, and still remains ready and willing to do all things necessary to the proper conduct of the arbitration such authority may make an order staying the proceedings.
" An application for stay of the suit pending before the Additional District Judge, Mandsaur was made by Pratap Singh and it was granted.
But thereby the jurisdiction of the Court to pass appropriate orders for protecting the subject matter of the suit was not excluded.
An application for appointment of a receiver could be granted notwithstanding the order of stay of suit under section 34 of the .
But it was urged that it is open to the Court as defined in section 2 (c) under section 41 read with the Schedule to the 780 to appoint a receiver of any other property in dispute or in relation to any proceedings before the arbitrator, and by conferment of that power, the power of the Civil Court in a suit to appoint a receiver is excluded.
On that premise it was urged that the only Court competent to entertain an application for appointment of a receiver was the Subordinate Judge 's Court at Delhi and not the Court of the Additional District Judge, Mandsaur.
It is true that an application for extension of time to make the award was made to the Court of the Subordinate Judge, Delhi and normally the parties would have to resort to that Court for interim relief in respect of the subject matter of the dispute before the arbitrator.
But so long as the jurisdiction of the Court of the Subordinate Judge, Delhi to entertain the application for extension of time was in dispute the Civil Court which is seized of the suit was entitled to make appropriate orders for preserving the property which is the subject matter of the suit.
We are therefore of the view that the Civil Court at Mandsaur was competent to appoint a receiver of the property until the question about the jurisdiction of the Delhi Court under section 31 (4) to entertain applications arising out of the order of reference is finally determined.
After the High Court of Delhi determines that question, receiver appointed, in order to comply with the requirements of the statute, may be made subject to the jurisdiction of the Delhi Court, if it be held that Delhi Court had jurisdiction to entertain the application.
It was urged that the suit filed at Mandsaur only relates to the assets, of the partnership at Pipliya within the State of Madhya Pradesh and does not relate to the properties at Bombay and Nagpur and that by the expedient of obtaining an order for appointment of a receiver Preetam Singh has managed to remain in possession of the properties at Bombay and Nagpur to the exclusion of Pratap Singh.
We cannot at this stage, decide whether the suit in so far as it relates to the assets of the partnership at Pipliya alone is maintainable.
The arbitration proceedings undoubtedly relate to all the assets of the Partnership and if Preetam Singh, as contended by Pratap Singh, has remained in possession of the properties of the partnership at Bombay and Nagpur to the exclusion of Pratap Singh and it is just and equitable to have a receiver appointed, his remedy is to com 781 mence appropriate proceedings for that purpose and to apply to a competent court to appoint a receiver of the properties.
The appeal fails and is dismissed.
There will be no order as to costs.
P.B.R. Appeal dismissed.
[/INST]After the land in suit was sold in June, 1957, for an ostensible sum of Rs. 1,35:000/ , the appellants and respondents 1 to 3 instituted two separate suits for pre emptions in which the sale price inserted in the sale deed was also questioned.
The two suits were consolidated and the plaintiffs in each suit were joined as defendants in the other suit under section 38 of Punjab Pre emption Act, 1913.
The vendees thereafter admitted the rights of preemptors in both the suits conceding that a decree may be passed in their favour.
The appellants accepted the sale price of Rs, 1,35,000 on or before 30th July 1958 and although respondents 1 to 3 wanted this issue to be decided on the merits, the trial court passed a decree in both the ,suits granting respondents 1 to 3 the right to preemption in the first instance on payment of Rs. 1,35,000 and, on their failure to so pay, holding the appellants entitled to exercise the right to pre emption on payment of the said amount on or before 30th October 1958.
In an appeal to the High Court, respondents 1 to 3 challenged the correctness of the amount of the deposit to be made.
Allowing the appeal, the High Court reduced the amount of deposit to Rs. 1,05,800/ and directed respondents 1 to 3 to deposit the amount within three months.
In an appeal by the appellants to this Court against the decision of the High Court, a preliminary objection was taken challenging the appelants right to appeal it was contended that the appellants had based their right to pre emption in their suit on the ground of their being proprietors of the village where the land was situated.
They were deprived of that right by the amendment of section 31 of the Punjab Pre emption Act by Punjab Act 10 of 1969 which amendment was retrospective in its operation and prohibited the Courts from passing any decree inconsistent with the amended Act.
On the other hand it was contended inter alia for the appellants that they had already secured a decree in their favour by the trial court which had become final 'and with the terms of which the had complied: in the present appeal they were merely seeking modification of the decree of the High Court in favour of respondents 1 to 3 by getting the amount of pre emption money enhanced t0 Rs. 1,35,000/ without claiming any rights of pre emption in their own favour furthermore, the only appeal preferred by respondents 1 to 3 to the High Court was from the decree in 'heir own suit and for this reason also the decree in favour of the appellants by the trial court had become conclusive and unassailable.
130 HELD: Upholding the preliminary objection, It was not open to this Court to pass a decree of pre emption in favour of the appellants who were deprived by the Amendment Act of 1960 of their right to secure such a decree.
[133 C D] The contention that the decree in the appellants ' suit had become final and the High Court 's order was only in relation to the suit of respondents 1 to 3 ignored the scheme of section 28 of the Act read with O.20, r. 14, C.P.C. which does not postulate decrees of pre emption in favour of rival preemptors on payment of different amounts of purchase money in respect of the same sale.
Such a course may lead to conflicting decisions on the question of value of the property sought to be pre empted for the purposes of a pre emption suit.
Besides., the appellants ' right to pre empted the sale under the unamended law was admittedly inferior to that of respondents 1 to 3 and the appellants could only be held entitled to exercise their right after the failure of those respondents to comply with the terms of the decree in their favour.
[133 E G] Ram Swarup vs Munshi and Others, ; ; referred to.
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<s>[INST] Summarize the judgement: Special Leave Petition (Crl. ) No. 419 of 1987.
From the Judgment and order dated 11.12.1986 of the Punjab and Haryana High Court in Criminal Miscellaneous No. 7421 M of 1 986 .
R.K. Garg, Ms. Suman Kapoor and R.P. Singh for the Petitioner.
P.N. Puri, R.S. Sodhi and R.S. Suri for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This is a petition for leave to appeal under Article 136 of the Constitution against the judgment and order of the High Court of Punjab and Haryana dated 11th of December, 1986.
By the order the High Court has dismissed the applica 452 tion under section 482 of the Code of Criminal Procedure praying that further that proceedings be stayed in Sessions Case No. 1 of 25th of March, 1985 under sections 148/302/325/323/149/120 B of the I.P.C.
The High Court dismissed this petition because it found no merit in the same.
The petitioner, herein alongwith 14 more persons were charged by an order dated 30th of May, 1986 under sections 148/302/149/325/149 and under sections 323/149 of the I.P.C. for allegedly causing death of one Ajit Singh and for causing hurt to Smt.
Gurmej Kaur, the complainant.
The case was committed to the Court of Sessions by the Judicial Magistrate 1st Class, Kapurthala vide order dated 20.2.1985.
As per the case set up by the complainant Smt.
Gujmej Kaur, her son Ajit Singh since deceased was involved in a murder case pertaining to the murder of head constable Bagga Singh of Police Station Dhilwan.
That case was registered in police station Bhogpur, District Jalandhar and Ajit Singh was tried alongwith other persons and was sentenced by the Additional Sessions Judge but he was acquitted by the High Court.
The complainant further states that Ajit Singh was also involved by the police in a case of dacoity of police station Kotwali Kapurthala and police station Dhilwan during investigation of the murder case in question.
Ajit Singh was also convicted in those cases but acquitted by the High Court.
It is the case of the complainant that Ajit Singh was allegedly involved in some other murder and dacoity case by the police which was tried in Himachal Pradesh and Ajit Singh was acquitted by the Himachal Pradesh High Court.
Mohinder Singh and Des Raj also co accused in this case allegedly investigated cases of Kapurthala and Ajit Singh was tortured by Des Raj and the leg of Ajit Singh was broken.
Ajit Singh then filed complaint against Des Raj (also accused in this case) and he was summoned by the Judicial Magistrate 1st p Class, Kapurthala and thus the relation between Ajit Singh and Kapurthala Police Station had become very strained.
Ajit Singh had then settled in U.P., according to the allegations in the complaint, out of fear of the police.
It is stated that on or about 7th of April, 1983 at about 3 p.m. all the accused including present petitioner went to village Bhandal Bet.
They went to the house of the complaint where she was present alongwith her sons Ajit Singh and Manjit Singh and other members of the family.
Manjit Singh and Ajit Singh, it was alleged, were surrounded by the police officials and Manjit Singh and Ajit Singh protested against this.
Then Bakshish Singh accused, petitioner, directed his companions to arrest Ajit Singh and Manjit Singh and tie them with ropes and put them in the truck for the purpose of throwing them in the river Beas.
It was further alleged that Manjit 453 Singh and Ajit Singh ran to save themselves but they were attacked by the police officials.
The complainant also received injuries in the A course of this occurrence when she was given dang blows.
Ajit Singh and Manjit Singh were given blows by the police officals on the asking of the appellant herein Bakhshish Singh Brar, who is the Deputy Superintendent of Police.
A hue and cry was raised.
Other persons came, Ajit Singh and Manjit Singh became unconscious and then they were taken away in the truck for the purpose of throwing them in the river, according to the complaint.
The case of the complainant further was that Ajit Singh and Manjit Singh were then got admitted by the police in Civil Hospital, Kapurthala as indoor patients and Ajit Singh died as a result of injuries on 8th of March, 1983.
It was further alleged that the accused who are the police officials fabricated false evidence in order to make out a defence and registered two false cases one under section 61(1)(a) of the Punjab Excise Act, F.I.R. No. 70 dated 7th of April 1983 and the other under section 307, I.P.C. F.I.R. No. l 1 dated 7th April, 1983.
On the other hand, the case of the respondents was that the police party headed by the petitioner including 13 of his subordinates went to the Haveli of Jit Singh alias Jita, situated in village Bhandel Bet in connection with raid on secret information to the effect that he is indulging in illicit liquor and unlicenced arms.
There were two First Information Reports one under section 61(1)(14) of the Punjab Excise Act and the other under section 25(54)(59) of the Arms act were recorded in Police Station Dhilwan.
That on the same date the police party raided the Haveli of Jit Singh alias Jita, where Manjit Singh, Jasbir Singh, Balwant Singh, Chhinda and Majwi, residence of village Bullowal and Gurdev Singh resident of village Ucha were present there.
It is further alleged that seeing the police party, Jasbir Singh fired at Ajit Singh, who saved himself by hiding himself behind a wall.
The other persons armed with dangs and dhope attacked the police party.
There are rival versions involved in this case.
The question was whether without the sanction under section 197 of the Code of Criminal Procedure the proceedings could go on.
It is quite apparent that as a result of the alleged search and raid, which was conducted by the petitioner in discharge of his official duties certain injuries, which are described as grievous, injuries had been inflicted on the complainant and one of the alleged offenders had died.
In this case, admittedly, the petitioner is a Government servant.
Admittedly, there was no sanction under section 197 of the Cr.
P.C. had been taken.
The trial in this case H 454 is one of the offences mentioned under section 196 of the Cr.
The A contention of the petitioner was that under section 196 of the Cr.
P.C. the cognizance of the offence could not be taken nor the trial proceeded without the sanction of the appropriate authorities.
The learned Additional Sessions Judge, Kapurthala after consideration of the facts and circumstances of the case in view of the observations of this Court in Pukhraj vs State of Rajasthan and another, that unless cognizance is taken and the facts and in the circumstances and the nature of the allegations involved in this case are gone into the question whether the raiding party exceeded its limits or power while acting in the official duties cannot be determined.
The learned Judge observed after gathering the materials and some evidence, it would be possible to determine whether the petitioner while acting in the discharge of his duties as a police officer had exceeded the limit of his official capacity in inflicting grievous injuries on the accused and causing death to the other accused.
This Court in the aforesaid decision had occasion to consider this aspect.
The case is instructive and illustrative how a balance has to be struck between the need for speedier trial of criminal offenders and at the same time protecting public servants or police officials in the discharge of their duties without obstructions.
There the appellant had filed a complaint against his superior officer, in the Postal Department under sections 323 and 502 of I.P.C. alleging that when the appellant went with a certain complaint to the second respondent, the said respondent kicked him in his abdomen and absued him by saying "Sale, gunde, badmash . " The said respondent filed an application under section 197 of the Cr.
P.C. praying that the Court should not take cognizance of the offence without the sanction of the Government, as required by section 197 of the Cr.
It was further contended that the alleged acts, if at all done by the accused were done while discharging his duties as a public servant.
The trial Magistrate dismissed the application.
The High Court allowed the revision application of the said respondent.
This Court on appeal held that at that stage, the Court was concerned only with one point, viz., whether on facts alleged in the complaint, it could be said that the acts were done in purported exercise of his duties.
Applying the test laid down in the decisions of the Federal Court and this Court to acts complained of, viz., kicking the complainant and abusing, could not be said to have been done in the course of the performance of the duty by the said respondent.
The facts subsequently coming to light during the course of the judicial enquiry or during the course of the prosecution evidence at the trial might establish the necessity for sanction, it was observed.
This Court noted that it might be possible for the said respondent to 455 place materials on record during the course of the trial for showing what his duties were and also that the acts complained of were so interrelated with his official duty, so as to attract the protection afforded by section 197 of the Cr.
This Court reiterated that the question whether sanction was necessary or not might have to depend upon from stage to stage having regard to the facts and circumstances of the case.
This Court allowed the appeal and allowed the trial to proceed without the sanction.
In the instant case, it is alleged that grievous injuries were inflicted upon the complainant and as a result of injuries one of the alleged accused had died.
The question is while investigating and performing his duties as a police officer was it necessary for the petitioner to conduct himself in such a manner which would result in such consequences.
It is necessary to protect the public servant in the discharge of their duties.
They must be made immune from being harassed in criminal proceedings and prosecution, that is the rationale behind section 196 and section 197 of the Cr.
But it is equally important to emphasise that rights of the citizens should be protected and no excesses should be permitted.
"Encounter death" has become too common.
In the facts and circumstance of each case protection of public officers and public servants functioning in discharge of official duties and protection of private citizens have to be balanced by finding out as to what extent and how far is a public servant working in discharge of his duties or purported discharge of his duties, and whether the public servant has exceeded his limit.
It is true that section 196 states that no cognizance can be taken and even after cognizance having been taken if facts come to light that the acts complained of were done in the discharge of the official duties then the trial may have to be stayed unless sanction is obtained.
But at the same time it has to be emphasised that criminal trials should not be stayed in all cases at the preliminary stage because that will cause great damage to the evidence.
In that view of the matter we are of the opinion that the order passed by the learned Additional Sessions Judge, Kapurthala, in the facts of this case, was proper and the High Court was right in not interfering with the same.
We, therefore, dismiss this petition.
G We, however, direct that the trial should proceed as expeditiously as possible.
We further record that if necessary the question of sanction under section 197 of the Cr.
P.C. may be agitated after some evidence have been noted by the learned Additional Sessions Judge.
P.S.S. Petition dismissed.
[/INST]% In a writ petition, the petitioner challenged the price fixation on the ground; that the State Government had not taken into consideration the guidelines in built in sub section 3C of section 3 of the , that the levy order was unreasonable or excessive restriction on the fundamental rights guaranteed under Articles 19(1)(g) and 14 of the Constitution, and that the levy was a colourable exercise of the power as the State Government sold the levy sugar by public auction realising large profit.
Dismissing the Writ Petition, ^ HELD: 1.1 The Court does not act like a Chartered Accountant nor acts like an Income Tax officer.
The Court is not concerned with any individual case of any particular problem.
The Court only examines whether the price determined was with due regard to considerations provided by the statute, and whether extraneous matters have been excluded from determination.
[580D E] Union of India vs Cynamide India Ltd. AIR 1987 Sept. SC 180 ' at 1805.
followed.
1.2 The primary consideration in the fixation of price would be 578 the interest of consumers rather than that of producers.
[581F] Since the petitioners in the instant case, are allowed to sell freely at any rate they like, the remaining 50% of the Sugar (after excluding the 50% which they have to give for levy) as also the produce by the second and third process, the loss if any caused to the petitioners would be minimal.
[581Gl New India Sugar Works vs State of Uttar Pradesh & Ors., ; , relied.
1.3 It is clear from the Preamble, that the primary object of the was to control production, supply, and distribution of essential commodities, and to make such commodities available at a reasonable price.
The exercise provided under the Act was intended ultimately to serve the interest of consumers.
It is fundamental in the entire scheme of the Act.
But then, the interest of the industry as a whole cannot be left out.
It is also required to be borne in mind.
The levy price of sugar should ensure reasonable return to the industry.
That is one of the guidelines provided under sub section 3C of section 3 of the Act.
But that does not mean that the interest of producers should outweigh the interest of consumers.
It would be tilting the balance too much.
[582C F] 1.4 There is no colourable exercise of power.
There was every justification for the sale by public auction.
The petitioner and some other producers delivered inferior quality of Khandsari, which was found to be unacceptable to consumers at Fair Price Shops.
The State officers accordingly reported to the Government, which issued instructions to distribute the levy sugar liberally through permits for marriages and religious functions.
The consumers, however, could not come forward.
The Government then directed the disposal of levy sugar by public auction.
It was not with a view to earn profit, although incidentally the Government made some profit.
The levy sugar was brought to public sale only to prevent deterioration when the consumers refused to accept it.
[583A C] The Panipat Co operative Sugar mills vs Union of India [197312 SCR 860 and Anakapalle Coop.
& Industrial Society Ltd. vs Union of India & Ors.
, ; , referred to.
</s> |
<s>[INST] Summarize the judgementCriminal Appeal No. 13 of 1981 From the Judgment and Order dated 26.3.1979 of the Allahabad High Court in Crl.
Petition No. 1816 of 1976 Altar Ahmad for the Appellant (not present).
V.A. Bobde (Amicus Curiae) for the Respondent.
The Judgment of the Court was delivered by NATARAJAN, J.
This is an unfortunate case where the High Court has quashed an order of maintenance passed in favour of a minor child Tarana Farooq by the Special Judicial Magistrate No. 1, Rampur under Section 125 Cr.
P.C., in exercise of its powers under Section 482 Cr.
The High Court has, however, deemed it fit to grant a certificate to the appellant Dukhtar Jahan, the mother of the minor child, under Article 134(1)(c) read with Article 134A of the Con stitution to prefer an appeal to this Court for considera tion of a question of law formulated as under: "Whether, in an application under Section 482 Cr.
P.C. the High Court can interfere with concurrent findings rendered by the courts below." As we find the appeal is capable of being disposed of on the basis of other materials, we do not feel called upon to answer the question of law formulated for consideration by the High Court.
We may now have a look at the facts of the case.
The appellant Dukhtar Jahan and the respondent Mohammed Farooq who were already related as first cousins, being the issues of two sisters, were married on 11.5.1973.
The marriage lasted only for about 17 months 1090 since the respondent divorced the appellant on 16.10.1974.
However, when the parties were in wedlock the appellant delivered a female child named Tarana Farooq on 5.12.1973.
After the respondent effected the divorce in October 1974, the appellant filed a petition under Section 125 Cr.
P.C. in the court of the Special Judicial Magistrate No. 1, Rampur for grant of maintenance to her and the child at Rs. 150 p.m. and Rs.50 p.m. respectively.
The appellant however gave up the claim of maintenance for herself as the stand of the respondent was that he had paid her the Maher and the amount payable for the Iddat period and that he had also returned all the articles given by way of dowry.
The enquiry in the petition was therefore, confined to the claim of maintenance for the child Tarana.
The respondent refuted his liability to provide mainte nance to the child on the ground that he was not the father of the child and that the child had been conceived even before marriage and the appellant had suppressed the fact of her being enceinte at the time of the marriage.
While the appellant examined herself and another witness to substantiate the claim for maintenance for the child, the respondent examined three witnesses besides himself to refute the claim.
Of those three witnesses, two have spoken about the payment of Maher etc.
to the appellant and hence we need mention only about the testimony of D.W.2 Abdul Asad.
This witness was a Panchayat Sevak and he has deposed that he made entries in the birth register (Exhibit Kha I) about the birth of the girl child Tarana Farooq to the respondent and the appellant on the basis of information given to him by the Village chowkidar by name Kalicharan.
Obviously this witness has been examined to show that the respondent was not the informant of the birth of the child in order to neutralise the effect of the entry in the birth register.
The Trial Magistrate, after taking into consideration the evidence adduced in the case and the conduct of the parties held that since the child had been born when the parents were in wedlock and since the respondent had not discarded the wife or disowned the child forthwith but had waited for about 10 months to divorce the appellant, it would be reasonable to hold that the child should have been conceived to the respondent and as such he is by law obli gated to provide maintenance to the child.
After taking into consideration the respondent 's income the learned Magistrate awarded maintenance to the child at Rs.30 per month as against the claim of Rs.50 p.m. 1091 A Revision preferred against the order of the Magistrate to the Sessions Judge, Rampur proved of no avail and hence the respondent filed Criminal Misc.
Petition No. 1816 of 1978 to the High Court of Calcutta under Section 482 Cr.
P.C. for quashing the order of maintenance.
A Single Judge of the High Court has allowed the petition and quashed the order of maintenance in favour of the child.
The learned Judge has taken the view that since the child had been born in about 7 months ' time from the date of marriage and since the child was not claimed to be prematurely born it has to be neces sarily held that the appellant should have conceived even before she married the respondent and consequently the respondent cannot be held to be the father of the child and called upon to pay maintenance to it.
As the order of the High court appeared to be prima facie unsustainable and as the respondent failed to enter appearance in spite of notice being served on him, we re quested Mr. Bobde to appear as amicus curiae for the re spondent, and we are thankful to him for his assistance.
The admitted facts are that the appellant and the re spondent were close relations and not strangers before marriage.
They were married on 11.5.1973 and the girl child was born on 5.12.1973.
The respondent did not divorce the appellant immediately after the child birth or even two or three months later but he divorced her only on 16.10.
The child birth took place in the house of the respondent himself and hence there is no question of the birth of the child not being known to the respondent immediately.
In spite of all these factors the High Court has allowed itself to be influenced by only two factors viz. the child birth taking place in about 7 months ' time from the date of marriage and the child being claimed to be a full grown one at the time of birth.
Examining the matter, we feel the learned Judge has failed to view the case in its entire conspectus and this has led to miscarriage of justice.
On the sole ground that the child had been born in about 7 months ' time after the marriage it cannot be concluded that the child should have been conceived even before the respondent had consummated the marriage.
Giving birth to a viable child after 28 weeks ' duration of pregnancy is not biologically an improbable or impossible event.
In "Combined Textbook of Obstetrics and Gynaecology" by Sir Gugald Baird 7th Edition at page 162 it is reported as under: 1092 "In the case of Clark vs Clark (1939) an extremely small baby, born alive 174 days after last possible date when intercourse with the husband could have taken place, and which survived, was held to be legitimate.
While it is most unusual for babies of this weight for gestation period to survive it does occasion ally happen.
" The learned Judge ought not, therefore, to have rushed to the conclusion that a child born in about 7 months ' time after the marriage of the parents should have necessarily been conceived even before the marriage took place.
In so far as the second aspect is concerned viz. about the appel lant 's statement that the child was not born prematurely, the High Court has failed to bear in mind that the appellant is a rustic and illiterate woman and as such her opinion could suffer from error of judgment.
Another serious infirmity noticed in the judgment is that the learned Judge has completely lost sight of Section 112 of the Indian Evidence Act.
Section 112 lays down that if a person was born during the continuance of a valid marriage between his mother and any man or within two hun dred and eighty days after its dissolution and the mother remains unmarried, it shall be taken as conclusive proof that he is the legitimate son of that man, unless it can be shown that the parties to the marriage had no access to each other at any time when he could have been begotton.
This rule of law based on the dictates of justice has always made the courts incline towards upholding the legitimacy of a child unless the facts are so compulsive and clinching as to necessarily warrant a finding that the child could not at all have been begotten to the father and as such a legitima tion of the child would result in rank injustice to the father.
Courts have always desisted from lightly or hastily rendering a verdict and that too, on the basis of slender materials, which will have the effect of branding a child as a bastard and its mother an unchaste woman.
To drive home the point, we may refer to some of the reported cases where the courts have applied the rule of evidence contained in Section 112 of the Indian Evidence Act and declared the legitimacy of a child born during wedlock, even though the child had been born prematurely.
In Mahbub Ali vs Taj Khan,, A.I.R. 1915 Lahore 77 (2) it was held that a boy born about 7 months ' after his father and mother were lawfully married and who had opportunity or access to each other at the time he could have been begotten, must be held to be the legitimate son of his parents.
In Kahan Singh vs Natha Singh, A.I.R. 1093 1925 Lahore 414 the defendant 's father was married to the defendant 's mother on 2nd August 1889 and the defendant was born on 23rd January 1890.
Even so it was held "that the defendant being born during the continuance of the marriage between his parents, he is his father 's legitimate son unless it is shown that his parents had no access to each other at any time when he could have been begotten and that it is immaterial how soon after the marriage the defendant was born." In Sibt Mohammad vs Md. Hameed, A.I.R. 1926 Allahabad 589 it was held that a Muhammedan child born during the continuance of a valid marriage between its parents but within 6 months of the date of its parents ' marriage must be held to be a legitimate child by reason of Section 112 of the Evidence Act.
In Ponnammal vs Addi Aiyan, A.I.R. 1953 TRA CO 434 [Vol. 40, C.N. 169] the paternity of a child born to a married woman after 8 months ' from the date of marriage was disputed as the husband alleged that he was incapacitated from having sexual intercourse for one month from date of marriage due to some operation he had to undergo and hence the child was not his.
The court held that even assuming that the husband was so incapacitated, the time available, viz, over seven months, was sufficient to raise the presumption that he was the father of the child.
Even without reference to Section 112 of the Indian Evidence Act if we take into consideration the facts of the case and the conduct of the parties and the attendant cir cumstances we find a preponderance of materials to support the case of the appellant rather than that of the respond ent.
The relevant features which have escaped the attention of the High Court can be catalogued as under: If the appellant was pregnant even at the time of the marriage she could not have concealed that fact for long and in any event the respondent would have come to know of it within two or three months of the marriage and thereupon he would have immediately protested and either discarded the appellant or reported the matter to the village elders and relatives and sought for a divorce.
On the contrary the respondent had continued to lead life with the appellant in a normal manner till the birth of the child.
Even the con finement appears to have taken place in his house as other wise the child 's birth would not have been registered in his village.
The respondent had not disowned the child immedi ately after its birth or sent away the appellant to her parents ' house.
Such would not have been his conduct if he had any doubt about the paternity of the child.
Moreover, there is an entry in 1094 the birth register (Exhibit Kha 1) setting out the respond ent as the father of the child.
Though the respondent has attempted to neutralise the entry in Exhibit Kha 1 by exam ining D.W.2 and making it appear that the entry had been made on the basis of information given by a third party, the lower courts have refused to give credence to the vague and uncorroborated testimony of D.W.2.
It is also significant to note that the respondent had allowed eleven months to pass before effecting a divorce.
By his inaction for such a long period the respondent has given room for inference that the divorce may have been effected for other reasons and not on account of the appellant giving birth to a child conceived through some one else.
Lastly, even if the child had been born after a full term pregnancy it has to be born in mind that the possibility of the respondent having had access to the appellant before marriage cannot be ruled out because they were closely related and would therefore have been moving in close terms.
All these factors negate the plea of the respondent that the minor child was not lathered by him.
The proper course for the High Court, even if entitled to interfere with the concurrent findings of the courts below in exercise of its powers under Section 482 Cr.P.C., should have been to sustain the order of maintenance and direct the respondent to seek an appropriate declaration in the Civil Court, after a full fledged trial, that the child was not born to him and as such he is not legally liable to maintain it.
Proceedings under Section 125 Cr.
P.C., it must be remembered, are of a summary nature and are intended to enable destitute wives and children, the latter whether they are legitimate or illegitimate, to get maintenance in a speedy manner.
The High Court was, therefore, clearly in error in quashing the order of maintenance, in favour of the child.
The appeal has, therefore, to succeed and we accordingly allow the appeal and set aside the order of the High Court and restore the order of maintenance passed by the trial court.
S.R. Appeal allowed.
[/INST]Section 12(2) of the Foreign Exchange Regulation Act, 1947 which is designed to prevent wholesale or partial evasion of repatriation of earnings from export of goods is to the effect that 'where any expert of goods has been made to which a notification under sub section (1) applies, no person entitled to sell, or procure the sale of the said goods shall, except with the permission of the Reserve Bank . . ".
In R. Venkata Subbu & Ors.
vs The Direc torate of Enforcement, Enforcement Directorate, New Delhi & Anr., ILR Vol p. 18, the Madras High Court held that section 12(2) covers not only sale proceeds of goods exported "for sale" but also "on sale" in the context of sales completed before export, while the Calcutta High Court in the judgment under appeal held that it covers sale pro ceeds of goods exported "for sale" only.
In view of the conflict of the opinions, the present appeal is by certifi cate.
Allowing the appeal and remitting the matters to the Competent Authority, the Court, HELD: 1.1 The expression 'no person entitled to sell or procure the sale of the said goods ' cannot be so narrowly construed (as referable to goods which have already been exported), so as to govern the scope of section 12(2) in such a truncated manner which renders it virtually impotent in so far as transactions of 'exports on sale ' are con cerned.
Too much is being read into too little for no more laudable a purpose than to paralyze the provision.
The expression does not necessarily induce one to the conclusion that the legislature wanted to prevent abuse in the context of 'export for sale ' only.
The expression is mean 982 ingful, relevant, and can co exist in the context of abuse arising from 'exports on sale ' from completed transactions as well.
[985H;986B] 1.2 The said expression has been employed by the Legis lature merely in order to indentify the accountable persons and is merely descriptive in that sense.
The said expression does not restrict the operation of the Act to the persons who have not yet sold the goods.
One would have to take a quantum jump in order to conclude that persons referred to in section 12(2) are the persons who have not yet sold the goods but are entitled to sell the goods in future merely because the expression 'entitled to sell ' has been employed.
The persons who have exported the goods to a foreign buyer, are not sought to be excluded from the operation of section 12(2).
Clause (a) in terms adverts to the sale of goods being delayed.
Clause (b) of section 12(2) adverts to pay ment for the goods, otherwise than in the prescribed manner, and also envisions a case where the payment does not repre sent the full amount payable by the foreign buyer in respect of the goods.
Clauses (a) and (b) are compatible both with transactions of export on sale as also to transactions of export for sale.
They are compatible with all transactions pertaining to both types of sales.
There is no warrant to assume that the Legislature has not made any provision in order to ensure that the full amount of the sale price is repatriated and foreign exchange earned therefrom is not lost to the Nation regardless of whether it is in respect of 'export on sale ' or 'export for sale '.
[986F. 987A C] 1.3 The avowed and the evident object of section 12 is to ensure that the Nation does not lose foreign exchange which is very much essential for the economic survival of the Nation.
The exporter cannot be allowed to syphon away a part of the foreign exchange or to deprive the Nation of the foreign exchange earned by the exports.
Such is the philoso phy of section 12.
To take the view that the legitimate National interest in the sphere of preservation of foreign exchange has relevance only in the context of transactions of exports for sales and that the Legislature exhibited total unconcern for the foreign exchange earned in the context of transactions of completed sales or consignment sales, is to attribute to the Legislature irrationality.
And to impute to the Legislature that it did not know its job inasmuch as it has tackled the problem only partially with out any rational basis for excluding the transactions of completed sales from the purview of the legislation which would substantially erode or defeat the purpose of the legislation.
When it is equally possible to take the view which would be conducive to the conclusion that there is no lacuna in the legislation, it would be unreasonable to take the view that the Legislature has left a lacuna eitber by 983 negligence or by lack of foresight or because it did not know its job.
[987B F] 2.1 Section 10 has no application in respect of foreign exchange earnings related to export of goods.
Section 10 Is designed primarily to impose an obligation on persons who have a right to receive any foreign exchange from a person resident outside India.
This section has nothing to do with the foreign exchange earned by export of goods.
The entire matter pertaining to payments for exported goods and the foreign exchange earnings arising therefrom has been dealt with in section 12 which is a complete Code in itself.
Section 12 has been very carefully designed.
Every possible situation has been conceived of and appropriate prophylactic measures to ensure the preservation of foreign exchange and prevention of syphoning off the foreign exchange, which is very much essential to the economic life of the Nation have been embedded therein.
The entire subject of foreign ex change earnings relatable to export of goods has been spe cifically and specially dealt with in section 12.
It would therefore be futile to search for an alibi in section 10 merely in order to support the plea that section 12 does not take within its fold the foreign exchange earnings relatable to transactions of completed sales.
[988A E] 2.2 On a plain reading of section 10, the matter per taining to the foreign exchange earned by exports in the context of completed sales will not directly fall within the ambit of it.
It will have to be strained beyond the point of endurance in order to accommodate this aspect.
Section 10 is akin to a complementary provision which deals with preserva tion of foreign exchange which does not fall within a spe cific provision like section 12.
What is more, if completed transactions are excluded from section 12, the purpose of the legislation will not be served, because sub section (6) of section 12 which has been designed to ensure compliance with the provisions made in section 12(1) to section 12 (5) cannot be availed of.
In that event, in regard to the per sons who syphon off foreign exchange earned out of the transactions in the context of a completed sale or export on sale they cannot be dealt with under section 12(6) and no sanction to ensure compliance will be available.
The Act will be thus rendered toothless to ensure compliance with evasion in the context of a completed sale.
There is accord ingly no compulsions of law, logic, or philosophy to adopt such a view.
[988F; 9B?A B] R. Venkata Subba & Ors.
vs The Director of Enforcement, Enforcement Directorate, New Delhi & Anr., ILR Vol.
3 Mad. , approved.
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 179 of 1983.
Appeal by special leave from the Award dated the 13th June, 1979 of the Industrial Tribunal, Maharashtra at Bombay in Ref (IT) No. 453 of 1975.
Jitender Sharma for the Appellant.
Dr. Y.S. Chitale, O.C. Mathur, section Kumar and Ms. Meera Mathur for the Respondent.
The Judgment of the Court was delivered by DESAI, J.
It is most unfortunate that all those unhealthy and 644 injudicious practices resorted to for unduly delaying the culmination of civil proceedings have stealthily crept in, for reasons not unknown, in the adjudication of industrial dispute for the resolution of which an informal forum and simple procedure were devised with the avowed object of keeping them free from the dilatory practices of civil courts.
Times without number this Court, to quote only two D.P. Maheswari vs Delhi Administration & Ors.
and S.K. Verma vs Mahesh Chandra & Anr. disapproved the practice of raising frivolous preliminary objections at the instance of the employer to delay and defeat by exhausting the workmen the outcome of the dispute yet we have to deal with the same situation in this appeal by special leave.
The Government of Maharastra by its order dated October 22, 1975 referred a dispute between Hindustan Lever Ltd. ( 'employer ' for short) and the workmen employed by them for adjudication under Sec.
10 of the to the Industrial Tribunal, Maharashtra.
The schedule annexed to the order of reference specified the dispute as under: "All the employees who are acting continuously in higher grades (as per annexure) for more than three months should be confirmed in the respective grades immediately and all the benefits should be given to the concerned employees with retrospective effect had they been confirmed immediately after three months or their continuous acting.
" After the workmen governed by the reference filed a statement of claim, M/s Hindustan Lever Ltd., the employer, appeared and contested the reference on diverse grounds.
A preliminary objection was raised that the reference was incompetent because the dispute raised by the workmen and referred by the Government to the Industrial Tribunal for adjudication was not an industrial dispute within the meaning of the expression in the Industrial Dispute Act, 1947.
Elaborating the contention, it was submitted that the dispute is not an industrial disputes because if the demand as raised is conceded, it would tantamount to allowing the workmen to decide the strength of the work force required in various grades and it is well settled that determining and deciding the strength of work force 645 required in any industry is a managerial function.
There were other contentions with which we are not concerned in this appeal at this stage.
The Industrial Tribunal held that whatever camouflage of the language in which the demand is couched, the attempt is to obtain promotion which cannot be claimed as a matter of right, it being a managerial function.
The Tribunal in terms held that promotion is the function of the management and the Industrial Tribunal will have no power and jurisdiction to take away the function of the management and direct that such and such workmen should be promoted to a particular post.
In this view of the matter ' the Tribunal held that the dispute was not an industrial dispute within the meaning of the expression and rejected the reference as incompetent.
Hence this appeal by special leave.
Sec.10(1) confers power on the appropriate Government to refer an existing or apprehended industrial dispute, amongst others, to the Industrial Tribunal for adjudication.
The dispute therefore, which can be referred for adjudication, of necessity, has to be an industrial dispute which would clothe the appropriate Government with power to make the reference and the Industrial Tribunal to adjudicate it.
The expression 'Industrial dispute ' is defined in Sec.
2(k) to mean 'any dispute or difference between employers and employers or between employers and workmen, or between workmen and workmen, which is connected with the employment or non employment or the terms of employment or with the conditions of labour, of any person '.
The question is: whether a demand for confirmation in the promoted post after a lapse of a certain time would be a dispute which is connected with the terms of employment or the condition of labour in the facts and circumstance of this case ? The expression 'industrial dispute ' has been the subject matter of numerous decisions of this Court and the High Courts.
The one feature common to all the decisions is that the expressions has been so widely defined as not to leave anything out of its comprehension and purview involving the area of conflict that may develop between the employer and the workmen and in respect of which a compulsory adjudication may not be available.
This is recognised to be the width and comprehension of the expression.
Keeping in view this extensive definition, let us approach the contention in this appeal.
It cannot be gain said that the dispute is between the employer 646 and their workmen.
The question is whether the dispute is connected (leaving aside the words not necessary) with the terms of employment of the workmen ? Since the introduction of the (1946 Act for short), it has been made obligatory for the employer in an industrial establishment to prepare a draft of standing orders and get them certified under the Act.
4 of the 1946 Act requires the employer to make provision in the standing orders for every matter set out in the Schedule which is applicable to the industrial establishment.
The Schedule provides amongst others for making provision in the standing orders for classification of workmen for example, whether permanent, temporary, apprentices, probationers or badlis.
This classification of workmen by the employer is thus made obligatory and has to be provided for in the standing orders.
It is also well settled that certified standing orders which have a statutory flavour prescribe the conditions of service and they shall be deemed to be incorporated in the contract of employment of each workman with his employee Sudhir Chandra Sarkar vs Tata Iron & Steel Co. Ltd. It would therefore follow as a corollary that the employer will have to classify the workmen and failure to classify would be violative of the 1946 Act.
Now if there is a statutory obligation to classify workmen under the 1946 Act, the classification would be permanent, temporary, apprentices, probationers and all other known categories such as acting, officiating etc.
In respect of the classification, a dispute can conceivably arise between the employer and the workman because failure of the employer to carry out the statutory obligation would enable the workman to question his action which will bring into existence a dispute.
It would become an industrial dispute because it would be connected with the conditions of employment.
It becomes a condition of employment because necessary conditions of service have to be statutorily prescribed, one such being classification of workmen.
Therefore, without anything more where the demand of the workmen was to confirm employees employed in an acting capacity in a grade, it would unquestionably be an industrial dispute.
This conclusion gets reinforced by a slightly different approach.
7 A of the provides that 647 the appropriate Government may by notification in the official Gazette constitute one or more Industrial Tribunal for the adjudication of industrial dispute relating to any matter whether specified in the Second Schedule or the Third Schedule.
Entry at plecitum 7 in the Third Schedule reads 'Classification by Grades '.
If there is any dispute in respect of classification by grades, it will necessarily be an industrial dispute.
This was not only not questioned but would flow indisputably from the language of Sec.
7 A, which provides for setting up of Industrial Tribunal for adjudication of industrial dispute relating to any matter specified amongst others, in the Third Schedule.
Therefore, even if one does not reach the conclusion that the dispute raised in question would be an industrial dispute by reference to the standing orders certified under the 1946 Act, a mere reference to Entry 7 of the Third Schedule read with Sec.
7 A would clinch the issue.
Let it be recalled that the demand of the workmen was for confirmation of employees promoted to the higher grade and acting in the higher grade for more than 3 months.
In other words, the demand was for classification of the workmen officiating in the higher grades either as permanent or temporary and they should not be continued indefinitely as temporary by making them permanent on rendering of continuous service in the higher grade for a period of three months.
The demand involves both the classification of employees and classification by grade.
Unfortunately, the Industrial Tribunal overlooked this obvious fact situation by mis interpreting the demand and reached a wholly untenable conclusion that the demand was for promotion which appeared to the Tribunal to be a managerial function and beyond the reach of adjudication.
It appears to have been contended before the Tribunal and vigorously re canvassed before us that removing the camouflage of language, the demand in terms seeks promotion to higher grade and promotion being a managerial function, the Industrial Tribunal had no jurisdiction to entertain the same.
The Tribunal after referring to the decision of this Court in Management of Brooke Bond India (P) Ltd. vs Workmen held that the demand shorn of verbiage is one for promotion which is the managerial function and therefore cannot be the subject matter of industrial adjudication.
To recall the words of the Tribunal, 'to seek confirmation of a workman in 648 a particular higher grade would mean a promotion as a confirmed workman who is entitled to some of the benefits such as not being removed from service without following certain procedure or promotion to higher post which benefits may not be available to a temporary hand, ' and this is nothing short of demanding promotion which is a managerial function.
We are unable to appreciate this approach unwarranted in the facts and circumstances of this case, because the decision in the Brooke Bond Case has to be understood in the context of the demand that was referred to the Industrial Tribunal for adjudication.
The demand was as under: "All things being equal, seniority shall count for promotion.
If the senior person has been overlooked in the question of promotion, he is at liberty to ask the concern for the reason why he has been overlooked, in which case the concern shall give him the reasons, provided that it does not expose the concern or the officer giving reasons, to any civil or criminal proceedings.
" The Tribunal in that case after accepting that promotion was a management function and had to be left to the discretion of the management which had to make choice from amongst the employees for promotion proceeded to hold that the action of management in the facts and circumstances of the case was malafide.
In appeal against this award of the Tribunal, a Constitution Bench of this Court observed as under: "Generally speaking, promotion is a management function; but it may be recognised that there may be occasions when a tribunal may have to interfere with promotions made by the management where it is felt that persons superseded have been so superseded on account of mala fides or victimisation.
" This view was also reiterated in the case of the present employer in The Hindustan Lever Ltd, vs The Workmen wherein the Court observed that it was not disputed before them that ordinarily promotion is a management function.
649 In the heyday of laissez faire and market economy, wage determination, hours of work, disciplinary measures including quantum of punishment, in short prescribing all enveloping conditions of service were the preserve of management, styled as managerial functions.
This relic of the past is slowly withering away since the introduction of the Constitution ushering in socioeconomic revolution through law.
Most of the managerial functions in relation to work force have been swept away by legislative enacments enacted to give effect to articles 38, 39 and 41 of the Constitution yet the Tribunal dug out from the bebris of the past, the concept of managerial function and by a distorted construction of the language of the reference comprehended it in the concept of managerial function and denied to itself the jurisdiction to adjudicate it.
In the process the Tribunal failed to take note of the development of law since the decision in Brooke Bond Case.
Since the decision of the Constitution Bench of this Court in All India S.M. and A.S.M. 's Association vs General Manager, Central Railway it is well settled that equality of opportunity in the matter of public employment guaranteed by article 16 (1) not only ensures it at the time of entry in public employment but ensures it even in the matter of promotion.
If equality in the matter of promotion is constitutionally guaranteed as the fundamental right, it is time to reconsider this archaic view of the laissez faire days that promotion is a management function.
The whole gamut of labour legislation is to check, control and circumscribe uncontrolled managerial exercise of power with a view to eschew the inherent arbitrariness in the exercise of such functions.
In the decisions of this Court it is assumed without controversy that promotion is a managerial function.
It may have to be re examined in an appropriate case.
But it is not necessary to go so far in this case and we would proceed on the assumption that the passing observation made by the Constitution Bench in Brooke Bond case settled the law as far as this country is concerned that promotion is a management function though we would like to point out that the expression 'terms of conditions of employment ' would ordinarily include not only the contractual terms and conditions but those terms which are understood and applied by the parties in practice or habitually or by common consent without ever being incorporated in the contract.
In England, it is settled law that promotion is comprehended in the 650 expression ' terms of employment of the employees. ' In British Broadcasting Corporation vs Hearn & others and in R. Industrial Disputes Tribunal & Anr.
Ex parte Queen Mary College, University of London it was held that claim for promotion is connected with terms of the employment of the employees.
Even on the footing of the law, as it stands at present in this country, that promotion is a management function, the industrial dispute referred to the Tribunal was not one for claiming promotion.
The Tribunal committed a grave error in so mis interpreting the dispute referred to it.
The Tribunal overlooked the fact that the demand was in respect of workmen already promoted i.e. in respect of whom managerial function of selecting personal for promotion had been already performed.
The demand was in respect of already promoted workmen, may be in an officiating capacity, for their classification from acting or temporary to confirmed that is permanent, in the higher grade to which they were promoted, after a reasonable period of service which according to the Union be three months of service.
By no cannon of construction, this demand could be said to be one for promotion.
Therefore, the decision in Brooke Bond case and followed in the case of this very employer had no application to the facts of this case and the Tribunal misdirected itself in rejecting the reference on this narrow ground.
Accordingly, this appeal succeeds and is allowed and the award of the Industrial Tribunal on the preliminary issue is quashed and set aside and the matter is remitted to the Tribunal for disposing of the reference on merits.
As the matter is an old one and we were told that persons continuously officiating in the higher grade for more than five years are not confirmed, the Tribunal is directed to give top priority to the reference and dispose it of as early as possible and not later than six months from today.
The respondent shall pay the costs of the appellant quantified at Rs. 2,000.
M.L.A. Appeal allowed.
[/INST]The appellant was employed in a public sector undertaking.
He was dismissed on charges of misconduct consisting of absence from duty, falsification of entries in the registers destruction of records etc.
Since an industrial dispute was pending before the Labour Court between the Management and its workman an application was filed by the management under section 33(2) (b) of the seeking approval of the Labour Court to the order of dismissal passed against the appellant.
The decision of the application was partly in favour of the appellant and partly against him.
The Labour Court held: (1) that the domestic inquiry was invalid because the Chief Medical officer was neither competent to issue the charge sheet nor to constitute the Enquiry Committee which held the appellant guilty of the charges framed against him, and (2) that the management should be given an opportunity to adduce evidence to justify the order of dismissal.
The appellant filed a writ petition against the latter part of the Court 's order contending that the management should not be allowed to lead evidence to justify the order of dismissal.
The management on the other hand filed a writ petition against the former part of the order of the Labour Court by which it held that the enquiry was vitiated.
The High Court dismissed both the writ petitions.
545 The management filed an appeal in this Court complaining of the finding of the High Court that it was not competent for the Chief Medical officer to charge sheet the appellant or to constitute the Enquiry Committee.
The appeal was, however, dismissed and the findings of the Labour Court and the High Court that the enquiry which resulted in the dismissal of the appellant was vitiated, was upheld.
After the disposal of the above appeal, the Labour Court resumed hearing of the matter and allowed the management to lead evidence in order to justify the order of dismissal.
The appellant filed an application objection to the management leading evidence but that application was dismissed.
The writ petition filed by the appellant in the High Court was also dismissed.
In the appeal to this Court, it was contended on behalf of the appellant workman that the employer did not ask for an opportunity to lead evidence to justify the order of dismissal and that the Labour Court gave that opportunity on its own accord and that it was open to him to argue even at this stage that the Labour Court ought not to have passed the particular order.
Dismissing the Appeal, ^ HELD: 1.
(i) In a proceeding under section 33(2) (b) of the it is open to the employer to lead evidence to justify the order passed against the employee.
[548E] (ii) In passing the order allowing the employers to lead evidence, the Labour Court cannot be said to have acted without jurisdiction.
[553E] Delhi Cloth and General Mills Co. vs Ludh Budh Singh ; and Shankar Chakravarti vs Britannia Biscuit Co.Ltd. ; , referred to.
In the instant case, the employers who are respondent No. 2 filed an application under section 33(2) (b) of the Act, asking for the approval of the Labour Court to the order of dismissal which was passed against the appellant.
By that application, they did not ask alternatively for an opportunity to lead evidence to justify the order of dismissal.
The tenor of the judgment of the Labour Court shows that, in all probability an oral request for permission to adduce evidence was made by the employers to the Labour Court when the hearing of the said application was coming to a close.
The contention of the appellant that the employers did not ask for such an opportunity and that the Labour Court gave them that opportunity on its own accord, is farfetched and cannot be accepted.
[550E G] 2.
A question of law which does not require a fresh investigation into facts may be allowed to be raised at a later stage of the proceedings but that is subject to the qualification that question is not concluded by a decision between the same parties.
[552F] 546 Chitturi Subbanna vs Kudappapa Subbanna, ; , referred to.
In the instant case, the question as to whether the Labour Court was right in giving an opportunity to the employers to lead evidence, is not being raised by the appellant for the first time in this Court.
It was raised in the writ petition filed in the High Court.[552G] 3.
In so far as questions of facts are concerned, the Court is not concerned with the correctness or otherwise of the earlier judgment while determining the application of the rule of res judicata.
Where however, the question is purely of law and relates to the jurisdiction of the Court or where the decision of the Court sanctions something which is illegal the party affected by that decision will not be precluded by the rule of res judicata from challenging the validity of the earlier decision.
The reason is, that a rule of procedure cannot supersede the law of the land.
[552D E] 4.
If an erroneous decision on a question of law is rendered by a Court by assuming jurisdiction which it does not possess, its decision cannot operate as res judicata even between the same parties.
[553A] Mathura Prasad Bajoo Jaiwal vs Dassibal N.B. Jeejeebohoy, [1970]3 S.C.R. 830, referred to.
In the instant case the Labour Court had the jurisdiction to decide whether to allow the employers to lead evidence or not.
It may have acted irregularly in the exercise of that jurisdiction but that is to be distinguished from cases in which the Court inherently lacks the jurisdiction to entertain a proceeding or to pass a particular order.
What seems to have happened is that the application filed by the employers under section 33(2) (b) was taken up for consideration first.
When the hearing of that Application was nearing completion, but before the final orders were passed therein, the employers asked for an opportunity to lead evidence to justify the order of dismissal.
The Labour Court disposed of both the matters together by a common judgment.
It held by one and the same order that the departmental inquiry was vitiated but that the employers should be allowed to lead evidence to justify the order of dismissal.
[553B; D E]
</s> |
<s>[INST] Summarize the judgementCivil Appeal Nos.
1256 1258 of 1981.
451 Appeals by Special Leave from the Judgment and Order dated 9.9.1980 of the Calcutta High Court in Appeal Nos. 94, 122 & 95 of 1980 respectively.
S.N. Kacker and H.R. Puri for the Appellant.
Shankar Ghosh, B.P. Maheshwari and Miss Asha Jain for Respondent No. 1.
Dalip Sinha, G.S. Chatterjee and P.K. Chatterjee for Respondent No. 2.
The Judgment of the Court was delivered by DESAI, J.
M/s Jethabhai Khatu & Co., a partnership firm, is the appellant in all the three appeals.
The respondents in all the three appeals are: (1) Luxmi Narayan Cotton Mills Ltd., an incorporated Company ( 'company ' for short), (2) State of West Bengal, (3) S.K. Dutta, who was for some time a receiver appointed by the High Court; (4) Grindlays Bank, ( 'Bank ' for short), having a fixed deposit account in the name of Receiver.
S.K. Dutta on behalf of Luxmi Narayan Cotton Mills Ltd., (5) A.K. Dutta, and (6) R.C. Deb, who claim to have been appointed as joint receivers after removal of Sh.
S.K. Dutta.
Appellant filed suit No. 1194/66 against the company on the original side of the Calcutta High Court to recover a certain amount due under two separate heads.
By the time the suit came up for hearing the board of Directors of the 1st respondent company was superseded and one Gurudas Sharma was appointed as an Administrator.
The Administrator on behalf of the 1st respondent company entered into a compromise with the appellant in respect of the claim in suit of the appellant and after obtaining leave of the Court to settle the matter, invited a consent decree by which the company was held liable and directed to pay Rs. 2,85,000 with interest thereon at 6% per annum from January 6, 1970, the date of the decree, till realisation.
The Ist respondent company was given an option to pay the decretal amount by monthly instalments of Rs. 5,000, the first instalment becoming due and payable on March 15, 1970, and each subsequent instalment to be paid by 15th day of the next succeeding month.
The default clause in the consent decree provided that if the company committed default in payment of any two instalments within the time stipulated in the decree, the whole of the decretal amount and the interest on the balance of the decretal 452 amount will become due and payable at once.
It appears that the Ist respondent company received Rs. 15,00,000 from the Custodian of Enemy Property in respect of its cotton Mills situated in Narayanganj, Bangladesh.
The 3rd respondent S.K. Dutta appears to have been appointed a receiver in respect of this compensation amount and he appears to have deposited Rs. 8,40,000 out of the compensation amount in fixed deposit account evidenced by receipt No.1002 2539 with the Bank at its Netaji Subhash Road Branch, Calcutta.
The appellant, by an order dated April 5, 1978, of the Calcutta High Court, obtained leave to execute the decree by attachment of funds lying in the hands of the 3rd respondent receiver S.K. Dutta (Annexure 'D ').
By the date of the order Rs. 4,20,702.94 p. had become due and payable under the decree.
Pursuant to this order an interim attachment was levied under order 21 Rule 52 C.P.C.
On the amount covered by the aforementioned fixed deposit receipt, and accordingly the Master of the Court, Shri S.K. Ghosh informed the 3rd respondent receiver by the writ of the Court dated April 12, 1978, that the receiver shall hold the money under the fixed deposit account subject to such order as may be made respecting the same in the suit in which he had been appointed a receiver and subject to further orders of the Court (Annexure 'E ').
The Master confirmed the interim attachment by his order dated April 24, 1978 (Annexure 'F ').
On May 4, 1978 upon a petition by the appellant the Court directed the receiver 3rd respondent to pay the sum of Rs. 4,20,702.94 to the appellant decree holder out of the amount in the fixed deposit account of the judgment debtor with the Bank in fixed deposit receipt No. 1002 2539 standing in the name of the receiver which was attached in terms of order dated April 12, 1978, as confirmed by the order dated April 24, 1978.
Presumably neither the 3rd respondent receiver nor the Bank effectively implemented the order dated May 4, 1978, whereupon the appellant moved the Court during the vacation on May 24, 1979, for an appropriate direction and a learned single Judge of the Calcutta High Court working as vacation judge gave the directions prayed for.
As this order has some legal consequences in this matter, it would be advantageous to extract it.
It reads as under: "There will be an order in terms of prayers (a) & (b) of the petition.
Prayer (a): That the receiver Sudhir Kumar Dutta be forthwith directed to instruct and intimate to the Grindlays Bank Ltd., Netaji Subhash Road Branch, Calcutta, to pay 453 a sum of Rs. 4,29,702.94 p. to the petitioner decree holder in terms of the payment order dated 4th May, 1978 out of the amount of the Fixed Deposit of the judgment debtor with Grindlays Bank Ltd., in Fixed Deposit Receipt No. 1002 2539 which has been Lying attached in terms of the order dated 12th April, 1978 and is confirmed by the order dated 24th April, 1978 and the said Grindlays Bank Ltd., Netaji Subhash Road, Branch, Calcutta, be directed to pay the said sum of Rs. 4,20,702.94 p. to the petitioner decree holder; Prayer (b): That Grindlays Bank Ltd., Netaji Subhash Road Branch, Calcutta, be directed to pay the said sum of Rs. 4,20,702.94 p. to the petitioner decree holder in terms of the payment order dated 4th May, 1978, out of the said fixed deposit receipt No. 1002 2539.
" Effectively this order of the Court directed the receiver to pay the amount therein mentioned to the decree holder and the Bank, the keeper of the fixed deposit account of the receiver was also put under an obligation not to raise any objection on receiver withdrawing the money and paying the same to the decree holder.
In fact upon its true construction, the Bank was also under an obligation to take effective steps to pay the amount mentioned in the order to the decree holder.
It appears that these directions were not obeyed.
Consequently, the appellant moved the Court for holding the 3rd respondent receiver S.K. Dutta and the 4th respondent Bank in contempt and for passing appropriate order for punishing them for contempt unless they purged themselves of the contempt.
On June 7, 1979, when the petition for taking action against the alleged contemners came up before the Court, respondents 5 and 6 appear to have been appointed as joint receivers.
The Bank appeared through its counsel Mr. Majumdar and the joint receivers appeared forth themselves as well as for their respective clients, namely, 1st respondent company and the 2nd respondent State of West Bengal.
Mr. Majumder, learned advocate for the Bank undertook to the Court to comply with the order dated May 24, 1979, to pay the amount therein mentioned to M/s Maharia & Co. Advocate on record for the appellant.
The court directed that on such payment being made the Bank shall be absolved from all the liability in respect of the said amount.
The Court specifically noted that in view of the undertaking given by the learned advocate on behalf of the 454 Manager of the Bank, the Court was not inclined to pass any order in respect of the contempt application and the application for taking action in contempt was accordingly disposed of.
At this stage.
Mr. A.K. Dutta appearing for the Ist respondent company prayed for stay of a portion of the order of the Court which prayer was specifically refused observing that as no fresh orders have been passed on that day affecting the interests of the said Company, no question of granting stay of a portion of the order arises.
The Court specifically directed that all the parties and particularly the Manager of the Bank should act on the signed copy of the minutes.
It appears that the solemn undertaking given by the Bank was not acted upon.
Probably soon thereafter some interim orders were obtained as would transpire from the order of Mrs. Padma Khastgir, J. dated March 7, 1980.
When the matter came up on March 7, 1980, the court observed that there will by no order on the applications before it save and except that the receiver will hold the balance sum of Rs. 4,19,697.06p till further order of the Court.
The Court also declined to grant prayer for discharge of the receiver S.K. Dutta, the 3rd respondent, because notice of the application was not served upon him.
This observation would, however, establish that till March 7, 1980, the 3rd respondent was not discharged as a receiver though from the recitals in the order dated June 7, 1979, it appears that by that date A.K. Dutta and R.C. Deb were functioning as joint receivers.
In this order it was distinctly made clear that except what is stated the specifically in the order all interim orders were vacated.
However, the Court at the instance of joint receivers stayed the portion of the order dated March 7, 1980, for a period of a fortnight.
To clarify the position it may be mentioned that when the Court directed that balance of Rs. 4,19,697.06 will be held by the receiver it would imply that would be the balance after payment of the amount directed to be paid to the appellant.
Specifically this order has the effect of confirming the earlier order dated May 24, 1970, to pay the decretal amount to the appellant.
If appears that thereafter three appeals came to be filed before the Division Bench of the Calcutta High Court.
Appeal No. 95/80 and Appeal No. 94/80 were preferred by the Ist respondent company.
Appeal No. 122/80 was preferred by the 2nd respondent State of West Bengal.
These three appeals were preferred against the order dated March 7, 1980, made by Mrs. Padma Khastgir, J.
In the two appeals preferred by the Ist respondent company a Division Bench of the Calcutta High Court by its order dated 455 March 27, 1980, granted ad interim stay as under: "The Joint Receivers, R.C. Deb and A.K. Dutta are directed not to part with any money lying deposited under the fixed deposit receipt No. 1002/2529 in the Grindlays Bank.
There will be an order directing the Grindlays Bank Ltd., of 29, Netaji Subhash Road not to disburse any amount in respect of fixed deposit No. 1002 2539 standing in the name of S.K. Dutta, the fixed deposit receipt whereof is Lying deposited with the present joint receivers R.C. Deb and A.K.Dutta .
Order of injunction restraining Jethabhai Khatau and Co. from obtaining any payment out of the moneys lying in the Grindlays Bank and held by the joint receivers or receiver.
" This interim order was confirmed by the Division Bench by its order dated September, 9, 1980.
Hence these three appeals by special leave.
Frankly, this Court ordinarily does not interfere with interim orders unless and until manifest injustice convulsively shakes it.
Even then, with our usual response of reluctance to undertake to examine interim orders, only a notice to show cause why special leave should not be granted and the interim stay application not be considered, was issued to the respondents.
After notices were served and counter affidavits and rejoinder affidavits were filed, this matter came before us about four weeks back, our hands off attitude to interim orders manifested itself when we adjourned the matter for four weeks indicating to the parties, especially the respondents who are appellants before the High Court, to take executive steps to get their appeals placed on the cause list for hearing and to move for expeditious disposal of the same.
We also declined to grant any interim relief.
We so adjourned the matter in the fond hope that we may hang on to our tenuous view that ordinarily we would not undertake to deal with interim orders.
Our hope has proved a mirage.
When this matter was listed before us on April 3, 1981, Mr. Kackkar, learned counsel for the Appellant stated that almost within the dying embers of the time granted by this Court an attempt was 456 made by the respondents to get their matter listed in the High Court and the only order that the court has made is that the appeals be added to the cause list of the Division Bench and it would be anybody 's guess when this last added matter would reach hearing.
Having no alternative left open to us, we have heard the matter.
As the appeals are pending before the Division Bench of the Calcutta High Court and are to be heard on merits, we would make every manageable human effort to avoid any expression of opinion which may even remotely interfere with judicious adjudication of the issues before the Division Bench.
However, we make it clear that even if there is any express or implied opinion discernible in this order, the same has to be wholly ignored by the High Court while disposing of the appeals on merits.
With this extra caution we proceed to dispose of these appeals.
As every stage of the proceeding has been neatly delineated by us with the orders of the Court referred to in details, the permissible inferences may alone be set out.
What is the injudicious situation which may bring disrepute to judicial process, stares in the face.
The consent decree under which appellant was entitled to recover Rs. 2,85,000 with interest, at the rate of 6% per annum from the date of the decree till realisation was made by the Court on January 6, 1970.
The decree without being satisfied in its minutest part has collected dust for 11 years.
And at present who is impeding the execution of the decree ? It is the 1st respondent company which has been a party to the consent decree and which decree has become final and unassailable.
There is no proceeding at precent questioning the correctness, validity or legality of the decree or its binding character on the 1st respondent company.
It is again incontrovertible that the judgment debtor Ist respondent company has in its fixed deposit with the 4th respondent Bank a sum of Rs. 8,40,000.
That his amount is of the ownership of the judgment debtor is not in dispute.
3rd respondent S.K. Dutta was once a receiver.
Respondents say that he has been removed and respondents 5 and 6 who are respectively the Advocates of the Ist respondent company and the 2nd respondent State of West Bengal claim to be appointed as joint receivers.
The date of appointment is not made clear but the order dated March 7, 1980 (Annexure 'J ') by Mrs. Padma Khastgir, J. leaves no room for doubt that till that date 3rd respondent S.K. Dutta was not discharged as receiver.
457 The High Court on a petition of the appellant levied attachment under order 21 Rule 52 C.P.C.
On the amount Lying in fixed deposit account with 4th respondent Bank in the name of 3rd respondent S.K.Dutta as receiver of the first respondent company by order dated April 5, 1978.
This attachment order was levied by the Master of the Court and the interim attachment was confirmed.
Admittedly these orders were not challenged.
Sabyasachi Mukerjee, J. by his order dated May 4, 1978, directed 3rd respondent S.K. Dutta to pay the amount of Rs. 4,20,702.94 P. Out of the amount Lying in fixed deposit receipt No. 1002 2539 with the fourth respondent Bank to the appellant in satisfaction of the decree.
This order may appear to have become final as not having been questioned by any one.
Manoj Kumar Mukherjee, J. by his order dated May 24, 1979, directed 3rd respondent S.K.Dutta, receiver of the Ist respondent company to pay Rs. 4,20,702.94 p.
Out of the fixed deposit account held by him as receiver of the Ist respondent company to the appellant and a consequential order was made directing the Bank to pay the amount set out in the order to the appellant.
This order dated May 24, 1979, may appear to have become final as it appears not to have been questioned, challenged or appealed by any one.
Failure to comply with the court 's mandatory direction led the appellant to file a petition for contempt.
The alleged contemners impleaded were Ist respondent company and the 4th respondent Bank.
When this petition for taking action in contempt came up before Manoj Kumar Mukherjee, J. there appeared on the scene one Mr. Majumdar, learned counsel for the 4th respondent Bank as well as the two joint receivers functioning in dual capacity as joint of receivers as well as learned counsel for the respective clients, namely, Ist respondent company and the 2nd respondent State of West Bengal.
At the hearing of this motion for taking action for contempt, Mr. Majumdar learned counsel for the 4th respondent unreservedly agreed to comply with the order of the Court on May 24, 1979, which means that he agreed and undertook to pay the amount of Rs. 4,20,702.94 out of the fixed deposit account in the name of 3rd respondent S.K. Dutta, receiver of the Ist respondent company.
It is because the Bank agreed unreservedly and unconditionally to pay up the amount that the motion for taking action in contempt was discharged by the Court.
No action was sought to be taken against the joint receivers who had interposed themselves in the meantime.
Therefore, the court declined to accede to their request to stay a 458 portion of the order.
The order dated June 7, 1979, is not a fresh order on merits.
It was merely an implementation of the order dated May 24, 1979, which may appear to have become final and binding.
Yet the 1st respondent company and the 2nd respondent State of West Bengal took no further action and surprisingly the Bank also joined hands with them by not paying the amount till March 7, 1980.
Maybe, there may be some interim orders.
We are not made knowledgeable about the nature and character of those interim orders save and except what has been recited in the order dated March 7, 1980, of Mrs. Padma Khastgir, J. However, there seems to be some apparent collusion between the company on one hand and the joint receivers in not complying with the court 's order dated May 24, 1979, even though action for contempt was avoided by giving an unconditional undertaking to carry out that order.
The three appeals were preferred against the order dated March 7, 1980.
That order has nothing to do with order dated May 24, 1979, or the order dated June 7, 1979.
At any rate, the order dated May 24, 1979, may appear to have become final.
Would it be appropriate in such circumstances to grant an interim stay of the portion of an order which may appear to have become final in an appeal against an altogether different order? Mr. Shankar Ghose, learned counsel for the respondent wanted us to take note of various allegations against the 3rd respondent, the receiver, the fact that he was removed, the fact that he was colluding with the appellant and that he was negligent as also that he was discharged at some stage of the proceedings.
At this stage, these contentions in our opinion are not very relevant.
Maybe, there is merit in these contentions.
Maybe, the Division Bench hearing the appeals by the Ist and 2nd respondent will examine these contentions on merits.
The only live issue is whether would it be fair while granting stay of the order dated March 7, 1980 to effectively stay the order dated March 24,1979, which appears not to be under appeal though its validity may be questioned in the course of hearing of the appeal? If that be so, could the Court overlook attempt of the Ist and 2nd respondents to circumvent the order by obtaining an interim stay in such manner that an order not under appeal gets frozen '? It is, therefore, that we propose to interfere with the interim order made by the Division Bench of the Calcutta High Court on September 9, 1980, confirming the ad interim order dated March 7, 1980, to a limited extent so that an impression that the court 's process can be lightly trifled with, may be avoided.
459 Under the circumstances the proper thing to do would be to set aside the interim stay order dated March 27, 1980, as also the order dated September 9, 1980, confirming the interim order but in order to ensure the resultant justice as we are interfering with an interim order, we consider it proper to give certain directions, while restoring status quo ante in the event the appeals filed by respondents 1 and 2 are allowed or any specific positive direction is given by the court in this behalf.
We accordingly allow these appeals and set aside the orders made by the Division Bench on March 27, 1980 and September 9, 1980.
The result would be that the order dated May 4, 1978, by Sabyasachi Mukherjee, J. and order dated May 24, 1978, made by Manoj Kumar Mukherjee, J. as also the undertaking given by the manager of the 4th respondent Bank through his learned counsel Shri Majumdar before Manoj Kumar Mukherjee, J. On June 7, 1979, would be revived and would be effective and will have to be implemented.
In pursuance to the aforementioned two orders, the 4th respondent Bank will have to pay Rs. 4,20,702.94 p. to the decree holder appellant towards the decretal amount.
On receipt of the amount the appellant shall pass a receipt acknowledging receipt of the amount and to the extent of the payment of the amount herein indicated the liability of the 4th respondent Bank to the Ist respondent company or anyone claiming on its behalf or the 3rd respondent receiver shall stand discharged.
Before the amount is paid, the appellant shall give security to the satisfaction of the High Court and also an undertaking on affidavit to the Division Bench of the Calcutta High Court before which the appeals preferred by the Ist and 2nd respondents are pending that in the event the appeals are allowed which makes it consequently necessary for the appellant to repay the amount received from the 4th respondent Bank in payment of the decretal amount, the appellant shall deposit the said amount with the Calcutta High Court within one month from the date of the order of the appellate Bench.
The appeals will stand disposed of as herein indicated with no order as to cost.
N.V.K. Appeals allowed.
[/INST]The respondent assessee an existing company under the had neither any share capital nor distributed any dividend to its members and its entire income was expended for fulfilment of its objects, which were the promotion, protection and development of trade, commerce and industry in India.
During the assessment year 1962 63, the relevant accounting year for which the year ended December 31, 1961 the assessee submitted a return showing its total income as 'nil ' claiming that all its income was exempt under section 11(1)(a) read with Section 2(15) of the Income Tax Act.
During the assessment year, the assessee held the Indian Trade Fair at New Delhi and derived receipts from rent for space allotted, temporary stalls and storage and realised deposit and advances from the participants for hotel accommodation.
In the relevant accounting year, the Conference of the Afro Asian Organisation for Economic Cooperation, was sponsored by the assessee and for organising the Conference, the assessee received from the Government Rs. 3 lakhs as grant in aid and after meeting the expenses, was left with a balance of Rs. 2 lakhs.
It also received income by sale of books, fee for arbitration etc.
The balance sheet for the accounting year indicated that it had an excess of income over expenditure under the head 'income '.
The contention of the assessee before the Income Tax Officer was that the activities carried on by the Federation were not were not motive of earning profits, but that they were carried on with the object of promotion, protection and development of trade, commerce and industry in India and abroad, and therefore the income derived by the assessee was exempt under section 11(1)(a).
The Income Tax Officer, held that the decision of this Court in the Andhra Chamber of Commerce 's case [1965] I.S.C.R. 565 was no longer good law due to the addition of the words 'not involving the carrying on any activity for profit ' in the definition of 'charitable purpose ' in Section 2(15) of the Act which qualify the fourth head of charity viz. 'any other object of general public utility ' and, therefore, must be read subject to the additional statutory requirement that the 490 object of general public utility should not involve the carrying on of any activity for profit, and accordingly raised a demand.
On appeal by the assessee, the Appellate Assistant Commissioner disagreed with the view of the Income Tax Officer and held that the activities carried on by the assessee were not profit oriented and, therefore, its income was exempt.
The Department appealed to the Appellate Tribunal, and the Appellate Tribunal upheld the view of the Appellate Assistant Commissioner and held that the dominant object with which the Federation was constituted being a charitable purpose viz., promotion, protection and development of trade, commerce and industry, there being no motive to earn profits, it was not engaged in any activity in the nature of business or trade, and, if, any income arose from such activity, it was only incidental or ancillary to the dominant object for the welfare and common good of the country 's trade, commerce and industry.
The Commissioner of Income Tax applied to the Appellate Tribunal to make a reference to the High Court under sub section (1) of section 256 of the Act, but in view of the conflict in the decisions of the High Courts on the construction of the expression 'charitable purpose ' as defined in section 2(15) of the Act the Tribunal made a reference to this Court under Section 257 .
On the question whether the words 'not involving the carrying on of any activity for profit ' in the definition of 'charitable purpose ' contained in section 2(15) of the Act, govern the word 'advancement ' and not the words 'object of general public utility '.
^ HELD: [By the Court] The reference must be answered against the Revenue and in favour of the assessee, in the view of the majority opinion in Addl.
Commissioner of Income Tax vs Surat Art Silk Cloth Manufactures, [1980] I S.C.R. 77.
[492 F] [Per A.P. Sen, J.] 1.
The majority view in the Surat Art Silk case was that the condition that the purpose should not involve the carrying on of any activity for profit would be satisfied if profit making is not the real object.
The theory of dominant or primary object of the trust, has, therefore, been treated to be the determining factor, even in regard to the fourth head of charity, viz. advancement of any other object of general public utility, so as to make the carrying on of business activity merely ancillary or incidental to the main object.
This doctrine of dominant or primary object holds the field till there is a change of law.
[496 C D, 497 F] 2.
The majority decision had the effect of neutralising the radical changes brought about by Parliament in the system of taxation of income and profits of charities, with particular reference to "object of general public utility" to prevent tax evasion, by diversion of business profits to charities.
It is the vagueness of the fourth head of charity "any other object of general public utility" that impelled 491 Parliament to insert the restrictive words "not involving the carrying on of any activity for profit".
[496 G 497 A] 3.
It was clearly inconsistent with the settled principles to hold that if the dominant or primary object of a trust was 'charity ' under the fourth head 'any other object of general public utility ', it was permissible for such an object of general public utility to augment its income by engaging in trading or commercial activities.[497 B] 4.
When the Government did not accept the recommendation of the Direct Taxes Laws Committee in Chapter 2 for the deletion of the words "not involving the carrying on of any activity for profit" occurring in Section 2(15) of the Act, it was impermissible for the Court by a process of judicial construction to achieve the same result.
[496 F] 5.
In the instant case, activities of the assessee in regard to holding of the Indian Trade Fair and sponsoring of the Conference of the Afro Asian organisation in the relevant accounting year were for the advancement of the dominant object and purpose of the trust, viz. promotion, protection and development of trade, commerce and industry in India.
The income derived from such activities was therefore exempt under section 11(1)(a) read with section 2(15) of the Act.
[498 G 499 A] 6.
There is a distinction between the "purpose" of a trust and the "power conferred upon the trustees" as incidental to the carrying out of the purpose.
If the primary or dominant purpose of a trust or institute is charitable, any other object which is merely ancillary or incidental to the primary or dominant purpose, would not prevent the trust or the institution being a valid charity.
[498 G, 499 A] [Per Venkataramiah, J.] 1.
It is open to the Legislature to give encouragement to objects which it considers to be laudable by means of fiscal exemptions.
At the same time, it takes care to enact fresh provisions from time to time to suppress any mischief which may have resulted from the misuse of existing law.
Parliament deliberately stepped in by adding the words "not involving the carrying on of any activity for profit" in the definition of 'charitable purpose ' in section 2(15) of the Act, when the tax exemptions available to charitable and religious trusts came to be misused by some for the unworthy purposes of tax avoidance.
The law had been so restructured to prevent allergy to taxation masquerading as charity.
The law was thus designed by Parliament to prevent this misuse of tax exemption in the name of charity.
[500 F H] 2.
This Court has enlarged the meaning "charitable purpose" in Section 2(15) beyond what it legitimately should mean in the Surat Art Silk Cloth Manufacturers Association 's case.
It has virtually wiped off the restrictive words "not involving the carrying on or any activity for profit" occurring in section 2(15), thereby defeating the very object and purpose of the legislation.
It is not the function of a court of law to give the words a strained and unnatural meaning.
Judicial attitudes cannot be formed in isolation from legislative processes, particularly, in connection with tax avoidance provisions.
[500 D, 501A, 500E] 492 3.
Modern legislation has changed in pattern re casting provisions of taxation with very wide language, while at the same time dealing in much more detail with some areas of law.
Judges while responding to general trends of law, but also reacting to the form of modern tax legislation, must be prepared to take account of the context and purposes of the change brought about.[501 E] Greenberg vs Inland Revenue Commissioners [1972] A.C. 109 (HL) referred to.
When the Government had not accepted the recommendation of the Direct Taxes Laws Committee in Chapter 2 for the deletion of the words "not involving the carrying on of any activity for profit", by suitable legislation, it was impermissible by a process of judicial construction to achieve the same result.
[501 B] 5.
People who are truly charitable do not think of the tax benefits while making charities.
Even the poor who do not pay income tax can be charitable and their charities are made at great personal inconvenience.
Charitable persons are not amongst the tax payers only.
[502 H 503 A]
</s> |
<s>[INST] Summarize the judgementivil Appeal No. 977 of 1976.
From the Judgment and Order dated 8.3.1976 of the Guwahati High Court in Civil Rule No. 261 of 1973.
D.N Mukherjee, N.R. Choudhary and Ranjan Mukherjee for the Appellant.
PG NO 325 Prabir Choudhary for the Respondents.
The Judgment of the Court was delivered by OJHA, J.
This appeal by special leave has been preferred against the Judgment dated 8th March, 1976 of the Guwahati High Court in Civil Rule No. 261 of 1973.
The appellant who was a Sub Inspector of Police in Assam was dismissed by the Superintendent of Police, Darrang district, Tezpur, by Order dated 29th January, 1973.
This order was passed without compliance with the requirements of Article 311(2) of the Constitution on the ground that it was a case to which the provisions of clause (b) of the second proviso to Article 311(2) were attracted.
The appellant preferred an appeal to the Inspector General of Police, Assam (Shillong).
The said appeal having been dismissed he challenged the order of dismissal as well as the appellate order under Article 226 of the Constitution in Civil Rule No. 261 of 1973 referred to above.
The various submissions made on behalf of the appellant did not, however, find favour with the Learned Judges who heard the civil rule mentioned above resulting in its dismissal by the judgment appealed against.
Two submissions have been made by learned counsel for the appellant: (i) The appellant having been appointed as Sub Inspector of Police by the Inspector General of Police, the order of his dismissal by the Superintendent of Police, Darrang, was illegal being in contravention of article 311(1) of the Constitution.
(ii) The provisions of clause (b) of the second proviso to article 311(2) of the Constitution were not attracted to the facts of the instant case and consequently the order of dismissal was illegal having been passed without compliance with the requirements of article 311(2).
In order to appreciate these submissions, it would be useful to extract article 311 of the Constitution.
It reads: "Dismissal, removal or reduction in rank of persons employed in civil capacities under the Union or a State (1) No person who is a member of a civil service of the Union or an all India service or a civil service of a State or holds a civil post under the Union or a State shall be dismissed PG NO 326 or removed by an authority subordinate to that by which he was appointed.
(2) No such person as aforesaid shall be dismissed or removed or reduced in rank except after an inquiry in which he has been informed of the charges against him and given a reasonable opportunity of being heard in respect of those charges.
Provided that where it is proposed after such inquiry, to impose upon him any such penalty, such penalty may be imposed on the basis of the evidence adduced during such inquiry and it shall not be necessary to give such person any opportunity of making representation on the penalty proposed: Provided further that this clause shall not apply (a) where a person is dismissed or removed in rank on the ground of conduct which has led to his conviction Oil a criminal charge; or (b) where the authority empowered to dismiss or remove a person or to reduce him in rank is satisfied that for some reason.
to be recorded by that authority in writing, it is not reasonably practicable hold such inquiry; or (c) where the President or the Governor, as he the case may be, is satisfied that in the interest of the security of the State it is not expedient to hold such inquiry.
(3) If, in respect of any such person as aforesaid, a question arises whether it ia reasonably practicable to hold such inquiry as is referred to in clause (2), the decision thereon of the authority empowered to dismiss or remove such person or to reduce him in rank shall be final.
" Having heard learned counsel for the parties, we find it difficult to agree with any of the submissions referred to above, In support of his first submission, learned counsel for the appellant placed reliance on a Memo dated 7th July, 1967 from the office of the Inspector General of Police which According to him was the letter of appointment whereby the appellant was appointed as a Sub Inspector of Police.
According to learned counsel for the appellant this being so the order of dismissal having been passed by the Superintendent of Police, Darrang, who was admittedly "an PG NO 327 authority subordinate to that by which the appellant was appointed", was on the face of it illegal.
With regard to this submission, we are of the opinion that the said Memo cannot be treated as the letter of appointment of the appellant.
It reads as hereunder: "Express: Office of the Inspector General of Police: Assam Memo No. F/1/93/Vol.
16/51 Shillong, the 7th July, 1967.
From: Shri P.C. Das, I.P.S., Deputy Inspector General of Police (P) Assam To Md. Ikramuddin Ahmed Borah, Ward No. III, P.O. Mariani, (Jorhat), Dist.
Sibsagar, Subject: Recruitment of temporary Sub Inspector of Police (Unarmed Branch) for 1967 You are hereby informed that you are provisionally selected for appointment as temporary Sub Inspector of Police (U.B.) subject to final and satisfactory police verification report.
Please report to the Principal, Police Training College, Dergaon on 17th July 1967 positively for training failing which your name will be struck off the list of selected candidates.
The details relating to books & uniform required for training in the college should be obtained from the Principal, Police Training College, Dergaon on your joining for the training.
Your provisional appointment letter will be issued by the Principle, Police Training College, Dergaon on joining.
" PG NO 328 In pursuance of the aforesaid Memo the Principal Police Training College, Dergaon, issued Memo dated 17th July, 1967, the relevant portion whereof reads as under: "OFFICE OF THE PRINCIPAL: Police Training College: Dergaon.
APPOINTMENT LETTER Memo No. 10712(A) PTC dated, Dergaon, the 17th July 1967.
Shri Ikramuddin Ahmed Borah, s/o Late A. Ahmed Borah Vill.
Mariani, P.O. Mariani, P.S. Mariani, Dist.
Sibsagar is hereby informed that he has been provisionally appointed as a Cadet Sub Inspector of Police in Assam with effect from 17 7 1967 A.N. He should provide himself with the books and uniforms.
2 to 6. . . 7.
Principal, Police Training College, Assam may expel or discharge him any time during the training if his progress or discipline or behaviour shows that he is not likely to be tit for Police service.
Principal Police Training College, Assam, Dergaon.
Even on a bare perusal of the two Memos mentioned above, it is apparent that by Memo dated 7th July, 1967 which was issued by the Deputy Inspector General of Police, the appellant was only informed that he had been provisionally selected for appointment as temporary Sub Inspector of Police (U.B.)and the order of appointment was to be issued by the Principal, Police Training College which indeed was issued by the subsequent Memo dated 17th July, 1967.
This memo seems to have been sent by the Deputy Inspector General of Police as President of the Selection Board constituted for the purpose according to the procedure for appointment of a Sub Inspector to be found in Assam Police Manual in Part III.
Rule 11(x) at the relevant time as it appears from the judgment appealed against read as hereunder: PG NO 329 "11.
(x) Direct recruitment of Sub Inspectors: The final selection will be made by the Deputy Inspector General of Police sitting as President of a Selection Board, which will consist of himself and 2 Superintendents of Police appointed by the Inspector General of Police.
The order of appointing Probationary Sub Inspectors will be issued by the Superintendents of Police of the Districts from which the candidates are nominated.
" Rule 66 deals with proceedings to be drawn up in cases of major punishment.
The said rule contains a schedule.
Item No. 3 of column I refers to Sub Inspector of Police.
Column II indicates that the appointing authorities of a Sub Inspector of Police inter alia are Superintendent of Police; S.P./S.S.P./C.I.D.; Commandant of Battalion, Principal, APTC (that is Assam Police Training College).
Deputy Inspector General of Police is shown as the final appellate authority.
Rule 11(x) and the schedule referred to above are the relevant provisions in pursuance whereof the selection was made of the appellant vide Memo dated 7th July 1967 and the appointment order was issued by the Principal Training College, Dergaon vide Memo dated 17th July, 1967.
Consequently, Superintendent of Police and Principal, Police Training College, Assam, are authorities having coordinate jurisdiction according to column Il of the schedule.
The appellant having been appointed by Principal Police Training College Dergaon, Assam, and having been dismissed by the Superintendent of Police, Darrang, who was a coordinate authority, the submission made by the learned counsel for the appellant that the order of dismissal was illegal having been passed by an authority sub ordinate to that by which he was appointed.
obviously therefore has no substance.
Coming to the second submission, we find it necessary to refer to the order of dismissal in extenso.
It reads: "D.O. No. 320 dated 29.1.73.
Whereas it has been made to appear before me that proby.
Sub Inspector of Police Ikramuddin Ahmed Borah was appointed as proby.
Sub Inspector of Police on l7.7.67 against a temporary vacancy; AND PG NO 330 Whereas said Ikramuddin Ahmed Borah since his joining the department, his service in all branches of Police work where he had been tried leaves much to be desired and that consistent efforts by his senior officers for improving his work has proved abortive and further that despite the above drawbacks the said S.I. 's conduct and integrity has recently been found to be doubtful and the said S.I. has been recently misusing his official position to the detriment of general social well being and to his personal gain.
AND Whereas I am satisfied that it is not reasonably practicable to hold any inquiry as contemplated under Clause (2) of Article 311 of the Constitution of India because of non availability of witnesses who would not testify against the said S.I. of Police out of various considerations such as fear and because of the likelihood of causing of damage to the Police image and administration before the general public in the event of holding of such an enquiry; Now, therefore, in exercise of powers under proviso (b) clause (2) of Article 311 of the Constitution of India, l, Shri P.N. Goswami, Superintendent of Police Darrang District, Tezpur, hereby order that said Ikramuddin Ahmed Borah be dismissed from the force with effect from the date of issue of this order.
Said Ikramuddin Ahmed Borah is accordingly dismissed from the police service.
Sd/ P.N. Goswami (P.N. Goswami) Superintendent of Police, Darrang, District Tezpur.
" The scope of clause (b) of the second proviso to Article 311(2) and of Article 311(3) came up for consideration before a Constitution Bench of this Court in Union of India and Anr vs Tulsi Ram Patel and Others, [1985] supplementary 2 S.C.R., page 131.
While construing the clause "it is not reasonably practicable to hold such enquiry" used in clause (b) aforesaid, it was held: PG NO 331 "Thus, whether it was practicable to hold the inquiry or not must be judged in the context of whether it was reasonably practicable to do so.
It is not a total or absolute impracticability which is required by clause (b).
What is requisite is that the holding of the inquiry is not practicable in the opinion of a reasonable man taking a reasonable view of the prevailing situation.
It is not possible to enumerate the cases in which it would not be reasonably practicable to hold the inquiry, but some instances by way of illustration may, however, be given.
It would not be reasonably practicable to hold an inquiry where the government servant, particularly through or together with his associates, so terrorizes, threatens or intimidates witnesses who are going to give evidence against him with fear of reprisal as to prevent them from doing so . " With regard to Article 311(3) of the Constitution after pointing out that where a government servant is dismissed, removed or reduced in rank by applying clause (b) or an analogous provision of the service rules and he approaches either the High Court under Article 226 or this Court under Article 32, the Court will interfere on grounds well established in law for the exercise of judicial review in matters where administrative discretion is exercised, it was held: "If the court finds that the reasons are irrelevant, then the recording of its satisfaction by the disciplinary authority would be an abuse of power conferred upon it by clause (b) and would take the case out of the purview of that clause and the impugned order of penalty would stand invalidated.
In considering the relevancy of the reasons given by the disciplinary authority the court will not, however, sit in judgment over them like a court of first appeal.
In order to decide whether the reasons are germane to clause (b), the court must put itself in the place of the disciplinary authority and consider what in the then prevailing situation a reasonable man acting in a reasonable way would have done.
The matter will have to be judged in the light of the then prevailing situation and not as if the disciplinary authority was deciding the question whether the inquiry should be dispensed with or not in the cool and detached atmosphere of a court room, removed in time from the situation in question.
Where two views are possible, the court will decline to interfere.
" PG NO 332 One of the illustration justifying clause (b) of the second proviso to Article 311(2) being invoked, as indicated above, is the non availability of the witnesses on account of fear of the officer concerned.
In the instant case as is apparent from the impugned order of dismissal this was the main ground for invoking the said clause (b).
On the material on record, it is not possible for us to make the view that there was an abuse of power by the disciplinary authority in invoking clause (b).
The Superintendent of Police who passed the order of dismissal was the best authority on the spot to assess the situation in the circumstances prevailing at the relevant time and we do not find any good ground to interfere with the view taken by the Superintendent of Police in this behalf.
As pointed out in the case of Tulsi Ram Patel supra, in such matters, the Court will not sit in judgment over the relevancy of the reasons given by the disciplinary authority for invoking clause (b) like a Court of first appeal and that even in those cases where two views are possible, the Court will decline to interfere.
In this view of the matter, we do not find any substance in the second submission either.
In the result, this appeal fails and dismissed but in the circumstances of the case there would be no order as to costs.
N.V.K. Appeal dismissed.
[/INST]The petitioner in the Special Leave Petition is the tenant, Respondent No. 3 was one of the five co owners of the petition premises.
On January 28, 1978, one of the co owners who had sole possession of the shop vacated the shop and sent intimation of the vacancy to the Rent Controller under the U.P. Urban Buildings (Regulation of Letting and Eviction) Act, 1972.
The petitioner filed allotment application for the said shop and he was the sole applicant.
The Rent Control Officer directed the petitioner to appear in the allotment proceedings, called for a report from the Inspector, found one of the co owners to he in possession of the shop and that he had discontinued the business and was going to let out the shop.
The 3 other co owners never objected to the petitioner 's tenancy on the allotment order.
The allotment letter was accordingly passed on 12th February.1978, and possession was taken up by the petitioner thereafter.
On or about 25th February, 1978 the 3rd respondent who was a non occupant owner filed an application under section 16(5) of the Act i.e. after 25 days of the allotment, for review of the order.
The Rent Controller allowed the review application and cancelled the allotment order.
The Additional District Judge having dismissed the revision petition, the petitioner filed a writ petition in the High Court.
The question about the maintainability of the review application under section 16(5) of the Act at the instance PG NO 276 PG NO 277 of a non occupant owner having arisen the matter was referred to a Full Bench and by a majority, the Bench came to the conclusion that such an application was maintainable.
Dismissing the Special Leave Petition, HELD: 1.
A landlord, even though not in actual possession at the time of the possession of the property, can ask for review of the order of release or allotment.
[280G] 2.
A landlord has a right to the property.
The section should not be so construed as to defeat the right to possession of property in appropriate cases unless the intention of the Legislature is manifest.
[280F] 3.
Section 16(5)(a) speaks of 'where the landlord or any other person '.
Hence, two categories of persons are contemplated i.e. a land lord, or any other person.
[280C] 4.
The requirement of the sub section, to be in lawful occupation of the building or any part thereof, applies only in case of any other person claiming to be in lawful occupation and not in case of landlord.
The Section has used the expression "or" and so the expression "or" is disjunctive of these two categories to be treated separately.
Hence, the requirement to be in lawful occupation, is not there is case of an application by the landlord.
[280C D] 5.
The proviso puts an embargo of 7 days in making the application for review.
It can only apply to those who were in lawful occupation at the time of the making of the original Order.
It cannot curtail the rights of the landlord.
as such, it only affects any other person who was in lawful occupation.
[280E G] Niren Kumar Das vs 7he District Judge, Pilibhit & Ors.
AIR 1977 Allahabad 47, approved.
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<s>[INST] Summarize the judgementAppeal No. 650 of 1957.
Appeal from the judgment dated July 13, 1956, of the Patna High Court in Miscellaneous Judicial Case No. 665 of 1954.
R. Ganapathy Iyer and R. H. Dhebar, for the appellant.
A. V. Viswanatha Sastri and R. C. Prasad, for the respondent.
November 29.
The Judgment of the Court was delivered by HIDAYATULLAH, J.
This is an appeal by the Commissioner of Income tax with a certificate against the judgment and order of the High Court at Patna answering two questions of law referred to it under section 66(1) of the Income tax Act by the Tribunal, in the negative.
Those questions were: "(1) Whether in the circumstances of the case assessment proceedings were validly initiated under section 34 of the Indian Income tax Act? (2) If so, whether in the circumstances of the case the amount received from interest on arrears of agricultural rent was rightly included in the income of the assessee ?" The assessee, the Maharaja Pratapsingh Bahadur of Gidhaur, had agricultural income from his zamindari for the four assessment years 1944 45 to 1947 48.
In assessing his income to income tax, the authorities did not include in his assessable income interest received by him on arrears of rent.
This was presumably so in view of the decision of the Patna High Court.
When the Privy Council reversed the view of law taken by the Patna High Court in Commissioner of Income tax vs Kamakhya Narayan Singh (1), the Income tax Officer issued notices under section 34 of the (1) 762 Indian Income tax Act for assessing the escaped income.
These notices were issued on August 8, 1948.
The assessments after the returns were filed, were completed on August 26, 1948.
Before the notices were issued, the Income tax Officer had not put the matter before the Commissioner for his approval, as the section then did not require it, and the assessments were completed on those notices.
Section 34 was amended by the Income tax and Business Profits Tax (Amendment) Act, 1948 (No. 48 of 1948), which received the assent of the Governor General on Sep tember 8, 1948.
The appeals filed by the assessee were disposed of on September 14 and 15, 1951, by the Appellate Assistant Commissioner, before whom no question as regards the validity of the notices under section 34 was raised.
The question of the validity of the notices without the approval of the Commissioner appears to have been raised before the Tribunal for the first time.
In that appeal, the Accountant Member and the Judicial Member differed, one holding that the notices were invalid and the other, to the contrary.
The President agreed with the Accountant 'Member that the notices were invalid, and the assessments were ordered to be set aside.
The Tribunal then stated a case and raised and referred the two questions, which have been quoted above.
The High Court agreed with the conclusions of the majority, and the present appeal has been filed on a certificate granted by the High Court.
Section 34, as it stood prior to the amendment Act No. 48 of 1948, did not lay any duty upon the Income tax Officer to seek the approval of the Commissioner before issuing a notice under section 34.
The amending Act by its first section made sections 3 to 12 of the amending Act retrospective by providing "sections 3 to 12 shall be deemed to have come into force on the 30th day of March, 1948. .
Section 8 of the amending Act substituted a new section in place of section 34, and in addition to textual changes with which we are not concerned, also added a proviso to the following effect : "Provided that 763 (1) the Income tax Officer shall not issue a notice under this sub section unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice.
" The question is whether the notices which were issued were rendered void by the operation of this proviso. ' The Commissioner contends that section 6 of the , particularly cls.
(b) and (c) saved the assessments as well as the notices.
He relies upon a decision of the Privy Council in Lemm vs Mitchell (1), Eyre vs Wynn Mackenzie (2) and Butcher vs Henderson (3) in support of his proposition.
The last two cases have no bearing upon this matter; but strong reliance is placed upon the Privy Council case.
In that case, the earlier, action which had been commenced when the Ordinance had abrogated the right of action for criminal conversation, had already ended in favour of the defendant and no appeal therefrom was pending, and it was held that the revival of the right of action for criminal conversation did not invest the plaintiff with a right to begin an action again and thus expose the defendant to a double jeopardy for the same act, unless the statute expressly and by definite words gave him that right.
The Privy Council case is thus entirely different.
No doubt, under section 6 of the it is provided that where any Act repeals any enactment, then unless a different intention appears, the repeal shall not affect the previous operation of any enactment so repealed or anything duly done thereunder or affect any right, obligation or liability acquired, accrued or incurred under any enactment so repealed.
It further provides that any legal proceedings may be continued or enforced as if the repealing Act had not been passed.
Now, if the amending Act had repealed the original section 34, and merely enacted a new section in its place, the repeal might not have affected the operation of the original section by virtue of section 6.
But the amending Act goes further than this.
It (1) ; (2) (3) 764 repeals the original section 34, not from the day on which the Act received the assent of the Governor General but from a stated day, viz., March 30, 1948, and substitutes in its place another section containing the proviso above mentioned.
The amending Act provides that the amending section shall be deemed to have come into force on March 30, 1948, and thus by this retrospectivity, indicates a different intention which excludes the application of section 6.
It is to be noticed that the notices were all issued on August 8, 1948, when on the statute book must be deemed to be existing an enactment enjoining a duty upon the Income tax Officer to obtain prior approval of the Commissioner, and unless that approval was obstained, the notices could not be issued The notice were thus invalid.
, The principle which was applied by this Court in Venkatachalam vs Bombay Dyeing & Mfg. Co. Ltd. (1) is equally applicable here.
No question of law was raised before us, as it could not be in view of the decision of this Court in Narayana Chetty vs Income tax Officer (2), that the proviso was not mandatory in character.
Indeed, there was time enough for fresh notices to have been issued, and we fail to see why the old notices were not recalled and fresh ones issued.
For these reasons, we are in agreement with the High, Court in the answers given, and dismiss this appeal with costs.
A appeal dismissed.
[/INST]The appellant who had agricultural income from his Zamindari was assessed to income tax for the four assessment years, 1944 45, to 1947 48.
The income tax authorities did not include in his assessable income, interest received by him on arrears of rent, in view of a decision of the Patna High Court, but subsequently this view of law was reversed by the Privy Council.
On August 8, 1948, the Income tax Officer issued notices under section 34of the Indian Income tax Act, 1922, for assessing the escaped income.
Before the notices were issued the Income tax Officer had not put the matter before the Commissioner for his approval as the section then did not require it and the assessments were completed on those notices.
In the meantime, certain amendments were made to the Indian Income tax Act by Act 48 of 1948, which received the assent of the Governor General on September 8, 1948.
The Amending Act substituted a new section in place of section 34, which among other changes, added a proviso to the effect that "the Income tax Officer shall not issue a notice. unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons that it is a fit case for the issue of such notice", and also made it retrospective by providing that the new section "shall be deemed to have come into force on the 30th day of March, 1948".
The question was whether the notices issued by the Income tax Officer on August 8, 1948, without the approval of the Commissioner, were rendered void by reason of the operation of the amended section 34.
The Commissioner claimed that section 6 of the , saved the assessments as well as the notices.
Held, that section 6 of the , was in applicable as the Amending Act of 1948 indicated a different intention within the meaning of that section, inasmuch as the amended section 34 of the Indian Income tax Act, 1922, provided that it shall be deemed to have come into force on March 30, 1948.
Lemm vs Mitchell, ; , distinguished, 761 Held, further, that the notices issued by the Income tax Officer on August 8, 1948, and the assessments based on them were invalid.
Venkatachalam vs Bombay Dyeing & Mfg. Co., Ltd., ; , applied.
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<s>[INST] Summarize the judgementminal Appeal No. 195 of 1966.
Appeal from the judgment and order dated February 25, 1966 of the Andhra Pradesh High Court in Criminal Revision, Case No. 382 of 1964.
P. Ram Reddy and G.S. Rama Rao, for the appellant.
A.V. Rangam, Miss Sen, A. Vedavalli and Subhashini, for the respondent.
The Judgment of the Court was delivered by Shah, J.
Motor Lorry No. A.P.P. 4695 belonging to the respondent Yedla Perraya was seized by the Forest Range Officer, Gokavaram, early in the morning of December 25,1963, when it 624 was being used without a license for carrying,eight Yegisi logs on Rajahmundry Gokavaram Road.
The driver of the motor lorry and another person were tried before the 2nd Additional, 2nd Class Magistrate, Rajahmundry on a complaint 'by the Forest Range Officer for offences under sections 35 and 36 of the Andhra Pradesh Forest Act and the rules framed thereunder.
The two accused admitted that they had committed the offence of illicit transportation of timber, and on their plea of guilty they were convicted.
The respondent applied to the Trial Magistrate for an order releasing the motor lorry on the plea that the offence of transportation of timber was committed without his knowledge and that the value of the timber seized was not more than Rs. 50/ at the relevant time.
The learned Magistrate observed: "After careful perusal of the deposition of R.W. 1, I find that there is nothing in it to indicate that the petitioner knowingly lent his lorry for the illicit transport of timber on the night of 24 12 63.
There is also nothing in the case records to show that the petitioner allowed the lorry to illicitly transport the timber on the above date.
1 accordingly hold that the petitioner cannot be said to have knowingly allowed his lorry to illicitly transport the timber.
" But the learned Magistrate was of the view that by section 43 of the Andhra Pradesh Forest Act, where it was proved that the value of the timber transported exceeded Rs. 50/ , he was enjoined to direct confiscation of the vehicle in which the forest produce was being transported without a license.
In his view the value of eight logs of timber seized from the lorry was Rs. 311/ at the market rate in Rajahmundry.
In appeal by the respondent to the Court of Session at Rajahmundry the order of confiscation was set aside and the High Court of Andhra Pradesh confirmed the order of the Court of Session.
The State of Andhra Pradesh has appealed to this Court with certificate.
granted under article 134( 1 ) (c) of the Constitution.
The Andhra Pradesh (Andhra Area) Forest Act 5 of 1882 provides by section 41 that when there is reason to believe that a forest offence has been committed in respect of any timber or forest produce, such timber or produce, together with all tools, ropes, chains, boats, vehicles and cattle used in committing any such offence may be seized by any Forest officer or Police officer.
Section 43 as amended by Act 11 of 1963 provides: "Where a person is convicted of any forest offence, the Court sentencing him shall order ,confiscation.
to the Government of, the timber or the ' forest produce in respect of which such 'offence was committed, and also any 625 tool, boat, cattle and vehicle and any other article used in committing such offence: Provided that it shall be open to such Court not to order confiscation of any tool, boat, cattle, vehicle or any other article used in committing such offence when the value of the timber or the forest produce in respect of which such offence was committed does not exceed fifty rupees.
" It may be observed that before the Forest Act was amended by Act 11 of 1963, the Magistrate was not obliged to direct confiscation of the articles, vehicles, cattle, tools or boats used for committing a forest offence.
The Trial Magistrate was of the view that after the amendment of the Forest Act by Act 11 of 1963 he had no option and he was bound on conviction of the offender in respect of any forest offence to direct confiscation of the vehicle used in the commission of such offence.
Counsel for the respondent contended that if the interpretation put by the Trial Magistrate upon section 43 as amended is correct, the enactment imposes an unreasonable restriction upon the fundamental right ' of the owner of the vehicle declared by article 19(1)(e) of the Constitution, and is on that account void.
Counsel urged that a statute which imposes upon a person who has himself not committed any offence or infraction of the law liability to forfeit his valuable property must be regarded as unreasonable.
It was urged that if a vehicle is stolen and then used for commission of a forest offence, or is borrowed by some person for a legitimate purpose and then used without the consent or knowledge of the owner for committing an offence under the Forest Act, or where with a view to involve the owner of the vehicle into a forest offence, forest produce is surreptitiously introduced into the vehicle, and the vehicle is liable to be forfeited, the provision making it obligatory to impose the penalty of forfeiture of the vehicle must be deemed to impose an unreasonable restriction on the owner of the vehicle and is ultra rites on that account.
It is not necessary for the purpose of this case to express any opinion on that part of the case.
Assuming that the statute which enjoins the Magistrate to confiscate the vehicle used in the commission of the forest offence, even when it is used without the knowledge or consent of the owner, is valid, in our judgment, section 47 of the Act enables the Court of Session and the High Court to make an appropriate order with regard to the vehicle which is just.
That section provides: "Any person claiming to be interested in property seized under section 41, may, within one month from the date of any order passed under section 43, 44 or 626 45, present an appeal therefrom which may be disposed of in the manner provided by section 419 Code of Criminal Procedure.
" The reference to section 419 is to the Code of Criminal Procedure of 1872 in force when the Andhra Pradesh Forest Act 5 of 1882 was enacted.
Section 419 of the Code of 1872 is now substituted by section 520 of the Code of Criminal Procedure, 1898, and by section 520 power is conferred, inter alia, upon the court of appeal to direct that any order passed under sections 517, 518 or 519 by a Court subordinate thereto be stayed pending consideration by the Court of appeal, and that Court may modify, alter or annul such order and make any further order that may be just Section 43 of the Andhra Pradesh Forest Act does not restrict the power of the appellate court to pass any appropriate order as may be just regarding disposal of the property.
The Court of Session in the present case has on the finding recorded by the Magistrate and confirmed by it passed an order which is essentially a just order and that has been confirmed by the High Court.
The Legislature had originally conferred a discretion both upon the Magistrate and the Court of Appeal to pass appropriate order with regard to the disposal of property used in the commission of the offence as may be just.
The Legislature has thereafter amended section 43 by Act 11 of 1963 and made it obligatory upon the Magistrate to confiscate the property or the vehicle used in the commission of Such offence.
No such restriction has, however, been placed upon the power of the appellate court and we will not be justified, having regard to the clear expression of the legislative intent, that the power is to be limited in the manner provided by section 43.
There is no warrant for implying that the power conferred by section 47 of the Act upon the appellate court is subject to some unexpressed limitation.
The High Court was, therefore, right in holding that the motor lorry belonging to the respondent, on the finding recorded by the Magistrate was not liable to be confiscated.
The appeal therefore fails and is dismissed.
V.P.S, Appeal dismissed.
[/INST]Six months after the, appelIant 's Standing Orders as modified had come into operation, the respondent applied for further modification of the Standing Orders, under section 10(2) of the , 'as amended in 1956.
The certifying officer allowed some of the modifications and on appeal by the respondent, the Appellate Authority allowed some more modifications.
In appeal, to this Court under article 136 of the Constitution, the appellant objected to four modifications, namely: (i) that the appellant should give reasons and communicate them to the workmen even in cases of discharge simpliciter; (ii) that appeals against penalties imposed should be disposed of within 60 days; (iii) that when a workman is removed on the ground of inefficiency due to physical unfitness, the appellant should offer to such workman alternative; employment on reasonable emoluments; and (iv) that a second show cause notice should be served on the workman at the stage of taking a decision on the suitable punishment.
The grounds urged were: (1 )The authorities under the Act can certify modifications of existing Standing Orders under section 10(2) only when a change of circumstances is established, because, section 6 of the Act confers finality on certified Standing Orders or modifications thereof; (2).
On principles analogous to res Judicata, the authorities had no jurisdiction to grant the modifications in the present case; and (3) the modifications were not reasonable or fair.
HELD: (1) [Per Shelat and Vaidialingam, JJ.]: A change of circumstances is not a condition precedent to the maintainability of an application for modification under section" 10(2).
Under the Act before its 'amendment in 1956, a workman could not object that the Standing Orders were not reasonable or fair.
His only remedy was to raise an industrial dispute, but that remedy was unsatisfactory, since the dispute had to be sponsored by a union or at least a substantial number of workmen and even then, the process was a protracted one.
Parliament knew that the workmen had the right to raise an industrial dispute and also the defects in that remedy and so amended sections 4 and 10 of the Act by Act 36 of 1956.
The amendment conferred on individual workman the right to object to draft Standing Orders submitted by an employer on the ground that they are either not fair or not reasonable, and also gave the right to apply for their modification.
Under section 6, a person aggrieved by the order of the certifying officer certifying or modifying Standing Orders, may appeal to the Appellate Authority whose decision shall be final.
But the finality only means that there is no further appeal or revision against the order and that the order cannot be challenged in 'a civil court.
It can, however.
be modified under section 10(2).
The only limitations on the power are, (a) reason. 132 ableness and fairness of the modification and (b) except on agreement between employer and the workmen six months must have elapsed from the date on which the Standing Orders or the last modifications thereof, came into operation, the object being that Standing Orders or the modifications should be allowed to work for some time to see if they are satisfactory.
In an application for modification the issue before the authority would be not as to reasonableness or fairness of the existing Standing Orders.
but whether the modification 'applied for is fair and reasonable.
Such an application is an independent application and merely because it could be made on the ground that the existing Standing Orders are discovered to be unsatisfactory even without any change in circumstances, it would not amount to a review of an earlier order.
Further, there will not be a multiplicity of applications because the workmen individually have the right to apply for modifications.
For, unless there is some justification for the modification, the authorities under the Act would reject the applications.
[139 G H; 140 C D; 141 A C; 142 A C; G H; 143 A C] Bangalore Woollen Cotton & Silk Co. Ltd. vs The Workmen [1968] l L.L.J. 555, Buckingham and Carnatic Co. Ltd. v Workmen C.A. No. 674 of 1968 dt.
25th July 1968 and Hindustan Brown Boveri Ltd. vs The Workmen C.A. No. 1631 of 1966 dt.
31st July 1967, referred to.
[Per Bhargava, J. dissenting]: When an application under section 10(2) is made, the certifying officer can modify Standing Orders already certified, only if the request is not made on the basis of the same material which existed at the earlier stage when they were certified.
[155 G H] Before the amendment in 1956 if the workmen had any grievance on the ground of unfairness or unreasonableness of the Standing Orders, their only remedy lay under the Industrial Disputes Act.
By amendment in 1956, a limited remedy was provided for them in the Act itself by conferring on the certifying officer the power of judging the reasonableness and fairness of the Standing Orders and of modifying them under section 10(2).
Therefore, after 1956 the workmen have two alternative remedies for seeking alteration in the Standing Orders proposed or certified.
Under section 10(2) a request for modification can only be made on the basis of fresh facts or fresh circumstances arising subsequent to the passing of the order by the Appellate Authority under section 6 on the limited ground of reasonableness and fairness.
The Industrial Tribunal, however.
can direct the alteration of a Standing Order held to be reasonable and fair, without any fresh grounds, material, or change in circumstances if an industrial dispute, in 'relation to it is raised, and this is the only remedy available if a modification is desired without a change of circumstances.
If it is held that even the certifying officer can reconsider the reasonableness or fairness of a Standing Order already certified and confirmed under section 6 the finality envisaged by the section would be nullified.
After a period of six months had elapsed, the certifying officer could set aside an order passed earlier by his superior, or a succeeding Appellate Authority may interfere with his predecessor 's order, merely because the certifying officer or Appellate Authority considers the modification to be reasonable and fair even though there was no change in the circumstances.
[153 F G; 154 A B, D F; 155 C F; 156 A C] (2) [Per Shelat and VaidiaIingam, JJ.]: It is doubtful whether principles analogous to res judicata can property be applied to industrial adjudication.
[143 H] Burn & Co. vs Their Employees, ; , Guest, Keen, Williams (P) Ltd. vs Sterling, ; and Workmen of Balmer Lawrie & Co. vs Balmer Lawrie & Co. , referred to, 133 [Per Bhargava, J.]: This Court bas expressed conflicting views on the question of 'applying the principle underlying the rule of res judicata to industrial adjudication.
[150 E] Burn & Co. 's case; , , Balmer Lawrie Co. 's case; , and Associated Cement Staff Union vs Associated Cement Co. referred to.
(3) [Per Shelat and Vaidialingam, JJ.]: So far as modifications (ii) and (iii) are concerned, in an appeal under article 136, this Court would not interfere with the conclusion of the authorities under the Act since no principle is involved.
[144 F] As regards modification (iv), the authorities under the Act held that it was fair and reasonable, and there is no justification for this Court to interfere with the decision.
In Industrial matters, at present, the doctrine of hire and fire is completely abrogated, because, security of employment is one of the necessities for industrial peace and harmony.
If reasons for discharging an employee are furnished tO him he not only has the satisfaction of knowing why his services are dispensed with, but in appropriate cases he can challenge it, as even when the services of an employee are terminated by an order of discharge simpliciter, its legality and propriety can be challenged before an industrial tribunal.
[145 A E] As regards modification (iv) the requirement of a second show cause notice is peculiar to cases coming under article 311 of the Constitution and neither the ordinary law nor the industrial law requires an employer to give such a notice.
Even in article 311, the requirement is now removed and so, it is not necessary to import it into industrial matters.
[145 E F] [Per Bhargava J. dissenting]: The order must be set aside because the four modifications were not based on any fresh facts, material or change of circumstances.
In fact, modification (i) was, specifically disallowed by the Appellate Authority at an earlier stage and merely because his successor considered it reasonable and fair it was permitted without any change in the circumstances.
[156 E F, H]
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<s>[INST] Summarize the judgementN: Criminal Appeal No. 615 of 1981.
356 Appeal by Special leave from the Judgment and Order dated the 6th May, 1981 of the Punjab & Haryana High Court in Criminal Revision No. 562 of 1979.
Uma Datta, T.C. Sharma and A.D. Malhotra for the Appellant.
R.N. Poddar for the Respondent.
This appeal by special leave is directed against the judgment of the Punjab and Haryana High Court, dismissing Criminal Revision Case No. 562 of 1979 which was filed by the appellant against the judgment of the Additional Sessions Judge, Gurgaon who affirmed the judgment of the Chief Judicial Magistrate, Gurgaon sentencing the appellant to rigorous imprisonment for six months and a fine of Rs. 1,000 under section 16 (1) (c) of the as amended from time to time.
We dismissed the appeal and confirmed the conviction and sentence on 5.4.
1983 for reasons to be giving later.
We hereby give the reasons.
The charge against the appellant was that when the Food Inspector, Gurgaon, Sant Lal Anand (P.W.2) went to the appellant 's grocery shop at Farrukh Nagar at about 4 p.m. on 27.8.1976 he prevented P.W.2 from taking a sample of dhania from the stock kept for sale by slipping away from the shop under some pretext.
The case of prosecution was that when the Food Inspector (P.W.2) visited the appellant 's grocery shop accompanied by Dr. Aggarwal, Medical officer Incharge, Primary Health Centre, Farrukh Nagar (P.W.1) and Dr. Yadav, Chief Medical Officer (Health), Gurgaon (P.W.3).
The appellant was found to have stored 6 kgs.
of dhania for sale in his shop.
P.W. 2 disclosed his identity to the appellant and demanded a sample of the dhania for analysis and sought to serve the notice Ex P/B and tendered Rs. 4.80 as the price of 600 gms.
of dhania asked for.
The appellant went away from the shop under the pretext of passing urine without accepting the notice exhibit P/B or the sum of Rs. 4.80 tendered by P.W.2 and he did not come back to the shop though P.Ws. 1 to 3 waited there for about 11/2 hours.
There after P.W.2 took a sample from the shop in the absence of the appellant and prepared the spot memo exhibit P/A in the presence of P.Ws. 1 and 3 and subsequently filed the complaint exhibit P/C in the Court of the Chief Judicial Magistrate, Gurgaon against the appellant for contravention of s.16 (1) (c) of the Prevention of Food Adulteration as amended, by preventing him from taking a sample of the article of food.
After the examination of P.Ws. 1 to 3 a charge was framed against the appellant for the offence punishable under section 16 (1) (c) of the Act and he pleaded not guilty to the charge and claimed to be tried.
The prosecution relied on the evidence of P.Ws. 1 to 3 who deposed to the facts mentioned above.
The appellant stated when examined under section 313 Criminal Procedure Code, that he is running a cloth business at Delhi and had casually visited his father 's grocery shop at Farrukh Nagar on 27.8.1976 when P.Ws. 1 to 3 came there and he went to call his father Uggar Sain (D.W. 1) and came back to the shop alongwith D.W. 1 after about 6 or 7 minutes and that P.Ws. 1 to 3 had gone from the shop by that time.
The appellant examined his father as D.W. 1 in his defence.
The learned Chief Judicial Magistrate, Gurgaon who tried the case rejected the evidence of D.W. 1 as being interested and unreliable and accepted the evidence of P.Ws. 1 to 3 of whom P.W. 1, however, could not identity the appellant as the person who went away from the shop without accepting the notice and cash tendered by P.W 2 and found following judgment of the Punjab and Haryana High Court in Krisha Lal & Ors.
vs State of Haryana(1) that the appellant was guilty of having prevented the Food Inspector (P.W. 2) from taking a sample of the article of food by going away from the shop without accepting the notice and cash tendered by P.W. 2.
Accordingly, the learned Magistrate convicted the appellant and sentenced him to undergo rigorous imprisonment for six months and to pay a fine of Rs. 1,000 under section 16 (1) (c) of the Act.
The conviction and sentence were confirmed on appeal by the learned Additional Sessions Judge, Gurgaon who found that the appellant was more than 18 years of age at the time of commission of the offence and was therefore not entitled to the benefit of section 360 Cr.
P.C. in view of section 20 AA of the Act according to which section 360 Cr.
P.C. is not applicable to the case of the accused who was more than 18 years of age at the time of commission of the offence.
The Criminal Revision Case filed by the appellant in the Punjab and Haryana High Court against the judgment of the learned Additional Sessions Judge, Gurgaon was dismissed by S.S. Dewan, J. who confirmed the conviction and sentence.
Hence, this appeal by special leave.
358 The prevention of Food Inspector from taking a sample of an article of food as authorised by the Act is an offence punishable under section 16 (1) (c) with imprisonment for a term which shall not be less than six months but which may extend to three years and with fine which shall not be less than on thousand rupees.
Mr. Uma Datta, appellant 's learned counsel invited our attention to paragraph 10 of the judgment of the learned Additional Sessions Judge, Gurgaon where it has been found that the Food Inspector (P.W. 2) had in fact taken a sample in the presence of P.Ws. 1 and 3.
But this must be noted that this was done after the appellant went away from the shop under the pretext of passing urine and did not return for about 1 1/2 hours, during which period P.Ws. 1 to 3 waited for him at the shop.
The finding of fact that the appellant went away from the shop under the pretext of passing urine when the Food Inspector (P.W. 2) tendered the notice exhibit P/B and the cash of Rs. 4.80 for purchasing a sample of dhania and did not return for about 1 1/2 hours, during which period P.Ws. 1 to 3 waited at the shop for him cannot be canvassed in this appeal.
The learned counsel for the appellant invited our attention to two decisions and submitted that the mere disappearance of the appellant from the shop after the sample was asked for by the Food Inspector without anything more did not amount to prevention of the Food Inspector from taking the sample.
The first of those decisions is of C.P. Sen, J of the Madhya Pradesh High Court in Jagannath vs State of Madhya Pradesh(1) where the facts found were that when the accused was taking 5 litres of milk in his kothi for sale the Food Inspector stopped him as he suspected the milk to be adulterated and asked him to accompany him to the Municipal office for taking a sample and that on reaching the Municipal office the accused bolted away leaving the kothi of milk, and the learned Judge held that the accused did not prevent the Food Inspector from taking a sample simply because he bolted away from the spot and that the Food Inspector was free to take the sample from the kothi of milk left behind by the accused even in the absence of the accused.
In holding so the learned Judge differed from the view taken in Municipal Board, Sambhal vs Jhamman Lal(2) where it has been held that the disappearance of the seller from the shop amounts to prevention of the Food Inspector from taking the sample and that over act on the part of the seller is not necessary to constitute an offence under section 16 (1) (b) of the Act as it then stood which corresponds to the present section 16 (1) (c).
The second decision 359 relied upon by the learned counsel of the appellant is of the Full Bench of the Rajasthan High Court in Narain Prasad vs State of Rajasthan & Anr.(1) where Shrimal, J., speaking for the bench has observed: "Thus the consensus of the opinion of almost all the High Court barring a few on the point is that section 16 (1) (b) of the Act makes a person liable to punishment, who prevents the Food Inspector from taking the sample as authorised by the Act.
Section 10 (1) (a) (i) gives the Inspector power to take sample of article of food from any person selling such article.
Sub sec.
(2) of Sec. 10 gives the Food Inspector power to enter any place where the article of food is exposed for sale.
Sub sec.
(4) of Sec.
10 provides for seizure of adulterated food.
The Inspector has also power to break open the door or any package in which the article of food is kept.
For all the purposes the Inspector has power to exercise the power of search and seizure of a police officer under the Crl.
The Food Inspector is also authorised to exercise powers of a police officer under Section 57 of the Code i.e. to arrest an offender, if he refuses to tell his name and residence.
Section 11 prescribes the procedure to be followed by the Food Inspector while taking sample.
Therefore, the Food Inspector can follow one of the two modes; one where the vendor co operates, the other when he refuses to co operate.
To prevent the Food Inspector from taking a sample, the accused must do something which makes it impossible for him to take the sample.
" The learned Judges of the Full Bench appear to have held that some overt act on the part of the seller apart from mere refusal to sell the article of food to the Food Inspector is necessary to constitute an offence of prevention of the Food Inspector from taking the sample.
On the other hand, Mr. R. N. Poddar, learned counsel appearing for the State of Haryana, invited our attention to two decisions and submitted that the conduct of the appellant in slipping 360 away from the shop when the Food Inspector disclosed his identity and asked for sale of a sample of dhania from his grocery shop, amounts to prevention of the Food Inspector from taking the sample as per the provisions of the Act.
The first of those decisions is to H.C.P. Tripathi, J. in Mamchand vs State(1) where the learned Judge has observed: "The sample had to be taken in accordance with the provisions of the Act and Rules thereunder.
As soon as the owner of the milk disappeared from the scene the Food Inspector could not have obtained the sample as required under law.
By running away from the place the applicant did prevent the Food Inspector from taking sample as required under the Act though not from taking away the entire quantity of the milk which the Food Inspector could do in exercise of his powers under Section 10 (iv) of the Act.
In the case of Municipal Board, Sambhal vs Jhamman Lal (AIR 1961 AII.
103), it was held by a Division Bench of this Court that if a person selling article leaves the shop he prevents Food Inspector from taking sample as authorised by the Act.
In the instant case, the applicant left the milk, which he was exposing for sale, and thereby prevented the Food Inspector from taking its sample.
" A learned single Judge of the Madhya Pradesh High Court has taken a similar view in Habib Khan vs State of Madhya Pradesh.(2) In that case a milk vendor on being accosted by the Food Inspector kept his milk can in the canteen and bolted away, and it has been held that the milk vendor prevented the Food Inspector from taking the sample and thus committed an offence under section 16 (1) (b) of the Act as it stood than.
The learned Judge has observed in his judgment thus: "The power of taking the sample has been conferred on the Food Inspector so that he may prosecute the person found selling adulterated food stuff or found in possession thereof for the purposes of sale.
Now, if a person bolts away and thus his identity remains undis 361 closed, the whole purpose of the exercise of the power conferred under section 10 on the Food Inspector is defeated.
In such a case, it will have to be held that in bolting away the person prevented the effective exercise of the power by the Food Inspector.
If this is so, it is difficult to see how the same action on the part of a known person would make any difference.
If he bolts away, an additional burden will be cast on the Inspector if he decides to prosecute him for selling or keeping for sale adulterated food articles, to prove that the person who bolted away was the accused and that the article left by him was in his possession.
Witnesses may not be available at the nick of the time and here, again, the result would be the same.
This is why it is necessary to interpret the two expressions "prevents" and "in exercise of the powers under the Act" in the manner interpreted by the Allahabad High Court in Municipal Board, Sambhal vs Jhamman Lal (supra)", We are of the opinion that the view of the Allahabad High Court expressed in Municipal Board, Sambhal vs Jhaman Lal (supra) reiterated in Mamchand vs State referred to above and taken by the learned single Judge of Madhya Pradesh High Court in Habib Khan vs State of Madhya Pradesh (supra) and the Punjab and Haryana High Court in the judgment under appeal in this case is the correct view and that appellant in this case who bolted away from the shop under the pretext of passing urine when the Food Inspector (P.W. 2) went to his shop alongwith P.Ws. 1 and 3 and disclosed his identity and tendered the notice exhibit P/B and cash of Rs. 4.80 and asked for a sample of the dhania kept for sale in his grocery shop without accepting the notice and the cash prevented the Food Inspector (P.W. 2) from taking a sample in accordance with the provisions of the Act and the Rules made thereunder and that no other overt act is necessary on the facts of this case to constitute the offence for which the appellant has been convicted and sentenced and that he has been rightly convicted and sentenced by the Court below under section 16 (1) (c) of the Act.
We accordingly, dismiss the appeal and confirm the conviction of the appellant and the sentence awarded to him.
P.B.R. Appeal dismissed.
[/INST]The disputes between the appellants and their workmen were referred to the Industrial Tribunal for adjudication by the appropriate Government, under the provisions of the .
It was contended for the appellants that the reference to the Tribunal was bad because (1) the Act was ultra vires the Constitution inasmuch as its provisions are ,Violative of the fundamental rights enshrined in article 14 and article 19 (1) (f) and (g) of the Constitution, (2) the Industrial Tribunals are legislating in the guise of adjudication,, and this amounts to delegation of the powers of legislation which it was not competent to the Central Legislature to do so, and (3) the definition of the term " industry '. comprises industrial as well as non industrial concerns and, therefore, the Act was not within the legislative competence of the Central Legislature under Entry 29 of List III of the Seventh Schedule to the Government of India Act, 1935.
Held: (1) The , is not unconstitutional and the provisions of the Act do not contravene articles 14 and 19 (1) (f) and (g) of the Constitution.
The basic idea underlying all the provisions of the Act is the settlement of industrial disputes and the promotion of industrial peace so that production may not be interrupted and the community in general may be benefited, and the appropriate Government has, therefore, a discretion in the matter of making the reference to one or other of the Authorities under the Act and also in the matter of carrying out the, various provisions of the Act, including the curtailment or extension of the period 'of 136 preperation of the award of the Tribunal, having regard to the.
exigencies of the situation and the objects to be achieved.
(2) Industrial Tribunals while settling particular industrial disputes referred to them, lay down certain general principles to be observed in regard to the determination of bonus, reinstatement of dismissed or discharged employee,% and other allied topics mainly with the object of promoting industrial peace, but these principles or rules of conduct, though they are applied as precedents by the Industrial Tribunals while adjudicating upon other similar industrial disputes referred to them, are not rules of law and do not amount to legislation.
(3) The Act is not ultra vires the legislature, as the matters included within the definition of the term " industry " are within the legislative competence of the Central Legislature under Entries 27 and 29 of List III of the Seventh Schedule to the Government of India Act, 1935.
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 478 of 1957.
Appeal from the judgment and decree dated August 17, 1954, of the Punjab High Court, Circuit Bench at Delhi, in Regular First Appeal No. 76 of 1952, arising out of the judgment and decree dated December 15, 1951, of the Court of Sub Judge, 1st Class, Delhi in Suit No. 169 of 1949/409 of 1950.
77 Ganapathy Iyer and D. Gupta, for the appellant.
Gurbachan Singh and Harbans Singh, for the respondent.
October 28.
The Judgment of the Court was delivered by SUBBA RAO J.
This appeal on a certificate granted by the High Court of Judicature for Punjab at Chandigarh is directed against its judgment confirming that of the Subordinate Judge, First class, Delhi, in a suit filed by the respondent against the appellant for the recovery of compensation in respect of non delivery of goods entrusted by the former to the latter for transit to New Delhi.
On August 15, 1947, India was constituted into two Dominions, India and Pakistan; and soon thereafter civil disturbances broke out in both the Dominions, The respondent and others, who were in government employment at Quetta, found themselves caught in the disturbances and took refuge with their household effects in a government camp.
The respondent collected the goods of himself and of sixteen other officers, and on September 4, 1947, booked them at Quetta Railway Station to New Delhi by a passenger train as per parcel way bill No. 317909.
Under the said bill the respondent was both the consignor and consignee.
The N. W. Railway (hereinafter called the Receiving Railway) ends at the Pakistan frontier and the E. P. Railway (hereinafter called the Forwarding Railway) begins from the point where the other line ends; and the first railway station at the frontier inside the Indian territory is Khem Karan.
The wagon containing the goods of the respondent and others, which was 'duly seated and labelled indicating its destination as New Delhi, reached Khem Karan from Kasur, Pakistan, before November 1, 1947, and the said wagon was intact and the entries in the " inward summary." tallied with the entries on the labels.
Thereafter it traveled on its onward march to Amritsar and reached that place on November 1, 1947.
There also the wagon was found to be intact and the label showed that it was bound to New Delhi from Quetta.
On November 2, 1947, it reached Ludhiana and remained 78 there between November 2, 1947 and January 14, 1948; and the " vehicle summary " showed that the wagon bad a label showing that it was going from Lahore to some unknown destination.
It is said that the said wagon arrived in the unloading shed at New Delhi on February 13, 1948, and it was unloaded on February 20, 1948; but no immediate information of the said fact was given to the respondent.
Indeed, when the respondent made an anxious enquiry by his letter dated February 23, 1948, the Chief Administrative Officer informed him that necessary action would be taken and he would be addressed again on the subject.
After further correspondence, on June 7, 1949, the Chief Administrative Officer wrote to the respondent to make arrangements to take delivery of packages lying at New Delhi Station, but when the respondent went there to take delivery of the goods, he was told that the goods were not traceable.
On July 24, 1948, the respondent was asked to contact one Mr. Krishan Lal, Assistant Claims Inspector, and take delivery of the goods.
Only a few articles, fifteen in number and weighing about 61 maunds, were offered to him subject to the condition of payment of Rs. 1,067 8 0 on account of freight, and the respondent refused to take delivery of them.
After further correspondence, the respondent made a claim against the Forwarding Railway in a sum of Rs. 1,62,123 with interest as compensation for the non delivery of the goods entrusted to the said Railway, and, as the demand was not complied with, he filed a suit against the Dominion of India in the Court of the Senior Subordinate Judge, Delhi, for recovery of the said amount.
The defendant raised various pleas, both technical and substantive to non suit the plaintiff.
The learned Subordinate Judge raised as many as 15 issues on the pleadings and held that the suit was within time, that the notice issued complied with the provisions of the relevant statutes, that the respondent had locus stand to file the suit and that the respondent had made out his claim only to the extent of Rs. 80,000; in the result, the suit was decreed for a sum of Rs. 80,000 with proportionate costs.
79 The appellant carried the matter on appeal to the High Court of Punjab, which practically accepted all the findings arrived at by the learned Subordinate Judge and dismissed the appeal.
In this Court the appellant questions the correctness of the said decree.
Learned Counsel for the appellant raised before us the following points: (1) there was no privity of contract between the respondent and the Forwarding Railway, and if he had any claim it was only against the Receiving Railway; (2) the suit was barred by limitation both under article 30 and Art 31 of the Indian Limitation Act and it was not saved by any acknowledgement or acknowledgements of the claim made within section 19 of the Limitation Act; and (3) the notice given by the respondent under section 77 of the Indian Railways Act, 1890, did not comply with the provisions of the said section inasmuch as the claim for compensation made thereunder was not preferred within six months from the date of the delivery of the goods for carriage by the Railway.
The third point may be taken up first and disposed of shortly.
Before the learned Subordinate Judge it was conceded by the learned Counsel for the defendant that the notice, exhibit P 32, fully satisfied the requirements of section 77 of the Indian Railways Act, and on that concession it was held that a valid notice under section 77 of the said Act bad been given by the respondent.
In the High Court no attempt was made to question the factum of this concession; nor was it questioned by the appellant in its application for special leave.
As the question was a mixed one of fact and law, we would not be justified to allow the appellant at this very late stage to reopen the closed matter.
We, therefore, reject this contention.
The learned Counsel for the appellant elaborates his first point thus : The Receiving Railway, the argument, proceeds, entered into an agreement with the respondent to carry the goods for consideration to their destination i.e., New Delhi, and in carrying out the terms of the contract it might have employed the agency of the Forwarding Railway, but the consignor was not in any way concerned with it and if loss was 80 caused to him by the default or neligence of the Receiving Railway, he could only look to it for compensation and he had no cause of action against the Forwarding Railway.
This argument is not a new one but one raised before and the Courts offered different solutions based on the peculiar facts of each case.
The decided cases were based upon one or other of the following principles: (i) the Receiving Railway is the agent of the Forwarding Railway; (ii) both the Railways constitute a partnership and each acts as the agent of the other; (iii) the Receiving Railway is the agent of the consignor in entrusting the goods to the Forwarding Railway: an instructive and exhaustive discussion on the said three principles in their application to varying situations is found in Kulu Ram Maigraj vs The Madras Railway Company (1), G. I. P. Railway Co. vs Radhakisan Khushaldas (2 ), and Bristol And Exeter Railway vs Collins (3); (iv) the Receiving Railway, which is the bailee of the goods, is authorized by the consignor to appoint the Forwarding Railway as a sub bailee, and, after such appointment, direct relationship of bailment is constituted between the consignor and the sub bailee; and (v) in the case of through booked traffic the consignor of the goods is given an option under 'section 80 of the Indian Railways.
Act to recover compensation either from the Railway Administration to which the goods are delivered or from the Railway Administration in whose jurisdiction the loss, injury.
destruction or deterioration occurs.
Some of the aforesaid principles cannot obviously be applied to the present case.
The statutory liability under section 80 of the Indian Railways Act cannot be invoked, as that section applies only to a case of through booked traffic involving two or more Railway Administration in India; whereas in the present case the Receiving Railway is situated in Pakistan and the Forwarding Railway in the Indian territory.
India and Pakistan are two independent sovereign powers, and by the doctrine of lex loci contractus, section 80, cannot (1) I.L.R. (2) I.L.R. (3) VII H L.C. 194.
81 apply beyond the territories of India; nor can the respondent rely upon the first two principles.
There is no allegation, much less proof, that there was any treaty arrangement between these two states governing the rights inter se in the matter of through booked traffic.
This process of elimination leads us to the consideration of the applicability of principles (iii) and (iv) to the facts of the present case.
The problem presented can only be solved by invoking the correct principle of law to mould the relief on the basis of the facts found.
We shall first consider the scope of the fourth principle and its applicability to the facts of this case.
Section 72 of the Indian Railways Act says that the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under sections 151, 152 and 161 of the .
Section 148 of the defines " bailment " thus: " A 'bailment ' is the delivery of goods by one person to another for some purpose, upon a contract that they shall, when the purpose is accomplished, be returned or otherwise disposed of according to the directions of the person delivering them." G.W. Patson in the book "Bailment in the Common Law" says, at p. 42, thus: " If a bailee of a res sub bails it by authority, then according to the intention of the parties, the third person may become the immediate bailee of 'the owner, or he may become a sub bailee of the original bailee".
At p. 44 the learned author illustrates the principle by giving as an example a carrier of goods entrusting them to another carrier for part of the journey.
One of the illustrations given by Byles J. in Bristol.
And Exeter Railway vs Collins (1) is rather instructive and it (1) VII H.L.C. 194,212, 11 82 visualises a situation which may be approximated to.
the present one and it is as follows: The carrier receiving the goods may, therefore, for the convenience of the public or his customers, adopt a third species of contract.
He may say, We do not choose to undertake responsibilities for negligence and accidents beyond our limits of carriage, where we have no means of preventing such negligence or accident; and we will not, therefore, undertake the carriage of your goods from A. to B., but we will be carriers as far as our line extends, or our vehicles go, and we will be carriers no further; but to protect you against the inconveniences and trouble to which you might be exposed if we only undertook to carry to the end of our line of carriage, we will undertake to forward the goods by the next carriers, and on so doing our liability shall cease, and our character of carriers shall be at an end; and for the purpose of so forwarding and of saving the trouble of two payments, we will take the whole fare, or you may pay as one charge at the end; but if we receive it we will receive it only as your agents for the purpose of ultimately paying the next carriers.
" We may add to the illustration the further fact that the Forwarding Railway is in India, a foreign country in relation to the country in which the Receiving Railway is situate.
Relying upon the said passages, an argument is advanced to the effect that the consignor i.e., the respondent, authorised his bailee, namely, the Receiving Railway, to entrust the goods to the Forwarding Railway during their transit through India to their destination and the facts disclosed in the case sustain in the said plea.
There is no document executed between the respondent and the Receiving Railway hereunder the Receiving Railway was expressly authorized to create the Forwarding Railway the immediate bailee of the owner of the goods.
exhibit P 50, the railway receipt dated September 4, 1947, does not expressly confer any such power.
But the facts found in the case irresistibly lead to that conclusion.
There 83 was no treaty between the two countries in the matter of through booked traffic; at any rate, none has been placed before us.
What we find is only that the Receiving Railway received the goods of the respondent and delivered the wagon containing the said goods to the care of the Forwarding Railway, and the latter took over charge of the wagon, carried it to New Delhi and offered to deliver the goods not lost to the respondent on payment of the railway freight.
In the absence of any contract between the two Governments or the, Railways, the legal basis on which the conduct of the respondent and the Railways can be sustained is that of the respondent delivered the goods to the Receiving Railway with an authority to create the Forwarding Railway as his immediate bailee from the point the wagon was put on its rails.
The same result could be achieved by approaching the case from a different perspective.
Section 194 of the says : " Where an agent, holding an express or implied authority to name another person to act for the principal in the business of the agency, has named another person accordingly, such person is not a sub `agent, but an agent of the principal for such part of the business of the agency as is entrusted to him.
" The principle embodied in this section is clearly stated by Thesiger L. J. in De Buasche vs Alt (1) at p. 310 thus : " But the exigencies of business do from time to time render necessary the carrying out of the instructions of a principal by a person other than the agent originally instructed for the purpose, and where that is the case, the reason of the thing requires that the rule should be relaxed, so as, on the one hand, to enable the agent to appoint what has been termed " a sub agent " or " substitute " ; and, on the other hand, to constitute, in the interests and for the protection of the principal, a direct privity of contract between him and such substitute.
" The aforesaid facts clearly indicate that the respondent appointed the Receiving Railway as his agent to 1. , 310.
84 carrv his goods on the railway to a place in India with whom Pakistan had no treaty arrangement in the matter of through booked traffic.
In that situation the authority in the agent must necessarily be implied to appoint the Forwarding Railway to act for the consignor during that part of the journey of the goods by the Indian Railway; and, if so, by force of the said section, the Forwarding Railway would be an agent of the consignor.
If no such agency can be implied, in our view, a tacit agreement between the Receiving Railway and the Forwarding Railway to carry the respondent 's goods to their destination may be implied from the facts found and the conduct of all the parties concerned.
If the Receiving Railway was not an agent of the Forwarding Railway, and if there was no arrangement between the two Governments, the position in law would be that the foreign railway administration, having regard to the exigencies of the situation obtaining during those critical days, brought the wagon containing the goods of the respondent and left it with the Forwarding Railway; and the latter consciously took over the responsibility of the bailee, carried the wagon to New Delhi and offered to deliver the goods to the respondent.
The respondent also accepted that relationship and sought to make the Forwarding Railway responsible for the loss as his bailee.
On these facts and also on the basis of the course of conduct of the parties, we have no difficulty in implying a contract of bailment between the respondent and the Forwarding Railway.
We may also state that section 71 of the permits the recognition of a contract of bailment implied by law under circumstances which are of lesser significance than those present in this case.
The said section reads: A person who finds goods belonging to another and takes them into his custody, is subject to the same responsiblity as a bailee.
" If a finder of goods, therefore, accepts the responsibility of the goods, he is placed vis a vis the owner of the goods in the same position as a bailee.
If it be held 85 that the Railway Administration in Pakistan for reasons of policy or otherwise left the wagon containing the goods within the borders of India and that the Forwarding Railway Administration took them into their custody, it cannot be denied that their responsibility in regard to the said goods would be that of a bailee.
It is true there is an essential distinction between a, contract established from the conduct of the parties and a quasi contract implied by law; the former, though not one expressed in words, is implied from the conduct and particular facts and the latter is only implied by law, a statutory fiction recognized by law.
The fiction cannot be enlarged by analogy or otherwise.
As we have held that the Receiving Railway was authorized by the respondent to engage the Forwarding Railway as his agent or as his bailee, this section need not be invoked.
But we would have had no difficulty to rely upon it if the Forwarding Railway was equated to a finder of goods within the meaning of the section.
If so, the next question that arises is what is the extent of the liability of the appellant in respect of the goods of the respondent entrusted to it for transit to New Delhi.
We have held that, in the circumstances of the present case, the application of the provisions of section 80 of the Indian Railways Act is excluded.
If so, the liability of the Forwarding Railway is governed by section 72 of the said Act.
Under that section the responsibility of a railway administration for the loss, destruction or deterioration of animals or goods delivered to the administration to be carried by railway shall, subject to the other provisions of the Act, be that of a bailee under sections 151, 152 and 161 of the .
Under section 151 of the , the bailee is bound to take such care of the goods bailed to him as a man of ordinary prudence would under similar circumstances take of his own goods of the same bulk, quality and value of the goods bailed; and under section 152 thereof, in the absence of any special contract, he is not responsible for the loss, destruction or deterioration of the thing bailed, if he has taken such amount 86 of care of it as described in section 151.
In other words, the liability under these sections is one for negligence only in the absence of a special contract.
Generally goods are consigned under a risk note under which the Railway Company is absolved of all liability or its liability is modified.
No such risk note is forth coming in the present case.
The question, therefore, reduces itself to an enquiry whether, on the facts, the Forwarding Railway observed the standard of diligence required of an average prudent men.
The facts found by the High Court as well as by the Subordinate Judge leave no room to doubt that the Forwarding Railway was guilty of negligence in handling the goods entrusted to its care.
The wagon reached Khem Karan intact.
D. W. 4 deposed that he received from the guard of the train that brought the wagon to the station the inward summary and that on checking the train with the aid of that summary he found that the wagon was intact according to the summary.
He also found the seals and labels of the wagon intact and that the 'inward summary ' tallied with the entries on the labels.
It may, therefore, be taken that when the Forwarding Railway took over charge of the goods they were intact.
The evidence of P. W. 1,Thakar Das, establishes that even at Amritsar the wagon was intact.
But, thereafter in its onward march towards New Delhi it does not appear on the evidence that the necessary care was bestowed by the railway authorities in respect of the said wagon.
The said wagon remained in the yard of Ludhiana Station between November 2, 1947, and January 14, 1948 and also it appears from the evidence that when it reached that place the label showed that its destination was unknown.
What happened during these months is shrouded in mystery.
It is said that the said wagon arrived at New Delhi on February 13, 1948, and that the Goods Clerk, Ram Chander, unloaded the goods in the presence of the head watchman, Ramji Lal and head constable, Niranjan Singh, when it was discovered that only 15 packages were in the wagon and the rest were lost.
The Goods Clerk, Ram Chander (D.W, 4), the head watchman, Ramji Lal (D. W. 7), 87 the Assistant Train Clerk, Krishan Lal (D. W. 8), and the head constable, Niranjan Singh (D. W. 16), speak to the said facts, but curiously no contemporaneous relevant record disclosing the said facts was filed in the present case.
We cannot act upon the oral evidence of these interested witnesses in the absence of such record.
No information was given to the respondent about the arrival at New Delhi of the said wagon.
Only on June 7, 1948, i.e., nearly four months after the alleged arrival of the wagon, the respondent received a letter from the Chief Administrative Officer asking him to effect delivery of the packages lying in New Delhi Station; but to his surprise, when the respondent went to take delivery no goods were to be found there.
Only on August 18, 1948 the appellant offered to the respondent a negligible part of the goods in a damaged condition subject to the payment of the railway freight, and the respondent refuse to take delivery of the same.
From the said facts it is not possible to hold that the railway administration bestowed such care on the goods as is expected of an average prudent man.
We, therefore, hold that the Forwarding Railway was guilty of negligence.
Then remains the question of limitation.
The relevant articles are articles 30 and 31 of the Indian Limitation Act.
They read: Description of suit period of Time from limitation.
wich period begins to run 30 Against carrier for compensation for losing or injuring One year When the loss or injury goods.
occurs.
Against a carrier for compensation for non delivery of, or One year When the goods ought delay in delivering to be delivered.
goods.
Article 30 applies to a suit by a person claiming com pensation against the railway for its losing or injuring his goods; and article 31 for compensation for nondelivery or delay in delivering the goods.
The learned Counsel for the appellant argued that article 30 would apply to the suit claim, whereas the 88 learned Counsel for the respondent contended that article 31 would be more appropriate to the suit claim.
We shall assume that article 30 governed the suit claim and proceed to consider the question on that basis.
The question now is, when does the period of limitation under article 30 start to run against the claimant ? The third column against article 30 mentions that the said claim should be made within one year from the date when the loss or injury occurs.
The burden is upon the defendant who seeks to non suit the plaintiff on the ground of limitation to establish that the loss occurred beyond one year from the date of the suit.
The proposition is self evident and no citation is called for.
Has the defendant, therefore, on whom the burden rests to prove that the loss occurred beyond the prescribed period, established that fact in this case ? The suit was filed on August 4, 1949.
In the plaint the plaintiff has stated that loss to the goods has taken place on the defendant railway, and, therefore, delivery has not been effected.
Though in the written statement there was a vague 'denial of this fact the evidence already noticed by us established beyond any reasonable doubt that the goods were lost by the Forwarding Railway when they were in its custody.
But there is no clear evidence adduced by the defendant to prove when the goods were lost.
It is argued that the goods must have been lost by the said Railway at the latest on February 20, 1948, when the goods are alleged to have been unloaded from the wagon at the New Delhi Station; but we have already discussed the relevant evidence on that question and we have held that the defendant did not place before the Court any contemporaneous record to prove when the goods were taken out of the wagon.
Indeed, the learned Subordinate Judge in a considered judgment held that it had not been established by the Forwarding Railway that the goods were lost beyond the period of limitation.
The correctness of this finding was not canvassed in the High Court, and for the reasons already mentioned, on this material produced, there was every justification for the findings.
If so, it follows that the 89 suit was well within time.
In this view it is not necessary to express our opinion on the question whether there was a subsequent acknowledgment of the appellant 's liability within the meaning of art 19 of the Indian Limitation Act.
In the result, the appeal fails and is dismissed with costs.
Appeal dismissed.
[/INST]The respondent booked certain goods on September 4, 1947, with the N. W. Railway at Quebec in Pakistan to New Delhi.
The wagon containing the goods was received at the Indian border station of Khem Karan on November 1, 1947, duly sealed and labelled indicating its destination as New Delhi.
It reached New Delhi on February 3, 1948, and was unloaded on February 20, 1948, but no immediate information was sent to the respondent.
On June 7, 1948, the respondent was asked by the E. P. Railway to take delivery of the goods lying at New Delhi station but when the respondent went there the goods were not traceable.
Again, on July 24, 1948, the respondent was asked to take delivery of the goods when only a small portion of the goods 76 were offered to him subject to the payment of Rs. 1,067 8 0 as freight but the respondent refused to take delivery.
On August 4,1949, the respondent filed a suit for Rs. 1,62,123 with interest as compensation for non delivery of goods against the Dominion of India.
The trial court found that the E. P. Railway was guilty of negligence in handling the goods and decreed the suit for Rs. 80,000, and on appeal the High Court confirmed the decree.
The appellant contended that there was no privity of contract between the respondent and the E. P. Railway and he could only have a claim against the N. W. Railway in Pakistan, and that the suit was barred by limitation.
Held, that there was an implied contract of bailment between the respondent and the E. P. Railway and that Railway was liable for the loss.
The conduct of the parties indicated that the respondent delivered the goods to the N. W. Railway with an authority to create the E. P. Railway as his immediate bailer from the point the wagon was put on its rails.
The N. W. Railway must be deemed to have had implied authority to appoint the E. P. Railway to act for the consignor during the journey of goods by the E. P. Railway and by force of section 194 of the , the E. P. Railway became an agent of the consignor.
The N. W. Railway left the wagon with the E. P. Railway and the latter consciously took over the responsibility of the bailer, carried the wagon to New Delhi and offered to deliver the goods to the respondent.
The respondent also accepted this relationship.
From these facts, even if an agency could, not be implied, a tacit agreement between the two Railways to carry the respondents goods to New Delhi could be implied resulting in a contract of bailment between the E. P. Railway and respondent.
Kulu Ram Maigraj vs The Madras Railway Company, I.L.R. , G.I.P. Railway Co. vs Radhakisan Kushaldas, I.L.R. , Bristol and Exeter Railway vs Collins, VII H.L.C. 194 and De Bussche vs Alt, (1878) L.R. 8 Ch.
D. 386, referred to.
Held, further that the suit was not barred by limitation.
Even if article 30 of the Indian Limitation Act applied, as contended for by the appellant, the burden was on the appellant, who sought to non suit the respondent, to establish that the loss occurred beyond one year from the date of the suit.
Thus the appellant had failed to establish by any clear evidence.
</s> |
<s>[INST] Summarize the judgementNo. 136 of 1957.
Writ Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
193 Purshottam Tricumdas, Mukund R. Mody, Anil B. Divan, Ramesh A. Shroff and I. N. Shroff, for the petitioner.
C. K. Daphtary, Solicitor General of India, R. Ganapathy Iyer and R. H. Dhebar, for respondent.
August 17.
The Judgment of the Court was delivered by SUBBA RAO J.
This is a petition under article 32 of the Constitution for the issue of a writ of mandamus or a writ in the nature of mandamus or any other appropriate direction, order or writ to direct the respondent, the Union of India, to withdraw or cancel the notification dated August 31, 1957, recognising " the Stock Exchange, Bombay " under section 4 of the (XLII of 1956), (hereinafter referred to as"the Act ").
At the outset it is necessary to notice briefly how a Stock Exchange is worked and how it is controlled or regulated by the State.
" Stock Exchange " means, " any body of individuals, whether incorporated or not, constituted for the purpose of assisting or con.
trolling the business of buying, selling or dealing in securities ".
The history of stock exchanges in foreign countries as well as in India shows that the development of joint stock enterprise would never have reached its present stage but for the facilities which the stock exchanges provided for dealing in securities.
They have a very important function to fulfil in the country 's economy.
Their main function, in the words of an eminent writer, is " to liquify capital by enabling a person who has invested money in, say, a factory or a railway, to convert it into cash by disposing of his share in the enterprise to someone else ".
Without the stock exchange, capital would become immobilized.
The proper working of a stock exchange depends upon not only the moral stature of the members but also on their calibre.
It is a trite saying that a jobber or dealer is born and not made.
In the words of the same author, a jobber must be a man of good nerve, cool judgment, and ready to deal 25 194 under any ordinary conditions, and he must be a man of financial standing, considerable experience, with an understanding of market psychology.
There are three modes of dealing in shares and stores, namely, (1) spot delivery contract, i.e., a contract which provides for the actual delivery of securities on the payment of a price thereof either on the day of the contract or the next day, excluding perhaps the period taken for the despatch of the securities or the remittance of money from one place to another; (2) ready delivery contract, which means a contract for the purchase or sale of securities for the performance of which no time is specified and which is to be performed immediately or within a reasonable time; (3) forward contracts, i.e., contracts whereunder the parties agree for their performance at a future date.
If the stock exchange is in the hands of unscrupulous members, the second and third categories of contracts to buy or sell shares may degenerate into highly speculative transactions or, what is worse, purely gambling ones.
Where the parties do not intend while entering into a contract of sale or purchase of securities that only difference in prices should be paid, the transaction, even though speculative, is valid and not void, for " there is no law against speculation as there is against gambling ".
But, if the parties do not intend that there should be any delivery of the shares but only the difference in prices should be accounted for, the contract, being a wager, is void.
More often than not it is difficult for a court to distinguish one from the other, as a wagering transaction may be so cleverly camouflaged as to pass off as a speculative transaction.
These mischievous potentialities inherent in the transactions, if left uncontrolled, would tend to subvert the main object of the institution of stock exchange and convert it into a den of gambling which would ultimately upset the industrial economy of the country.
For that reason, in Bombay as early as 1925, the Bombay Securities Contracts Control Act was passed to regulate and control contracts for the purchase and sale of securities in the City of Bombay and elsewhere in the Bombay Presidency.
Under section 6 of that Act, 195 " Every contract for the purchase or sale of securities, other than a ready delivery contract, entered into after a date to be notified in this behalf by the Provincial Government shall be void, unless the same is made subject to and in accordance with the rules duly sanctioned under section 5 and every such contract shall be void unless the same is made between members or through a member of a recognised stock exchange; and no claim shall be allowed in any Civil Court for the recovery of any commission, brokerage, fee or reward in respect of any such contract ".
But this Act defined " ready delivery contract " to mean " a contract for the purchase or sale of securities for performance of which no time is specified and which is to be performed immediately or within a reasonable time ".
It was also stated therein by way of explanation that what was reasonable time was in each particular case a question of fact.
This Act did not achieve its purpose, for under section 6 thereof contracts entered into in contravention of the provisions of that section were not made illegal but only void, with the result that even members of a stock exchange not recognised under that Act were able to do business in that line.
What is more, the explanation to the definition of " ready delivery contract " which is excluded from the operation of the Act was so elastic that in the name of ready delivery contracts unrecognised stock exchanges.
and individuals were able to carry on business in forward contracts.
( ,ambling in shares went on unchecked in Bombay as elsewhere.
After the Second World War, the post war boom gave an unhealthy impetus to the stock exchange transactions.
Various expert committees appointed by the Government from time to time considered the question of regulation of stock exchanges and the latest of those committees was the Gorwalla Committee.
The report of that Committee was circulated to the principal stock exchanges, Chambers of Commerce, and other interested associations and individuals.
After considering the reports of the committees and the comments made thereon by the various bodies, the Government introduced a bill in the Parliament, which became law on 196 September 4, 1956.
The Act was passed to prevent undesirable transactions in securities by regulating the business therein by prohibiting auction and by providing for certain other matters connected therewith.
The Act mainly provides for the recognition of stock exchanges and for controlling the rule making of the said exchanges.
Section 4 of the Act empowers the Central Government to recognise stock exchanges subject to two conditions.
Section 13 enables it to issue a notification that in a particular State or area every contract which is entered into after the date of the notification otherwise than between members of a recognised stock exchange in such State or area or through or with such member shall be illegal.
Without resorting to such drastic procedure the Government is also given power to prohibit contracts in certain securities in certain areas from doing business without obtaining a licence.
Spot delivery contracts are excluded from the operation of sections 13, 14, 15 and 17 of the Act, unless the Central Government by notification thinks fit to extend the operation of section 17 of the Act to such contracts.
Section 19 prohibits formation of stock exchanges other than recognised ones except with the permission of the Central Government.
It declares all auctions in securities entered into after the commencement of the Act illegal.
It also provides penalties for the infringements of the provisions of the Act.
In short, the Act confers an effective controlling power on the Central Government over the stock exchanges.
In exercise of the power conferred upon the Central Government to make rules, the Central Government made rules described as the Securities Contracts (Regulation) Rules, 1957, providing, inter alia, for the qualification for membership of a stock exchange seeking recognition, the procedure for recognition, the manner of keeping accounts, the submission of annual reports, the constitution of governing bodies and for taking disciplinary action against any member of such bodies and other similar matters.
In Greater Bombay there were two stock exchanges, 197 one called the Native Share & Stock Brokers ' Association, and the other the Indian Stock Exchange Limited.
The former was in existence for more than., 80 years and it was registered under the Bombay Securities Contracts Control Act, 1925.
Its rules and bye laws were approved by the Government of Bombay and it was doing business in both forward as well as ready transactions.
It has a clearing house and was doing extensive business in different kinds of securities.
The other, namely, the Indian Stock Exchange Limited, was a company incorporated under the Indian Companies Act, 1913, as a company limited by guarantee without any share capital.
The said Company had been functioning since 1937, but was not registered under the Bombay Securities Contracts Control Act, 1925.
It was mainly doing business in Tata Ordinary and Bombay Dyeing shares and had hardly any investment business.
Not being registered under the Bombay Securities Contracts Control Act, 1925, it could only deal in ready delivery contracts; and as the definition of " ready delivery contract " under that Act was elastic and as forward contracts were not made illegal thereunder, this Exchange was also doing speculative business mainly in the said two shares.
After the Act came into force, both the Exchanges applied for recognition under the Act.
The Government, after considering the relative merits and the relevant circumstances, issued a notification dated August 31, 1957, recognising the Native Share and Stock Brokers ' Association under the name " The Stock Exchange, Bombay " subject to the conditions mentioned therein.
One of the conditions imposed was that the members of the Indian Stock Exchange Limited would be entitled to apply for membership of the Stock Exchange, Bombay, provided they were active members of the Indian Stock Exchange Limited for 12 months immediately preceding August 6, 1957, and they were also eligible under r. 8(1) of the Securities Contracts (Regulation) Rules, 1957, to be members of a recognised stock exchange.
The notification 198 further gave some concessions to such active members in the matter of payment of the membership fee.
They had to apply for membership before October 15, 1957, or before such period as the Board of the recognised Stock Exchange might think fit to extend.
It appears that within the extended time a number of active members of the Indian Stock Exchange Limited as defined by the notification applied for membership and were admitted as members of the recognised Stock Exchange.
Though three years have passed by, no member other than the petitioner has so far thought fit to question the validity of the notification, that is, the validity of the notification has been accepted and the recognised Stock Exchange has become stabilised on that basis.
Subsequent to the filing of.
the petition on November 30, 1957, the Central Government issued another notification applying section 13 of the Act to Greater Bombay; with the result that thereafter every contract in shares between the members of any unrecognised stock exchange in that City would be illegal.
The petitioner had become a member of the Indian Stock Exchange Limited on February 27, 1956, but he had not been transacting any business on the floor of the said Stock Exchange either on his own account or on account of his clients.
He avers in the affidavit filed in support of the petition that he has been doing considerable business on his own account or on account of his clients through other members of the Stock Exchange and that he intends to commence business directly in ready delivery contracts.
As the impugned notifications affect his right to do business, he seeks for the issue of a writ of mandamus for the aforesaid reliefs.
Shri Purshottam Trikumdas, learned counsel for the petitioner, raised before us the following contentions: (1) under article 19(1)(g) of the Constitution the petitioner has a fundamental right to carry on the business in shares and the notification dated August 31, 1957, and the subsequent notification dated November 30, 1957, imposed unreasonable restrictions on his said right; (2) the notification dated August 31, 199 1957, is void inasmuch as it is not sanctioned by the provisions of section 4 of the Act; and (3) the condition 2(i)(a) of the said notification classifying members of A the Indian Stock Exchange Limited as active members and members who were not active infringes the fundamental right enshrined in article 14 of the Constitution and that as the said condition is not severable the entire notification is bad.
Learned Solicitor General in addition to controverting the said contentions pressed on us to hold that as the vires of the Act was not questioned, the notification issued thereunder could not be questioned by the petitioner on the ground that it contravened one or other of the said fundamental rights.
It would be convenient to take first the contention of the learned Solicitor General as it is in the nature of a preliminary point.
He says that as the validity of the Act was not questioned the notification issued in the exercise of the power conferred thereunder cannot also be questioned.
There is a fallacy underlying this contention.
Under article 13(2) of the Constitution, the State shall not make any law which takes away or abridges the rights conferred by Part III thereof; and " law " is defined under article 3(a) to include a notification.
Therefore, the validity of a notification issued by the State, it being law, is as much vulnerable to attack as that of the Act itself on the ground that it infringes any of the fundamental rights.
If an Act is a self contained one and the notification issued there under only restates the provisions of the Act, the validity of the notification cannot obviously be questioned as the validity of its contents were accepted.
But if the Act confers a power on the State in general terms and the notification issued thereunder infringes one or other of the fundamental rights, the validity of the Act cannot equally obviously prevent an attack on the notification.
In the former case the notification only reflects the provisions of a valid Act and in the latter it is the notification and not the Act that infringes the fundamental rights.
Take an example of an Act imposing restrictions on the freedom of speech.
The Act authorizes the State to impose conditions on 200 the said freedom in the interests of security of State.
The Act is constitutionally valid.
But, if a notification issued under that Act imposes unreasonable restrictions infringing the said rights, it is liable to be challenged on the ground of unconstitutionality.
So too, in the instant case section 4 of the Act empowers the Central Government to issue a notification recognising a stock exchange subject to certain conditions expressed in general terms.
The general terms can comprehend both reasonable and unreasonable restrictions.
If the notification imposes unreasonable restrictions if the contention of the learned counsel for the petitioner be accepted, the restrictions imposed would certainly be unreasonable it is liable to be set aside.
We cannot, therefore, accept this contention.
(1): Article 19(1)(g) of the Constitution states that every citizen shall have the right to carry on any business; but the State in empowered under el.
(6) of the said Article to make any law imposing in the interest of the general public reasonable restrictions on the exercise of the said right.
Briefly stated, the argument is that the combined effect of the two notifications is that the petitioner is driven out of his business of stock exchange in as much as, it is said, they confer a monopoly on the Stock Exchange, Bombay, and the rules of the said Stock Exchange exclude any outsider from becoming its member without obtaining a nomination and that too only in the place of an existing member.
To put it differently, the argument proceeds that under the rules of the Stock Exchange, Bombay, membership is not thrown open to the public.
This leads us to the consideration of the relevant provisions of the Stock Exchange Rules, Bye laws and Regulations, 1957.
Under r. 3 the membership of the Exchange shall consist of such number of members as the Exchange in general meeting may from time to time determine.
It is common case that the membership of the Exchange is not limited.
Under the heading " Election of New Members ", the Rules prescribe the conditions of eligibility for election as a member of the Exchange.
These Rules adopt the provisions of r. 8 of the Securities 201 Contracts (Regulation) Rules, 1957.
The Rules do not contain any limitation on the eligibility of a person to be elected as a member such as that the person, should be nominated in the manner provided by the Rules or that he should come only in the vacancy caused by another member ceasing to be one in one of the ways mentioned thereunder.
The words " no person " in r. 17 are comprehensive enough to take in any outsider seeking for election as a, member.
Rule 22 provides for an application for admission in the form prescribed in Appendix A to the Rules.
This rule also does not impose any such limitation.
The admission application form in Appendix A is also general in terms and enables any person of India to apply for membership provided he agrees to abide by the conditions imposed therein.
In the form also there is no such limitation.
But it is contended that a fair reading of the provisions of rr. 20 and 21 makes it clear that a candidate for admission is confined only to two categories, viz., (1) a candidate nominated by a member or a legal representative of a deceased member seeking admission to membership in the place of ' the deceased; and (2) a person recommended for admission to membership in the place of a member who has forfeited his right to membership.
A careful scrutiny of the Rules does not bear out the contention; nor do they enable us to cut down the wide amplitude of rr.
17 to 22.
Rule 10 says: " When a right of membership is forfeited to or vests in the Exchange under any Rule, Bye law, or Regulation of the Exchange for the time being in force it shall belong absolutely to the Exchange free of all rights, claims or interest of such member or any person claiming through such member and the Governing Body shall be entitled to deal with or dispose of such right of membership as it may think fit." Rule 54 is to the following effect: " A member 's right of membership shall lapse to and vest in the Exchange immediately be is declared a defaulter." Rule 11 is as follows. 26 202 "(a) A member of not less than seven years ' standing who desires to resign may nominate a person eligible under these Rules for admission to membership of the Exchange as a candidate for admission in his place (b) The legal representatives of a deceased member or his heirs or the persons mentioned in Appendix C to these Rules may with the sanction of the Governing Board nominate any person eligible under these Rules for admission to membership of the Exchange as a candidate for admission in the place of the deceased member.
In considering such nomination the Governing Board shall be guided so far as practicable by the instructions set out in Appendix C to these Rules.
" Appendix B gives the nomination forms Nos. 1 and 2 to be filled by a member or a legal representative, as the case may be, under r. 11 (a) and (b).
Now it would be convenient to read rr. 20 and 21.
They are as follows: Rule 20: " A candidate for admission except ' a candidate applying for a membership vesting in the Exchange must obtain a nomination in the manner provided in these Rules.
" Rule 21: " A candidate for admission must be recommended by two members none of whom should be a member of the Governing Board.
The recommenders must have such personal knowledge of the candidate and of his past and present circumstances as shall satisfy the Governing Board.
" The argument is that under r. 20 a candidate for ad.
mission falls under two categories, namely, (1) a candidate who must obtain a nomination in the manner provided in the Rules, i.e., r. 11 (a) and (b); and (2) a candidate applying for a membership vesting in the Exchange; and, therefore, these two categories exhaust the candidates for admission and that when under r. 21 the same words, " a candidate for admission ", are used they must carry the same meaning as in r. 20, that is, they must be confined only to the two categories comprehended by r. 20.
This argument appears to be plausible and even incontrovertible, if 203 rr. 20 and 21 are taken out of their setting and construed independently of other rules.
But in the setting in which they appear they can bear only one meaning, namely, that r. 20 provides for nomination only in the case of a candidate for admission who requires a nomination in the manner provided by the rule and r. 21 provides, for all the candidates for admission, that they should be recommended by two members who have personal knowledge of the candidates.
To put it in other words, under the Rules candidates for admission fall under three groups, viz., (1) candidates falling under r. 11, (a) and (b); (2) candidates applying for membership vesting in the Exchange; and (3) other candidates.
All the three categories of candidates must be recommended by two members.
But the candidates belonging to the first category shall in addition be nominated in the manner provided by the Rules.
We, therefore, hold that the Stock Exchange Rules do not operate as a bar against the petitioner becoming a member of the Stock Exchange subject to the rules governing such application.
The petitioner has the right to do business in shares: in spite of the notifications he can still do business in spot delivery contracts.
He can apply to become a member of the Stock Exchange subject to the conditions laid down by the Rules.
The Act the validity of which he has not chosen to question, enables the State to give or refuse recognition to any Stock Exchange and it has chosen to give recognition to the Stock Exchange, Bombay, subject to the conditions prescribed.
The restrictions, in our view, are not unreasonable, having regard to the importance of the business of a stock exchange in the country 's national economy and having regard to the magnitude of the mischief sought to be remedied in the interest of the general public.
At another place we have already dealt with the necessity for stringent rules governing this type of business For the reasons Mentioned we reject the first contention.
(2): The second contention also has no merits.
The criticism is that condition 2(i) (a) annexed to the notification cannot be supported on the basis of any 204 of the provisions of section 4 of the Act.
Condition 2 (i) reads as follows: " The Members of the Indian Stock Exchange Limited, Bombay, will be entitled to apply for Membership of the Stock Exchange, Bombay, provided they fulfil or comply with the following terms and conditions: (a) they have been active members of the Indian Stock Exchange Limited, for twelve months immediately preceding the 6th August, 1957.
Explanation:" Active Members " for purpose of this condition means members who have themselves transacted business regularly on the floor of the Indian Stock Exchange Limited either on their own account or on account of their clients.
To appreciate the argument it is also necessary to read the material provisions of section 4 of the Act.
Section 4: " (1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as it may require, (a) that the rules and bye laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors; (b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by it, may impose for the purpose of carrying, out the objects of this Act; and (c) that it would be in the interest of the trade and also in the public interest to grant recognition to the stock exchange; It may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed.
(2) The conditions which the Central Government 205 may prescribe under clause (a) of sub section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating.
to, (i) the qualifications for membership of stock exchanges; (ii) the manner in which contracts shall be entered into and enforced as between members; (iii) the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and (iv) the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government.
" The argument proceeds that condition 2(i)(a) enables only the active members of the Indian Stock Exchange Limited to apply for membership of the Stock Exchange, Bombay and that such a condition can be imposed only if it amounts to a qualification of membership within the meaning of sub section
(2) of section 4, as the other conditions in that sub section are obviously inapplicable.
It is further pointed out that sub section (2) refers back to sub section
(i)(a) and under that clause the condition imposed must only be that prescribed by the Rules made under the Act and that the condition imposed by the notification is not a condition so prescribed.
There is force in this argument; but, the acceptance of this contention does not advance the case of the petitioner, for, if the condition is not covered by cl.
(a) of section 4(1), it falls under cl.
(b) thereof.
Under that clause, the Central Government may grant recognition to a stock exchange if the said stock exchange is willing to comply with " any other conditions ".
It is said that the other conditions in section 4 (1) (b) must only be conditions relating to the area served by the stock exchange, its standing and the nature of the securities dealt with by it.
This is not what cl.
(b) of section 4(1) says.
The conditions under cl.
(b) of section 4(1) no doubt shall be such as may be imposed by the Government, having regard to the aforesaid three considerations, but they need not necessarily be 206 confined only to the said considerations.
The Government may impose any conditions, no doubt germane to the recognition of a stock exchange, after consultation with its governing board, and having regard to the said considerations.
It cannot be said that condition 2(i)(a) imposed on the Stock Exchange is not a condition germane to its recognition.
The record discloses that the Central Government in recognising the Stock Exchange sought to avoid the consequential hardship on the members of the rival stock exchange and therefore imposed the said condition on the Stock Exchange, Bombay, as a condition for its recognition.
The condition is germane to recognition of the Stock Exchange and is, therefore, a condition within the meaning of " any other conditions " in cl.
(b) of sub section
(1) of section 4 of the Act.
(3): Learned counsel for the petitioner advanced a forcible argument questioning the validity of condition 2(i)(a) of the notification on the ground that it infringed article 14 of the Constitution.
Elaborating his argument, the learned counsel stated that the said condition classified members of the Indian Stock Exchange Limited into two groups, one active members and the other who were not active members, and that that classification was arbitrary and had no reasonable relation to the object sought to be achieved by the notification.
He further pointed out that the defining of active members as those who had themselves transacted business regularly on the floor of the Indian Stock Exchange Limited either on their own account or on account of their clients for 12 months immediately preceding August 6, 1957, was not only arbitrary and vague but also, if analysed, would lead to anomalies destructive of any standard of reasonableness.
It is alleged in the affidavit filed by the petitioner that from the inception of the Indian Stock Exchange Limited, 199 members of the said Stock Exchange were actually trading on the floor of the said Exchange from time to time but for some reason or the other were not trading during the period of 12 months immediately preceding August 6, 1957; that there were 34 members of the said Stock Exchange who were regularly 207 transacting business on the floor of the said Stock Exchange prior to August 6, 1956, and for some time after August 6, 1956, but not during the entire period of 12 months from August 6, 1956 to August 6, 1957; and that there were 24 members of the said Stock Exchange who started transacting business regularly on the floor of the said Stock Exchange some time after August 6, 1956 and continued to transact business right upto and after August 6, 1957.
It was asked what was the reasonable basis for confining the definition of active members to those who were carrying on business during the period of 12 months from August 6, 1956 to August 6, 1957, while excluding the aforesaid three categories who were equally active members and indeed more active than those included in the definition.
It was further asked what was the justification for excluding a member who was an active member for years before the crucial year and irregularly conducted business on the floor of the Stock Exchange during the crucial year while including a member who might have been a newcomer or who might have been earlier a nominal member but began to do business regularly only during the said year.
Emphasis was also laid upon the alleged elastic and indefinite content of the word " regular " and it was suggested that the said word could not possibly afford a precise standard.
These are all weighty con siderations and we must confess that there is force in them.
But there is the other side of the picture.
It is well settled that a classification must have reasonable relation to the object sought to be achieved.
The standard of reasonableness is inextricably conditioned by the extent and nature of the evil and the urgency for eradicating the same.
The object of the notification is twofold.
The main object is to carry out the purpose of the Act, namely, to prevent undesirable transactions in securities by regulating the business in them.
The subsidiary object is to assuage the hardship that recognition of only one stock exchange would cause to the members of the other association.
To achieve this twin object the classification is made between active members and inactive members.
While 208 on the one hand the Government found it necessary to exclude the nominal members who would add their deadweight to the recognised association and bring down its efficiency and affect its disciplined conduct of business, on the other hand it gave opportunity to persons who were actively interested in the business to become regular members of the Stock Exchange, Bombay.
There is every justification for excluding members who had not been taking active interest in the business, for, as we have already pointed out, the efficient carrying out of the business of the Stock Exchange depends upon the moral stature, high caliber, and genuine and active interest evinced by the members.
The active members justified themselves to the preferential treatment by their sustained interest in the business whereas the members who were not active showed their continued indifference to that line of business.
But the crux of the question is, what is the justification for fixing twelve months immediately preceding August 6, 1957, as the standard for active membership ? The Under Secretary to the Govern ment of India, Ministry of Finance, filed an affidavit describing the circumstances whereunder this classification was made.
It discloses that the notification was issued after taking into consideration the representations made on behalf of both the Stock Exchanges and also the facts pertaining to the course of business conducted by the Indian Stock Exchange Limited.
It also gives the vicissitudes through which the said Stock Exchange passed from the date of its formation and the circumstances under which the membership of that Exchange was divided into full members and associate members.
It points out that the Indian Stock Exchange Limited became moribund in a few years and to revive its activities it allowed the members of the East India Chamber of Commerce, by relaxing its entrance fee and security deposit requirements in 1950 51 and created a new class of Associate Members, which facilitated the enrollment of hundreds of Associate Members on payment of a nominal entrance fee of Rs. 100.
The Government on a consideration of the necessary data and presumably 209 having regard to the record of the activities of the various members fixed the activities in the crucial year 1956 57 as the standard of activity for membership.
There is a presumption in favour of the State that there is a reasonable basis for the classification.
Except the mere allegations in the affidavit which are not admitted, the petitioner has not placed before us any materials to ascertain that any other members, who were regularly doing business on the floor of the Indian Stock Exchange Limited before August 6,1956, temporarily suspended their business for one reason or other over which they had no control.
No statement from the accounts has been produced to enable us to evaluate the activities of the members before the crucial date so as to enable us to form a view that really active members were excluded by the fixing of this period.
Nor are we in a position to verify whether any of the members excluded were regularly doing business during a part of the year in continuation of their business in the earlier period.
We cannot also say that the words "carrying on business regularly " are so vague that the parties did not understand their connotation, for it is admitted that some of the regular members applied for membership of the Stock Exchange, Bombay and most of them were admitted.
There is also the fact that though three years have elapsed since the date of the notification no other member of the Indian Stock Exchange Limited thought fit to question the notification on the ground that the period fixed was unreasonable and that really active members were excluded from membership of the Stock Exchange, Bombay.
So far as the petitioner is concerned, he was admittedly not an active member, though lie now pretends that he was doing business through other members.
There is also no material placed before us to support the said assertion.
If the classification, between active members and others who were not, is justifiable we hold it is the Government has to draw a line somewhere and to fix a period of activity reasonable in its opinion as a 27 210 standard to satisfy the test of " active member ".
The burden which lies upon the petitioner who impeaches the validity of the classification to show that it violates the guarantee of equal protection has not been discharged.
On the material placed before us we cannot say that the period fixed by the Government as the standard for ascertaining the active membership is arbitrary or unreasonable.
We must make it clear that this finding must be confined only to the validity of the impugned notification dated August 31, 1956.
The petition accordingly fails and is dismissed with costs.
Petition dismissed.
[/INST]The Assam Taxation (on goods carried by Roads and Inland Waterways) Act, 1954, was passed under Entry 56 of List II of Seventh Schedule to the Constitution.
The appellants contended that the Act violated the freedom of trade guaranteed by article 301 Of the Constitution and as it was not passed after obtaining the previous sanction of the President as required by article 304(b) it was ultra vires.
The respondent urged that taxing laws were not governed by Part XIII (which contained articles 301 and 304) but only by Part XII and in the alternative that the provisions of Part XIII applied only to such legislative entries in the Seventh Schedule as dealt specifically with trade, commerce and intercourse.
Held, (per Gajendragadkar, Wanchoo and Das Gupta, JJ.) that the Act violated article 30i and since it did not comply with the provisions of article 304(b) it was ultra vires and void.
The freedom of trade, commerce and intercourse guaranteed by article 301 was wider than that contained in section 297 Of the Government of India Act, 1935, and it included freedom from tax laws also.
Article 301 provides that the flow of trade shall run smooth and unhampered by any restriction either at the boundaries of the States or at any other points inside the States themselves ; and if any Act imposes any direct restrictions on the movement of goods it attracts the provisions of article 301, and its validity can be sustained only if it satisfied the requirements of article 302 or article 304.
The operation of article 301 cannot be restricted to legislation under the Entries dealing with trade and commerce.
The Assam Act directly affected the freedom contemplated by article 301.
Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, M. P. V. Sundararamier & Co. vs The State of Andhra Pradesh, [1058] S.C.R. 1422, James vs Commonwealth of Australia, , The State of Bombay vs The United Motors (India) Ltd., ; , Saghir Ahmed vs The State of U.P. 810 ; , James vs State of South Australia, ; and James vs Cowan, , referred to.
Per Sinha, C. J.
The Assam Act did not contravene article 301 and was not ultra vires.
Neither the one extreme position that article 301 included freedom from all taxation nor the other that taxation was wholly outside the purview of article 301 was correct.
The freedom conferred by article 301 did not mean freedom from taxation simpliciter but only from the erection of trade barriers, tariff walls and imposts which had a deleterious effect on the free flow of trade, commerce and intercourse.
The Assam Act was a taxing statute simpliciter and did not suffer from any of the vices against which Part XIII of the Constitution was intended.
Ramjilal vs Income tax Officer, Mohindargarh, [1951] S.C.R. 127, referred to.
Further, the impugned Act was within the competence of the State Legislature and fell directly within Entry 56 of List 11 ; it was not in conflict with the Tea Act Of 1953 enacted by Parliament; it did not contravene article 14 and it was not extra territorial in operation.
The Tata Iron & Steel Co. Ltd. vs The State of Bihar, ; , followed.
Per Shah, J. The Assam Act infringed the guarantee of freedom of trade and commerce under article 301 and as the Bill was not moved with the previous sanction of the President as required by article 304(b) nor was it validated by the assent of the President under article 255(c), it was ultra vires and void.
Article 301 guarantees freedom in its widest amplitude, freedom from prohibition, control, burden or impediment in commercial intercourse.
The freedom includes not only freedom from discriminative tariffs and trade barriers but also from all taxation on commercial intercourse.
Part XIII of the Constitution places restrictions upon the legislative power granted by articles 245, 246 and 248 and the Lists and these restrictions include burdens in the nature of taxation.
James vs Commonwealth of Australia, , referred to.
</s> |
<s>[INST] Summarize the judgementAppeal No. 2169(NT).
of 1993.
From the Judgment and Order dated 10.12.1979 of the Madras High Court in Tax Case No. 398 of 1976.
Mrs. Janaki Ramachandran for the Appellant.
K.N. Shukla, Sudhir Walia and P. Parmeswaran for the Respondent.
The Judgment of the Court was delivered by B.P. JEEVAN REDDY, J.
Under Section 256(1) of the Income Tax Act, the Income Tax Appellate Tribunal, Madras stated the following question of law for the opinion of the Madras High Court: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 19 being the interest received on the deposits made with the 1000 Electricity company is a business receipt and accordingly deleting the additional surcharge of Rs. 81,920 charged .for the assessment year 1963 64?" The High Court returned the reference unanswered.
It directed the Tribunal to consider the case 'on all points that require consideration of the question, whether additional surcharge was attracted '.
In short, it asked the Tribunal to examine whether the additional surcharge was attracted even if the income of Rs. 19 is chargeable under the head 'Profits and gains of business '.
The learned counsel for the assessee submits that the High Court exceeded its jurisdiction in making the above direction.
It is submitted that the matter be sent back to the High Court for answering the question of law as stated by the Tribunal.
The contention of the learned counsel is that by giving the impugned direction the High Court has sought to widen the scope of enquiry which it is not empowered to do in a reference under Section 256.
The assessee is a cooperative society engaged in the business of banking.
The previous year relevant to the assessment year 1963 64 was the year ending June 30, 1962.
Its business income was exempt under the provisions of Section 81(1) as it then stood.
During the said accounting year, the assessee received a sum of Rs. 19 being the interest on the deposit made by it with the Salem Erode Electricity Distribution Company.
This deposit was made by the assessee as required by the conditions notified by the said company for supply of energy.
The deposit carried interest and it is on account of the said interest that the sum of Rs. 19 was received by the assessee.
The Income Tax Officer treated the said amount of Rs. 19 as 'income from other sources '.
On that basis, he levied additional surcharge, in a sum of Rs. 81,920, under the provisions of the relevant Finance Act.
On appeal, the Appellate Assistant Commissioner upheld the contention of the assessee that the said sum of Rs. 19 also constituted its business income and, therefore, exempt.
Accordingly, he held, the levy of surcharge was unsustainable.
The Revenue appealed to the Appellate Tribunal.
Its case was that the said receipt cannot be treated as a business receipt and that it was rightly treated by the I.T.O. as "income from other sources '.
The Tribunal recorded in its order : "Before us it is made clear by both sides that the levy of additional surcharge and interest would depend upon the classification of the head of income for this interest income of Rs. 19 and that if it fell under income from business, the appeal has to be dismissed 1001 and that if it fell under 'income from other sources ', the appeal has to be allowed and the levy of surcharge and interest restored.
So we proceed to discuss the vital issue in this case on which hangs the result of this appeal.
" The Tribunal held it 'income from business ' and accordingly dismissed the appeal filed by the Revenue.
At the instance of the revenue, the Tribunal stated the aforesaid question.
Before the High Court it was contended by the Revenue that both the A.A.C. and the Tribunal laboured under an erroneous assumption that the said sum of Rs. 19 represented business income and the liability of surcharge was not attracted.
It was submitted that whether the said sum was a business income or income from other sources, it attracted the liability of additional surcharge.
The assessee, however, submitted that it was not open to the revenue to take the said stand, inasmuch as it agreed before the Tribunal that in case the said sum constituted business income, liability of additional surcharge was not attracted.
The assessee submitted further that the High Court should not allow the revenue to shift its stand and urge a new contention.
The High Court held, after an examination of the relevant provisions of the Finance Act and of the decisions relating to the nature of jurisdiction of the High Court in such a reference, that the assumption made by the A.A.C. and the Tribunal that the liability of surcharge is not attracted in case 'the said sum of Rs. 19 represented business income may not be warranted and that in such a situation the High Court does possess the power to correct the error so long as the point arose out of the Tribunal 's order.
The High Court held: "This Court cannot look on helplessly with reference to an error which is manifested in the contention of both sides before the Tribunal.
This court has jurisdiction to correct an error in the order of the Tribunal, so long as the point arose out of its order, whoever be the author of the mistake or error in taking up an particular contention.
Having regard to the nature of the issue that was before the Tribunal and having regard to what we have stated above, we think it proper to set aside the order of the Tribunal and direct the Tribunal to consider the case on all the points that require consideration of the question whether additional surcharge was attracted.
The reference is returned unanswered.
" 1002 We find it difficult to agree with Smt.
Janaki Ramachandran, learned counsel for the assessee that the High Court has exceeded its jurisdiction under Section 256 in making the above direction.
As rightly observed by the High Court, if the Tribunal proceeds upon an assumption which is erroneous in law and refers a question to the High Court, it cannot be said that the High Court is bound by the terms of the question referred and cannot correct the erroneous assumption of law underlying the question.
If such power is not conceded to the High Court, the result would be that the answer given by the High Court may equally be erroneous in law.
Such a situation cannot certainly be countenanced.
It would not be in the interest of law or justice.
It is not as if the High Court has asked for any fresh investigation of facts in this case not that such power does not exist in the High Court in a appropriate case.
All that the High Court has asked the Tribunal to do is to consider whether the liability of surcharge is not attracted even if the said sum of Rs. 19 is treated as income from business, The fact that the revenue was also a party to the said erroneous assumption before the Tribunal cannot stand in the way of the Revenue resiling from an erroneous assumption of law.
In C.I.T., Bombay vs Scindia Steam Navigation Ltd., ; the facts were these: a steam ship belonging to the respondent company was requisitioned by the government.
The ship was lost by enemy action on March 16, 1944.
The company received a sum of Rs. 20 lacs by way of compensation on July 17, 1944, a sum of Rs. 23 lacs on December 22.
1944 and a sum of Rs. 33,333 on August 10, 1946.
The total compensation so received exceeded the cost price of the steam ship.
The difference between the cost price and written down value was Rs. 9,26,532.
In the assessment proceeding for the A.Y. 1946 47, the revenue sought to charge the said amount under the fourth proviso to Section 10(2)(vii) of the Income Tax Act, 1922, inserted by the Income Tax (Amendment) Act, 1946, which came into force on May 4, 1946.
The assessee contended that the amount should be deemed to have been received on April 16,1944 as was done for the purposes of Excess Profits Tax Act, in which case it could not fall within the accounting period July 1, 1944 to June 30, 1945, relevant to the A.Y. 1946 47.
The Tribunal was of the opinion that the material date for the purpose of the fourth proviso to Section 10(2)(vii) was the date when the compensation was in fact received and that therefore the amount was assessable in the A.Y. 1946 47.
At the instance of the assessee, the Tribunal 1003 stated the following question of law for the opinion of the High Court "whether the sum of Rs. 9,26,532 was properly included in the assessee company 's total income computed for the A.Y. 1946 47?" Before the High Court the assessee raised a new contention for the first time that the fourth proviso to section 10(2)(vii) did not apply to the assessment as it was not in force on April 1, 1946 and the liability of the company had to be determined as on April 1, 1946, when the Finance Act, 1946 came into force.
A preliminary objection was raised by the revenue that the said aspect, or question as it may be called, did not arise out of the order of the Tribunal, that it was not raised before or dealt with by the Tribunal and that it was also not referred for the opining of the High Court.
The High Court over ruled the objection opining that the form in which the question was framed was sufficiently wide 'to take in the new contention and that the company was entitled to raise it even if that aspect of the question had not been argued before the Tribunal.
It upheld the new contention raised by the assessee and answered the question in its favour.
On appeal, this court affirmed.
It was held that the High Court had jurisdiction to entertain the new contention raised by the assessee for the first time inasmuch as it was within the scope of the question framed by the Tribunal and was implicit therein.
This court enunciated several principles relating to the nature of the jurisdiction of the High Court under Section 256, of which the following principle is relevant for our purpose: "Section 66(1) speaks of a question of law that arises out of the order of the Tribunal.
Now a question of law might be a simple one, having its impact at one point, or it may be a complex one, branching over an area with approaches leading to different points therein.
Such a question might involve more than one aspect, requiring to be tackled from different standpoints.
All that Section 66(1) requires is that the question of law which is referred to the court for decision and whic h the court is to decide must be the question which was in issue before the Tribunal.
Where the question itself was under issue, there is no further limitation imposed by the section that the reference should be limited to those aspects of the question which had been argued before the Tribunal.
It will be an over refinement of the position to hold that each aspect of a question is 1004 itself a distinct question for the purpose of section 66(1) of the Act. ' This decision of the Constitution Bench, in our opinion justifies and warrants the approach adopted by the High Court in the judgment under appeal.
The question in the present case is whether additional surcharge was leviable for the A.Y. 1963 64 under the relevant Finance Act.
The assessee 's contention was that it has no income which was liable to be assessed to income tax inasmuch as its entire income was exempt under Section 81(1)(a).
In tune with this submission, the assessee submitted that the said sum of Rs. 19 was also a business income and, therefore, the liability of additional surcharge did not attach to the assessee.
The I.T.O. took the view that the said sum of Rs. 19 represented income from other sources and therefore liability of additional surcharge was attracted.
On Appeal, the AAC and the Tribunal upheld the assessee 's contention that it was business income and therefore the liability of surcharge was not attracted.
The High Court, however, thought that having regard to the language of the provisions of the relevant Finance Act, the Tribunal ought to examine whether the liability to additional surcharge is attracted even if the said sum of Rs. 19 was treated as income from business.
The High Court was of the opinion that the legal submission urged by the Revenue before the High Court, no doubt for the first time, did call for serious consideration.
This was done to arrive at a correct decision in law relating to the liability to additional surcharge.
If really, additional surcharge was chargeable according to the Finance Act even in case the said sum of Rs. 19 represented business income, the High Court cannot be called upon to act on the assumption that it is not so chargeable and answer the question stated.
Such a course would neither be in the interest of law or justice.
That the Revenue was also a party to the erroneous assumption of law makes little difference to the principle.
Counsel for the parties have cited several decisions touching upon the nature of the jurisdiction of the High Court under Section 256 viz., V.R. Y.K.N. Kallappa Chettiar vs Commissioner of Income Tax, C.I.T vs Ogale Class Works Ltd., and Keshav Mills Co. Ltd. vs Commissioner of Income Tax Bombay North, Ahmedabad, by the learned counsel for the appellant and Commissioner of 'Income Tax, Bihar and Orissa vs kirkend Coal Co., and Kusunben D. 1005 Mahadevia vs Commissioner of Income Tax, Bombay City, by the learned counsel for the Revenue.
We do not, however, think it necessary to refer to them, since the situation present herein was not present in those cases.
The principles of these decisions does not in any manner run contrary to the one affirmed by us herein, which is consistent with the one enunciated in Scindia Steam Navigation.
The appeal accordingly fails and is dismissed.
No costs.
N.V.K. Appeal dismissed.
[/INST]The question involved in these appeals was whether the amounts collected for spending on charity and kept in a separate account for Dharmadha could be included in the business income of the assessee.
The explanation that these amounts were distributed among the poor relatives of the labourers and to the girls in their families at the time of marriage, was not accepted by the Income tax Officer as a charity.
He added the entire dharmadha amounts to the business income of the appellant assessees.
On appeal the Appellate Assistant Commissioner deleted the said additions, and the Tribunal confirmed the deletions.
Revenue filed ap plications before the High Court for reference.
The High Court having dismissed the applications, Revenue preferred the present appeals contending that the assessees were using the amounts collected in the name of dharmadha for business purposes.
Allowing the appeals, this Court, HELD:1.
So far as the inclusion of amounts collected as Dharmada which are kept in a separate account and are utilised for charitable purposes is concerned, there can be no dispute that they are not liable to be included in the income of the assessee.
The Revenue 's case is that though collected in the name of Dharmada, these amounts were neither meant for any charitable purpose nor were they spent on charitable purposes.
In these circumstances, the High Court ought to have directed the Tribunal to state the question under Sec.256(2) of the Income tax Act, 875 1961, as to whether such amounts could be assessed to tax as revenue receipts.
The Tribunal is directed to do so.
[877 A C]
</s> |
<s>[INST] Summarize the judgementil Appeal No. 212 of 1975.
(Appeal by Special Leave from the Judgment and Order dated 26 6 1974 of the Kerala High Court in A.S. No. 510/72).
L.N. Sinha, Sol.
of India, Shaymla Pappu and Girish Chandra for the appellant.
A.S. Nambiar for the respondent.
The Judgment of the Court was delivered by BEG, J.
The Union of India and the Commander, Officer incharge, Naval Base, Cochin, are the appellants before us by grant of special leave against a judgment and decree of a Division Bench of the High Court of Kerala.
The Division Bench had affirmed the decision of a learned subordinate Judge awarding Rs. 25,000/ as damages, together with inter est @ 6% per annum, to the plaintiff respondent for the illegal termination of the respondent 's services.
The plaintiff respondent was serving as a Welder, Grade II, in the Civilian Defence Forces at the Naval Base, Cochin, at the time of this allegedly illegal termination of service by an order of 25th October, 1968, of the Govt.
of India, Ministry of Defence.
Special leave was granted on condition that the appel lants Will bear the costs of the respondent in any event.
The point of law sought to be canvassed before us is: Does the doctrine that a Central Govt.
servant holds his post "at the pleasure of the President", contained in Article 310 of the Constitution, authorise the passing of an order of termination of services, without assigning any reason what soever, of the holder of a post "connected with defence ?" There is no finding anywhere that the services of the plaintiff respondent were terminated as a measure of pun ishment for any wrong done by him or for incompetence, although, a perusal of the pleadings would show that the appellants denied the assertions of the plaintiff respondent that he was efficient and entitled to promotions as he had qualified for them by passing certain tests.
The Subordinate Judge had awarded only Rs. 25,000 .
out of a claim of Rs. 75,000/ made on the ground that, but for illegal termination of the service of the plaintiff respond ent, the plaintiff would have continued in service upto the age of 60 years and duty promoted instead of being thrown out of service at the age of 41.
The plaintiff respondent alleged that the termination of his service, without giving any reason whatsoever, was contrary to, rules made under Article 309.
A glance at paragraph 4 of the plaint shows that the violation of rules 89 relating to conduct of disciplinary proceedings was alleged by the petitioner.
In paragraph 5 of the plaint, however, he alleged: "As per the terms of appointment and the rules governing the service of the petitioner,, he is entitled normally to continue in service till the age of 60.
If his service had not been terminated as per the impugned order, the petitioner would have been entitled to continue for a further period of 19 years and 8 months".
He proceeded to assert: "Due to the illegal termination, the peti tioner had lost a valuable right vested in him by virtue of his appointment and guaranteed by the Constitution of India and the rules framed thereun der namely a right to continue in service for the full period of 19 years and 8 months and thus to gain a livelihood for himself and his family".
A perusal of the judgment of the Division Bench shows that the only point really considered by it was whether the pleasure of the President mentioned in Article 310 of the Constitution, can over ride rules made under Article 309 of the Constitution.
The High Court had explained away a passage cited from State of U.P. & Ors., vs Babu Ram Upadhya(1) by observing that it did not support the argument that rules made under Article 309 of the Constitution did not control the pleasure of the President, under Article.310, which was to be subject to matters otherwise expressly provided in the Constitution.
The passage so explained away runs follows :.
"If there is a specific provlsion in some part of the Constitution giving to a Government servant a tenure different from that provided for in article 310, that Government servant is excluded from the operation of article 310.
The said words refer, inter alia,, to articles 124, 148, 218 and 324 which provide that the Judges of the Supreme.
Court, the Auditor General, the Judges of the High Courts and the Chief Election Commissioner shall not be re moved from their offices except in the manner laid down in those Articles.
If the provisions of the Constitution specifically prescribing different tenures were excluded from article 310, the purpose of that clause would be exhausted and thereafter the Article would be free from any other restrictive operation.
In that event, article 309 and 310 should be read together, excluding the opening words in the latter Article, namely, "Except as expressly provided by this Constitution".
Learned Counsel seeks to confine the operation of the opening words in article 309 to the provisions of the Constitution which empower other authorities to make rules relating to the conditions of service of certain classes of public servants:, namely articles 146(2), 148(5) and 229(2).
That may:be so, but there is no reason why article 310.
should (1) A.I.R. 1961 S.C. 751. 8 1003 SCI/76 90 be excluded therefrom.
It follows that while article 310 provided for a tenure at pleasure of the President or the Governor, article 309 enables the legislature or the executive, as the case may be, to make any law or rule in regard, inter alia, to conditions of service without impinging upon the overriding power recognised under article 310".
The Kerala High Court relied on Union of India vs J. N. Sinha & Anr.,(1) to hold that doctrine of office held at the pleasure of the President was subject to rules made under Article 309 of the Constitution, and pointed out that it was held, inter alia, by a Division Bench of this Court (at p. 42): "A Government servant serving under the Union of India holds his office at the pleasure of the President as provided in Article 310 of the Consti tution.
But this "pleasure" doctrine is subject to the rules or law made under Article 309 as well as to the conditions prescribed under Art.311 ".
The High Court also relied on State of Madhya Pradesh & Ors.
vs Shardul Singh,(2) where the same Division Bench of this Court had held inter alia (at p. 111 ): "Article 310(1) of the Constitution declares that every person who is a member of Civil service of a State or holds any civil post in a State holds office during the pleasure of the Governor of a State.
But the pleasure doctrine embodied therein is subject to the other provisions in the Constitu tion.
Two other Articles in the Constitution which cut down the width of the power given under Article 310 (1) are Articles 309 and 311.
Article 309 provides that subject to the provisions of the Constitution acts of the appropriate Legislature may regulate the, recruitment, and conditions of service of persons appointed, to public.
services and posts in connection with the affairs of the Union or of any State.
Proviso to that Article says: 'Provided that it shall be competent for the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union, and for the Governor of a State or such person as he may direct in the: case of services and posts in connection with the af fairs of the State to make rules regulating the recruitment, and the conditions of service of persons appointed, to such services and posts until provision in that behalf is made by or under an Act of the appropriate Legislature under this article, and any rules so made shall have effect subject to the provisions of any such Act ." The High Court then referred to N. Ramanatha Pillai vs State of Kerala & Anr.
,(3) a decision of 5 learned Judges of this Court, in which Ray CJ., speaking for the Constitution Bench of this Court, (1) A.I.R. 1971 S.C. 40.
(2) at 111.
(3) ; at 2645.
91 while considering the power of the Govt.
to create, continue, and abolish a post said (at p. 2645): "Article 309 provides that subject to the.
provisions of the Constitution, Acts of the appropriate Legislature may regulate the recruit ment and conditions of service of persons appoint ed, to public services and posts in connection with the affairs of the Union or of any State.
There fore, Acts in respect of terms and conditions of service of persons are contemplated.
Such Acts of Legislature must however be subject to the provi sions of the Constitution.
This attracts Article 310 (1).
The proviso to article 309 makes it compe tent to the President or such person as he may direct in the case of services and posts in connection with the affairs of the Union and for the Governor of a State or such person as he may direct in the case of services and posts in con nection with the affairs of the State, to make rules regulating the recruitment and the conditions of service of persons appointed,, to such services and posts under the Union and the State.
These Rules and the exercise of power conferred on the delegate: must be subject to Article 310.
The result is.
that Article 309 cannot impair or affect the pleasure of the ' President or the Gover nor therein specified.
Article 309 is, there fore, to be.
read subject to Article 310".
The High Court, after citing the passage set out above, said: "We do not understand the above passage as suggesting that Article 310 cannot in any manner be controlled by Rules framed under Article 309".
After a consideration of decisions of this Court in this manner it expressed its views as follows: "These cases, we think, sufficiently indicate that while it may be open to the PreSident or to the Governor to dismiss a civil servant at pleas ure, if Rules have been framed under Article 309 of the Constitution to regulate the mode and manner of termination of service, these .have to be com plied with.
This, we think, is reasonable and understandable enough on first principles.
If the untrammelled pleasure of the President has been subjected to Rules framed by the President himself in regard to the manner of termination of service, the pleasure must be subject to such Rules".
The Division Benh of the High Court then re corded its conclusion: "We are therefore of the opinion that in the instant case, the Civil Services (Classification, Control and Appeal) Rules, having been framed under Article 309 of the Constitution, the same had to be followed before the respondent 's service was terminated.
The same not having been admittedly complied with, the finding of the ' Court below that the termination is illegal was correct and requires no interference.
No arguments were addressed on the quantum of damages awarded".
92 We do not think that the difficulty before the High Court could be resolved by it by following what it consid ered to be the view of a Division Bench of this .Court in two cases and by merely quoting the views expressed by larger benches of this Court and then observing that these were insufficient for deciding the point before the High Court.
It is true that in each of the cases cited before the High Court, observations of this Court occur in a con text different from that of the case before us.
But, we do not think that the High Court acted correctly in skirting the views expressed by larger benches of this Court in the manner in which it had done this.
The proper course for a High Court, in such a case, is to try to find out and follow the opinions expressed by larger benches of this Court in preference to those expressed by smaller benches of the Court That is the practice followed by this Court itself.
The practice has now crystallized into a rule of law de clared by this Court.
If, however, the High Court was of opinion that the views expressed by larger benches of this Court were not applicable to the facts of the instant case it should have said so giving reasons supporting its point of view.
we have perused the Central Civil Service (Classifica tion, Control and Appeal) Rules of 1965, (hereinafter re ferred to as '1955 Rules ') which deal principally with procedure for disciplinary proceedings and penalties and appeals and reviews against orders passed under the rules.
There is no rule there dealing with the conditions under which a service such as that of the plaintiff respondent may be terminated.
We fail to see any rule made under Article 309 of the Constitution which was violated by the impugned order of termination of service of the plaintiff respondent.
We do not consider ourselves called upon to.
decide a ques tion which has really not arisen in the case.
before us.
The 1965 Rules are applicable when disciplinary proceed ings are taken.
They do not make disciplinary proceedings under the rules incumbent or obligatory whenever the services of a person covered ' by these rules are terminated.
The obligation to follow the procedure for punishment laid down in the rules flows from the provisions of Article 311 of the Constitution.
And, as the opening words of Arti cle 310 show, the doctrine of office held at the pleasure of the ' President does not apply to cases covered by Article 311.
Rule 3 of the above mentioned rules begins.
as follows: "3.
Application. (l ) These rules shall apply to every Government servant including every civilian Government servant in the Defence Serv ices, but shall not apply to (a) any railway servant, as defined in rule 102 of volume I of the Indian Railway Establishment Code, (b) any member of the All India Services, (c) any person in casual employment, (c) any person in casual employment, (d) any person subject to discharge from service on less than one month 's notice.
(e) any person for whom special provision is made, in respect of matters covered by these rules, by or under 93 any law for the time being in force or by or under any agreement entered into by or with the, previous approval of the President before or after the commencement of these rules, in regard to matters covered by such special provisions; (2) Notwithstanding anything contained in sub rule (1), the President may by order exclude any class of Government servants from the operation of all or any of these rules.
(3) Notwithstanding anything contained in sub rule (1), or the Indian Railway Establishment Code, these rules shall apply to every Government servant temporarily transferred to a Service or post coming within exception (a) or (e) in sub rule (1 ), to whom, but for such transfer, these rules would apply.
(4) If any doubt arises (a) whether these rules or any of them apply to any person, or (b) whether any person to whom these rules apply belongs to a particular service the matter shall be referred to the President, who shall decide the same".
Even if the parties were governed by these rules, because the plaintiff held a civil post in one of the Defence; Departments, yet there must be some violation of one of these rules, which were no doubt framed under Article 309 read with clause 5 of Article 148 of the Constitution, before any question of a conflict between a rule framed under Article 309 and the provisions of Article 310 could possibly arise.
We fail to see such a conflict here.
These rules merely lay down procedure for matters cov ered by Article 31 l of the Constitution.
There is no doubt that proceedings under Article 311 of the Constitution constitute an exception to the doctrine of pleasure con tained in Article 310 of the Constitution.
But, in the case before us, no question of any disciplinary proceedings has been discussed because it did not arise at all.
There is no finding that any punishment was imposed upon the plaintiff respondent.
It may be that mere termination of service, when the plaintiff.respondent was holding a perma nent post and entitled to continue in service until 60 years of age, may constitute punishment per seven when the termination of service is not meant as a punishment.
But, in that event,, there had to be a finding on the rule or order under which the plaintiff was entitled to continue in serv ice.
until he reached the age of 60 years.
The High Court had cited no rule made under.
Article 309 to show that there was any such provision.
In P.L. Dhingra vs Union of India(1) Das, CJ., speaking for the majority of a Bench of five judges of this Court, said (at p. 47): "It has already been said that where a person is appointed substantively to a permanent post in Government service.
(1) ; at 47.
94 he normally acquires a right to hold the post until under the rules, he attains the age of superannua tion or is compulsorily retired and in the absence of a contract, express or implied, or a service rule,.
he cannot be turned out of his post unless the post itself is abolished or unless he is guilty of misconduct, negligence, inefficiency or.
other disqualifications and appropriate proceedings are taken under the service rules read with article 311 (2).
Termination of service of such a servant so appointed must per se be a punishment, for it operates as a forfeiture of the servant 's rights and brings about a premature end of his employ ment".
The propositions laid down in Dhingra 's case (supra) by this, Court mean that, unless a legally justifiable ground is made out for the termination of the service of a Govern ment servant.
in permanent service, in the sense that he is entitled to remain in service until he ' reaches the age of retirement, he could be deemed in a given case to be pun ished by an apparently innocent order of termination of service.
If, however, the respondent belonged to a class of government servants the tenure or conditions of whose serv ice was subject to the over riding and unqualified sway of the power to terminate his services at will, by reason of Article 310(1) of the Constitution, we doubt whether he could claim to be a "permanent" servant, who could continue, as of right, in service until he reaches the age of super annuation.
At any rate, he could not be a "permanent" Government servant of the same class as one protected by Article 311.
Even if we were to hold that the plaintiff respondent was constructively punished, the provisions of Article 311, unfortunately, do not apply to such a Government servant as the respondent was.
Whereas the power contained in Article 310 governs all Government servants, including those in the services connected with defence, the benefits of Article 311, which impose limitations on the exercise of this power in cases of punishment, do not extend to those who hold posts "connected with defence".
Constitution Bench of this Court has held, after a review of relevant authorities, this to be the position of the.
holder of a post such as that of the plaintiff respondent in L. R: Khurana vs Union of India.
(1) As the plaintiff respondent was not entitled to the protection of Article 311, the only effect of the 1965 Rules upon his case is that they could be applied if disci plinary proceedings had been taken against him as the holder of a post "connected with defence".
In other eases of such servants,.
where no such disciplinary proceedings are instituted (and none were started against the plaintiff respondent), the 1965 Rules, governing procedure for.
punishments to be imposed, will not apply at all.
There is no legal obligation to apply those rules here.
The legal obligation to apply them to every case of punish ment, flowing from Article 311, is confined to holders of posts covered by Article 311.
On this question, we are bound by the decision of a bench of five learned Judges of this Court in Khurana 's case (supra).
(1) ; 95 We were asked to import the obligation to apply the procedure prescribed by Article 311 to a case such as the one before us by invoking the aids of Articles 14 and 16.
Apart from the fact that these .Articles could not be in voked against a discrimination made by Constitutional provi sions, no such case was set up earlier.
We cannot permit it at this stage.
The only ground on which the respondent had assailed the order of termination of his service was non compliance of 1965 Rules, which meant ' that he claimed the protection of Article 311 of the Constitution.
But for the reasons given above, this protection is not available to him.
Therefore, this appeal must succeed.
Consequently, we allow this appeal, set aside the judgment and decree of the High Court and ,dismiss the plaintiff 's suit.
But: in the circumstances of the case, the appellant will, in keeping with the undertaking given at the time of grant of special leave, bear the costs of both sides throughout.
Appeal allowed.
[/INST]The respondent terminated the appellant 's services on the ground of habitual absence which is a misconduct under the company 's standing orders.
Although there was a dispute pending before the Tribunal, the respondent did not make an application under section 33(2)(b) of the Industrial Disputes Act for its approval.
On an application by the appellant under section 33A of the Act, the Tribunal ordered his reinstatement.
A few months after the appellant rejoined duty the respondent terminated his services purporting to act under the agreement of service with him.
On a complaint by the appellant under section 33A, the Tribunal ordered his reinstatement.
A single Judge of the High Court dismissed the writ petition of the respondent holding that the discharge was nothing but dismissal for misconduct.
On appeal, the Division Bench held that since the employer invoked the terms of the agreement, it was not a case of discharge for misconduct and as such the Tribunal had no jurisdiction to entertain the complaint under section 33A.
Allowing the appeal. ^ HELD: The Tribunal has not committed any error of law or of jurisdiction in entertaining the application under section 33A and the Single Judge was right in not interfering with the award under Article 226 of the Constitution and the Division Bench was wrong in doing so.
[641H; 641E] (a) The Tribunal has found as a fact that the termination was on account of misconduct of the employee.
It is, therefore, difficult to hold that there was any manifest error of law committed by the Tribunal in reaching that conclusion only because the misconduct, as found, was not within the four corners of the various misconducts mentioned in the standing orders.
[641H] (b) Standing orders only describe certain cases of misconduct and they cannot be exhaustive of all the species of misconduct.
Even though a given conduct may not come within the specific terms of misconduct described in the standing orders, it may still be a misconduct in the special facts of a case, which it may not be possible to condone and for which the employer may take appropriate action.
[641F] (c) Termination simpliciter under the conditions of service or under the standing orders is outside the scope of section 33 of the Act.
This does not mean that the employer has the last word about the termination of service of an employee.
It is also not a correct proposition of law that in case of a complaint under section 33A, the Tribunal would be debarred from going into the question whether notwithstanding the form of the order.
in substance, it is an action of dismissal for misconduct and not termination simpliciter.
[642 A B] Management of Murgan Mills Ltd. vs Industrial Tribunal, Madras and Another ; , held inapplicable.
Air India Corporation, Bombay vs V. A. Rebellow & Anr. ; , referred to.
636 Shyamala Studios vs Kannu Devar (S.S.) and Others, and Sri Rama Machinery Corporation (P) Limited, Madras vs Murthi (N.R.) and Others, , partly approved.
(d) Section 33(2)(b) makes it obligatory upon the employer to make an application to the Tribunal under the proviso when he discharges or dismisses the workman for misconduct.
From the provisions of section 33, it is manifest that punitive action of the employer in whatever form it may be passed, is permissible against an ordinary workman as distinguished from a protected workman even during the pendency of proceedings before the Tribunal provided that the employer pays one month 's wages and also applies to the concerned Tribunal for approval of his action.
Since the action is punitive, namely, dismissal or discharge for misconduct, the Tribunal has to oversee the action to guarantee that no unfair labour practice or victimisation has been practised.
If the procedure of fair hearing has been observed, the Tribunal has to find in an application under section 33 that a prima facie case is made out for dismissal.
If, on the other hand, there is violation of the principles of natural justice in the enquiry, the Tribunal can go into the whole question relating to the misconduct and come to its own conclusion whether the same is established.
[641E; 640H] (e) In the instant case even though the employer invoked the agreement for terminating the service of the employee it was open to the Tribunal to pierce the veil of the order and have a closes look at the circumstance and come to a decision whether the order was passed on account of certain misconduct.
This is a finding of fact which could not be interfered with under article 226 of the Constitution unless the conclusion is perverse.
[643F]
</s> |
<s>[INST] Summarize the judgementNo. 1810 of 1971.
(Appeal by Special Leave from the Judgment and Order dated 1.3.1971 of the Orissa High Court in O.J.C. No. 1597 of 1968) AND C.A. No. 1170 of 1972 (Appeal by Special Leave from the Judgment and Order dated 8.3.1971 of the Orissa High Court in O.J.C. No. 316 of 1970) AND Civil Appeal No. 1981 of 1972 (Appeal by Special Leave from the Judgment and Order dated 28.3 .1971 of the Orissa High Court in O.J.C. No. 1885 of 1968) AND Civil Appeal No. 1982 of 1972.
(Appeal by Special Leave from the Judgment and Order dated 28.6.1971 of the Orissa High Court in O.J.C. No. 153 of 1971) AND Civil Appeal No. 1603 & 1604 of 1972 716 (Appeal by Special Leave from the Judgment and Order dated 2.3.1971 of the Orissa High Court in O.J.C. Nos. 202 and 203 of 1969.) A.K. Sen, Bishamber Lal Khanna and Bishamber Lal for the appellants in CA No. 1810/71.
A.K. Sen, (CA No. 40/72) H.R. Gokhale (CAs 1603 1604) Gobind Das (CAs 1170, 198, 1982, SLPs and for the interven ers) Bijoy Mohenty, Mrs. Sunanda Bhandare, M.S. Narsimhan, A. K. Mathur, A.K. Sharma and Miss Malini Poduval for the appellants in CA Nos.
1170, 1981 1982, 1603 1604 of 1972 and CA No. 40/72 and in the SLPs Nos. 305 310/72 and for the Interveners.
G. Rath, Adv.
During the pendency of the writ petitions filed by the appellants in the Orissa High Court, the Orissa Legislature passed the Orissa Taxation (on Goods carried by Roads or Inland Waterways) Validation Act, 18 of 1962, validating the Act of 1959.
The High Court accepted the appellants ' contention that the Act of 1959 was unconstitutional but it dismissed the Writ petitions on the ground that the appellants were not entitled to any relief as they had not challenged the Act of 1962 which had validated the Act of 1959.
After the decision of the High Court.
respondent No. 2, the Tax Officer, assessed tax in varying amounts for different quarters on the goods carried by the appellants by road.
The appellants then filed fresh writ petitions under article 226 of the Constitution challeng ing the Act of 1962.
Those petitions were dismissed by the High Court but in appeal, the judgment of the High Court was set aside by this Court on August 10, 1967.
It was held by this Court that the Validating Act of 1962 did not cure the defect from which the Act of 1959 suffered and therefore, respondents were not entitled to recover any tax from the appellants under the aforesaid Acts.
On March 25, 1968 the Orissa Legislature, having ob tained the previous sanction of the President to the moving of the Bill. passed the Orissa Taxation (on Goods carried by Roads or Inland Waterways) Act, 8 of ' 1968, imposing the same levy which it had unsuccessfully attempted to levy under the Act of 1959 and to validate under the Act of 1962.
Some of the appellants from whom the State Government had recovered taxes after the Act of 1962 was upheld by the High Court asked for refund thereof after that Act was declared unconstitutional by this Court.
The refund having been refused by the Governments, the appellants filed writ peti tions in the High Court 717 challenging the validity of the 1968 Act.
The dismissal of those writ petitions has given rise to these appeals by special leave.
There is no substance in any of the contentions raised on behalf of the appellants regarding the constitutionality of the Act of 1968.
The bill which matured into the impugned Act was introduced by the Orissa Legislature after obtaining the previous sanction of the President under the Proviso to article 304 of the Constitution.
As shown by the Preamble, the Act was passed in order to provide for the level of tax on certain goods carried by roads or inland waterways in the State of Orissa and to validate certain taxes imposed on such goods.
By section 1 (3), the Act was to be deemed to have come into force on April 27, 1959 being the date on which the Act of 1959 had come into force.
Section 3 of the Act which contains the charging provision provides that there shall be levied a tax on goods of the description mentioned in the section and carried by means specified therein.
Section 27 of the Act provides in so far as material that notwithstanding the expiry of the Act of 1959 and notwith standing anything contained in any judgment, decree or order of any Court, all assessments made, all taxes imposed or realised, any liability incurred or any action taken under the Act of 1959 shall be deemed to have been validly made, imposed, realised, incurred or taken under the corresponding provisions of the Act of 1968.
These provisions of the Act of 1968 show that what the State legislature did thereby was to enact, with retrospective effect, a fresh piece of taxing statute after complying with the constitutional mandate contained in the proviso to article 304 that no Bill for the purposes of clause (b) of the Article shall be introduced or moved in the Legislature of a State without the previous sanction of the President.
The reliance of the appellants on the judgment of this Court in Jawaharmal vs State of Rajasthan(1) is wholly misconceived.
In that case, section 4 of the impugned Act of 1964 in truth and substance provided that the failure to comply with the constitutional mandate of Presidential sanction shall no.t invalidate the Finance Acts of 1961 and 1962.
It was held by this Court that it was not competent to the legislature to pass an Act providing that an earlier Act shall be deemed to be valid even though it did not company with the requirements of the Constitution.
In the instant case, the State Legislature passed an independent enactment in 1968 after complying with the constitutional requirement but it gave to that enactment retrospetive effect from the date that the 1959 Act had come into force and it created a legal fiction, which was permissible for it to do, that all actions taken under the Act of 1959 shall be deemed to have been taken under the Act or 1968.
Mr. Gobind Das, appearing on behalf of some of the appellants, raised points commonly associated with high constitutional concepts, but lacking in substance.
He urged that the Act of 1968 is a piece of colourable legislation, that it constitutes a flagrant encroachment on (1) ; 718 the functions of the judiciary and that since the Act has no operation in futuro and operates only on the dead past, it is void as lacking in legislative competence.
Learned counsel also employed the not unfamiliar phrase that the Act is a fraud on the Constitution.
Happily all ' of these attacks, in so far as they at all require an answer,"can be met effectively in a brief compass.
In Khyerbari Tea Co. Ltd. vs State of Assam(1), it was held by this Court that article 304(b) of the Constitution does not require that laws passed under it must always be prospective.
Nor was it correct to say that once the State Legislature passes an Act without recourse to that Article and that Act is struck down, the Legislature cannot re enact, that Act under that article and give it retrospective effect.
The Court fur ther held in Khyerbari (supra) that the mere fact that a validating taking statute has.
retrospective operation does not change the character of the tax ' nor can it justify the Act being branded as a colourable piece of legislation in any sense.
We may only add that since it is well settled that the power to legislate carries with it the power to legislate retrospectively as much as prospectively, the circumstance that an enactment operates entirely in the past and has no prospective life cannot effect the competence of the legislature to pass the enactment, if it fails within the list on which that competence can operate.
As regards the power to pass a validating Act, that power is essen tially subsidiary to the legislative competence to pass a law under an appropriate: entry of the relevant list.
Thus the impugned enactment is a valid exercise of legislative power and is in no sense a fraud on the Constitution.
As regards the alleged encroachment by the legislature on fields judicial, the argument overlooks that the Act of 1968 does not, like the Act under consideration in Jawahar mal(2), declare that an invalid Act shall be deemed to be valid.
It cures the constitutional vice from which the Act of 1959 suffered by obtaining the requisite sanction of the President and thus armed, it imposes a new tax, though with retrospective effect.
Imposition of taxes or valida tion of action taken under void laws is not the function of the judiciary and therefore, by taking these steps the legislature cannot be accused of trespassing on the preserve of the judiciary.
Courts have to be vigilant to ensure that the nice balance of power so thoughtfully conceived by our Constitution is not allowed to be upset but the concern for safeguarding the judicial power does not justify conjur ing up trespasses for invalidating laws.
There is a large volume of authority showing that if the vice from which an enactment suffers is cured by due compliance with the legal or constitutional requirements, the legislature has the ' competence to validate the enactment and such validation does not constitute an encroachment on the functions of the judiciary.
The validity of a validating taxing law depends upon whether the legislature possesses the compe tence over the subject matter of the law, whether ' in making the validation it has removed the defect from which the earlier enactment suffered and whether it has made due and adequate provision in the validating law for a valid imposi tion of the tax; ( See, for example Prithvi Cotton Mills vs Broach Borough Municipality(3) (1) ; (2) ; (3) [1970]1 S.C.R. 388. 719 Tirath Ram Rajindra Nath vs State of U.P.(1); Government of Andhra Pradesh vs Hindustan Machine Tools Ltd.(2).
The passage from Cooley 's ConstitutiOnal Limitations ' (Ed. 1927, Vol.
I, p. 183) that a legislative act is a "pre determination of what the law shall be for the regulation of all future cases falling under its provisions" does not bear upon the power of the legislature to pass laws which are exclusively retrospective.
Mr. Gobind Das 's reliance on that passage cannot therefore further his contention.
Mr. Gokhale, who appears on behalf of some of the appel lants, attempted to challenge the Act of 1968 on the ground of unreasonableness but he did not pursue that argument.
But he made another point which requires some attention.
The appellants or some of them, did not challenge the orders of assessment passed against them as the Acts of 1959 and 1962 were held unconstitutional.
Counsel 's apprehen sion is that any appeal filed hereafter for challenging the assesSment made under the earlier Acts would be barred by limitation and the appellants would be deprived of their statutory right to question the correctness of the assess ment.
This apprehension is unfounded because the 2nd proviso tO section 12 of the Act of 1968 empowers the appropriate authority to admit an appeal after the period of limitation is over if it is satisfied that the dealer had sufficient cause for not preferring the appeal within the said period.
Sub section (3) confers on the Commissioner the power of revision and sub section (4) of section 12 confers the power of review subject to the rules made under the Act.
We have no doubt that if any appeal challenging.
an order of assessment is filed beyond the period of limitation and the authority is satisfied that the appeal could not be filed within limitation for the reason that the Acts of 1959 and 1962 were held to be unconstitutional, the delay in filing the appeal would be condoned.
We are equally confident that if any appeal filed for challenging an order of assessment was withdrawn or not pursued for the reason that the two Acts were held unconstitutional, the authority concerned would pass appropriate orders reviving the appeal.
We are happy to note the assurance of the learned Advocate General of the State of Orissa that the State will not oppose in such cases the condonation of delay or the revival of appeals.
For these reasons we dismiss the appeals but there will be no order as to costs.
The Special Leave Petitions which were kept pending to await the decision of these appeals are hereby dismissed.
We may take this opportunity to dwell upon the incon venience resulting from the enactment of article 144A which was introduced by the 42nd Amendment to the Constitution.
That article reads thus: "Special provisions as to disposal of ques tions relating to Constitutional validity of laws.
(1) [1975] Supp S.C.R. 394.
720 "144A (1) The minimum number of Judges of the Supreme Court who shall sit for the purpose of determining any question as to the Constitu tional validity of any central law or State law shall be seven.
(2) A Central law or a State law shall not be declared to be constitutionally invalid by the Supreme Court unless a majority of not less than two thirds of the Judges sitting for the purposes of determining the question as to the constitutional validity of such law hold it to be constitutionally invalid."" The points raised in these appeals undoubtedly involve the determination of questions as to the constitutional validity of a State law but they are so utterly devoid of substance that Mr. Asoke Sen and Mr. Gokhale who appear for the appel lants could say nothing in support of their contentions beyond barely stating them.
Were it not for the valiant, though vain, attempt of Mr. Gobind Das to pursue his points, the appeals would have taken lesser time to dispose of than for a Court of seven to assemble.
Article 13(3)(a) of the Constitution defines "law" to include any Ordinance, Order, bye law, rule, regulation, notification etc.
having the force of law with the result that seven judges of this Court may have to sit for determining any and every question is to the constitutional validity of even orders and notifica tions issued by the Government, which have the force of law.
A Court which has large arrears to contend with has now to undertake an unnecessary burden by seven of its members assembling to decide all sorts of constitutional questions, no matter what their weight or worth.
It is hoped that article 144A will engage he prompt attention of the Parliament so that it may, be general consensus, be so amended as to leave to the Court itself the duty to decide how large a Bench should decide any particular case.
S.R. Appeals dismissed.
[/INST]In Appeal No. 1347(N) 1977 by special leave against the interlocutory orders dated 21 4 1977 of the Company Judge of the Calcutta High Court in the company petition No. 85/75, filed by the respondents sections 397/398 of the Companies Act, '1956, complaining of oppression by majority and praying for certain reliefs against the appellants and also the orders dated 25 4 1977 of the Division Bench against that order, this Court made an order on 31 5 1977, in terms of an agreement reached between the par ties.
By one such term the company was directed to purchase 1300 shares held by the respondents petitioners.
The price of the shares was to be determined by Messrs. Price Water House and Peet, Chartered Accountants and Auditors, as on the date of the filing of the petition sections 397 398, on the basis of the existing as also contingent and anticipated debts, liabilities, claims, payments and receipts of the ' company.
The Chartered Accountants were to determine the value of the shares after examining accounts and calling for necessary explanations and after giving opportunity to both the groups to be heard in the matter and the determination of the value by the Chartered Accountants was to be final and binding and not open to any challenge by either side on any ground whatsoever.
After such determination of the value the company has to purchase the shares, and, on such purchase, the share capital of the company was to stand reduced protanto.
The order made it ;fear that if the value of the shares is more than Rs. 65/ per share, the company will have to pay the balance, and, if it is less than Rs. 65/ per share, the respondents who have to sell the shares, will have to refund the difference between.
the price of the shares calculated at the rate of Rs. 65/ per share and the rate determined by the Chartered Accountants and Auditors within four weeks from the date of determination.
After the appeal was thus disposed of, the interveners, claiming to be the creditors of the company to the extent of 40 lakhs, in their petition dated 22 8 1977 requested the Court (i) to permit them to be heard and (ii) to postpone the purchase of shares by the company until such time as the company adopts proceedings in a competent court by following the procedure laid down by the , particularly in Sections 100 to 104 for reduction of the share capital.
In the alternative they prayed for safeguarding their interests by modifying the Court 's order dated 31 5 1977.
Rejecting the petition to interfere with its order dated 31 5 1977, the Court, after hearing the interveners, HELD : (i) Section 77 envisages that, on the purchase by a company of its own shares, reduction of its share capital may be effected and sanctioned in either of two different modes : (i) according to the procedure prescribed in Sections 100 to 104; or (ii) under section 402, depending upon the circumstances in which reduction becomes necessary.
[427E F] (ii) Section 77 of the prohibits the company from buying its own shares unless the consequent reduction of capital is effected and sanctioned in pursuance of Sections 100 to 104 or Section 402.
It places an embargo on the company purchasing its own shares so as to become its own member, but the embrago is lifted, if the company reduces its share capital protanto.
[427E] 423 (iii) Section 77 leaves no room for doubt that reduction of share capital may have to be brought about in two different situations by two different modes.
Undoubtedly, where the company has passed a resolution for reduction of its share capital and has submitted it to the Court for confirmation, the procedure prescribed by Sections 100 to 104 will have to be followed, if they are attracted.
On the other hand, where the Court, while disposing of a petition under Ss. 397 and 398, gives a direction to the company to purchase shares of its own members, consequent reduction of the share capital is bound to ensue, and, before making such a direction it is not always necessary to give notice of the consequent reduction of the share capital to the creditors of the company.
No such requirement is laid down by the Act.
The two procedures ultimately bringing about reduction of the share capital are distinct and separate and stand apart from each other; and one or the other may be resorted to according to the situation.
That is the clearest effect of the disjunctive 'or ' in section 77.
[428H, 429AB] (iv) Where the reduction of share capital is necessitated by directions given by the Court in it petition under sections 397 and 398, the procedure prescribed in Sections 100 to 104 is not required to be followed in order to make the direction effective.
[428G] (v) It would not be correct to say that, whenever it becomes necessary to reduce the capital of a company, the reduction can be brought about only by following the procedure prescribed in Ss. 100 to 104.
Sections 100 to 104 specifically prescribe the procedure for reduction of share capital where the Articles of the company permit and the company adopts a special resolution which can only become effective on the Court according sanction to it.
Reduction of share capital may also take pursuant to a direction of the Court requiring the company to purchase the shares of a group of members while granting relief u/s 402.
Both the procedures, by which reduction of capital of a company may be effected, are.
distinct and separate and stand apart from each other.
[427F H] (vi) The scheme of Ss. 397 to 406 is to constitute a code by itself for granting relief to oppressed minority shareholders and for granting appropriate relief, a power of widest amplitude, inter alia, lifting the ban on company purchasing its share under Court 's direction, is conferred on the Court.
When the Court exercises this power by directing a purchase of its shares by the company, it would necessarily involve reduction of the capital of the company.
Such a power of the Court is not subject to a resolution to be adopted by the members of the company which, when passed with, statutory majority, has to be submitted to Court for confirmation.
No canon of construction would permit such an interpretation in which the statutory power of the Court for its exercise depends upon the vote of the members of the company.
[428C E] (vii) If reduction of share capital can only be brought about by resorting to the procedure prescribed in Ss. 100 to 104, it would cause inordinate delay and the very purpose of granting relief against oppression would stand self defeated.
[428E F] (viii) When minority shareholders complain of oppression by majority and seek relief against oppression from the Court under Ss. 397 and 398 and the Court, in a petition of this nature, considers it fair and just to direct the com pany to purchase the shares of the minority shareholders to relieve oppression, if the procedure prescribed by Ss. 100 to 104 is required to be followed, the resolution will have to be first adopted by the members of the company, but that would be well nigh impossible because the very majority against whom relief is sought would be able to veto it at the threshold and the power conferred on the Court would be frustrated.
That could never have been the intention of the Legislature.
[428F H] (ix) The object_behind prescribing this procedure requiring, in special circumstances as contemplated in Section 101(3), the court to give notice to the creditors is that the members of the company may not unilaterally act to the detriment of the creditors behind their back.
If such a procedure were not prescribed, the Court might, unaware of all the facts, be persuaded by the members to confirm the resolution and that might cause, serious prejudice to the creditors.
But such a situation would not be likely to arise in a petition 424 under Ss. 397 and 398.
In such a petition the Court would be in a better position to have all the relevant facts and circumstances before it and it would be the Court which would decide whether to direct purchase of shares of the members by the company.
Before giving such a direction, the Court Would certainly, keep in view all the relevant facts and circumstances, including the interest of the creditors.
Even if the petition is being disposed ' of on a compromise between the parties, yet the Court, before sanctioning the compromise, would certainly satisfy itself that the direction proposed to be given by it pursuant to the consent terms, would not adversely affect or jeopardise the interest of the creditors.
Therefore, it cannot be said that merely because section 402 does not envisage consent of the creditors before the Court gives direction for reduction of share capital consequent upon purchase of shares of some of the members by the company.
there is no safeguard for the creditors.
[430EH] In the instant case, there is no scope for apprehension on behalf of the interveners that the reduction of share capital to be effected under the Court 's direction, without reference or notice to creditors, would adversly affect their interests because : (1) As per the order of the Court dated 31st May, 1977 while ascertaining the break up value of the shares on the date of filing the petition under Sections 397 and 398, the Chartered Accountants and Auditors will have to take into account the assets of the company as also the existing, contingent and anticipated debts, liabilities, claims, and demands etc., as revealed in the accounts of the company for the last five years, which would indisputably include the claims made by the interveners in the two suits filed by them to the extent to which they appear genuine and well founded and.
(ii) the order of the Court did not fix any minimum price at which the shares shall be purchased by the company.
[431A C, D] (x) A right to notice by reason of any rule of natural justice, which a party may establish, must depend for its existence upon proof of an interest which is bound to be injured by not hearing the party claiming to be entitled to a notice and to be heard before an order is passed.
If the duty to give notice and to hear a party is not mandatory, the actual order passed on a matter must be shown to have injuriously affected the interest of the party which was to be given no notice, of the matter.
[431G] In the instant case, after hearing the intervener , it was found that no interest of theirs has been injured by not hearing them before the order was passed.
The order passed by this Court on 31st May, 1977, is not vitiated on the ground of non issue of notices to them under the inherent powers of the Court under Rule 9 of the Company (Court) Rules, 1959, even though there was no statutory duty to hear them.
[431H. 432A] (xi) Undoubtedly, when a petition is made to the Court under Ss. 397 and 398, it is obligatory upon the Court to give notice u/s 400 of the petition to the Central Government and it would be open to the Central Government to make a representation and if any such representation is made, the Court would have to take it into consideration before passing the final order in the proceeding.
But Section 400 does not envisage a fresh notice to be issued at the appellate stage.
[432C D] (The Court directed to expedite the suit Nos.
729/74 and 933/76 filed by the interveners in the Bombay High Court and dispose off within a period of six months).
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<s>[INST] Summarize the judgementAppeal No.449 of 1958.
Appeal by special leave from the judgment and decree dated August 7, 1956, of the Patna High Court in Misc.
Judicial Case No. 604 of 1953.
406 D. P. Singh, for the appellant.
section P. Varma, for the respondent.
January 11.
The Judgment of the Court was delivered by SHAH, J.
The High Court of Judicature at Patna answered in the affirmative the following question which was submitted by the Board of Agricultural Income tax, Bihar, under section 28(3) of the Bihar Agricultural Income tax Act, XXXII of 1948 hereinafter referred to as the Act: " Whether, in the facts and circumstances of the case, the petitioner could be legally assessed for the income of the Estate in 1355 Fasli when the Estate was in the hand of the Receiver ? " With special leave under article 136 of the Constitution, this appeal is preferred against the order of the High Court.
The appellant is the Mahant of the Asthal Estate, Salauna, in the District of Bhagalpur in Bihar.
In a suit concerning that estate, a Court Receiver was appointed by the First Class Subordinate Judge, Monghyr, to manage the estate.
The Receiver functioned till sometime in December, 1949, and under the order of the Subordinate Judge he handed over charge of the estate to the appellant on January 8, 1950.
On January 15, 1950, the appellant submitted a return of income of the estate to the Agricultural Income tax Officer, Monghyr, for the Fasli year 1355 corresponding to September 16, 1948, to September 15, 1949.
The Agricultural Income tax Officer assessed on August 7, 1950, the agricultural income of the estate at Rs. 90,507 2 6 and ordered the appellant to pay Rs. 20,290 13 0 as agricultural income tax.
Appeals against the order of assessment preferred to the Commissioner of Agricultural Income tax and the Board of Agricultural Income tax, Bihar, were unsuccessful.
The Board however referred the question set out hereinbefore to the High Court under section 28(3) of the Act as arising out of its order.
The only question which falls to be determined in this appeal is whether the appellant was liable to be assessed to pay agricultural income tax for the year 407 in which the estate was in the management of the Court Receiver.
Section 3 of the Act which is the charging section provides: " Agricultural income tax shall be charged for each financial year in accordance with and subject to the provisions of this Act on the total agricultural income of the previous year of every person.
" By section 4,it is provided: Save as hereinafter provided, this Act shall apply to all agricultural income derived from land situated in the State of Bihar.
" The income of the estate of the appellant was not exempt from payment of tax and by virtue of section 3, agricultural income tax was charged upon the income for the assessment year in question, and the appellant was prima facie liable as owner of the estate to pay tax on that income.
The appellant however relied upon section 13 of the Act which provides: " Where any person holds land, from which agricultural income is derived, as a common manager appointed under any law for the time being in force, or under any agreement or as receiver, administrator or the like on behalf of persons jointly interested in such land or in the agricultural income derived therefrom, the aggregate of the sums payable as agricultural income tax by each person on the agricultural income derived from such land and received by him shall be assessed on such common manager, receiver, administrator or the like, and he shall be deemed to be the assessee in respect of the agricultural income tax so payable by each such person and shall be liable to pay the same.
" The appellant urged that if the land from which agricultural income is derived is held by a Receiver and the income is received by the Receiver, the Receiver alone can, by virtue of section 13, be deemed to be the assessee and the Receiver alone is liable to pay the tax in respect of that income.
In support of his contention, the appellant relies upon the definition of the word.
, " person " in s, 2, cl.
(m) which estates; 408 Person ' mean,% any individual or association of individuals, owning or holding property for himself or for any other, or partly for his own benefit and partly for another, either as owner, trustee, receiver, common manager, administrator or executor or in any capacity recognised by law, and includes an undivided Hindu family, firm or company.
" In our view, there is no substance in the contention raised by the appellant.
The liability to pay tax is charged on the agricultural income of every person.
The income though collected by the Receiver was the income of the appellant.
By section 13, in addition to the owner, the Receiver is to be deemed to be an assessee.
But the fact that the Receiver may, because he held the property from which income was derived in the year of account, be deemed to be an assessee and liable to pay tax, does not absolve the appellant on whose behalf the income was received from the obligation to pay agricultural income tax.
Section 13 merely provides a machinery for recovery of tax, and is not a charging section.
When property is in the possession of the Receiver, common manager or administrator, the taxing authorities may, but are not bound to, treat such persons as assessees and recover tax.
The taxing authorities may always proceed against the owner of the income and assess the tax against him.
The definition in the connotation of" person " undoubtedly included a receiver, trustee, common manager, administrator or executor, and by such inclusion, it is open to the taxing authorities to assess tax against any such persons; but on that account, the income in the hand of the owner is not exempt from liability to assessment of tax.
Counsel for the appellant urged that the income received by the appellant from the Receiver did not retain its character of agricultural income and therefore also the appellant was not liable to pay agricultural income tax.
But this contention was never raised before the taxing authorities and no such question has been referred to this court.
The character of the income was accepted to be agricultural 409 income in the hands of the appellant and the only question which was sought to be referred and raised before the Board of Agricultural Income tax was one as to the liability of the appellant to be assessed to agricultural income tax for the year in question.
In that view of the case, the appeal fails and is dismissed with costs.
Appeal dismissed.
[/INST]One Rangachari, a partner of a partnership firm, assigned by means of a deed of settlement a fourth share of the profits of the firm each to his wife, a married adult daughter and a minor daughter for 8 years with the right to receive the said share of profits absolutely and exclusively from the firm.
The question which arose before the High Court on a reference under section 66(1) of the Income tax Act was " Whether the inclusion in the assessee 's total income of the profits settled by him on his wife and two daughters is justified in law ?" The assessee Rangachari relying on the rule laid down by the Privy Council in Bijoy Singh Dudhuria 's case claimed that the amounts payable to his wife and two daughters never became his income, being diverted by an overriding title and that those amounts could not be included in his total income for the purposes of assessment being excluded by reason of the third proviso to section 16(1)(c) of the Income tax Act.
The High Court held that the third proviso was not attracted and that the income had accrued to the assessee in the first instance, and had then been applied for payments under the deeds.
On appeal with a certificate of the High Court: Held, that the answer given by the High Court was correct.
381 An examination of the deeds of settlement showed that the disponer had stated that from the profits " payable to him " certain amounts in specified shares were to be paid to his wife and two daughters.
No doubt, the assessee in those deeds created a right in favour of the disponees to get the amounts direct from the firm, of which he was a partner.
The tenor of the document In, showed that the profits were first to accrue to him and were then applied for payments to the disponees.
Under the law of partnership, it is the partner and the partner alone who is entitled to the profits.
A stranger, even if he were an assignee, has not and cannot have a direct claim to the profits.
By the deeds in question, the assessee merely allowed a payment to his wife and daughters to constitute a valid discharge in favour of the firm, but what was paid was, in law, a portion of his profits or, in other words, his income.
The rule in Bijoy Singh 's case was not applicable to this case, and in view of the decision of this court in Sitaldas Tirathdas 's case it cannot be said that the profits were diverted by an overriding title before they accrued to the assessee.
Provat Kumar Mitter vs Commissioner of Income tax, West Bengal ; Tulsidas Kilachand vs The Commissioner of Income tax ; The Commissioner of Income tax, Bombay vs Sitaldas Tirathdas ; , applied.
Bijoy Singh Dudhuria vs Commissioner of Income tax, Bengal , held inapplicable.
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<s>[INST] Summarize the judgementAppeal No.155 of 1953.
Appeal by special leave from the Judgment and Order dated the 15th July, 1953, of the Election Tribunal, Nagpur, in Election Petition No. 3 of 1952.B. Sen and T. P. Naik for the appellant.
Veda Vyas (section K. Kapur with him) for respondent No. 1. 1954.
February 15.
The Judgment of the Court was delivered by Bose J.
This is an appeal against a decision of the Nagpur Election "Trbunal.
The contest before the tribunal was about two seats in the Bhandara Parliamentary Constituency.
The elections were held on five days 'in December, 1951, and January, 1952.
819 Thirteen candidates filed nomination papers, among them the petitioner.
Of these, six contested the seat reserved for the Scheduled Castes.
One of these was Gangaram Thaware who has since died.
The Scheduled Caste in question is the Mahar caste.
Objection was taken to Thaware 's nomination for the reserved seat on the ground that he was not a Mahar.
It is admitted that he was born a Mahar, but later in life he joined the Mabanubhava Panth.
This, according to the appellant, is a sect which does not believe in caste, and alternatively that it forms a separate caste in itself The contention was that when Gangaram Thaware joined the Panth he ceased to be a member of the Mahar caste ' The objection succeeded and his nomination was rejected.
The nomination of another Scheduled Caste candidate was also rejected and five others were withdrawn before the election, among them was the present petitioner.
That left six candidates of whom three were eligible for the reserved seat.
The two who were elected were Tularam Sakhare, for the Scheduled Caste seat, and chaturbhuj, Jasani, nor the general seat.
Jasani 's election was challenged on the ground that he was subject to the disqualifications set out in section 7 (d) of the Representation of the People Act (Act XLIII of 1951) as he was interested in a contract for the supply of goods to the Central Government.
The Election Tribunal held that the rejection of Gangaram Thaware 's nomination was improper as he continued to be a member of the Mahar caste despite his conversion to the tenets of the Mahanubhava.
Panth.
It also held that Chaturbhuj Jasani had a contract with the Central Government, so he was disqualified.
Accordingly it set aside the whole election.
We will deal with Chaturbhuj Jasani 's election first.
Section 7(d) is in these terms : "A person shall be disqualified for being chosen as, and for being, a member etc.
* * * * 820 (d)if by himself he has any share or interest in a contract for the supply of goods to the appropriate Government." Chaturbhuj Jasani was, and still is, a partner in the firm of Moolji Sicka & Company, and it is said that at all material times the firm had a contract for the supply of bidis to the Government for the troops.
Moolji Sicka & Company is a firm of bidi manufacturers.
The Central Government was interested in stocking and purchasing bidis for sale to its troops through its canteens.
Accordingly, it placed two of the brands of bidis manufactured by this firm on its approved list and entered into an arrangement with the firm under which the firm was to sell, and the Government was to buy from the firm, from time to time, these two brands of bidis.
It was argued that this amounted to a contract for the supply of goods within the meaning of the section.
It was said that the contract was embodied in four letters.
We do not intend to analyse these letters in detail.
It is enough to say that in our opinion no binding engagement can be spelt out of them except to this extent : Moolji Sicka & Company undertook to sell to the canteen contractors only through the Canteen Stores and not direct and undertook to pay a commission on all sales.
This, in our opinion, constituted a Continuing arrangement under which the Canteen Stores, i.e., the Government, would be entitled to the commission on all orders placed and accepted in accordance with the arrangement ; and in fact the Canteen Stores did obtain a sum of Rs. 7,500 'in satisfaction of a claim of this kind.
This money was paid long before the dates which are crucial here but the settlement illustrates that there was an arrangement of that nature and 'that it was a continuing one.
In our opinion, it continued in being even after that and the mere fact that there was no occasion for any claim subsequent to the settlement does not indicate that it was no longer alive.
But except for this, the; letters merely set out the terms on which the parties were ready to do business with 821 each other if and when orders were placed and executed.
As soon as an order was placed and accepted a contract arose.
It is true this contract would be governed by the terms set out in the letters but until an order was placed and accepted there was no contract.
Also, each separate order and acceptance constituted a different and distinct contract: see Rose and Frank Co. vs J. R. Crompton & Bros. Ltd.(1) The crucial dates with which we are concerned are 15th November, 1951, the last date for putting in the nominations, and 14th February, 1952, the date on which the results were declared.
The section runs "A person shall be disqualified for being chosen as.
The words which follow, "and for being", need not be considered as it is enough for our purposes to use only the former.
Now the words of the section are "shall be disqualified for being chosen.
" The choice is made by a series of steps starting with the nomination and ending with the announcement of the election.
It follows that if a disqualification attaches to a candidate at any one of these stages he cannot be chosen.
The disqualification alleged in this case is that Chaturbhuj Jasani had an interest in a contract, or a series of contracts, for the supply of goods to the Central Government.
He had this interest because the contracts were made with Moolji Sicka & Company a firm of which Jasani is one of the partners.
The fact of partnership is admitted but the other facts are denied.
We have therefore to see whether any contract for the supply of goods to Government by Moolji Sicka & Company existed at any 'time on or between the relevant dates.
Exhibit C is a tabular statement which sets out the dealings between the parties during certain months.
It is accepted as correct by both sides.
The following extracts from this statement show that Moolji Sicka & Company had an interest in a series of contracts for the sale of bidis to the Canteen Stores at and between the relevant dates.
(1) ; 822 Date of order Date of invoice Price of Date of by and goods pay Canteen Stores Despatch.
supplied.ment. 8 10 1951 18 10 1951Rs.
1,684 13 919 12 1951.
8 10 195119 10 19513,373 9 3do 17 8;195126 10 195112,602 8 0do 12 9 195126 10 195111,426 14 6do 11 10 195126 10 19518,411 14 0do 21 10 195130 11 195110,125, 2 9do 9 8 195129 8 195125,812 12 024 12 1951 8 10 195118 10 19514,793 4 9do 14 11 195122 11 1951:1,887 9 95 I .1952 17 10 19518 11 195116,534 2 022 1 1952 12 11 195120 11 19514,205 15 0do 13 12 195110 1 195213,97,079 7 912. 2 1952 14 1 195222 1 19521,691 11 9do 21 12 195110 1 195216,983 8 018 2 1952 12 11 195122 11 19518,411 14 013 3 1952 9 1 195216 1 19525,888 4 9do 23 1 195228 1 19528,411 ,14 020 3 1952 This statement reveals that various contracts aggregating Rs. 15,39,345 6 0 less some small sums for railway freight, were outstanding at one time or another between the two crucial dates and that payments in discharge of these liabilities were made at various dates between 15th November, 1951, and 20th March, 1952.
It also shows that orders were placed and accepted for goods priced at Rs. 84,659 14 3 before 15th November, 1951, and that payment was not made till after that date.
Therefore, on 15th November, 1951, goods worth Rs. 84,659 14 3 had still to be paid for.
Then between 15th November, 1951, and 14th.
February, 1952, further orders for goods valued at Rs. 39,695 8 9 were placed And accepted and they were not paid for till after 14th February, 1952.
It was argued that there is nothing to show that.
the goods were, not supplied before 15th November, 1951, and before 14th February, 1952.
It was said on behalf of 'the appellant that these are the only dates which are crucial, so if Moolji Sicka.
& Company hid.
fully 823 executed their part of the contracts before the two crucial dates the disqualification would not apply.
That raises these questions: (1) Does a person who has fully executed his part of a contract continue to have an interest in it till the goods are paid for ?; and (2) were these contracts fully executed so far as Moolji Sicka & Company 's part was concerned? The parties are not agreed about this, so it will now be necessary to examine their letters in detail to determine the terms of the various contracts.
The correspondence discloses that the Canteen Stores and Moolji Sicka & Company dealt with each other from time to time under various arrangements which they called " systems.
The earliest letter we have about the transactions between these parties is one dated 30th March, 1951.
It shows that the "system" which they called the " Direct Supply System " was in use at that time.
The details of the " system " are set out in an order dated 17th April, 1951.
Under it Moolji Sicka & Company had to send supplies of bidis direct to the Canteen Stores contractors as and when ordered.
The value of the goods so supplied was to be recovered from the contractors direct and the Canteen Stores were to be informed of the sales and were to be paid a certain commission.
This led to some friction and in their letter of 30th March, 1951, the Canteen Stores complain that information about some of the sales to the contractors had been suppressed with the result that the Canteen Stores lost their commission.
Moolji Sicka & Company replied to this on 24th April, 1951, and suggested a slight change in the system, namely that all orders for the goods should in future be placed through the Canteen Stores and that there should be no dealings with the contractors direct except to supply them with the goods ordered by the Canteen Stores; then, ' they said, there would be no complaint about their having been kept in the dark.
This appears to have been agreed to because such of the subsequent order& as are on record were placed by the Canteen Stores.
824 The order dated 17th April, 1951, to which we have referred above is a sample.
This was considered unsatisfactory and it was felt that a change was called for.
Moolji Sicka & Company 's letter of 24th April, 1951, shows that their complaint was that the Canteen Stores did not keep a sufficient stock of bidis on hand.
They said " We feel that you can stock more of our bidis.
And that will mean an added profit to you; since the rebate you get on supplies made under the Direct Supply System is Rs. 4 only, whereas on supplies made to you we have now offered a much higher rebate. . .
We have therefore to request you to kindly 8stock more of our bidis.
" In view of this, two representatives of Moolji Sicka & Company, met the Chairman of the Board of Administration, who was in charge of the Canteen Stores Department, on 10th July, 1951.
They reached certain tentative conclusions which were reduced to writing by the Canteen Stores on 11th July, 1951.
Their letter of that date shows that the Canteen Stores proposed to abolish the Direct Supply System in the near future but so far as Moolji Sicka & Company were.
concerned they said that the system could be abolished.
at once (" forthwith " is the word used) provided Moolji Sicka & Company would agree to supply bidis for the Bombay, Calcutta and Delhi Depots of the Canteen Stores under a new system which they called the " Consignment System ".
Under this the Canteen Stores were to pay as they sold.
But the new system was intended only for the Bombay, Calcutta and Delhi Depots of the Canteen Stores.
The letter goes on to say that for the Pathankot and Srinagar Depots the supplies would have to be made on the " Outright Purchase Basis ".
These proposals were embodied under the heading " Future Business RelationsThen there was a provision for what was called theTransition Period ".
That said that Untilstocks could be placed in our depots, it was agreed that you would supply your bidis direct against our orders and on such supplies you would allow us rebate as at present.
825 These proposals were sent to Moolji Sicka & Company for confirmation.
It will be seen that the ' letter makes four proposals: (1)That so far as Moolji Sicka & Company were concerned, " The Direct Supply System " should be terminated at once though, so far as other manufacturers were concerned, it should continue in force for some time longer; (2)That in its place the Calcutta, Bombay and Delhi Depots were to be supplied under a new system called the " Consignment System "; (3)That the Pathankot and Srinagar Depots were to be supplied under another new system called the Outright Purchase System "; (4)That during the "transition period" the "Direct Supply System" was to continue in operation " as at present " even with Moolji Sicka and Company.
Moolji Sicka & Company replied on 16th July, 1951, saying that they were prepared to accept these terms provided the Canteen Stores confirmed certain modificatioins which Moolji Sicka & Company proposed.
They were as follows: (1)Regarding the " Transition Period " they said" "We are pleased to note that you will soon be abolishing the Direct Supply System.
But it should be applied to all suppliers at the same time.
Till then we should be allowed to supply any orders received from the Canteen Contractors.
You should inform us of the date on which Direct Supply System will be discontinued.
(2) Regarding the new proposals under the heading Future Business Relations Moolji Sicka & Company said "Goods sent to your depot on consignment basis must be either returned to us or paid for fully within three months of the date of supply.
We understand that the system.
of supplying goods on consignment basis will be discontinued in about six months ' time.
" 107 826 (3) They said " And for this purpose we have agreed to offer you Rs. 7,500 in full and final settlement of all your claims to date and upon the understanding of your acceptance of the terms for future business.
They concluded " Upon receiving your confirmation we shall instruct our Bombay office to send you the cheque for the amount stated above.
" The Rs. 7,500 was what the Canteen Stores claimed from Moolji Sicka & Company as compensation for breach of the agreement under which Moolji Sicka & Company had agreed not to sell to the Canteen Contractors without paying the Canteen Stores a commission.
Neither side was able to produce exact figures but this was the estimate made by the Canteen Stores of the loss suffered by them by reason of that breach.
It will be seen that the proposal about the " Consignment System " which the Canteen Stores made was that they would pay Moolji Sicka & Company only when they sold the stocks with which Moolji Sicka & Company were to supply them for stocking their depots at Calcutta, Bombay and Delhi.
Moolji Sicka & Company were not satisfied with this and said that the Canteen Stores must either return or pay for all stocks supplied, within three months from the date of supply.
The Canteen Stores replied on 19th July, 1951, as follows: (1) They accepted Moolji Sicka & Company 's suggestion that when the Direct Supply System was abolished the abolition would apply to all suppliers of bidis.
(2) As regards the " Consignment Account System they did not turn down the proposals but observed that they were thinking of doing away with that too in favour of the " Outright Purchase System" and warned Moolji Sicka & Company that in view of that it might not be necessary to place any of Moolji Sicka & Company 's stocks in their depots.
827 (3) They wanted a six months ' guarantee period in place of three months.
The letter concludes "Although under the system of provisioning,adopted by us, and as explained to you during our discussions, it may not be that we shall at any time have any stocks surplus to our requirements or stocks which have not been disposed of within the guarantee period, but should there be any solitary occasions will you please confirm that you will replace Such stock with fresh stock without any cost to us? We await your agreement by return.
" They also said, "We now await your cheque for Rs. 7,500.
Moolji Sicka & Company replied on 26th July, 1951, and commenced by saying " We agree to all you have said in page one of your letter under reply.
" Regarding the guarantee they said they could not agree to six months but would agree to three provided the guarantee was limited to goods found to be defective because of faults in manufacture.
They concluded "We have also to pay you Rs. 7,500 as per our ' letter, dated 16th July, 1951," and asked how the Canteen Stores would like the payment to be made.
The Canteen Stores replied on 31st July, 1951, and explained what they meant by the " guarantee period ".
Bidis deteriorate by keeping, so the idea was to have a system under which they could be returned within six months to prevent their deterioration.
They explain that this is in the interests of the 'manufacturer because (1) it will not bring their brands into disrepute, for that would, be the inevitable result if stale bidis which had deteriorated were sold in the canteens and (2) if the period is made too short, then "the goods will not stay in our depots and in the stalls of our canteens and contractors long enough to sell and hence our depots will always be,, anxious to 828 return these stocks.
The result will be obvious.
Your sales will be, lower.
They continue " We therefore consider that the period of six months should be the least before the expiry of which goods may be taken back by you and replaced. . .
The period of three months within which you expect us to return your stocks, should we find them not moving, will be too short.
" They conclude by saying that they hope Moolji Sicka & Company will agree to the six months.
Now it will be seen that all this correspondence related to the proposals about the " Consignment System " which were first mooted on 11th July, 1951.
Moolji Sicka & Company complained on 24th April, 1951, that the Canteen Stores were not keeping large enough stocks of their bidis and they asked the Canteen Stores to stop the Direct Supply System and purchase stocks direct.
The Canteen Stores were naturally reluctant to keep large stocks on hand because bidis 'deteriorate and become unsaleable in course of time.
Therefore they proposed the " pay as we sell " system, that is, they would keep stocks of bidis and pay for whatever they sold.
But the problem of unsold stocks deteriorating still remained.
Who was to be responsible? The obvious answer was that the manufacturers should take back the unsold stocks before they were too far gone and in their place send fresh consignments for sale on the " pay as we sell " basis.
We say "obvious" because the manufacturers could use the stale tobacco by re curing and blending it, or could use it for other purposes provided it was not too far gone.
The proposal therefore was that the, Canteen Stores were to keep stocks of Moolji Sicka & Company 's bidis in their depots and canteens, pay for what they sold and return all unsold stocks within six months.
Moolji Sicka & Company were then to replace them with fresh stocks which would be paid for when sold.
This was agreed to in the main but the point at which they were at issue was the six months.
Mooli Sicka & Company proposed three months while the 829 Canteen Stores wanted six months.
We think 'the argument used in the letter of 31st July, 1951, that " the result will be obvious.
Your sales will be lower " can only have reference to an arrangement of this kind, otherwise no question of the sales being lower could arise.
In the case of an outright sale, the sale would be complete when the order was executed, and except for bidis found to be defective due to manufacture Moolji Sicka & Company would have no further concern with them.
The sentences the goods may be taken back by you and replaced and " should we find them not moving " can only refer to these proposals about the "Consignment System " In any case, it certainly includes this system.
Moolji Sicka & Company 's reply is dated 9th August, 1951.
They say "We are in receipt of your letter No. 7B/29/ 17 1299, dated 31st July, 1951, and are pleased to extend the guarantee period from three to six months.
We are sure this will now enable you to keep adequate stocks of our bidis.
Awaiting your esteemed orders.
" This is an acceptance of the interpretation of the " guarantee period " as given by the Canteen Stores in their letter of 31st July, 1951.
The words "now" and "adequate" relate to the dispute which started on 24th April, 1951, when Moolji Sicka & Company complained that the Canteen Stores were not keeping adequate.stocks of their bidis in their depots.
The ,subsequent correspondence was aimed at finding out ways and means to meet this objection and at the same time satisfy both sides.
It all ended by Moolji Sicka & Company accepting the terms set out in the letter of 31st July, 1951.
We are accordingly of opinion, that Moolji Sick& & Company accepted the " Consignment System " on 9th August, 1951.
That imported a "pay as we sell" arrangement with an obligation to take back stocks unsold within six months and replace them with fresh stocks which would be paid for when sold.
in the "transition period " the Direct Supply System was also to continue.
That meant that there would be two systems in force for a time in certain depots: the "Consignment 830 System " regarding stocks ordered for the stocking up of the Calcutta, Bombay and Delhi depots of the Canteen Stores and the " Direct Supply System " till such time as the depots were stocked.
The third system of " Outright Purchase " was limited for the time being to the Pathankot and Srinagar depots.
Both the "Direct Supply" and the "Consignment" systems were abolished together on list November, 1951 (see the Canteen Stores ' letter dated 24th November, 1951).
But the obligation to take back unsold stocks within the six months ' period continued to attach to all contracts for consignment to the Calcutta, Bombay and Delhi depots made between 9th August, 1951, and 31st October, 1951.
The tabular statement shows that the following contracts for consignment to one or other of these three depots were made during that period.
The date of the invoice is the date of the execution of the order and thus of the acceptance of the proposal contained in the order.
Date of Invoice Depot Price of goodsd date & despatch supplied payment.
1 10 1951 Bombay.
Rs. 5,056 2 0 15 11 1951 13 10 1951 do.
13,536 4, 6 do 18 10 1951 Delhi 1,684 13 919 12 1951 19 10 1951 Calcutta 3,373 9 3 do 18 10 1951 Bombay 4,793 4 924 12 1951 The value of these orders comes to Rs. 28,444 2 3.
The obligations under these several contracts continued from 1st April, 1952 to 18th April, 1952.
It was argued that assuming that to be the case then there were no longer any contracts for the "supply of goods" in existence but only an obligation arising under the guarantee clause.
We are unable to accept such a narrow construction.
This term of the contract, whatever the parties may have chosen to call it, was a term in a contract for the supply of goods.
When a contract consists of a number of terms and conditions, each condition does not form a separate contract but is an item in the one contract of which it is a part.
The consideration for each 831 condition in a case like this is the consideration for the contract taken as a whole.
It is not split up into several considerations apportioned between each term separately.
But quite apart from that, the obligation, even under this term, was to supply fresh stocks for these three depots in exchange for the stocks which were returned and so even when regarded from that narrow angle it would be a contract for the supply of goods.
It is true they are replacements but a contract to replace goods is still one for the supply of the goods which are sent as replacements.
But even if all that be disregarded and it be assumed that Moolji Sicka & Company had fully performed their part of the contract by placing the goods on rails before 15th November, 1951, we are of opinion that the contracts were not at an end until the vendors were paid and the contracts were fully discharged.
The words of the sections are "if. he has any share or interest in a contract for the supply of goods to. . the appropriate Government.
" There can be no doubt that these various transactions were contracts and there can equally be no doubt that they were contracts for the supply of the goods.
Whether they were contracts for the supply of goods to the Government is a matter which we shall deal with presently.
But we have no doubt that they were contracts for the supply of goods.
The question then is, does a contract for the supply of goods terminate when the goods are supplied or does it continue in being till payment is made and the contract is fully discharged by performance on both sides 9 We are of opinion that it continues in being till it is fully discharged by performance on both sides.
It was contended, on the strength.
of certain observations in some English cases, that the moment a contract is fully executed on one side and all that remains is to receive payment from the other, then the contract terminates and a new relationship of debtor and creditor takes its place.
With the utmost respect we are unable to agree.
There is always a possibility of the liability being disputed before actual payment is made and the vendor may 832 have to bring an action to establish his claim to payment.
The existence of the debt depends on the contract and cannot be established without showing that payment was a term of the contract.
It is true the contractor might abandon the contract and sue on quantum meruit but if the other side contested and relied on the terms of the contract, the decision would have to rest on that basis.
In any case, as we are not bound by the dicta and authority of those cases, even assuming they go that far, we prefer to hold that a contract continues in being till it is fully discharged by both sides: see the observations of Gibson J. in O 'Carroll vs Hasting8(1).
To use the language of O 'Brien L.C.J. in that case at page 599, these contracts have not been "merged, abandoned, rescinded, extinguished or satisfied; and if any demur was made as to payment before payment was actually made, he could have sued upon the contract specially; or if he sued for work done at the request of the defendants the contract would have been.
a part of his necessary proofs" We agree with the learned Lord Chief Justice in thinking that "it is far fetched to contend that a man is not concerned in the contract or security by which he can enforce payment.
" The same view was taken, by Costello J. in an Indian case in Satyendrakumar Das vs Chairman of the Municipal Commissioners8 of Dacca(2).
Counsel for the appellant relied strongly on certain English cases.
They were all examined and distinguished in the above decisions.
They either turned on special facts or on the words of a statute which are not the same as ours.
The leading case appears to be Royse vs Birley(3 ).
But the decision turned on the language of the English statute which the learned Judges construed to mean that the contract must be executory on the contractor 's part before the English Act can apply.
Tranton vs Astor(4) follows the earlier ruling.
The statute with which Darling J. was dealing (1) at 608.
(2) I.L.R. from p. 193 onwards.
(3) (4) 833 in Cox vs Truscott(1) is nearer the language of our Act.
He hesitatingly proceeded on the debtor and creditor basis.
We need not go further than this because, as we have said, if these decisions cannot be distinguished, then we must with respect differ.
We hold therefore that these contracts which Moolji Sicka & Company had entered into with the Government subsisted on 15th November, 1951, and on 14th February, 1952, and that as Chatturbhuj Jasani, the appellant, was a partner in the firm he also had both a share and an interest in them on the crucial dates.
That brings us to article 299 (1) of the Constitution.
It states: "All contracts made in the exercise of the executive power of the Union or of a State shall be expressed to be made by the President . and all such contracts. made in the exercise of that power shall be executed on behalf of the President . by such persons and in such manner as he may direct or authorise." The contention was that as these contracts were not expressed to be made by the President they are void.
Cages were cited tons under the Government of India Acts of 1919 and 1935.
Certain sections in these Acts were said to be similar to article 299.
We do not think that they are, but in any case the rulings ,under section 30 (2) of the Government of India Act, 1915, as amended by the Government of India Act of 1919 disclose a difference of opinion.
Thus, Krihsnaji Nilkant vs Secrtary of State(2) ruled that contracts with the Secretary of State must be by a deed executed on behalf of the Secretary of State for India and in his name.
They cannot be made by correspondence or orally.
Secretary of State vs Bhagwandas(3) and Devi Prasad Sri Krihhna Prasad Ltd. vs Secretary of State(1) held they could be made by correspondence.
Secretary of State V. O.T. Sarin & Company(1) took an intermediate vie,* and held that though contracts in the prescribed form could not be enforced by either side, (1) (4) A.I.R. 1941 All. 377.
(2) A.I.R. 1937 Bom.
449,451.
(5) I.L.R. 11 Lah.
(3) A.I.R. 1938 Bom.
108 834 a claim for compensation under section 70 of the Indian Contract Act would lie.
Province of Bengal vs section L. Puri(1) took a strict view and held that even letters headed "Government of India" did not comply with, the rule in section 175 (3) of the Government of India Act, 1935.
The Federal Court was called upon to construe section 40 (1) of the Ninth Schedule of the Government of India Act, 1935.
It held that the directions in it were only directory and not mandatory, and the same view was taken of article 166 (1) of the present Constitution by this court in Dattatreya Moreshwar Pangarkar vs State of Bombay(2).
None of these provisions is quite the same as article 299.
For example, in article 166, as also in section 40(1) of the Government of India Act of 1935, there is a clause which says that "orders" and "instruments" and "other proceedings" "Made" and "expressed" in the name of the Governor or Governor General in Council and "authenticated" in the manner prescribed shall not be, called in question on the ground that it is not an "order" or "instrument" etc. 'made" or "executed" by the Governor or Governor General in Council.
It was held that the provisions had to be read as a whole and when that was done it became evident that the intention of the legislature and the Constitution was to dispense with proof of the due "making" and "execution" when the form prescribed was followed but not to invalidate orders and instruments otherwise valid.
Article 299(1) does not contain a similar clause, so we are unable to apply the same reasoning here.
In our opinion, this is a type of contract to which section 236(3) of the Indian Contract Act would apply.
This view obviates the inconvenience and injustice to innocent persons which the Federal Court felt in J. K. Gas Plant Manufacturing Co., Ltd. vs The King.
Emperor (3)and at the same time protects Government.
We feel that some reasonable meaning must (1) (2) ; at 632, 633.
(3) at 156, 157, 835 be attached to article 299(1).
We do not think the provisions were inserted for the sake of mere form.
We feel they are there to safeguard Government against unauthorised contracts.
If in fact a contract is unauthorised or in excess of authority it is right that Government should be safeguarded.
On the other hand, an officer entering into a contract on behalf of Government can always safeguard himself by having recourse to the proper form.
In between is a large class of contracts, probably by far the greatest in numbers, which, though authorised, are for one reason or other not in proper form.
It is only right that an innocent contracting party should not suffer because of this and if there is no other defect or objection we have no doubt Government will always accept the responsibility.
If not, its interests are safeguarded as we think the Constitution intended that they should be.
In the present case, there can be no doubt that the Chairman of the Board of Administration acted on behalf of the Union Government and his authority to contract in that capacity was not questioned.
There can equally be no doubt that both sides acted in the belief and on the assumption, which was also the fact, that the goods were intended for Government purposes, namely, amenities for the troops.
The only flaw is that the contracts were not in proper form and so, because of this purely technical defect, the principal could not have been sued.
But that is just the kind of case that section 230(3) of the Indian Contract Act is designed to meet.
It would, in our opinion, be disastrous,to hold that the hundreds of Government officers who have daily to enter into a variety of contracts, often of a petty nature, and sometimes in an emergency, cannot contract orally or through correspondence and that every petty contract must be effect ed by a ponderous legal document couched in a particular form.
it may be that Government will not be bound by the contract in that case, but that is a very different thing from saying that the contracts as such are void and of no effect.
It only means "that the principal cannot be sued ; but we take it there would 836 be nothing to prevent ratification, especially if that was for the benefit of Government.
There is authority for the view that when a Government officer acts in excess of authority Government is bound if it ratifies the excess: see The Collector of Masulipatam vs Cavaly Venkata Narrainapah(1).
We accordingly hold that the contracts in question here are not void simply because the Union Government could not have been,sued on them by reason of article 299(1).
Now section 7(d) of the Representation of the People Act does not require that the contracts at which it strikes should be enforceable against the Government; all it requires.
is that the contracts should be for the supply of goods to the Government.
The contracts in question are just that and so are hit by the section.
The purpose of the Act is to maintain the purity of the legislatures and to avoid a conflict between duty and interest.
It is obvious that the temptation to place interest before duty is just as great when there is likely to be some difficulty in recovering the money from Government (for example, if Government were to choose not to ratify the contracts) as when there is none.
In our opinion, the Election Tribunal was right in disqualifying Chatturbhuj Jasani.
We now turn to Gangaram Thaware.
He stood as a Scheduled Caste candidate and his nomination was rejected on the ground that he did not belong to the Scheduled Caste in question, namely the Mahars.
The only question here is whether he ceased to be a Mahar when he joined the Mahanubhava Panth.
This gave rise to much controversy and we have been presented with many conflicting opinions.
Thus, the Imperial Gazetteer of India, Voluime XXI, page 3012 states that the founder of the sect repudiated the caste system as also a multiplicity of God7f3 and insisted on the monotheistic principle.
At the same time it ,says that he taught his disciples to eat with none but (1) 8 M.I.A. 529 at 554.
837 the initiated and to break off all former ties of caste and religion.
Russell in Volume IV of his Tribes and Castes of the Central Provinces says that the Manbhaos (Mahanubhau) is a religious sect,or order which has " now" (1911) become a caste.
The Central Provinces Ethnographic Survey, Volume IX, says the same thing at page 107 and at page 110 and adds that members of the sect often act as priests or gurus to the Mahars.
As against this, the Election Tribunal has quoted a number of opinions which tend the other way.
Thus, V. B. Kolte says at page 247 of his Shri Chandradhar Charitra that no serious attempt has been made by them to abolish caste, and Ketkar says at page 76, Volume XVIII of the 1926 edition of his Maharashtriya Dhnyankosh that there are two divisions among the Mahanubhavas, one of Sanyasig who renounce the world and the other a secular one.
The latter observe the caste system and follow the rituals of their own caste and carry on social contacts with their caste people and marry among them.
Similar views are expressed by Bal Krishna Mohanubhav Shastri.
But we are not really concerned 'with their theology.
What we have to determine are the social and political consequences of such conversions and that, we feel, must be decided in a common sense practical way rather than on theoretical and theocratic grounds.
Conversion brings many complexities in its train, for it imports a complex composite composed of 'many ingredients.
Religious beliefs, spiritual experience and emotion and intellectual conviction mingle with more material considerations such as severance of family and social ties and the casting off or retention of old customs and observances.
The exact proportions of the mixture vary from person to person.
At one extreme there is bigoted fanaticism bitterly hostile towards the old order and at the other an easy going laxness and tolerance which makes the conversion only nominal.
There is no clear out dividing line and it is not a matter which can be viewed from only one angle.
838 Looked at from the secular point of view, there are three factors which have to be considered: (1) the reactions of the old body, (2) the intentions of the individual himself and (3) the rules of the new order.
If the old order is tolerant of the new faith and sees no reason to outcaste or ex communicate the convert and the individual himself desires and intends to retain his old social and political ties, the conversion is only nominal for all practical purposes and when we have to consider the legal and political rights of the old body the views of the new faith hardly matter.
The new body is free to ostracise and outcaste the convert from its fold if he does not adhere to its tenets, but it can hardly claim the right to interfere in matters, which concern the political rights of the old body when neither the dld body nor the convert is seeking either legal or political favours from the new as opposed to purely spiritual advantage.
On the other hand, if the convert has shown by his conduct and dealings that his break from the old order is so complete and final that he no longer regards himself as a member of the old body and there is no reconversion and readmittance to the old fold, it would be wrong to hold that he can nevertheless claim temporal privileges and political advantages which are special to the old order.
In our opinion, broadly speaking, the principles laid down by the Privy Council in the case of a Hindu convert to Christianity apply here: not, of course, the details of the decision but the broad underlying principle.
In Abraham vs Abraham(1), their Lordships say: " He " (the convert) " may renounce the old law by which he was bound, as he has renounced his old religion, or, if he thinks fit, he may abide by the old law, notwithstanding he has renounced the old religion.
" The only modification here is that it is not only his choice which must be taken into account but also the views of the body whose religious tenets he has (1) 9 M.I.A. 199 at 242, 243, and 244.
839 renounced, because here the right we are considering is the right of the old body, the right conferred on it as a special privilege to send a member of its own fold to Parliament.
But with that modification the observations which follow.
apply in their broad outline.
"The profession of Christianity releases the convert from the trammels of the Hindu law, but it does not of necessity involve any change of the rights or relations of the ' convert in matters with which Christianity has no concern, such as his rights and interests in, and his powers over, property.
The convert, though not bound as to such matters, either by the Hindu law or by any other positive law, may by his course of conduct after his conversion have shown by what law he intended to be governed as to these matters.
He may have done so either by attaching himself to a class which as to these matters has adopted and acted.
upon some particular law, or by having himself observed some family usage or custom; and nothing can surely be more just than that the rights and interests in his property, and his powers over it, should be governed by the law which he has adopted, or the rules which he has observed.
" Now what are the facts here ? Whatever the views of the founder of this sect may have been about caste, it is evident that there has been no rigid adherence to them among his followers in later years.
They have either changed their views or have not been able to keep a tight enough control over converts who join them and yet choose to retain their old caste customs and ties.
We need not determine whether the Mahanubhava tenets encourage a repudiation of caste only as a desirable ideal or make it a fundamental of the faith because it is evident that present day Mahanubhavas admit to their fold persons who elect to retain their old caste customs.
That makes it easy for the old caste to regard the converts as one of themselves despite the conversion which for all practical purposes is only ideological and involves no change of status.
840 Now no witness has spoken of any outcasting, neither outcasting in general nor in this special case.
No single instance has been produced in which any person who has joined this sect from the Mahar community has ever been outcasted from the Mahars for that reason; and as the sect is said to be over 1000 years old, therehas been time enough for such instances to accumulate.
Further, no instance has been produced of a Mahanubhava marrying outside his or her old caste whereas there are instances of Mahanubhavas who have married non Mahanubhavas belonging to their own caste.
Nene (P. W. 1), Sadasheo (P. W. 3), Sitaram (P. W. 4) and Haridas (P. W. 5) say that a Mahar 'convert does not lose his caste on conversion.
He is admitted to all caste functions and can marry in the community.
Of these, Sadasheo (P. W. 3) and Haridas (P. W. 5) are Mahars.
There is no evidence to rebut this.
The witnesses on the other side take refuge in theory and, when confronted with actual facts, evade the issue by saying that Mahanubhavas who do these things are not real Mahanubhavas.
Harendra (R. W. 1) is a Mahanubhava Guru and so ought to know, but he affects an otherworldly indifference to mundane affairs and says that as he does not lead a worldly life he does not know whether converts retain their caste distinctions and whether there are inter dinings and inter marriages in the Mahanubhava fold itself among those who belonged to different castes before conversion.
Shankar (R. W. 2) says that a convert loses his caste on conversion but gives no instance of ostracism from the old fold.
In any case, his evidence is confined to the sanyasi order among the Mahanubhavas because he says that every person who becomes a convert to this sect must renounce the world and cannot marry.
When pinned down in cross exami nation he had to admit that he did know two or three Mahanubhavas who were leading a worldly life but he meets that by saying that they are not real Mahanubhavas.
Chudaman (R. W. 3) evades the issue in the same way.
He is a Mahanubhava Pujari and so is 841 another person who ought to have special knowledge.
Despite that he says he cannot give a single instance of a person belonging to one caste, initiated into the Mahanubhava sect, marrying a person of another caste initiated into the same Panth.
When further pressed he said the question did not arise as a man lost his caste on conversion.
On this evidence, and after considering the historical material placed before us, we conclude that conversion to this sect imports little beyond an intellectual acceptance of certain ideological tenets and does not alter the convert 's caste status, at any rate,, so far as the householder section of the Panth is concerned.
So much for the caste consciousness on both sides.
Now considering Gangaram Thaware the individual we find that he was twice married and on both occasions to Mahar girls who were not Mahanubhavas at the time of their respective marriages.
His first wife was never converted.
His second wife was converted after her marriage.
The witnesses say ' he was still regarded as a Mahar after his conversion and always looked upon himself as a Mahar and identified himself with the caste.
No one on the other side denies this.
As we have shown, they took shelter behind generalities and evaded the issue by saying that in that case he cannot be a real Mahanubhava.
If he was not, then he must have continued a Mahar even on their view.
The evidence also discloses that Gangaram Thaware led Mahar agitations and processions as a member and leader of the Mahar caste.
In 1936 he contested the election for the Provincial Assembly as a Mahar candidate.
No one appears to have questioned his competency.
And lastly, he declared himself to be a Mahar in the verification to his nomination form in the present election as also in an affidavit filed before the Returning Officer who rejected his nomination.
The 'Returning Officer described that as a "cleverly, worded document.
" We have read it and find nothing tricky or crooked in it., Therefore, applying the test in Abraham vs Abraham(1), we hold that despite his (1) 9 M.I.A. 199.
109 842 conversion he continued to be a Mahar and so his nomination form was wrongly rejected.
That affects the whole election.
The other points argued before the Election Tribunal were not pressed before us.
We therefore uphold the decision of the Tribunal and dismiss the appeal with costs.
Appeal dismissed.
[/INST]Held, that the rule of English law that a civil servant cannot ' maintain a suit against the State or against the Crown for the 787 recovery of arrears of salary does not prevail in India and it has been negatived by the provisions of the statute law in India.
Section 240 of the Government of India Act, 1935, places restrictions and limitations on the exercise of the pleasure of the Crown and these restrictions must be given effect to.
They are imperative and mandatory.
Therefore whenever there is a breach of restrictions imposed by the statute ' by the Government or the Crown the matter is justiciable and the aggrieved party is entitled to suitable relief at the hands of the court.
Government servants are entitled to relief like any other person under the ordinary law, and that relief must be regulated by the Code of Civil Procedure.
Punjab Province vs Pandit Tara Chand ([1947] F.C.R. 89) approved.
High Commissioner OF India and Pakistan vs I.M. Lall ([1948] L.R. 75 I.A. 225) distinguished.
</s> |
<s>[INST] Summarize the judgements Nos. 114 and 115 of 1961.
Petition under article 32 of the Constitution of India for enforcement of Fundamental Rights.
832 M. K. Nambiar, M. K. Govind Bhatt, section N. Andley, and Rameshwar Nath, for the petitioners.
M. C. Setalvad, Attorney General of India, K. K. Mathew, Advocate General for the State of Kerala, Sardar Bahadur, George Pudissary and V. A. Seyid Muhammad, for the respondents.
December 5.
The Judgment of Gajendra gadkar, Wanchoo and Das Gupta, JJ., was deliverd by Wanchoo, J. Sarkar, J. and Ayyangar, J. delivered separate Judgment.
WANCHOO, J. These two writ petitions which were heard along with Purushothaman Nambudiri vs The State of Kerala (1) raise the constitutionality of the Kerala Agrarina Relations Act, No. IV of 1961 hereinafter referred to as the Act.
The petitioners come from that part of the State of Kerala which was formerly in the South Canara district of the State of Madras and came to the State of kerala by the State Reorganisation Act of 1956.
Their lands are situate in Hosdrug and kasargod Taluks which have now been made part of the Cannanore District in the State of Kerala.
They hold large areas of lands, the major part of which is held by them as ryotwari parradars, of Madras under the Board 's Standing Orders of that State.
In these lands they have areca and pepper plantations besides rubber plantation.
They also grow other crops on some of the lands.
The Act is being attacked on the ground that it contravenes articles 14, 19 and 31 of the Constitution.
Besides this, it is also contended on behalf of the petitioners that the Bill which became the Act lapsed under the provisions of the Constitution, and therefore the assent given to the Bill by the President was of no effect and did not result in the Bill becoming an Act.
We do not think it necessary to set out the details of the attack on this last score in the present petitions as the matter 833 has been considered in full in the judgment in the connected Writ Petition No. 105 of 1961.
The petitioners further submit that their lands which they hold as ryotwari pattadars are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act so far as it affects them is not protected under article 31A, and it is open to them to assail it as violative of the rights conferred on them by articles 14, 19 and 31 of the Constitution.
They have attacked the Act on a number of grounds as ultra vires the Constitution in view of the provisions of articles 14, 19 and 31.
We do not however think it necessary to detail all the attacks on the constitutionality of the Act for present purposes.
It is enough to say that the main attack on the constitutionality of the Act has been made on the following six grounds: (1) The Bill which became the Act had lapsed before it was assented to by the President and therefore the assent of the President to a lapsed bill was of no avail to turn it into law.
(2) The Act is a piece of colourable legislation as it has made certain deductions from the compensation payable to landholders under Chap.
II and to others who held excess land under Chap.
III and this amounts to acquisition of money by the State which it is not competent to do under the power conferred on it in Lists II and III of the Seventh Schedule to the Constitution.
(3) The properties of the petitioners who are ryotwari pattadars are not estates within the meaning of article 31A of the Constitution and therefore the Act is not protected under that Article so far as it applies to lands of ryotwari pattadars like the petitioners.
(4) The Act exempts plantation of tea, coffee, rubber and cardamom from certain 834 provisions thereof, but no such exemption has been granted to plantations of areca and pepper, and this is clearly discriminatory and is violative of article 14.
(5) The manner in which ceiling is fixed under the Act results in discrimination and is therefore violative of article 14.
(6) The compensation which is payable under Chapters II and III of the Act has been reduced by progressive cuts as the amount of compensation increase and this amounts to discrimination between persons similarly situate and is therefore violative of article 14.
The petitions have been opposed on behalf of the State and its contention is, firstly, that the Bill did not lapse and the President 's assent was rightly given to it rightly became law; secondly, that the petitioners ' estates lands are estates within the meaning of article 31A (2)(a) and the Act is therefore protected under that Article; thirdly, that the Act is not a piece of colourable legislation and the State Legislature was competent to enact the Act under item 18 of List II and item 42 of List III of the Seventh Schedule and there is no acquisition of money by the state under the Act and reference is made to section 80 of the Act in this connection; and lastly, that the discrimination alleged with respect to plantations, the fixation of ceiling and the deductions from compensation payable under Chapters II and III is really no discrimination at all and the provisions in that behalf are based on an intelligible differentia which is in accordance with the object and purpose of the Act.
The question whether the Bill which finally received the assent of the President on January 21, 1961, had lapsed because the legislative assembly which originally passed it was dissolved and a new legislative assembly which came into being after 835 the general elections reconsidered and re passed it under article 201 of the Constitution has been considered by us in Writ Petition No. 105 of 1961, judgment in which has just been delivered and it has been held there that the bill did not lapse and therefore it validly became law when the President assented to it.
The attack on the Act therefore on this grounds must fail.
We now come to the attack made on the Act on the ground that it is a piece of colourable legislation beyond the legislative competence of the State legislature.
What is colourable legislation is now well settled: see K. C. Gajapati Narayan Deo vs The State of Orissa (1), where it was held "that the question whether a law was a colourable legislation and as such void did not depend on the motive or bona fides of the legislature in passing the law but upon the competency of the legislature to pass that particular law, and what the courts have to determine in such cases is whether though the legislature has purported to act within the limits of its powers, it has in substance and reality transgressed those powers, the transgession being veiled by what appears, on proper examination, to be a mere pretence or disguise.
The whole doctrine of colourable legislating is based upon the maxim that you cannot do indirectly what you cannot do directly.
The Act has been passed under the legislative powers vested in the State legislature under item 18 of List II and item 42 of List III of the Seventh Schedule.
Item 18 of List II deals inter alia with "land, that is to say, rights in or over land, land tenures including the relation of landlord and tenant, and the collection of rents" Item 42 of list III deals with "acquisition and requisitioning of property.
" The contention on behalf of the petitioners is that in the guise of legislating under these two entries the State legislature by the employment of certain 836 devices has taken away money, which should have gone to land owners or to those from whom excess lands were being acquired.
The attack is based on the facts that in section 52 of the Act compensation payable to a land owner is reduced after the purchase price to be paid by the tenant to whom the land is to be assigned has been ascertained, and that in section 64 of the Act the compensation payable to a person from whome excess land is taken in reduced by certain percentage after the market value of the land has been determined.
It is urged that by these devices the State is acquiring money which should properly have gone to the land owner to whome compensation is payable under section 52 and to the person who surrenders excess land to whome compensation is payable under section 64.
There is no doubt that certain deductions are made from the purchase price payable by the tenant under section 45 and from the market value before compensation is arrived at for payment to the land owner under section 52 and to the person surrendering excess land under section 64.
But if one looks at the purpose and object of the Act it will be clear that the main provisions of the Act are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III.
The scheme of the Act so far as Chap.
II dealing with extinction of the land owner 's right is concerned is that the land owner 's right vested in the State under sections 41 and 42 on a day to be notified by the Government in that behalf.
Thereafter, section 43 provides that cultivating tenants of the lands which have vested in the State shall have a right to assignment of the right, title and interest so vested in the State on payment of a certain price which is calculated under section 45 and is called the purchase price.
After the purchase price is determined, the compensation to be paid to the land owner is provided by section 52 and there is reduction in the purchase price for the purpose of given compensation.
It is however obvious that the object of Chap.
II is to vest proprietorship in the land in the 837 cultivating tenants and for that purpose Chap.
II provides for carrying out the object in two stages.
In the first stage, the property of the landowner is vested in the State.
Thereafter the tenant is given the right to acquire that property from the State.
What price the tenant is to pay for the land is worked out under section 45, and what compensation the State is to pay to the land owner is worked out under section 52, which however reduces the purchase price arrived at under section 45 for the purpose of giving compensation.
It is however clear that tenants are not bound to apply to acquire the land which they hold as tenants and where they do not do so, section 44 (3) provides that they become the tenants of Government and shall be liable to pay to the Government the rent payable in respect of the land from the date on which the right, title and interest over the land vested in the Government.
It cannot therefore be said that the scheme which provides for two stages, namely, first acquisition by Government and secondly assignment to tenants is a camoflage devised for the purpose of taking away the money which would otherwise have been payable to the land owner in case the interest of the landowner was directly transferred to the cultivating tenants.
It is also clear that there is bound to be a time lag between the acquisition under sections 41 and 42 and the assignment to tenants under section 43 and the subsequent sections and in the meantime the Government would be the owner of the rights acquired.
Clearly, therefore Chap.
II of the Act envisages first the acquirement of the land owner 's interest by the State for which compensation is payable under s.52.
Thereafter the State will assign to such cultivating tenants as may apply the rights acquired by the State and there is likely to be an interval between the two transactions.
Besides some cultivating tenants may not apply at all and that part of the property will remain with the State Government.
In these circumstances it cannot be said that the scheme evolved in Chap.
II is a device for 838 taking away any part of the money to the landowner from the tenant to whom his interest may eventually be assigned.
Besides the adequacy of compensation provided under section 52 for acquisition by the State of the interest of the land owner cannot be challenge on the ground that the compensation provided by the law is not adequate: See article 31(2).
It is only because the compensation provided under section 52 is a percentage of the purchase price as calculated under section 45 that it appears as if the State is taking away a part of the compensation due to the landowner.
Section 52 is however only a method for determining compensation and the whole compensation due to the land owner is to be found in section 52 and it cannot therefore be said that any part of the compensation is being taken away by the State.
Similarly the scheme of Chap.
III which provides a ceiling is that any land in excess of the ceiling shall vest in the Government under section 62.
Thereafter the land so vested in Government can be assigned under section 70 to persons who do not possess any land or possess land less than 5 acres of double crop nilam or its equivalent.
It is true that Government may assign the lands to those who apply under section 70 but it is not bound to do so and here again there will be a time lag between the vesting of the excess land in the Government under s.62 and its assignment to those who are eligible under section 70.
The charge that in this Chapter there is a device for taking away the compensation due to the land owner is based on the fact that section 72 the person to whom the land is assigned under section 70 has to pay 55 per cent.
Of the market value of the land while the person from whom the excess land is taken is not always paid 55 per cent.
Of the market value, inasmuch as the percentage goes down to 25 per cent.
Of the market value in certain circumstances.
But here again the compensation is provided entirely under section 64 and it is that section which sets out the manner in which the compensation is to be 839 provided.
The adequacy of that compensation cannot be questioned in view of article 31(2).
The fact that under sections 70 and 72 when the Government in its turn assigns land to those who are eligible for such assignment, a different percentage of market value is fixed would not make these provisions a device to take away the money due to those who surrender excess land.
As we have already said the compensation to those who surrender excess land is all provided by section 64 and even if there is a difference between the price payable under section 72 by the assignee and the compensation payable to the landowner under section 64 that would not amount to taking away the money of the landowner by a device particularly when the assignment is bound to take place sometime after the property has been acquired by Government.
It is also clear from the provisions contained in Chapters II and III of the Act that the main purpose of the Act is to do away with intermediaries and to fix a ceiling and give the excess land, if any, to the landless or those who hold land much below the ceiling.
The method employed to carry out this object is first to acquire the land for the State and thereafter to assign it to the cultivating tenants or to the landless or to those with small amounts of land.
The main provisions of the Act therefore are clearly within the legislative competence of the State legislature under item 18 of List II and item 42 of List III and this is not being disputed on behalf of the petitioners.
But what they contend is that in the process of doing this, the Government has by adopting certain devices taken away the money which was due to the land owner or to the person from whom the excess land is acquired.
This argument is however fallacious because the compensation due to the land owner or the person from whom excess land is acquired is not what is provided by section 45 and s 72 but what is provided in section 52 and s 64.
The adequacy of that compensation cannot be 840 challenged in view of article 31(2), and there is therefore no justification for saying that the money due to the landowner or the person from whom the excess land is acquired is being taken away by the State.
That argument would only be possible if the compensation was the whole amount arrived at under section 45 or under section 72 and from that the Government deducted money due to the landowner.
That however is not so and the compensation to which the landowner or the person from whom the excess land is acquired is to be found only in sections 52 and 64 and there is thus no question of taking away any money due to the landowner.
Further, whatever unfairness might appear because of the difference between sections 45 and 52 on the one hand and sections 64 and 72 on the other and the manner in which the compensation is shown as a percentage of the purchase price or the market value is removed by the provision in section 80 of the Act.
That section provides for the constitution of an agriculturist rehabilitation fund in which the surplus, if any, of the purchase price after the disbursement therefrom of the compensation is to be put along with other moneys.
This surplus does not to go to the revenues of the State and the State cannot be said to have taken away for its own purpose any part of the compensation.
Further section 80 provides that the fund shall be utilised for rendering help by way of loan, grant or otherwise to persons affected by the Act who are eligible for the same in accordance with the rules framed by the Government.
The fund therefore created under section 80 of the surplus, if any, is to be utilised for rendering help to persons affected by the Act.
That in our opinion clearly means either the landowners whose rights are affected by Chap.
II or the persons from whom excess land is taken under Chap.
The surplus money therefore is to be utilised for the benefit of the persons affected by the Act as indicated above.
This section also 841 provides that the Government will frame rules with respect to the persons affected and their eligibility for help from the fund.
Our attention in this connection has been drawn to the eligibility rules framed under this section for the administration of the fund, and in particular to r. 161 which provides for eligibility for grants and loan.
That rule in our opinion goes beyond the scope of section 80 in so far as it provides for making of grants or loans to persons not affected by the Act.
We may in this connection refer to r. 161 (a)(i) and (ii) and r. 161 (b) (i) and (ii) which are so framed as to take within their scope even persons not affected by the Act, though r. 161 (a)(iii) and r. 161(b)(iii) are with respect to persons who may be affected by the Act.
Rule 161(a)(i) and (ii) and r. 161(b)(i) and (ii) in so far as they take in persons not affected by the Act are ultra vires of the provisions of section 80 and must be struck down on that ground and may have to be replaced by more suitable rules.
But the rules which have been actually framed will not affect the provisions of section 80 which clearly show that the fund is for the benefit of those who are affected by the Act, namely, those who are affected by Chapters II and III of the Act, i.e., those landowners whose rights have been acquired under sections 41 and 42 and those persons from whom excess land is taken away under section 62.
Section 80 thus clearly shows that any surplus that may arise is not taken away by the State for its own revenue purposes but is meant to be used for the benefit of those affected by the Act and therefore even the apparent result of the difference between sections 45 and 62 and ss 64 and 72 is taken away by the constitution of the fund under section 80, and it cannot be said at all under the circumstances that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State.
We are therefore of opinion that 842 the Act" cannot be struck down as a colourable piece of legislation which is beyond the competence of the State Legislature.
Article 31A was inserted in the Constitution by the Constitution (First Amendment) Act, 1951, with retrospective effect so that it must be deemed to have been in the Constitution from the very beginning, i.e., January 26, 1950.
The article was further amended by the Constitution (Fourth Amendment) Act, 1955 which was also made retrospective and therefore article 31A as it stands today must be deemed to have been part of the Constitution right from the start, i.e., January 26, 1950.
We are not concerned in the present petitions with cl.
(1) of article 31A, which was extensively amended in 1955 but only with cl.
This clause originally read as follows: "In this article, (a) the expression 'estate ' shall, in relation to any local area, have the same meaning as that expression or its local equivalent has in the existing law relating to land tenures in force in that area, and shall also include any jagir, inam or muafi or other similar grant.
(b) the expression 'right ' in relation to an estate, shall include any rights vesting in a proprietor, sub proprietor, under proprietor, tenure holder or other intermediary and any rights or privileges in respect of land revenue.
" In 1955, in sub cl.
(a) the words "and in the States of Madras and Travancore Cochin any janmam rights " were added at the end while in sub cl.
(b) the words " raiyat under raiyat " were added after the word " tenure holder " and before the words "or other intermediary".
843 It will be seen therefore that so far as the meaning of the word "estate" is concerned, there was no change in sub cl.
(a) and the only change was with respect to the inclusive part of the definition of the word "estate".
The word "estate has all along been defined to have the same meaning in relation to any local area as that expression or its local equivalent has in the existing law relating to landtenures in force in that area.
It is also remarkable that the word "intermediary" does not occur in sub cl.
(a) though it occurs in sub cl.
The definition in sub cl.
(a) is self contained and there is no scope for importing any idea of intermediary in the definition from sub cl.
The reason why the words "other intermediary" are used in sub cl.
(b) which defines rights in relation to an estate, is that sub clause mentions a number of intermediaries as such, like sub proprietors, under proprietors, tenure holders but does not give a complete enumeration of all intermediaries that may be existing in an estates all over India and therefore uses the words "other intermediary" to bring in all kinds of intermediaries existing in an estate.
As an example we may mention that formerly in Uttar Pradesh there were fixed rate tenants in the permanently settled districts who were also intermediaries and it is such persons or their likes who were brought in within the sweep of the definition of rights in relation to an estate by the use of the words "other intermediary".
Therefore, when the words "raiyat, under raiyat " were added in sub cl.
(b) in 1955, it was further enumeration within a class already there; further as held in The State of Bihar vs Rameshwar Pratap Narain Singh (1), their inclusion in the circumstances and in the particular setting showed that the words "or other intermediary" did not necessarily qualify or colour the meaning to be attached to these new tenures.
The meaning of the word "estate" has however to be found in 844 sub cl.
(a) and it is the words used in that sub clause only which will determine its meaning irrespective of whether any intermediary existed in an estate or not.
The meaning of the word "estate" in sub cl (a) is the same as it might be in the existing law relating to land tenure in force in a particular area.
Where therefore there is an existing law in a particular area in which the word "estate" as such is defined the word would have that meaning for that area and there is no necessity then for looking for its local equivalent.
But if in existing law of a particular area the word "estate" as such is not defined, but there is a definition of some other term which in that area is the local equivalent of the word "estate" then the word "estate" would have the meaning assigned to that term in the existing law in that area.
In order, however, that one may be able to say that a particular term in an existing law in a particular area is a local equivalent of the word "estate" used in sub cl (a) it is necessary to have some basic idea of the meaning of the word "estate" for that purpose.
That basic idea seems to be that the person holding the estate should be the proprietor of the soil and should be in direct relationship with the State paying land revenue to it, when it is not remitted in whole or in part.
If a term therefore is defined in any existing law in a local area which corresponds to this basic idea of an estate that term would be a local equivalent of the word "estate" in that area.
It is unnecessary to pursue the matter further because this aspect of the case has also been considered in Writ Petition No. 105 of 1961.
It may be added that as the definition of the word "estate" came into the Constitution from January 26, 1950, and is based on existing law we have to look into law existing on January 26, 1950, for the purpose of finding out the meaning of the word "estate" in article 31A. 845 Let us therefore look at state of the law as it was in the State of Madras on January 26, 1950, for the area from which these petitions come was then in the district of South Canara, which was then a part of the Province of Madras, which became the State of Madras on January 26, 1950.
The usual feature of land tenure in Madras was the ryotwari form but in some districts, a landlord class had grown up both in the northern and southern parts of the Presidency of Madras as it was before the Constitution.
The permanent settlement was introduced in a part of the Madras Presidency in 1802.
There were also various tenures arising out of revenue free grants all over the Province (see Chap.
IV, Vol.
III of land Systems of British India by Baden Powell) and sometimes in some districts both kinds of tenures, namely, landlord tenures and the ryotwari tenures were prevalent.
There were various Acts in force in the Presidency of Madras with respect to landlord tenures while ryotwari tenures were governed by the Standing orders of the Board of Revenue.
Eventually, in 1908, the Madras legislature passed the Madras Estate Land Act, No. 1 of 1908, which was later amended from time to time.
It contains a definition of the word "estate" as such in section 3(2) and when the Constitution came into force the relevant part of the definition was as follows: "Estates ' means: (a) any permanently settled estate or temporarily settled zamindari; (b) any portion of such permanently settled estate or temporarily settled zamindari which is separately registered in the office of the Collector; (c) any unsettled palaiyam or jagir; (d) any inam village of which the grant has been made, confirmed or recognised by the British Government, notwithstanding that 846 subsequent to the grant, the village has been partitioned among the grantees or the successors in title of the grantee or grantees.
" This Act applied to the entire Presidency of Madras except the Presidency town of Madras, the district of Malabar and the portion of the Nilgiri district known as South East Wynaad.
It thus applied to the district of South Canara from where these petitions come.
So far therefore as the District of South Canara was concerned, there was an existing law which defined the word "estate" for that local area.
Shortly before the Constitution came into force the Madras legislature had passed the Madras Estates (Abolition and Conversion into Ryotwari) Act No. XXVI of 1948.
That Act provided for the abolition of estates subject to certain restrictions with which we are not concerned.
It also provided for repeal of the Madras Permanent Settlement Regulation, 1802, and the Estates Land Act of 1908 to the extent and from the date on which notifications were made under section 3 of that Act.
There was thus no repeal of Act I of 1908 by the Act of 1948, and it is not in dispute that Act No. 1 of 1908 was in force on January 26, 1950, in large parts of the Province of Madras including South Canara, and is still in force in such parts of it as have not been notified under section 3 of the Act of 1948.
Therefore, we reach the position that when article 31 became applicable from January 26, 1950, Act No. 1 of 1908 was still in force in large parts of the Madras State and it contained a definition of the word "estate" as such.
Further, Act I of 1908 was clearly a law of land tenures as a brief review of its provisions will show.
Section 6 of the Act conferred occupancy rights on tenants of certain lands in "estates" as defined in the Act of 1908.
Chapter II dealt with the general rights of landlords and tenants.
Chapter III dealt with provisions relating to rate of rent payable by tenants and provided for enhancement, reduction, commutation, alteration 847 and remission of rent.
Chapter IV dealt with pattas and muchilikas.
Chapter V provided for payment of rent and for realisation of arrears of rent.
Chapter VI provided the procedure for recovery of rent.
Other Chapters dealt with other matters including Chap.
X which dealt with relinquishment and ejectment.
It is clear therefore that the Act of 1908 was a law relating to landtenures.
Therefore, we reach the position that in a law relating to land tenures which was in force in the State of Madras when the Constitution came into force the word "estate" was specifically defined.
This law was in force in the whole of the State of Madras except some parts and was thus in force in the area from which the present petitions come.
This area was then in the south Canara district of the State of Madras.
We are therefore of opinion that the word "estate" in the circumstances can only have the meaning given to it in the Act of 1908 as amended up to 1950 in the State of Madras as it was on the date the Constitution came into force.
We have already said that the Act of 1908 dealt with landlord tenures of Madras and was an existing law relating to land tenures.
The other class of land tenures consisted of ryotwari pattadars which were governed by the Board 's Standing Orders, there being no Act of the legislature with respect to them.
The holders of ryotwari pattas used to hold lands on lease from Government.
The basic idea of ryotwari settlement is that every bit of land is assessed to a certain revenue and assigned a survey number for a period of years, which is usually thirty and each occupant of such land holds it subject to his paying the land revenue fixed on that land.
But it is open to the occupant to relinquish his land or to take new land which has been relinquished by some other occupant or become otherwise available on payment of assessment, (see Land Systems of British India by Baden Powell, Vol.
III, Chap.
IV, section II, p. 128).
Though, theoretically, according to some authorities, the occupant of ryotwari 848 land held it under an annual lease (see Macleane, Vol.
I Revenue Settlement, p. 104), it appears that in fact the Collector had no power to terminate the tenant 's holding for any cause whatever except failure to pay the revenue or the ryot 's own relinquishment or abandonment.
The ryot is generally called a tenant of Government but he is not a tenant, from year to year and cannot be ousted as long as he pays the land revenue assessed.
He has also the right to sell or mortgage or gift the land or lease it and the transferee becomes liable in his place for the revenue.
Further, the lessee of a ryotwari pattadar has no rights except those conferred under the lease and is generally a sub tenant at will liable to ejectment at the end of each year.
In the Manual of Administration, as quoted by BadenPowell, in Vol.
III of Land Systems of British India at p. 129, the ryotwari tenure is summarised as that of a tenant of the State enjoying a tenant right which can be inherited, sold, or burdened for debt in precisely the same manner as a proprietary right subject always to payment of the revenue due to the State".
Though therefore the ryotwari pattadar is virtually like a proprietor and has many of the advantages of such a proprietor, he could still relinquish or abandon his land in favour of the government.
It is because of this position that the ryotwari pattadar was never considered a proprietor of the land under his patta, though he had many of the advantages of a proprietor.
Considering, however, that the Act of 1908 was in force all over the State of Madras but did not apply to lands held on ryotwari settlement and contained a definition of the word "estate" which was also applicable throughout the State of Madras except the areas indicated above, it is clear that in the existing law relating to land tenures the word "estate" did not include the lands of ryotwari pattadars, however valuable might be their rights in lands as they eventually came to be recognised.
849 Turning now to the district of South Canara and the areas from which the present petitions come it appears that originally the ryotwari settlement was not in force in this area and two kinds of tenures were recognised, namely, mulawargdar and Sarkarigniwargdar.
It is, however, unnecessary to go into the past history of the matter, for it is not in dispute that the ryotwari system was introduced in South Canara district in the early years of this century.
The history will be found in the Book "Land Tenures in the Madras Presidency" by section Sunderaraja Iyengar, IIEdn., pp.
45 47, where it is said that "after the introduction of the ryotwari system into South Canara, no distinction now exists between the wargadar, the mnulawargadar and kudutaledar and they are all ryotwari pattadars" Therefore, when the Constitution came into force the ryotwari pattadars of South Canara were on the same position as the ryotwari pattadars of the rest of the State of Madras.
Further, as the Act of 1908 was in force in South Canara also, though there may not be many estates as defined in that Act in this area it follows that in this area also the word "estate" would have the same meaning as in the Act of 1908 and therefore ryotwari pattadars and their lands would not be covered by the word "estate".
Further, there can be no question of seeking for a local equivalent so far as this parts of the State of Kerala which has come to it from the former State of Madras is concerned.
We are therefore of opinion that lands held by ryotwari pattadars in this part which has come to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not estates within the meaning of article 31A (2)(a) of the Constitution and therefore the Act is not protected under article 31A (I) from attack under articles 14, 19 and 31 of the Constitution.
850 Re.
The next contention on behalf of the petitioners is that the Act makes a discrimination between areca and pepper plantations on the one hand and certain other plantations on the other and should therefore be struck down as violative of article 14 of the Constitution.
Section 2(39) of the Act defines "plantation" to mean any land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or such other kind of special crops as may be specified by the Government by notification in the gazette.
Areca and pepper plantations have however not been included in this definition.
It is urged on behalf of the petitioners that in this part of the State there are a large number of areca and pepper plantations which are practically run on the same lines as tea, coffee and rubber plantations and there is no reason why discrimination should be made between areca and pepper plantations on the other hand and tea, coffee and rubber plantations on the other.
The discrimination is said to arise from the provisions of section 3 and section 57 of the Act.
Section 3(viii) which occurs in Chap.
II dealing with the acquisition of the interest of landowners by tenants excepts tenancies in respect of plantations exceeding thirty acres in extent from the application of that chapter.
The result of this is that tenants in plantations exceeding thirty acres in extent cannot acquire the interest of the landowners with respect to such plantations and the landowners continue to own such plantations as before.
Further section 57 which is in Chap.
III provides for exemption of all plantations whatever their extent from the provisions of that Chapter.
Thus the ceiling area provided in section 58 will not apply to plantations which will be left out in calculating the ceiling area for the purpose of s.58.
Further, s.59(2) provides that in calculating the ceiling area any cashew estate if it was a cashew estate on April, 11, 1957 and continued as such at the 851 commencement of section 59 (provided the cashew estate was principally planted with cashewnuts tree and be a contiguous area not below 10 acres) will continue to be owned or held as before, though the ceiling in such cases would be reduced to half of that provided in s.58.
These provisions inter alia confer benefits on those who hold plantations as defined in section 2(39) and also on those who have cashew estates as defined in the Explanation to section 59(2).
The contention on behalf of the petitioners is that there is no reason why the same benefits which have been conferred on plantations as defined in the Act should not be conferred on those who hold areca and pepper plantations, and that there are no intelligible differentia which would justify the State legislature in treating the pepper and areca plantations differently from rubber, tea and coffee plantations.
Article 14 has been the subject of consideration by this Court on a number of occasions and the principles which govern its application have been summarised in Shri Ram Krishna Dalmia vs Shri Justice section R. Tendolkar (1), in these words: "(a) that a law may be constitutional even though it relates to a single individual if, on account of some special circumstances or reasons applicable to him and not applicable to others, that single individual may be treated as a class by himself; (b) that there is always a presumption in favour of the constitutionality of an enactment and the burden is upon him who attacks it to show that there has been a clear transgression of the constitutional principles; (c) that it must be presumed that the legislature understands and correctly appreciates the need of its own people, that its laws are directed to problems 852 made manifest by experience and that its discriminations are based on adequate grounds; (d) that the legislature is free to recognise degrees of harm and may confine its restrictions to those cases where the need is deemed to be the clearest; (e) that in order to sustain the presumption of constitutionality the court may take into consideration matters of common knowledge, matters of common report, the history of the times and may assume every state of facts which can be conceived existing at the time of legislation; and (f) that while good faith and knowledge of the existing conditions on the part of a legislature are to be presumed, if there is nothing on the face of the law or the surrounding circumstances brought to the notice of the court on which the classification may reasonably be regarded as based, the presumption of constitutionality cannot be carried to the extent of always holding that there must be some undisclosed and unknown reasons for subjecting certain individuals or corporations to hostile or discriminating legislation.
" The petitioners rely on cl.(f) of this summary and contention is that there is nothing to show either in the Act or even in the affidavit filed on behalf of the State in reply to the petitions or in the circumstances brought to the notice of the court that the classification in this case which excludes areca and pepper plantations and includes tea, coffee and rubber plantations is a proper classification based on intelligible differentia which are related to the objects and purposes of the Act.
853 This brings us to a consideration of the reasons which may have impelled the legislature to treat plantations as a class differently from other lands.
The objective of land reform including the imposition of ceilings on land holdings is to remove all impediments which arise from the agrarian structure inherited from the past in order to increase agricultural production, and to create conditions for evolving as speedily as possible an agrarian economy with a high level of efficiency and productivity (see p. 178 of the Second Five Year Plan).
It is with this object in view that ceiling on land holdings has been imposed in various States.
Even so, it is recognised that some exemptions will have to be granted from the ceiling in order that production may not suffer.
This was considered in the Second Five Year Plan at p. 196 and three main factors were taken into account in deciding upon exemptions from the ceiling, namely: (1) integrated nature of operations, especially where industrial and agricultural work are undertaken as a composite enterprise, (2) specialised character of operations, and (3) from the aspect of agricultural production the need to ensure that efficiently managed farms which fulfil certain conditions are not broken up.
Bearing these criteria in mind it was recommended in the Second Five Year Plan (see p. 196) that the following categories of farms may be exempted from the operation of ceiling namely: "(1)tea, coffee and rubber plantation; (2) orchards where they constitute reasonably compact areas; 854 (3) specialised farms engaged in cattle breeding, dairying, wool raising etc; (4) sugarcane farms operated by sugar factories; and (5) efficiently managed farms which consist of compact blocks, on which heavy investment or permanent structural improvements have been made and whose break up is likely to lead to a fall in production.
" The same view has been reiterated in Chap.
XIV of the Third Five Year Plan dealing with Land Reform and ceiling on agricultural holdings and para 28 thereof refers to the grounds of exemption envisaged by the Second Five Year Plan.
It is obvious therefore that when the State legislature in this case exempted tea, coffee, rubber and cardamom plantations from the ceiling under Chap.
III and treated plantations of over 30 acres as a special case for the purpose of Chap.
II, it must have had the principles enunciated above in mind to differentiate them from ordinary cultivation of other crops.
If that be so, the question immediately arises whether there is any reason for treating areca and pepper plantations differently.
If there is none and areca and pepper plantations stand so far as these conditions are concerned on the same footing as tea, coffee and rubber plantations there will clearly be a discrimination against them by the provisions of the Act referred to above.
Turning now to pepper plantations, first, we may refer to the information contained in Farm Bulletin No. 55 relating to pepper cultivation in India issued by the Farm Information Unit, Directorate of Extension, Ministry of Food and Agriculture, New Delhi in September 1959.
It appears from this bulletin that Kerala is the most important pepper producing State in India, where pepper is cultivated on an organised plantation scale over 855 fairly extensive areas.
There are three distinct regions of the pepper growing belt, namely, (1) The Travancore and Cochin region.
(2) The Malabar and South Canara region, and (3) the Coorg and North Canara region.
Though pepper is essentially a homestead garden crop, growers were encouraged to grow it on plantation scale since 1928 when the price of pepper rose to about Rs. 700/ per candy.
Since then there has been a further rise in the price of pepper with the result that new homestead gardens and plantations have sprung up and pepper cultivation has extended a good deal.
During the last fifty years, pepper which was largely a household garden crop has emerged as a plantation crop and fairly large sized plantations of pepper exist in the submontane eastern parts of North Malabar and the Hosdrug taluk of South Canara, (the area from which these petitions come).
In Hosdrug taluk in particular pepper is grown mostly on large scale plantations and it is here that the finest and the best organised pepper plantations in India exist.
Some of the largest plantations among them have an area of a 100 to 150 acres.
Pepper vines commence yielding usually from the third year, the yield increasing gradually until the vines come to full bearing in about ten years.
The economic life of a vine varies from place to place.
From the tenth to the 25th year, the vines are in full bearing, and the yield begins to decline after the 30th year.
The initial outlay on pepper plantations is heavy and the pepper crop requires continuous attention and care.
The total area under pepper is over 2 lakhs acres out of which about 20,000 acres are under pure pepper plantations.
The initial expenditure on laying out a pepper plantation can be recovered only after several years and the best organised and most extensive pepper plantations of India are in the Hosdrug taluk, South Canara (from where these petitions come) and North Malabar.
856 This information taken from Farm Bulletin 55 shows that in the last fifty years pepper in India has reached the plantation stage and in particular in Hosdrug taluk from where these petitions come there are the best organized and most extensive pepper plantations in India.
The initial cost of laying out a pepper plantation is heavy and the pepper vines yield nothing for three years and full production comes only in the tenth year.
Therefore, where pepper is cultivated as a plantation crop on a large scale the cost is heavy and may be comparable to the outlay on large scale tea, coffee and rubber plantations.
It is in these circumstances that we have to consider whether there has been discrimination against pepper plantations when they have not been included in the definition of plantation under section 2(39) of the Act.
Turning to arecanut, reference may be made to Farm Bulletin No. 14 issued by the same authority.
The major arecanut growing belt in India is again the same regions, i.e., South Canara, Malabar, Coorg and Travancore Cochin along with parts of Mysore, Bengal and Assam.
Arecanut is also grown on plantation scale.
Since the crop begins to bear fruit after about eight years, large sums have to be expended up to the bearing stage without any income till then.
The estimated life of an arecanut garden is about 50 to 60 years, though some of the palms in the garden will be dying occasionally or becoming uneconomic and it will be necessary to replace them.
For this reason underplanting is taken up periodically.
It appears further from the Proceedings of the Ninth Annual General Special and Twelfth Ordinary Meetings of the Indian Central Arecanut Committee held on January 23, 1958, that the question whether arecanut gardens should be put under ceiling or not and whether there would be hampering of production which would be against national interest if a ceiling were imposed on such gardens had been referred to a Sub committee for consideration.
857 The Sub committee reported that if areca gardens were brought under the ceiling it would hamper production which would be against the national interest and recommended to the Planning Commission, the Central Government and the State Governments that, as proposed by the Planning Commission in respect of tea, coffee and rubber plantations, orchards, specialised farms and efficiently managed farms, arecanut gardens be also similarly exempted from ceiling.
The Sub committee also noticed that arecanut cultivation involved heavy capital outlay in establishing, maintaining and protecting the arecanut trees.
This recommendation of the Sub committee came up for consideration before the Indian Central Arecanut Committee on January 23, 1958, and was accepted.
Thus these proceedings show that fixation of ceiling on arecanut gardens would hamper production which would be detrimental to national economy.
It is in this background therefore that we have to consider whether the non inclusion of areca and pepper plantations in the definition in section 2(39) with the result that areca and pepper plantations do not enjoy similar benefits as others, is discriminatory.
From what we have said above it has not been shown that there is any appreciable difference between the economics of tea, coffee and rubber plantations and areca and pepper plantations.
It is true that plantations in areca and pepper are not so widespread as tea, coffee and rubber plantations but it is equally true that in this particular area from which these petitions come areca and pepper plantations are very common.
The fact however that areca and pepper plantations are very common only in this area of the State of Kerala is no reason for treating them differently from tea, coffee and rubber plantations which are apparently more evenly distributed throughout the State.
If the criteria evolved by the Planning Commission, as already indicated, apply to tea, coffee and rubber 858 plantations in our opinion they equally apply to areca and pepper plantations and there is no reason for differentiating between these two sets of plantations.
So far as areca is concerned we have the recommendation of the Sub committee, mentioned above, endorsed by the Indian Central Arecanut Committee, that it would be detrimental to national economy not to extend the benefit of exemption from ceiling to arecanut plantations in the same way as is done in the case of tea, coffee and rubber plantations.
As for pepper we have it from Farm Bulletin No. 55 that the best organised and most extensive pepper plantations of India are in Hosdrug Taluk of South Canara and that some of them are even as large as 100 to 150 acres each.
The result of the application of the ceiling and other provisions of the Act would mean the break up of these plantations and may result in fall in production.
It is to avoid the break up of tea, coffee and rubber plantations and the consequent fall in production that ceiling has not been imposed on these plantations.
The same reasons in our opinion lead to the conclusion that pepper plantations should also be treated similarly.
In this connection reference may be made to the opinion expressed in Farm Bulletin No. 55 where the author has said that it is impossible to keep a large plantation of pepper in good tip top condition, without incurring heavy expenditure and without great efforts and has added that in the existing conditions no one planter should have more than 10 acres of pepper plantation.
This would seem to suggest that 10 acres is the economic optimum limit for pepper plantations.
It is not clear however on what basis this recommendation is based, for undoubtedly the bulletin shows that there are plantations of much larger extent in this area and the plantations here are the best organised and the most extensive throughout the whole of India.
The only reason which seems to have been given in support of the opinion that 859 10 acres is the optimum area for a pepper plantation is that one planter in that region was of the view that unless the price of one candy of pepper remained at a high level of anything between Rs. 1,500/ and Rs. 2,000/ it will be impracticable and unprofitable to maintain large scale plantations of pepper in these regions, and if prices go down for below this level, large scale pepper plantations may have even to be abandoned.
This does not afford a sufficient basis for holding that 10 acres is the optimum holding for a pepper plantation.
In the first place, it is mentioned at p. 8 of the bulletin that pepper began to be grown on plantation scale when the price rose to about Rs. 700/ per candy in 1928.
Therefore even if the price falls below Rs. 1,500/ to Rs. 2,000/ per candy there is no reason why pepper cultivation on a plantation scale should become impracticable, particularly as it is unlikely that the cost of only pepper will fall and not all other commodities.
At p. 72 the bulletin mentions that the cost of cultivation of pepper can be brought down only if the general price level is brought down substantially.
Now there is no reason to suppose that there would be a catastrophic fall in the price level of pepper only which would make all pepper plantations above 10 acres uneconomic and unprofitable.
In any case this is not the reason urged on behalf of the State in support of not including pepper plantations in the definition of plantation.
In this connection we ought to add that the counter affidavit filed by the respondent is very unsatisfactory; no serious attempt has been made at all to justify the exclusion of pepper and arecanut from the exemption granted to tea, coffee, rubber and cardamom; no facts are stated and no data supplied in reply to the detailed allegations made in the petitions challenging the validity of the classification in question.
The only reason given by the State in the counter affidavit is that a plantation crop is generally understood 860 to refer only to tea, coffee and rubber and cardamom.
It is not quite clear what exactly is meant by this one sentence in the counter affidavit in support of the definition.
If a plantation crop is generally understood to refer to only tea, coffee, rubber and cardamom, it is not understood why the definition provides for extending the word "plantation to other crops by notification.
The very fact that power has been reserved for extending the definition by notification to other crops shows that other crops can also be grown on plantation scale.
In view therefore of what we have said above with respect to the economics of areca and pepper cultivation, it is obvious that no sufficient reason has been shown for differentiating areca and pepper plantations in this area from tea, coffee and rubber plantations in the State.
Making all the presumptions in favour of the classification made under s.2(39) it is clear that there is nothing on the face of the law or the surrounding circumstances which has been brought to our notice in this case on which the classification contained in section 2(39) can be said to be reasonably based.
Considering the object and purpose of the Act and the basis on which exemption has been granted under Chapters II and III to plantations as defined in the Act, there appears to be no reason for making any distinction between tea, coffee and rubber on the one hand and areca and pepper on the other in this particular case.
It is not as if tea, coffee and rubber are grown only on a large scale while areca and pepper are mostly grown on a small scale.
We find from the report of the Plantation Inquiry Commission, 1956, that small holdings exist in tea, coffee and rubber plantations also and are in fact the majority of such plantations.
For example, in the report of the Plantation Inquiry Commission relating to coffee at pp. 9 and 14 we find that out of the total number of registered estates more than 4,500 are between 5 acres and 25 acres while only about 2,200 861 estates are above 25 acres.
Further there are more than 24,000 estates below 5 acres.
Similarly at p. 97, Chap.
XI, Part III of the Report dealing with rubber, out of the total of over 26, 709 rubber estates, 23,300 are up to 5 acres, 1,900 up to 10 acres and only about 1,500 above 10 acres.
So it appears that the large majority of plantations whether they be of coffee or rubber are below 10 acres and that is also the case with area and pepper plantations.
Thus there is no reason for giving preference to plantations of tea, coffee and rubber over plantations of area and pepper for the conditions in the two sets of plantations whether for the purpose of ceiling under Chap.
III or for the purpose of acquisition of landowners ' rights under Chap.
II are the same.
The reasons therefore which call for exemption of tea, coffee and rubber plantations equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against area and pepper plantations.
We are therefore of opinion that the provisions relating to plantations are violative of article 14 of the Constitution.
The next question is whether these provisions are severable, that is to say, whether the Kerala legislature would have passed the Act without these provisions.
That depends upon the intention of the legislature and as far as we can judge that intention from the provisions of the Act, it seems clear to us that the legislature did not intend that the provisions relating to acquisition by tenants and ceilings should apply to plantations as defined in the Act, so that they may have to be broken up with consequent loss of production and detriment to national economy.
It seems that the legislature could not have intended in order to carry out the purpose of the legislation to do so even after breaking up all the plantations which 862 existed in the State.
It follows therefore that the legislature would not have passed the rest of the Act without the provisions relating to plantations.
As these provisions affect the entire working out of Chapter II and III of the Act which are the main provisions thereof, it follows that these provisions relating to plantations cannot be severed from the Act and struck down only by themselves.
Therefore, the whole Act must be struck down as violative of article 14 of the Constitution so far as it applies to ryotwari lands in those areas of the State which were transferred to it from the State of Madras, and we order accordingly.
Then we come to the attack that the Act is violative of article 14 on account of the manner in which ceiling has been fixed under section 58 thereof.
Section 2(12) defines a "family" as meaning husband, wife and their unmarried minor children or such of them as exist.
There are three kinds of families existing in this State namely, the joint Hindu family, Marumakhathayam family and Aliyasanthana family, the latter two being matriarchal.
In the matriarchal family the husband and wife are not members of the same family but belong to different families.
The joint Hindu family does not merely consist of the husband, wife and unmarried minor children; it consists at least of the husband wife and all the children whether married or unmarried and whether minor or adult.
The definition of "family" therefore in the Act is an artificial one which does not conform to any of the three kinds of families prevalent in the State.
Turning now to section 58, the ceiling has been fixed in two ways.
The first is by reference to a family as defined in the Act of not more than five members which is allowed 15 acres of double crop nilam or its equivalent with an addition of one acre of double crop nilam or its equivalent for each 863 member in excess of five, so however that the total extent of the land shall not exceed 25 acres of double crop nilam or its equivalent.
The second is by reference to an adult unmarried person who is allowed 7.50 acres of double crop nilam or its equivalent.
It has been urged on behalf of the State that the provisions as they stand do not make any discrimination whatsoever for there is the same provision for all adult unmarried persons and the same for all families as defined in the Act.
This in our opinion is an over simplification of the provision relating to ceiling under section 58.
On an argument of this kind no provision would ever be discriminatory for it is unlikely that a provision would on the face of it make a discrimination.
The discriminatory nature of the provision has to be judged from the results that follow from it and we have no doubt that the results which follow from this double provision as to ceiling are bound to be discriminatory.
If the ceiling had been fixed with respect to one standard whether it be of an individual person or of a natural family by which we mean a family recognised in personal law, the results may not have been discriminatory.
But where the ceiling is fixed as in the present case by a double standard and over and above that the family has been given an artificial definition which does not correspond with a natural family as known to personal law, there is bound to be discrimination resulting from such a provision.
A simple illustration will explain how the results of the manner in which the ceiling has been fixed by section 58 will lead to clear discrimination between person and person.
Take the case of an adult unmarried person and a minor who is an orphan with no father, mother brother or sister.
Assume further that each owns 25 acres of land under personal cultivation.
The former who is an adult unmarried person will retain 7 acres and will have to surrender 17.50 acres as excess land.
The latter will be an artificial family under the definition of that word 864 in section 2(12).
This follows from the fact that a family consists of husband, wife and their unmarried minor children or such of them as exist.
This is also made clear by section 61(2) which shows that even a minor who has no parents, and no brothers or sisters will constitute a family under section 2(12).
This minor therefore as constituting a family will be entitled to 15 acres of land and will have to surrender only 10 acres as excess land.
No justification has been shown to us on behalf of the State for this discriminatory treatment of two individual persons; nor are we able to understand why such discrimination which clearly results from the application of the provisions of section 58(1)is not violative of article 14 of the Constitution.
Examples can be multiplied with reference to joint Hindu families also, which would show that in many cases discrimination will result on the application of these provisions to joint Hindu families.
Similar would in our opinion be the case with Marumakhathayam and Aliyasanthana families where as we have already pointed out the husband and wife do not belong to the same family as known to personal law.
Discrimination therefore is writ large on the consequences that follow from the provisions of section 58(1).
We are therefore of opinion that section 58(1) is violative of the fundamental right enshrined in article 14; as that section is the basis of entire Chap.
III the whole Chapter must fall with it.
This would be an additional reason why Chap.
III should be struck down as violative of Art 14 in its application to ryotwari landas which have come to the State of Kerala from the State of Madras.
(6) It is contended that the manner in which the compensation is cut down progressively in sections 52 and 64 of the Act is violative of article 14.
The Compensation payable under section 52 is determined in this manner.
First the purchase price is arrived at under section 45.
Thereafter section 52(2)(b) provides that the landowner or the intermediary, except in the 865 case of religious, charitable and educational institution of a public nature, would be entitled to compensation.
The compensation would consist of (1) the value of structures, wells and embankments of a permanent nature situated in the land and belonging to the landowner or the intermediary, as the case may be, and (2) the percentage of the value of interest of the landowner or the intermediary in respect of the land and the improvements other than those falling under sub cl.
(i) according to the scales specified in Sch.
Schedule II then provides that the first Rs. 15,000/ .
of the compensation will be paid in full.
Thereafter there will be a reduction of 5 per cent.
in each slab of Rs. 10,000/ till we reach compensation above Rs. 1,45,000/ Thereafter the compensation arrived at under section 52 read with section 45 is reduced by 70 per cent so that the landowner or the intermediary gets only 30 per cent of what has been arrived at under section 52 (2) (b) read with section 45.
Similarly in section 64 the compensation payable for excess land surrendered is (i) the full value of any structures, wells and embankments of a permanent nature situate in the land and belonging to the person who surrenders such land, and (ii) the percentage of the market value of the land and improvements other than those specified above.
Here again on the first Rs. 15,000/ compensation at 60 per cent is to be paid.
Thereafter the compensation is reduced by 5 per cent for each slab of Rs. 15,000/ till we reach over Rs. 1,75,000/ when the compensation is reduced by 75 per cent.
The contention on behalf of the petitioners is that there is no intelligible differentia on which the purchase price determined under section 45 or the market value is to be reduced by different percentages depending on the total purchase price or the total market value of the interest to be acquired.
The reply on behalf of the State is that there is really no discrimination inasmuch 866 as the same percentage is reduced where the compensation payable to different persons is the same.
That is undoubtedly so.
But that alone is not in our opinion the end of the matter.
The question which is posed for our consideration is why a person in whose case the purchase price or the market value Rs. 15,000/ should get the full purchase price or suffer a reduction in the market value at a certain rate while another person in whose case compensation is more than Rs. 15,000/ should suffer reductions at a different rate which reductions become progressively higher as the purchase price or the market value increases.
We could understand once the purchase price or the market value had been determined a uniform cut therefrom for all persons entitled to compensation.
That would then raise the question of adequacy of compensation and unless the cut was so large as to make the compensation illusory the cut may be protected by Art.31(2).
But in the present case there is not a uniform cut on the purchase price or the market value for all persons, the cut is higher as the purchase price or the market value gets bigger and bigger after the first slab of Rs. 15,000/ .
This difference in cut in being justified on behalf of the State on the same principle on which (for example) the slab system exists for purposes of income tax.
We are however of opinion that there is no comparison between the slab system of income tax rates and the present cuts.
Taxation is a compulsory levy from each individual for the purpose of the maintenance of the State.
We may therefore reasonably expect that a rich man may be required to make a contribution which may be higher than what may be proportionately due from his income for that purpose as compared to a poor man.
This principle cannot be applied in a case where a person is deprived of his property under the power of eminent domain for which he is entitled to compensation.
There is no reason why when two persons are deprived of their property one richer than the other, they should be paid at 867 different rates when the property of which they are deprived is of the same kind and differs only in extent.
No such principle can be applied in case where compensation is being granted to a person for deprivation of his property.
Where one person owns property valued at Rs. 15,000/ while another owns property valued at Rs. 30,000/ , both are equally deprived of the property.
When therefore it comes to a question of payment of compensation we can see no reason why a person whose compensation amounts to Rs. 15,000/ should get the whole of it or a large part of it while another person whose compensation amounts to (say) Rs. 30,000/ should get something less than the first person.
It is not as if there is some difference in the nature of the property which might justify different payments of compensation.
What the Act provides is to work out the purchase price or the market value first for the purpose of determining compensation and then make different cuts from the purchase price or the market value according to whether in one case the purchase price or the market value is Rs. 15,000/ and in another case it is more than Rs. 15,000/ .
No justification, is pointed out for this discrimination except the principle on which the slab system for the purpose of income tax is justified.
That principles as we have just pointed out does not apply to a case of compensation.
Nor are we able to see any rational classification which would justify different cuts based simply on the amount of compensation worked out on the basis of purchase price or market value.
The only thing we can see is that because a person is possibly richer he must be paid less for the same type of land while a person who is poorer must be paid more.
This kind of discrimination in the payment of compensation cannot in our opinion be possibly justified on the objects and purposes of the Act.
The object and purpose of the Act, as we have already said, is to grant rights to cultivating tenants so that they may 868 improve their lands resulting in larger production to the benefit of the national economy.
Secondly, the object of the Act is to provide land for the landless and to those who may have little land by taking excess land from those who have large tracts of lands so that peasant proprietorship may increase with consequent increase in production due to greater interest of the cultivator in the soil.
But these objects have no rational relation which would justify the making of different cuts from the purchase price or the market value for the purpose of giving compensation to those whose interests are being acquired under the Act.
We can therefore see no justification for giving different compensation based on different cuts from the purchase price or the market value as provided in sections 52 and 64 of the Act.
We may in this connection refer to Kameshwar Singh vs The State of Bihar (1), in which similar question with respect to compensation provided in the Bihar Land Reforms Act, 1950, came up for consideration.
There the Act provided compensation at different rates depending upon the net income.
The landowner having the smallest net income below Rs. 500/ was to get twenty times the net income as compensation while the landowner having the largest net income, i. e., above 1,00,000/ was to get only three times of the net income.
Intermediate slabs provided different multiples for different amounts of net income.
That provision was struck down by the Special Bench of the Patna High Court as violative of article 14.
It may be mentioned that decision was given before the Constitution (First Amendment) Act adding article 31A and the Ninth Schedule to the Constitution was passed.
Three learned Judges composing the Special Bench who heard that case were unanimously of the 869 opinion that such difference in payment was violative of article 14 and the principle of progressive taxation did not apply to compensation for land acquired.
We are of opinion that the view taken in that case is correct and the same applies to the present case.
We may point out that case came in appeal to this Court (see, The State of Bihar vs Maharajadhiraja Sir Kameshwar Singh (1) ).
The appeal however was heard after article 31A and the Ninth Schedule had been introduced in the Constitution and therefore this Court had no occasion to consider whether such difference in payment of compensation would be violative of article 14.
We are therefore clearly of opinion that the manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to land owners or intermediaries in one case and to persons from whom excess land is taken in another results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act.
As the provision as to compensation is all pervasives, the entire Act must be struck down as violative of article 14 in its application to ryotwari lands which have come to the State of Kerala from the State of Madras.
In view of what we have said above on the main points urged in the petitions, it is unnecessary to consider other subsidiary points attacking particular sections of the Act on the ground that they were unreasonable restrictions on the right to acquire, hold and dispose of property under article 19(1)(f).
We therefore allow the petitions and strike down the Act in relation to its application to ryotwari lands which have come to the State of Kerala from the State of Madras.
The petitioners will get their costs from the State of Kerala, one set of hearing costs.
870 SARKAR, J. I wish to say a few words on two of the questions that arise in these cases.
The Act, the validity of which is challenged, provides for acquisition of lands for equitable distribution among the people who require it for cultivation by themselves.
It provides for payment of compensation to those whose interests are acquired.
It also provides for a mode of valuation of these interests.
Then it provides by sections 52 and 64 for payment of compensation at a progressively smaller rate for larger valuations.
For the higher slabs in the valuation made as provided by the Act, less and less is paid by way of compensation.
It is said that these provisions for progressively diminishing compensation are discriminatory and unconstitutional.
This is the first point with which I propose to deal.
The question is whether the payment of compensation at a progressively smaller rate as the valuation is higher offends article 14 of the Constitution.
Now it is not disputed that progressively higher rate of taxation by an Act taxing income is not unconstitutional.
I think such taxation is too well recognised now to be challenged.
If that is so and that was the basis on which arguments proceeded in this case I am unable to see that a statute providing for acquisition of property and for payment of compensation at a progressively lower rate for the higher slabs of valuation can be unconstitutional.
"The reason for progressive taxation in the case of inheritance taxes and income taxes is the ability of those receiving or giving to pay": Willis 's Constitutional Law (1936 ed.) p. 597.
The cases in America that I have looked up also put the matter on the same basis.
The classification by progressively higher taxation in a taxing statute is therefore good if based on the tax payers ' ability to pay.
It is however said that what applies in the case of a taxing statute cannot apply to a statute 871 permitting acquisition of property on payment of compensation.
I do not see why ? I am not aware that the test for determining whether there has been unequal treatment is different with different varieties of statutes, that the test for a taxing statute is not the same as that for a statute providing for acquisition on payment of compensation.
I think the test is the same for all statutes, and it is that there must be an intelligible differentia having a rational relation to the object of the Act.
Now the object of a taxing statute is to collect revenue for the governance of the country.
Ability to pay is acknowledged to be an intelligible differentia having a relation to such an object.
The object of the statute with which we are concerned is to acquire land on payment of compensation so that the land may be equitably distributed among the people.
If under a statute whose object is to collect revenue more can be legitimately demanded from a person having more, it seems to me that under a statute whose object is to acquire land by paying compensation less can equally legitimately be paid to a person who has more.
Ability to pay, or which is the same thing as ability to bear the loss arising from smaller payment received, would in either case be an intelligible differentia having a rational relation to the object of the Act.
In one case it serves the object by collecting more revenue for adding to the resources for governing the country and in the other case it serves the object by making it possible for the State by payment of less money out of its resources to acquire lands for better distribution.
In both cases the State resources are benefited, in one by augmentation and in the other by prevention of larger depletion.
Therefore, I would accept the learned Attorney General 's argument that sections 52 and 64 of the Act cannot be held to be discriminatory and void for the same reason on which 872 progressive rates of taxation are held not to be so in the case of an Income tax Act.
The next question on which I wish to say a few words concerns those provisions of the Act which exempt plantations of tea, coffee, rubber or cardamom or such other kinds of special crops as the Government may specify, from certain provisions of the Act.
Plantations have been defined in section 2(39) of the Act as land used by a person principally for the cultivation of tea, coffee, rubber or cardamom or other notified crops.
No other crop appears to have been notified yet.
Section 58 of the Act provides the ceiling area of land which may be held by any individual proprietor.
Land above the ceiling has to be surrendered to the Government.
Section 57 of the Act provides that this provision would not apply to plantations as defined in section 2(39).
Again, Ch. 2 of the Act which gives the tenants the right to purchase land from the landlords and vests in the Government the lands of the landlords not themselves cultivating them above the ceiling fixed, is by section 3 (viii) not made applicable to plantations exceeding thirty acres in extent.
The question is whether the benefit so given to the plantations as defined in the Act is discriminatory.
The petitioners own large scale cultivation of areca and pepper.
They contend that no legitimate differentiation is possible between lands on which areca and pepper are grown and lands on which tea, coffee, rubber and cardamom are grown.
No doubt the presumption is that a statute is constitutional but such presumption is not conclusive.
It is also true that a court is entitled to assume the existence of all rational basis on which the classification made by an Act may be justified.
Even so, it seems to me, that the present classification is, on the materials now before us not justified.
It may be that plantations of tea, coffee 873 rubber and cardamom, especially the first three, are usually large in size and require big investments.
It may be that they are carried on as industries which give employment to a large labour force.
These characteristics may however only justify the putting of large plantations of these crops in a class.
The Act however exempts all lands on which tea, coffee, rubber or cardamom is grown irrespective of the size of the business carried on or of labour employed on them, as a class.
Materials have been placed before us to show that there are a very large number of smaller plantations growing tea, coffee and rubber.
There are also many areca and pepper plantations exceeding thirty acres in area.
There is no reason to put tea, coffee, rubber and cardamom plantations in a class as distinguished from similar sizes of plantations of areca and pepper.
None at least has been shown by the State of Kerala to exist.
The only ground shown in the affidavit of the State of Kerala seeking to justify the classification of tea, coffee, rubber and cardamom plantations in one class is that "plantation crop is generally understood to refer only to tea, coffee, rubber and cardamom" and that "areca and pepper are not generally grown on a plantation scale".
I am unable to think that these afford sufficient justification for making a discrimination in favour of tea, coffee, rubber and cardamom plantations.
It would appear from the Planning Commission 's Report that other kinds of crops might profitably be grown as plantation crops.
In any case, a general understanding even if there was one, is not sufficient basis for discrimination.
With regard to the other statements of the State, it is enough to say that the Act does not make a discrimination because of the size of the plantations.
Therefore, there is no point in saying that areca and pepper are not grown on a plantation scale.
For these reasons I think the provisions in the Act making a discrimination in favour of tea, 874 coffee, rubber and cardamom plantations cannot be upheld.
For the same reason, I think the discriminatory treatment made in favour of cashew plantation also cannot be sustained.
Sections 3(viii), 57(1)(d) and 59(2) of the Act are therefore, in my opinion, invalid.
I think however that these provisions are severable from other parts of the Act.
I think it cannot be reasonably said that the legislature would not put the Act into operation if these provisions are taken out of it.
The deletion of the provisions does not further make it impossible for the rest of the Act to operate.
I am, therefore, unable, to hold that because the sections mentioned above are bad, the whole Act should be declared to be bad.
That is all I wish to say in this judgment.
With regard to the other matters arising in this case, I agree with the judgment delivered by Wanchoo J. AYYANGAR, J. I entirely agree with the order that the petitions should be allowed and the impugned Act struck down in relation to its application to ryotwari lands which came into the State of Kerala from the State of Madras this being the only relief which the petitioners seek from this Court.
My only reason for this separate judgment is because I do not agree with that portion of the reasoning in the judgment just now pronounced in these petitions where it deals with the interpretation of article 31A(2).
In my judgment in the companion case Writ Petition No. 105 of 1961 I have endeavored to point out what according to me is the proper construction of this Article and I adhere to that view.
I consider that on article 31A(2) as it stands even after the fourth Amendment, properties held on ryotwari tenures and the interest of the royt in such lands would not be "estates" for the purposes of that Article.
No doubt as pointed out by me in the 875 other judgment, if there was a law existing on the date of the Constitution in relation to land tenures under which "estate" were defined as including not merely lands held by intermediaries and of others holding under favourable tenurers, but also of ryotwari proprietors having direct relationship with the Government and paying full assessment, such latter category of interests might also be comprehended within the term "estate" by reason of the words "have the same meaning as that expression. .has in the existing law relating to land tenures in force in that area" in Art.31A(2)(a).
That is the real basis and the ratio underlying the decisions of this Court in Ram Ram Narain Medhi vs State of Bombay(1), and Atma Ram vs State of Punjab(2).
In all other cases (apart from the two categories specially added by the Fourth Amendment) no lands other than those held by intermediaries or held on a favourable tenure would fall within the definition of "an estate" this being according to me the central concept or the thread which runs through the entire definition.
The choice between the different interpretations of the Article does not however present itself for the disposal of this petition which has to be answered in favour of the petitioner even on the view of the scope of article 31A which has commended itself to my colleagues.
Where an "existing law in relation to land tenures in force in an area" contains a definition of an "estate" and that definition excludes the interest of a roytwari proprietor, the very words of Art.31A(2)(a) which I have extracted earlier would negative the applicability of its provisions to that tenure.
article 31A being out of the way I agree that the provision in (1) section 2 (39) of the Act which by definition excludes pepper and areca plantations from the category of the plantations which are named in it which are exempted from the operative provisions of the impugned Act, (2)s. 58 for the 876 determination of the ceiling in respect of different individuals who are brought within the scope of the enactment, and (3) ss.52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under Act, all these are violative the guarantee of the equal protection of laws under article 14 of the Constitution.
I therefore agree in the order proposed that the petitions be allowed, and with costs.
Petitions allowed.
[/INST]The Kerala Agrarian Relations Act was impugned on various grounds.
^ Held, (per Gajendragadkar, Wanchoo and Das Gupta, JJ.) that (1) the bill which was originally passed by a Legislative Assembly which as dissolved and was reconsidered and re passed by a new legislative assembly did not lapse and validly became the law when the President assented to it after it was passed by the second legislative assembly.
830 Purushothaman Nambudiri vs State of Kerala, [1962] Supp. 1 S.C.R. 753, followed.
(II) The Act which made certain deductions from the compensation payable to the landholders under Ch.
II and to others who held excess land under Ch.
III cannot be struck down as a piece of colourable legislation which is beyond the competence of the State Legislature, and it cannot be said that any device has been employed in the Act to take away the moneys of the landowners or the persons from whom excess land is taken away for the purpose of adding to the revenue of the State.
Section 80 of the Act provides for the Constitution of an agriculturist rehabilitation fund for the purpose of rendering help by way of loan, grant or otherwise to persons affected by the Act and eligible for the same under the rules but rr. 161 (a) (III) and 161 (b) (III) are so framed as to take within their scope even persons not affected by the Act.
Those rules are ultra vires of section 80 and must be struck down.
(III) The lands held by ryotwari pattadars in the area which came to the State of Kerala by virtue of the States Reorganisation Act from the State of Madras are not 'estates ' within the meaning of article 31A(2)(a) of the Constitution and therefore the Act is not protected under article 31A (1) from attack under articles 14, 19 and 31 of the Constitution.
State of Bihar vs Rameshwar Pratap Narain Singh, ; , referred to.
(IV) The reasons which call for exemption of tea, coffee and rubber plantations from certain provisions of the Act equally apply to areca and pepper plantations and there is no intelligible differentia related to the object and purpose of the Act which would justify any distinction in the case of tea, coffee and rubber plantations as against areca and pepper plantations.
The provisions in the Act relating to plantations are violative of article 14 of the Constitution.
The provisions relating to plantations cannot be severed from the Act and struck down only by themselves.
The whole Act must be struck down as violative of article 14 of the Constitution so far as it applied to ryotwari lands in those areas of the State which were transferred to it from the State of Madras.
(V) The manner in which ceiling has been fixed under section 58(1) is violative of the fundamental right enshrined in article 14 of the constitution and as that section is the basis of entire Ch.
III the whole chapter must fall with it 831 (IV) The manner in which progressive cuts have been imposed on the purchase price under section 52 and the market value under section 64 in order to determine the compensation payable to landowners or intermediaries in one case and to persons from whom excess land is taken in another, results in discrimination and cannot be justified on any intelligible differentia which has any relation to the objects and purposes of the Act.
The provision as to compensation is all pervasive and the entire Act must be struck down as violative of article 14 of the Constitution in its application to ryotwari lands which have come to the State of Kerala from the State of Madras.
Per Sarkar, J. Sections 52 and 64 of the Act which provide for payment of Compensation at progressively smaller rates for larger valuations of the interests acquired are not invalid as offending article 14 of the Constitution.
The provisions in the act making a discrimination in favour of tea, coffee, rubber and cardamom plantation and also in favour of cashew plantations cannot be upheld.
Sections 3(viii), 57 (1) (d) and 59 (2) are therefore invalid.
These are however severable from the other parts of the Act and the whole Act cannot be held to be bad merely because those provisions are bad.
Per Ayyangar, J. Properties held on ryotwari tenures and the interest of the ryot in such lands would not be "estate" for the purposes of article 31A(2) as it stood even after the Fourth Amendment of the Constitution.
Where an existing law in relation to land tenures in force in an area contains a definition of an 'estates ' and that definition excludes the interest of a ryotwari proprietor, the very words of article 31A(2) of the Constitution negatived the applicability of its provisions to that tenure.
Ram Ram Narain Medhi, vs State of Bombay, [1959] Supp.
I S.C.R. 489 and Atma Ram vs State of Punjab, [1959] Supp.
I S.C.R. 748, referred to.
Section 2(39) which by definition excludes pepper and areca plantations from the category of the plantations named in it which are exempted from the operative provisions of the impugned Act, section 58 for the determination of the ceiling in respect of different individuals who are brought within the scope of the enactment and sections 52 and 64 for determining the compensation payable to the several classes of persons whose lands are acquired under the Act are all violative of the guarantee of equal protection of laws under article 14 of the Constitution.
</s> |
<s>[INST] Summarize the judgementivil Appeal (C) No. 137 of 1991.
From the Judgment and Order dated 20.2.1989 of the Allahabad High Court in W.P. No. 3096 of 1980.
Yogeshwar Prasad and Ms. Shoba Dixit for the Appellants.
R.B. Datar, R.K. Khanna and Surya Kant for the Respondent.
The Judgment of the Court was delivered by SINGH, J.
Leave granted.
This appeal is directed against the judgment of the Allahabad High Court (Lucknow Bench) setting aside the order dated 23.9.1980 terminating the respondent 's services.
The sole question which falls for consideration in this appeal is whether the order dated 23.9.1980 terminating the respondent 's services, who was admittedly an ad hoc and temporary employee is vitiated in law.
The High Court has held that since juniors to the respondent were retained in service while the respondent 's services were terminated, the order of termination was discriminatory in nature.
It further held that since the order of termination was founded on an adverse entry awarded to the respondent his character roll without giving him any opportunity on the ground that he was not suitable, the order "cannot be said to be a decision given in good faith.
" The High Court further observed: "Even if any punishment was to be awarded, it should have been proportionate to the alleged offence , if any." On these findings the High Court held that the order of termination suffered from apparent error of law, it accordingly allowed the respondent 's writ petition and quashed the order of termination.
The factual matrix of the case is in a short compass.
The respon 32 dent, was appointed on ad hoc basis on 18.2.1977 as an Assistant Auditor under the Local Funds Audit Examinater of the State of Uttar Pradesh, for a fixed period ending on 31.8.1977.
In December, 1977 the respondent was again appointed on ad hoc basis for a period ending on 28.2.1978.
Since the regular appointment could not be made in time, the respondent 's services were extended from time to time.
The last extension was granted on 21.1.1980 and the extended period of service was to expire on 28.2.1981.
The terms and conditions of respondent 's service as contained in the order of appointment stated that the appointment was ad hoc, purely temporary for the term fixed in the order and his services were liable to be terminated at any time without assigning any reason.
He was awarded an adverse entry in his character roll for the year 1977 78.
The entry stated that the respondent 's work was poor and he should work hard and take interest in the work.
The respondent made representation against the entry but the same was rejected.
The respondent and Rajendra Prasad Pandey another Sub Auditor both were deputed to audit the accounts of Raja Raghunbar Dayal Inter College, Sitapur for the year 1979 80.
While carrying on the Audit the respondent and Rajendra Prasad Pandey both are alleged to have acted in excess of their authority in auditing the "Boys Fund Accounts" of that College for the year 1978 79 on their own accord without any authority for the same.
They issued audit note under their own signatures and also irregularly demanded a high amount of Rs. 13,250.70 as audit fee and collected an amount of RS.
2,000 as audit fee for which they issued receipts under their own signatures.
On receipt of complaint a preliminary inquiry was held that it was found that the allegations against the respondent and Rajendra Prasad Pandey were correct and both of them had acted beyond their authority and collected a sum of Rs. 2,000 as audit fee for the audit of the Boys Fund Accounts, although the Boys Fund of the Institution did not fall within the purview of audit of the Local Funds Audit and no fee was chargeable for the audit of such Fund.
After the preliminary inquiry report, the respondent was relieved from his duties from Sitapur and directed to join his duties at Allahabad, but the respondent proceeded on leave and did not join his duties at Allahabad.
Ultimately, the respondent 's services were terminated by the order dated 32.9.1980 and on the same day by another order, service of Rajendra Prasad Pandey were also terminated.
Both the aggrieved persons filed writ petitions in the High Court at Lucknow Bench under Article 226 of the Constitution contending that their termination orders were illegal, having been passed in violation of Article 311 of the Constitution.
The writ petition filed by Rajendra prasad pandey was dismissed but the respondent 's writ petition was allowed by a 33 Division Bench of the High Court on the ground as noted earlier.
There is no dispute that the respondent was an ad hoc and temporary employees and the terms and conditions of his employment were regulated by the U.P. Temporary Government Servant (Termination of Services0 Rules, 1975.
The contract of service as contained in the appointment letter also stipulated the terms and conditions of the respondent 's employment that his services were liable to be terminated at any time without assigning any reason or compensation.
In the counter affidavit filed before the High Court the order of termination was defended on the ground that the respondent 's work and conduct were not satisfactory and he was unsuitable for the service, therefore his services were terminated.
To support that contention the appellant placed reliance on the adverse entry awarded to the respondent in the year 1977 78 and also on the allegations made against him with raged to the audit of the Boys Fund of Raja Raghubar Dayal Inter College.
The High Court held that since junior persons to the respondent in service were retained, the order of termination was rendered illegal.
In our opinion, the principle of 'last come first go ' is applicable to a case where on account of reduction of work or shrinkage of cadre retrenchment takes place and the services of employees are terminated on a count of retrenchment.
In the event of retrenchment the principle of 'last come first go ' is applicable under which senior in service is retained while the junior 's services are terminated.
But this principle is not applicable to a case where the services of a temporary employee are terminated on the assessment of his work and suitability in accordance with terms and conditions of his service.
if out of several temporary employees working in a department a senior is found unsuitable on account of his work and conduct, it is open to the competent authority to terminate his services and retain the services of juniors who may be found suitable for the service.
Such a procedure does not violate principle of equality, enshrined under Articles 14 and 16 of the Constitution.
if a junior employees is hard working, efficient and honest his services could not be terminated with a view to accommodate the senior employee even though he is found unsuitable for the service.
if this principle is not accepted there would be discrimination and the order of the termination of a junior employee would be unreasonable and discriminatory.
On the admitted set of facts, the order of termination in the instant case, could not be rendered illegal or unjustified on the ground of juniors being retained in service.
The view taken by the High Court is not sustainable in law.
34 The High Court held that the termination of respondent 's services on the basis of adverse entry in the character roll was not in good faith and the punishment imposed on him was disproportionate.
it is unfortunate that the High Court has not recorded any reasons for this conclusion.
The respondent had earned an adverse entry and complaints were made against him with regard to the unauthorised audit of the Boys Fund in an educational institution, in respect of which a preliminary inquiry was held and thereupon, the competent authority was satisfied that the respondent was not suitable for the service.
The adverse entry as well as the preliminary inquiry report with regard to the complaint of unauthorised audit constituted adequate material to enable to competent authority to form the requisite opinion regarding the respondents suitability for service.
Under the service jurisprudence a temporary employee has no right to hold the post and his services are liable to be terminated in accordance with the relevant service rules and the terms of contract of service.
If on the perusal of the character roll entries or on the basis of preliminary inquiry on the allegations made against an employee, the competent authority is satisfied that the employee is not suitable for the service whereupon the services of the temporary employee are terminated, no exception can be taken to such an order of termination.
A temporary Govt.
Servant has no right to hold the post, his services are liable to be terminated by giving him one month 's notice without assigning any reason either under the terms of the contract providing for such termination or under the relevant statutory rules regulating the terms and conditions of temporary Govt.
servants.
A temporary Govt.
servant can, however, be dismissed from service by way of punishment.
Whenever, the competent authority is satisfied that the work and conduct of a temporary servant is not satisfactory of that his continuance in service is not in public interest on account of his unsuitability, misconduct or inefficiency, it may either terminate his services in accordance with the terms and conditions of the service or the relevant rules or it may decide to take punitive action against the temporary Government servant.
if it decides to take punitive action may hold a formal inquiry by framing charges and giving opportunity to the Govt.
servant in accordance with the provisions of article 311 of the Constitution.
since, a temporary Govt.
servant is also entitled to the protection of Article 311(2) in the same manner as a permanent Govt.
servant, very often, the question arises whether an order of termination is in accordance with the contract of service and relevant rules regulating the temporary employment or it is by way of punishment.
It is now sell settled that the form of the order is not conclusive 35 and it is open to the Court to determine the true nature of the order.
in Parshotam Lal Dhingra vs Union of India; , a Constitution Bench of this Court held that the mere use of expressions like 'terminate ' or 'discharge ' is not conclusive and in spite of the use of such expressions, the Court may determine the true nature of the order to ascertain whether the action taken against the Govt.
servant is punitive in nature.
The Court further held that in determining the true nature of the order the Court should apply two tests namely: (1) whether the temporary Govt.
servant had a right to the post or the rank or (2) whether he has been visited with evil consequences; and if either of the tests is satisfied, it must be held that the order of termination of a temporary Govt.
servant is by way of punishment.
It must be borne in mind that a temporary Govt.
servant has no right to hold the post and termination of such a Govt.
servant does not visit him with any evil consequences.
The evil consequences as held in Parshotam Lal Dhingra 's case (supra) do not include the termination of services of a temporary Govt.
servant in accordance with the terms and conditions of service.
The view taken by the Constitution Bench in Dhingra 's case has been reiterated and affirmed by the Constitution Bench decisions of this Court in the State or Orrisa and anr.
vs Ram Narayan Das; , ; R.C. Lacy vs The State of Bihar & Ors., C.A. No. 590/62 decided on 23.10.1963; Champaklal Chimanlal Shah vs The Union of India, ; Jagdish Mitter vs The Union of India, ; A.G. Benjamin vs Union of in`ia, C.A. No. 1341/66 decided on 13.12.1966 and Shamsher Singh & Anr.
vs State of Punjab,[1975] 1 SCR 814, These decisions have been discussed and followed by a three Judge Bench in State of Punjab & Anr.
vs Shri Sukh Raj Bahadur, ; Learned counsel for the respondent urged that the allegations made against the respondent in respect of the audit of Boys Fund of an educational institution were incorrect and he was not given any opportunity of defence during the inquiry which was held ex parte.
had he been given the opportunity, he would have placed correct facts before the inquiry officer.
His services were terminated on allegation of misconduct founded on the basis of an ex parte enquiry report.
He further referred to the allegations made against the respondent in the counter affidavit filed before the High Court and urged that these facts demonstrate that the order of termination was in substance, an order of termination founded on the allegations of misconduct, and the ex parte enquiry report.
In order to determine this question, it is necessary to consider the nature of the respondent 's right to hold the post and to ascertain the nature and purpose of the inquiry held against 36 him.
As already observed, the respondent being a temporary Govt.
servant had no right to hold the post, and the competent authority terminated his services by an innocuous order of termination without casting any stigma on him.
The termination order does not indict the respondent for any misconduct.
The inquiry which was held against the respondent was preliminary in nature to ascertain the respondent 's suitablity and continuance in service.
There was no element of punitive proceedings as no charges had been framed, no inquiry officer was appointed, no findings were recorded, instead a preliminary inquiry was held and on the report of the preliminary inquiry the competent authority terminated the respondent 's services by an innocuous order in accordance with the terms and conditions of his service.
Mere fact that prior to the issue of order of termination, an inquiry against the repondent in regard to the allegations of unauthorised audit of Boys Fund, was held does not change the nature of the order of termination into that of punishment as after the preliminary inquiry the competent authority took no steps to punish the respondent instead it exercised its power to terminate the respondent 's services in accordance with the contract of service and the Rules.
In State of Orissa & Anr.
vs Ram Narain Dass, ; a Constitution Bench of this court considered the question and indicated "the fact of the holding of an inquiry is not decisive of the question.
What is decisive is whether the order is by way of punishment in the light of the tests laid down in Purshottam Lal Dhingra 's case." In Jagdish Mitter 's case (supra) a Constitution Bench of this Court held that every order terminating the services of a temporary public servant does no amount to dismissal or removal from service merely because an inquiry was held before the order of termination was passed.
The Court observed that the appropriate authority has power to terminate a temporary public servant either by discharging him under the terms of contract or the relevant rules or by holding departmental disciplinary inquiry and dismissing him from service.
Before passing order of termination the competent authority may hold inquiry in fairness to ascertain whether the temporary servant should be continued in service or not.
While discussing the nature of preliminary inquiry the Court observed as under: "There is no element of punitive proceedings in such an enquiry; the idea in holding such an enquiry is not the punish the temporary servant but just to decide whether he 37 deserves to be continued in service or not.
If as a result of such an enquiry, the authority comes to the conclusion that the temporary servant is not suitable to be continued, it may pass a simple order of discharge by virtue of the powers conferred on it by the contract or the relevant rule; in such a case, it would not be open to the temporary servant to invoke the protection of article 311 for the simple reason that the enquiry which ultimately led to his discharge was held only for the purpose of deciding whether the power under the contract or the relevant rule should be exercised and the temporary servant discharged.
" In Champaklal chiman lal Shah 's case (supra) the appellant therein was a temporary employee of the Union Government.
His services were terminated without assigning any reasons and without affording him opportunity of showing cause.
Before passing the order of termination the competent authority had issued a notice to Champaklal Chimanlal Shah calling upon him to explain certain irregularities and to show cause why disciplinary action should not be taken against him.
In response to the notice, he submitted his explanation thereupon, certain preliminary enquiries were held, but he was not given opportunity to place his case during the preliminary enquiry.
However, after the preliminary enquiry to regular departmental enquiry was held instead proceedings for departmental enqiury were dropped and the services of Chimanlal Shah were terminated in accordance with the terms and conditions of service of a temporary Govt.
servant.
The termination order was assailed on the ground that the order of termination was in substance an order of punishment.
the Constitution Bench held that the order of termination was not an order of punishment and the appellant was not entitled to the protection of Article 311(2) of the Constitution.
The Court emphasised that when a preliminary enquiry is held against a temporary Govt.
employee, it must not be confused with the regular departmental inquiry which usually follows the preliminary inquiry, after the government decides to frame charges and to get a departmental enquiry made, with a view to inflict one of the three major punishments on the Govt.
servant.
So far as the preliminary enquiry is concerned, there is no question of it being governed by Article 311(2) of the Constitution, as it is made for the purpose of collection of facts to enable to the competent authority to decide whether punitive action should be taken or action should be taken in terms and under the contract of service or the rules applicable to a temporary government servant.
A Govt.
servant has no right to insist for affording him opportunity during such enquiry and such an 38 ex parte enquiry is not initiated in law in view of the purpose and object of preliminary enquiry.
On an elaborate discussion, the Court observed as under: "In short a preliminary enquiry is for the purpose of collection of facts in regard to the conduct and work of a government servant in which he may not be associated so that the authority concerned may decide whether or not to subject the servant concerned to the enquiry necessary under article 311 for inflicting one of the three major punishments mentioned therein.
Such a preliminary enquiry may even be held ex parte for it is merely for the satisfaction of government, though usually for the sake of fairness, explanation is taken from the servant concerned even at such an enquiry.
But at that stage he has no right to be heard for the enquiry is merely for the satisfaction of the Government, and it is only when the government decides to hold a regular departmental enquiry for the purposes of inflicting one of the three major punishments that the government servant gets the protection of article 311 and all the rights that protection implies as already indicated above.
There must therefore be no confusion between the two enquiries and it is only when the government proceeds to hold a departmental enquiry for the purpose of inflicting on the government servant one of the three major punishments.
indicated in article 311 that the government servant is entitled to the protection of that Article.
That is why this Court emphasised in Parshotam Lal Dhingra 's case (supra) and in Shyamlal vs The State of Uttar pradesh; , that the motive or the inducing factor which influences the government to take action under the terms of the contract of employment or the specific service rule is irrelevant.
" The above principles were reiterated by another Constitution Bench of this Court in R.C. Lacy 's case (supra) dealing with the case of reversion of a permanent Govt.
servant officiating on a higher post.
The Bench observed that the Government might find it necessary to terminate the services of a temporary employee if it is not satisfied with the conduct or work of an employee and the same reasoning applies to a public servant who is reverted from a higher post to his substantive lower post, if the higher post was held in a temporary nature.
Before terminating the services of a temporary servant or reverting the person 39 officiating in a higher post to his substantive post, the Govt.
may hold a preliminary enquiry to form the requisite satisfaction for the continuance of the officiating govt.
servant.
Such an inquiry does not change the nature of the order of the termination or reversion.
In A.G. Benjamin 's case (supra) the appellant was temporarily employed as a Store Officer in the Central Tractor Organisation, his services were terminated under the Central Civil Service (Temporary Service) Rules, 1949 by granting him one month 's salary in lieu of notice.
Benjamin contended that the order of termination was in fact an order of punishment, which had been passed without affording him the protection under Article 311(2) of the Constitution.
In that case before the issue of termination order, a notice had been issued to Benjamin for showing cause as to why disciplinary action should not be taken on the allegations made against him in respect of which the charges had been framed and an enquiry officer had been appointed.
After the charges were framed and the explanation of Benjamin was obtained, the Chairman of the Central Tractor Organisation submitted a note to the Government that the departmental proceedings may take much longer time and he was not sure that after going through all the formalities of departmental enquiry Benjamin will be dealt in the way he deserved, therefore, he suggest that action should be taken under Rule 5 of the Central Civil Service (Temporary Service) Rules, 1949 for terminating his services by giving him one month 's salary in lieu of notice as he was a temporary Govt.
servant.
The Minister concerned accepted the recommendations, whereupon, order of termination was issued terminating the services of Benjamin.
While assailing the order of termination, it was seriously contended before this Court that in view of the charges being framed and the enquiry officer having been appointed the order of termination in substance was an order of punishment and the recourse to the temporary service rules had been taken only to circumvent article 311 of the Constitution.
The Constitution Bench repelled the contention and held that the preliminary enquiry held against the Govt.
servant must not be taken to mean that the Govt. had taken decision to inflict major punishment on Benjamin.
The Court held that no temporary Govt.
servant is entitled to opportunity in the preliminary inquiry as "there is no element of punitive proceedings in such an inquiry; the idea in holding such an inquiry is not to punish the temporary government servant but just to decide whether he deserves to be continued in service or not.
" Further the Constitution Bench held that even if formal departmental inquiry is initiated against the temporary Govt.
servant, it is open to the competent authority to drop further proceedings in the departmental enquiry 40 against the temporary govt.
servant and to have recourse to Rules applicable to a temporary Govt.
servant for terminating his services.
The Court observed as under: "If therefore the authority decides, for some reason, to drop the formal departmental enquiry even though it had been initiated against the temporary govt.
servant, it is still open to the authority to make an order of discharge simpliciter in terms of the contract of service or the relevant statutory rule.
In such cases the order of termination of services of the temporary govt.
servant which in form and in substance is no more than his discharge affected under the terms of contract or the relevant rule cannot, in law, be regarded as his dismissal, because the appointing authority was actuated by the motive that the said servant did not deserve to be continued in service for some alleged inefficiency or misconduct.
" We have referred to the above decision in detail to dispel any doubt about the correct position of low.
It is erroneous to hold that where a preliminary enquiry into allegations against a temporary govt.
servant is held or where a disciplinary enquiry is held but dropped or abandoned before the issue of order of termination, such order is necessarily punitive in nature.
Learned counsel for the respondent placed reliance on the decisions of this Court in Nepal Singh vs State of U.P. & Ors.; , and Ishwar Chand Jain vs High Court of Punjab & Haryana & Anr., ; in support of his contention that the termination order is punitive in nature.
In Nepal Singh 's case a disciplinary inquiry was instituted against Nepal Singh who was a temporary sub Inspector of Police, on the charge of having contracted a second marriage during the life time of his first wife without prior permission of the Government in violating of Rule 29 of the U.P. Government Servants ' Conduct Rules, 1956.
Before any finding could be rendered the inquiry was dropped for want of territorial jurisdiction of the concerned Superintendent of Police, and thereafter, his services were terminated in accordance with the rules applicable to the temporary Government servants by giving him one month 's pay in lieu of notice.
nepal Singh unsuccessfully challenged the order of termination before the High Court, but his appeal was allowed by a three Judge Bench of this Court.
This Court quashed the order of termination on three grounds.
Firstly,it held that the order of termination was arbitrary, violative of 41 Articles 14 and 16 of the Constitution as power of termination had not been exercised honestly, in good faith for valid considerations.
Secondly, the grounds mentioned in the report of the superintendent of Police on the basis of which the services of the Sub Inspector had been terminated were mere allegations and there was no definite material for terminating his services.
Thirdly, the Court held that since the inquiry against Nepal Singh on the charges had been dropped for want of jurisdiction and since no attempt was made to institute a proper inquiry, instead his services were terminated on the allegation of misconduct the order of termination was violative of Article 311(2) of the Constitution.
The Court further held that the termination order had been passed to circumvent the constitutional provision of article 311(2) of the Constitution.
The facts and circumstances in Nepal Singh 's case were quite different than those in the instant case.
However, Nepal Singh 's case is no authority for the proposition that the services of an ad hoc and temporary employee cannot be terminated even if the competent authority on an assessment of the work and the conduct of the employee finds him unsuitable for the service.
The Court 's observations in Nepal Singh 's case that since the enquiry against nepal Singh on certain charges was dropped and his services were terminated under the rules applicable to the temporary govt.
servant with a view to circumvent the protection of Art 311(2) of the Constitution and as such the order of termination was illegal, must be confined to the facts of that case.
It appears that he decisions in the case of Champaklal (supra) and R.C. Lacy (supra) and the principles laid down therein were not brought to the notice of the Bench.
Had those decisions been placed before the Court, the finding that the termination order had been passed to circumvent the provision of article 311(2) merely because departmental inquiry was dropped and the termination order had been passed, may not have been made.
The decision of Nepal Singh 's case in this regard is per incurium.
In Ishwar Chand Jain 's case the order of termination of Probationary Judicial Officer was set aside by this Court on the ground that no relevant material had been taken into consideration in assessing the satisfactory nature of the work and conduct of the Officer on probation.
The Court held that some of the material which had been taken into account in adjudging the Judicial Officer 's work and conduct as unsatisfactory was not relevant.
The decision has no relevance to the instant case.
We are, therefore, of the opinion that neither of the two cases relied upon by the respondent lend any support to his case.
On the other hand our view is fully supported by the decision of three Judge Bench of this Court in R.K. Misra vs U.P. State Handloom Corporation, In the instant case the repondent was a temporary Government servant and there was adverse report regarding his work which was reflected in the adverse remarks made for the year 1977 78.
The competent authority held a preliminary inquiry in the allegations of improper conduct in carrying out unauthorised audit of Boys Fund of an educational institution, On result of the preliminary enquiry no charges were framed against the respondent, no officer was appointed for holding the departmental inquiry instead the competent authority chose to terminate the respondent 's services in exercise of its power under the terms of contract as well as under the relevant rules applicable to a temporary Govt.
servant.
It never intended to dismiss the respondent from service.
Holding of preliminary inquiry does not affect the nature of the termination order.
The allegations made against the respondent contained in the counter affidavit by way of a defence filed on behalf of the appellants also do not change the nature and character of the order of termination.
The High Court failed to consider the question in proper perspective and it interfered with the order of termination in a casual manner.
We, accordingly, allow the appeal and set aside the order of the High Court and dismiss the respondent 's Writ Petition.
There will be no order as to costs.
Y.Lal Appeal allowed.
[/INST]A division Bench of this Court in V.J. Jain vs Shri Pradhan and Ors., ; observed that the representation of the detenu should be considered by the detaining authority as early as possible before any order is made confirming the detention.
The confirmation of the detention order without the consideration of representation would be invalid and the subsequent consideration of the representation would not cure the invalidity of the order of confirmation.
This view was reiterated in the later case of Om Prakash Bahl vs Union of India, W.P.No. 845 of 1979 decided on 15.10.1979.
As the aforesaid view required reconsideration, the instant SLPs and WPs had been referred to and heard by a constitutional bench.
On December 1, 1988, the officers of the Directorate of Revenue Intelligence upon getting information that contraband gold has been secreted in the room of petitioner No. 1 searched the room in the presence of independent witnesses.
Another person was also present inside the room.
The officers recovered one Samsonite punch, and some bundles of Indian currencies from the table drawer in that room.
Inside the said pouch, there were five gold biscuits of 24 ct.
purity and of foreign origin, and seized the same under a Mahazar.
On 24th February, 1989, that State Government passed two separate orders of detention under section 3(1)(iv) of the Conservation of 103 Foreign Exchange and Prevention of Smuggling Activities Act 1974 and the petitioners were taken into custody and detained in the Central pension.
On 17th April, 1989, the detenus made representation to the Government, which could not be immediately considered since they required translation, and collection of information and comments.
In the meanwhile, the matter was referred to the Advisory Board, which had its meeting on 20th April, 1989 considered the case of the detenus, and reported that there was sufficient cause for detention.
On 27th april, 1989, the Government accepted the report and confirmed the detention orders.
On 6th and 7th May, 1989 the Government considered and rejected on representation of the detenus and they were informed of the same.
The detention orders were challenged in the High Court through a writ petition but the High Court dismissed the same.
In the appeals and writ petition to this Court, the main question for consideration was, whether the confirmation of detention order upon accepting the report of the Advisory Board renders itself invalid solely on the ground that the representation of the detenu was not considered, and the subsequent consideration of the representation would not cure that invalidity.
Disposing of the matters, the Court, HELD: 1(a) With regard to liberty of citizens the Court stands guard over the facts and requirements of law, but Court cannot draw presumption against any authority without material.
[115G] (b) The confirmation of detention does not preclude the Government from revoking the order of detention upon considering the representation of the detenu.
[115G] (c) There may be cases where the Government has to consider the representation only after the confirmation of the detention.
[115H] 2(a) There are two constitutional safeguards, viz: Clause (4) of Article 22, and Clause(5) of Article 22.
The former requires that if a detenu is liable to be detained for a longer period than three months, hiscase shall be referred to the Advisory Board which, must report before the expiration of the said period of three months that there is in its opinion sufficient cause for such detention.
The latter provides that when any person is detained in pursuance of an order made under any 104 law providing for preventive detention the authority making the order shall, as soon as may be, communicate to such person the grounds on which the order has been made and shall afford him the earliest opportunity of making a representation against the order.
[108E G] 2(b) The detenu has two rights under clause (5) of Article 22 of the Constitution: (i) to be informed, as soon as may be, of the grounds on which the order of detention is based, that is, the grounds which led to the subjective satisfaction of the detaining authority, and (ii) to afforded the earliest opportunity of making a representation against the order of detention.
[108H; 109A] 3.
The function of the Advisory Board is purely advisory and its report will enable the Government to detain the person beyond three months provided the detention is valid on its merits and does not otherwise offend the Constitution.
[108F] 4(a) The constitution right to make representation under clause (5) of Article 22 by necessary implication guarantees the constitutional right to a proper consideration of the representation.
The obligation of the Government to afford to the detenu an opportunity to make representation and to consider such representation is distinct from the Government 's obligation to refer the case of detenu along with the representation to the Advisory Board to enable it to from its opinion and send a report to the Government.
[110B C] 4(b) It is implicit in clause (4) and (5) of Article 22 that the Government while discharging its duty to consider the representation, cannot depend upon the views of the Board on such representation.
it has to consider the representation on its own without being influenced by any such view of the Board.
The obligation of the Government to consider the representation is different from the obligation of the Board to consider the representation at the time of hearing the reference.
The Government consider the representation to ascertain essentially whether the order is in conformity with the power under the law.
[110C D] 4(c) The Board, on the other hand, considers the representation and the case of the detenu to examine whether there is sufficient case for detention.
The consideration by the Board is in additional safeguard and not a substitute for consideration of the representation by the Government.
[110E] 4(d) The right to have the representation considered by the 105 Government, is safeguarded by clause (5) of Article 22, and it is independent of the consideration of the detenu 's case and his representation by the Advisory Board under clause (4) of Article 22 read with section 8(c) of the .
[110F] SK.
Abdul Karim & Ors.
vs State of West Bengal, ; , Pankaj Kumar Chakrabarty & Ors.
vs State of West bengal; , ; Shayamal Chakraborty vs The Commissioner of Police Calcutta and Anr.,[1969] 2 SCC 426; B. Sundar Rao & Ors.
vs State of Orissa, ; John Martin vs State of West Bengal, [1975] 3SCR 211; .
S.K. Sekawat vs State of West Bengal, and Haradhan Saha & Anr.
vs State of West Bengal & Ors.
,[1975] , referred to.
5(a) The representation relates to the liberty of the individual, the highly cherished right enshrined in Article 21 of our Constitution.
Clause (5) of Article 22 therefore, casts a legal obligation on the Government to consider the representation as early as possible.
It is a constitutional mandate commanding the concerned authority to whom the detenu submits his representation to consider the representation and dispose of the same as expeditiously as possible.
[110H;111A] 5(b) The words "as soon as may be" occuring in clause (5) of Article 22 reflect the concern of the Framers that the representation should be expeditiously considered and disposed of with a sense of urgency without an avoidable delay.
However, there can be no hard and fast rule in this regard.
It depends upon the fact and circumstances of each case.
There is no period prescribed either under the Constitution or under the concerned detention law, within which the representation should be dealt with the requirement however, is that there should not be supine indifference slackness or callous attitude in considering the representation.
Any unexplained delay in the disposal of the representation would be a breach of the constitutional imperative and it would render the continued detention impermissible and illegal.
[11B D] Jayanarayan Sukul vs State of West Bengal, ; ; Frances Coralie Mullin vs W.C. Khambra and Ors., ; ; Rama Dhondu Borade vs V.K. Saraf, Commissioner of Police & Ors., ; and Aslam Ahmed Zahire Ahmed Shaik vs Union of India & Ors.
, ; , referred to.
6(a) There is no constitutional mandate under clause (5) of Arti 106 cle 22, much less any statutory requirement to consider the representation before confirming the order of detention.
As long as the Government without delay considers the representation with an unbiased mind there is no basis for concluding that the absence of independent consideration is the obvious result if the representation is not considered before the confirmation of detention.
indeed there is no justification for imposing the restriction on the power of the Government.
[115C D] 6(b) Clause 5) of Article 22 suggests that the representation could be received even after confirmation of the order of detention.
The words "shall afford him the earliest opportunity of making a representation against the order" in clause (5) of Article 22 suggest that the obligation of the Government is to offer the detenu an opportunity of making a representation against the order, before it is confirmed according to the procedure laid down under section 8 of the Act.
But ifthe detenu does not exercise his right to make representation at that stage, but presents it to the Government after the Government has confirmed the order of detention, the Government still has to consider such representation and release the detenu if the detention is not within the power conferred under the statue.
The confirmation of the order of detention is not conclusive as against the detenu.
It can be revoked suo motu under Section 11 or upon a representation of the detenu.
[116A B] 6(c) So long as the representation is independently considered by the government and if there is no delay in considering the representation, the fact that it is considered after the confirmation of detention makes little difference on the validity of the detention or confirmation of the detention.
The confirmation cannot be invalidated solely on the ground that the representation is considered subsequent to confirmation of the detention.
Nor it could be presumed that such consideration is not an independent consideration.
[116C D] V.J. Jain vs Shri Pradhan & Ors.
, ; ; Om Prakash Bahl vs Union of India & Ors., W.P. No. 845 of 1979 decided on 15.10.1979 and Khairul Haque vs State of West Bengal W.P.No.
246/69 decided on 10.9.1969, over ruled; Khudiram Das vs State of West Bengal & Ors., ; , distinguished.
</s> |
<s>[INST] Summarize the judgement(C) No. 1237 of 1988.
(Under Article 32 of the Constitution of India).
P.P. Rao and Ms. K Amreshwari, B. Rajeshwar Rao and Vimal Dave for the Petitioners.
V.R. Reddy, Addl.
Solicitor General, K. Madhaya Reddy, G. Prabhakar, B. Kanta Rao, A. Ranganathan and A.V. Rangam for the Respondents.
The Judgment of the Court was delivered by KULDIP SINGH, J.
The petitioners and respondents 4 to 16 are District and Sessions Judges in the State of Andhra Pradesh.
The petitioners are direct recruits whereas the respondents were promoted from the Subordinate judiciary.
The respondents were initially appointed on temporary basis in the year 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claim seniority over the respondents by way of this petition under Article 32 of the Constitution of India.
The recruitment to the Andhra Pradesh Higher Judicial Service (the Service) is governed by the Rules called "The Andhra Pradesh State Higher Judicial Service Special Rules" (the Special Rules).
Rules 1, 2, 4 and 6 of the Special Rules which are relevant are as under: "Rule 1.
Constitution: The service shall consist of the following categories: 550 Category 1 : District and Sessions Judges 1st Grade.
Category II : District and Sessions Judges, Second Grade including Chairman, Andhra Pradesh Sales Tax Appellate Tribunal, Chief Judge, City Civil Court, Additional Chief Judge, City Civil Court, Chief Judge, Court of small Causes, Chief City Magistrate, Chairman, Tribunal for Disciplinary Proceedings, Presiding Officers, Labour Courts and Addl.
District and Sessions Judges.
Rules 2.
Appointment : (a) Appointment to Category 1 shall be made by promotion from Category II and appointment to Category II shall be made: (i) by transfer from among: (a) Sub Judges in the Andhra State Judicial Service; or in the Hyderabad State Judicial Service; and (ii) by direct recruitment from the Bar: Provided that 33 1/3% of the total number of permanent posts shall be filed or reserved to be filled by direct recruitment.
Explanation: In the determination of 33 1/3% of the total number of permanent posts, fractions exceeding one half shall be counted as one and other fractions shall be disregarded.
(b) All promotions shall be made on grounds of merit and ability, seniority being considered only when merit and ability are approximately equal.
Rule 4.
Probation: Every person appointed to Category II otherwise than by transfer, shall, from the date on which he joins duty be on probation for a total period of one year on duty.
Rule 6.
Seniority: The seniority of a person appointed to Category 1 or Category 2 shall be determined with refer 551 ence to the date from which he was continuously on duty in that category.
" We may briefly notice the scheme of the Special Rules.
Rule 1 constitutes the Service.
Category 1 consists of District and Sessions Judges ' 1st grade and Category II consists of District and Sessions Judges Second grade.
Rule 1 does not say that Service shall consist of only permanent posts.
All the posts designated as District and Sessions Judges Second grade under Category II are part of the service under Rule 1.
In other words, as and when a post of District and Sessions Judge Second grade is created permanent or temporary it becomes part of the Service under Rule 1 of the special Rules.
Rule 2 provides the method of appointment.
Appointment to Category 1 is from Category II.
Appointment to Category II is from two sources.
By transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
Proviso to Rule 2 states that 33 1/3% of the total number of permanent posts shall be filled or reserved to be filled by direct recruitment.
All the posts of District and Sessions Judges Second grade are part of the Service but quota for the direct recruits is provided only in the permanent posts.
Rule 6 of the Rules provides for the fixation of seniority.
Under Rule 6 the seniority of persons appointed to Category 1 or Category II posts is fixed on the basis of continuous length of service in their respective posts.
On the plain reading of the Special Rules the salient features of the Service can be culled out as under: 1.
Rule 1 provides for the constitution of the Service.
All the posts of District and Sessions Judges Second grade created from time to time are part of the Service.
The natural corollary is that the Service consists of permanent as well as temporary posts.
The recruitment to Category II of the service is by transfer from amongst the Subordinate Judges and also by direct recruits from the Bar.
33 1/3% of the total number of permanent posts in Category II of the Service are to be filled by way of direct recruitment.
The seniority under Rule 6 is to be determined with reference to the date from which a person is continuously on duty.
Whether the person 552 is continuously on duty against a temporary post or permanent post is of no consequence.
A person is entitled to the fixation of his seniority on the basis of continuous length of service rendered either against permanent post or temporary post.
The three petitioners were appointed as District and Sessions Judges Second grade by direct recruitment on October 12, 1981.
Petitioners 1 and 2 joined service on October 23, 1981 and petitioner 3 on October 30, 1981.
Respondents 4 to 16 were appointed District and Sessions Judges Second grade by transfer from amongst the Subordinate Judges during the years 1978/79.
It is not disputed that permanent vacancies in their quota became available in the year 1983.
We, therefore, proceed on the basis that the petitioners were appointed substantive members of the Service earlier to respondents 4 to 16.
We may at this stage notice Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules (the State Rules).
The State Rules are general rules which are applicable to all the services in the State of Andhra Pradesh.
Needless to say that to the extent the Special Rules are applicable to the Service the State Rules are excluded.
Rule 10(a)(i) of the State Rules is as under: "10.
Temporary appointment.
(a)(i) Where it is necessary in the public interest to fill emergently a vacancy in the post borne on the cadre of a service, class or category and if the filling of such vacancy in accordance with the rules is likely to result in undue delay, the appointing authority may appoint a person temporarily otherwise than in accordance with the said rules.
" Mr. P.P. Rao, learned counsel for the petitioners has raised the following contentions for our consideration: 1.
That the Service consists of only permanent posts under the Special Rules.
There is no provision under the Special Rules for adding temporary posts to the cadre.
The appointment of respondents to the posts of District and Sessions Judges Second grade on temporary basis can at best be treated under rule 10(a)(i) of the State Rules.
553 2.
The temporary service rendered by respondents.4 to 16 being outside the cadre cannot be counted towards seniority.
Proviso to Rule 2 and Rule 6 of the Special Rules have to be read together and doing so the permanent vacancies having been made available for respondents 4 to 16 in the year 1983 their service prior to that date cannot be counted towards seniority.
Before dealing with Mr. Rao 's contentions, we may notice two preliminary contentions raised by Mr. K. Madava Reddy, learned counsel for the respondents.
Mr. Madava Reddy has invited our attention to the judgment of a Division Bench of Andhra Pradesh High Court in T.H.B. Chalapathi and others vs High Court of Andhra Pradesh and others, Writ Petition Nos.
1968/82, 52/83 and 12282/85 decided on December 28, 1985.
Those writ petitions were filed before the Andhra Pradesh High Court by the direct recruits to Category II of the Service claiming seniority over the persons who were appointed to category 11 on temporary basis earlier to them.
Similar questions were raised as are being raised by Mr. P.P. Rao before us.
By a well reasoned judgment the High Court rejected all the contentions of the direct recruits and dismissed the writ petitions.
It is not disputed that Special Leave Petition No.1035 of 1986 against the said judgment was dismissed by this Court on January 30, 1988.
Mr. Madava Reddy plausibly contends that all the contentions which are being raised by the petitioners in this Court, having been rejected by the High Court and special leave petition against the judgment of the High Court having been dismissed by this Court the same cannot be agitated once over again.
Mr. Madava Reddy then contended that the petitioners were appointed in the years 1981 and since then till the year 1988 twelve seniority lists have been published showing the petitioners below respondents 4 to 16.
At no point of time they challenged the seniority lists in the Court.
Even when the writ petitions filed by Chalapathi and others were pending they did not intervene before the High Court.
The petitioners, according to Mr. Madava Reddy, are guilty of gross delay and latches and as such are not entitled to get relief by way of this petition under Article 32 of the Constitution of India.
554 We see considerable force in both the contentions raised by Mr. Madava Reddy.
We are, however, of the view that it would be in the larger interest of the Service to dispose of this petition on merits.
We see no force.
in the contention of Mr. Rao that the Service consists of only permanent posts under the Special Rules.
We have already interpreted Rule 1 to mean that the Service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judges Second grade.
Even otherwise in the absence of any prohibition under the Special Rules the State Government can always create temporary posts as additions to the cadre.
Rule 10(a)(i) of the State Rules has no application to the Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant service.
The appointments of respondents 4 to 16, on the other hand, Were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
We are of the view that the Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
Rule 10(a)(i) of the State Rules has no application to the Service Constituted under the Special Rules.
We, therefore, reject the contention raised by Mr. Rao.
Having taken the view that the Service under the Special Rules consists of permanent as well as temporary posts the second contention of Mr. Rao looses its ground.
Temporary, posts of District and Sessions Judges Second grade being part of the Service the seniority has to be counted on the basis of length of service including the service against a temporary post.
The third contention of Mr. Rao is mentioned to be rejected in view of Rule 6 of the Special Rules.
Rule 6 of the Special Rules is in no way dependent on proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In the scheme of the rules the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a 555 post in the category.
Even though, the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service against temp orary as well as permanent posts respondents 4 to 16 have been rightly given seniority above the petitioners.
We, therefore, find no force in any of the contentions raised by Mr. Rao.
The writ petition is consequently dismissed.
No costs.
N.V.K. Petition dismissed.
[/INST]Recruitment to the Andhra Pradesh Higher Judicial Service is governed by "The Andhra Pradesh State Higher Judicial Service Special Rules".
Rule 1 constitutes the service.
Category 1 consists of District and Sessions Judges 1st grade and Category 11 consists of District and Sessions Judges, Second Grade.
Appointment to Category 1 is from Category 11.
Appointment to Category 11 is from two sources by transfer from amongst the Subordinate Judges and by direct recruitment from the Bar.
The petitioner were direct recruits whereas respondents 4 to 16 were promoted from the Subordinate judiciary.
The respondents were Initially appointed on temporary basis in the yew 1978/1979 but they were made substantive in the year 1983.
The petitioners who were appointed substantively in the year 1981 claimed seniority over the said respondents, and riled the Writ Petition under Article 32 of the Constitution of India for relief.
It was contended on their behalf that: (1) The Service consists of only permanent posts, there is no provision under the Special Rules for adding temporary posts to the cadre, consequently the appointment of respondents 4 to 16 to the post of District and Sessions Judges, Second Grade on temporary basis can at best be treated under Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules.
(2) The temporary service rendered by the respondents 4 to 16 being outside the cadre cannot be counted towards seniority.
(3) Porviso to Rule 2 and Rule 6 of the Special Rules have to be read together, and as such the permanent vacancies having been made available for them in the year 1983 their service 548 prior to that date cannot be counted towards seniority.
The respondents constested the writ petition by contending that the petitioners were appointed in the year 1981 and since then till the year 1988, twelve seniority lists have been published showing the petitioners below respondents 4 to 16, and at no point of time they challenged the seniority lists in the Court.
Even when the Writ Petition T.H.B. Chalapathi & Ors.
vs High Court of Andhra Pradesh & Ors., was pending in the High Court they did not intervene.
The petitioners were thus guilty of gross delay and latches and as such are not entitled to get relief in the Writ Petition.
Dismissing the writ petition, this Court, HELD: 1.
(i) Rule 1 has to be interpreted to mean that the service under the Special Rules consists of all the posts permanent and temporary which have been designated as District and Sessions Judge Second Grade.
Even otherwise in the absence of any prohibition under the Special Rules, the State Government can always create temporary posts as addi tions to the cadre.
[554 B] (ii) Rule 10(a)(i) of the Andhra Pradesh State and Subordinate Service Rules has no application to the Andhra Pradesh Higher Judicial Service which is governed by the Special Rules.
Rule 10(a)(i) provides for emergency appointments made on stop gap basis to meet a temporary exigency.
Apart from that the temporary appointments under the said Rules are made without following the procedure prescribed under the Rules governing the relevant Service.
[554 C D] In the instant case, the appointments of respondents 4 to 16 were made under Rule 2 of the Special Rules by the State Government in consultation with the High Court.
The Special Rules provide a complete scheme for the appointment and seniority of the members of the Service.
[554 D] 2.
Temporary posts of District and Sessions Judges Second Grade being part of the Service, the seniority has to be counted on the basis of length of service including the service against the temporary posts.
[554 F] 3.
Rule 6 of the Special Rules is in no way dependent on the proviso to Rule 2 of the Special Rules.
Both are to be operative independently.
In 549 the scheme of the rules, the seniority rule is not dependent on the quota Rule.
Quota has been provided for the direct recruits only against permanent posts.
The seniority rule permits the counting of total period of service from the date a person is on duty against a post in the category.
[554 G H] In the instant case, even though the petitioners were appointed substantively to the service earlier to respondents 4 to 16 but in view of Rule 6 they cannot be declared senior on the basis of continuous length of service.
Respondents 4 to 16 have been rightly given seniority above the petitioners.
[555 A]
</s> |
<s>[INST] Summarize the judgementAppeal No. 95 of 1952.
Appeal from the judgment and decree dated the 27th February, 1950, of the High Court of Judicature at Madras (Rao and Ayyar JJ.) in Appeal No. 635 of 1946 arising, out of judgment and decree dated the 13th August, 1946, of the Court of the Subordinate Judge of Tinnevelly in Original Suit No. 50 of 1945.
K. section Krishnaswamy Iyengar (section Ramachandra with him) for the appellants.
K. Rajah Iyer (R. Ganapathy Iyer, with him) for the respondent.
April 14.
The Judgment of the Court was delivered by MAHAJAN J.
One Lakshminarayana Iyer, a Hindu Brahmin, who owned considerable properties in the Tirunelveli district, died on 13th December, 1924, leaving him surviving a widow Ranganayaki, and a married daughter Ramalakshmi.
Ramalakshmi had married the plaintiff and had a number of children from him.
They were all alive in December, 1924, when Lakshminarayana died, Before his death he 850 executed a will on 16th November, 1924, the construction of which is in controversy in this appeal.
By this will he gave the following directions "After my lifetime, you, the aforesaid Ranganayaki Amminal, my wife, shall till your lifetime, enjoy the aforesaid entire properties, the outstandings due to me, the debts payable by me, and the chit amounts payable by me.
After your lifetime Ramalakshmi Ammal, our daughter and wife of Rama Ayyar Avergal of Melagaram village, and her heirs shall enjoy them with absolute rights and powers of alienation such as gift, exchange, and sale from son to grandson and so on for generations.
As regards the payment of maintenance to be made to Chinnanmal alias Lakshmi Ammal, wife of my late son Hariharamayyan, my wife Ranganayaki Ammal shall pay the same as she pleases, and obtain a release deed".
Ranganayaki entered into possession of the properties on the death of her husband.
On 21st February, 1928, she settled the maintenance claim of Lakshmi Ammal and obtained a deed of release from her by paying her a sum of Rs. 3,350 in cash and by executing in her favour an agreement stipulating to pay her a sum of Rs. 240 per annum.
Ramalakshmi died on 25th April, 1938 during the lifetime of the widow.
None of her children survived her.
On the 24th July, 1945, the widow describing herself as an absolute owner of the properties of her husband sold one of the items of the property to the 2nd defendant for Rs. 500.
On the 18th September, 1945, the suit out of which this appeal arises was instituted by the plaintiff, the husband and the sole heir of Ramalakshmi, for a declaration that the said sale would not be binding on him beyond the lifetime of the widow.
A prayer was made that the widow be restrained from alienating the other properties in her possession.
On the 19th September, 1945, an ad interim injunction was issued by the High Court restraining the widow from alienating the properties in her possession and forming part of her husband 's estate, In 851 spite of this injunction, on the 27th September, 1945, she executed two deeds of settlement in favour of the other defendants comprising a number of properties.
The plaintiff was allowed to amend his plaint and include therein a prayer for a declaration in respect of the invalidity of these alienations as well.
It was averred in the plaint that Ramalakshmi obtained a vested interest in the suit properties under the will of her father and plaintiff was thus entitled to maintain the suit.
The defendants pleaded that the plaintiff had no title to maintain the suit, that the widow was entitled under the will to an absolute estate or at least to an estate analogous to and not less than a widow 's estate, that the estate given to Ramalakshmi under the will was but a contingent one and she having predeceased the widow, no interest in the suit properties devolved on the plaintiff.
The main issue in the suit was whether the widow took under the will an absolute estate or an estate like the Hindu widow 's estate and whether the daughter 's interest therein was in the nature of a contingent remainder, or whether she got in the properties a vested interest.
The subordinate judge held that the widow took under the will a limited life, interest, and not an absolute estate or even a widow 's estate under Hindu law, and that the daughter got thereunder a vested interest in the properties to which the plaintiff succeeded on her death.
In view of this finding he granted the plaintiff a declaratory decree to the effect that the first defendant had only an estate for life in the suit properties and that the alienations made by her would not enure beyond her lifetime.
The question as to the validity of the alienations was left undetermined.
The unsuccessful defendants preferred an appeal against this decree to the High Court of Judicature at Madras.
During the pendency of the appeal the widow died on 14th February, 1948.
The High Court by its judgment under appeal affirmed the decision of the trial judge and maintained his view on the construction of the will.
Leave to appeal to the Supreme Court was 852 granted and the appeal was admitted on the 27th November, 1951.
The substantial question to decide in the appeal is whether the estate granted by the testator to his widow was a fall woman 's estate under Hindu law or merely a limited life estate in the English sense of that expression.
It was not contested before us that a Hindu can by will create a life estate, or successive life estates, or any other estate for a limited term, provided the donee or the persons taking under it are capable of taking under a deed or will.
The decision of the appeal thus turns upon the question whether the testator 's intention was to give to his widow ail ordinary life, estate or an estate analogous to that of a Hindu widow.
At one time it was a moot point whether a Hindu widow 's estate could be created by will, it being an estate created by law, but it is now settled that a Hindu can confer by means of a will oil his widow the same estate which she would get by inheritance.
The widow in such a case takes as a demisee and not as an heir.
The court 's primary duty in such cases is to ascertain from the language employed by the testator "what were his intentions", keeping in view the surrounding circumstances, his ordinary notions as a Hindu in respect to devolution of his property, his family relationships etc.; in other words, to ascertain his wishes by putting itself, so to say, in his armchair.
Considering the will in the light of these principles,it seems to us that Lakshminarayan Iyer intended by his will to direct that his entire properties should be enjoyed by his widow during her lifetime but her interest in these properties should come to an end on her death, that all these properties in their entirety should thereafter be enjoyed as absolute owners by his daughter and her heirs with powers of alienation, gift, exchange and sale from generation to generation.
He wished to make his daughter a fresh stock of descent so that her issue, male or female, may have the benefit of his property.
They were the real persons whom he earmarked with certainty as the ultimate recipients of 853 his bounty.
In express terms he conferred on his daughter powers of alienation byway of gift, exchange, sale, but in sharp contrast to this, on his widow he conferred no such powers.
The direction to her was that she should enjoy the entire properties including the outstandings etc.
and these shall thereafter pass to her daughters.
Though no restraint in express terms was put on her powers of alienation in case of necessity, even that limited power was not given to her in express terms.
If the testator had before his mind 's eye his daughter and her heirs as the ultimate beneficiaries of his bounty, that intention could only be achieved by giving to the widow a limited estate, because by conferring a full Hindu widow 's estate on her the daughter will, only have a mere spes successions under the Hindu law which may or may not mature and under the will her interest would Only be a contingent one in what was left indisposed of by the widow.
It is significant that the testator did not say in the will that the daughter will enjoy only the properties left indisposed of by the widow.
The extent of the grant, so far as the properties mentioned in the schedule are concerned, to the daughter and the widow is the same.
Just as the widow was directed to enjoy tile entire properties mentioned in the schedule during her lifetime in like manner the daughter and her heirs were also directed to enjoy the same properties with absolute rights from generation to generation.
They could not enjoy the same properties in the manner directed if the widow had a full Hindu widow 's estate and had the power for any purpose to dispose of them and did so.
If that was the intention, the testator would clearly have said that the daughter would only take the properties remaining after the death of the widow.
The widow cannot be held to have been given a full Hindu widow 's estate under the will unless it can be said that under its terms she was given the power of alienation for necessary purposes, whether in express terms or by necessary implication.
As above pointed out, admittedly power of alienation in express terms was not conferred on her.
It was argued 854 that such a power was implicit within the acts she was authorized to do, that is to say, when she was directed to pay the debts and settle the maintenance of Ramalakshmi it was implicit within these directions that for these purposes, if necessity arose, she could alienate the properties.
This suggestion in the surrounding circumstances attending the execution of this will cannot be sustained.
The properties disposed of by the will and mentioned in the schedule were considerable in extent and it seems that they fetched sufficient income to enable the widow to fulfil the obligations under the will.
Indeed we find that within four years of the death of the testator the widow was able to pay a lump sum of Rs. 3,350 in cash to the daughter in law without alienating any part of the immovable properties and presumably by this time she had discharged all the debts.
It is not shown that she alienated a single item of immovable property till the year 1945, a period of over 21 years after the death of her husband, excepting one, which she alienated in the year 1937 to raise a sum of Rs. 1,000 in order to buy some land.
By this transaction she substituted one property by another.
For the purpose of her maintenance, for payment of debts etc., and for settling the claim of the daughter in law she does not appear to have felt any necessity to make any alienation of any part of the estate mentioned in the schedule and the testator in all likelihood knew that she could fulfil these obligations without having recourse to alienations and hence he did not give her any power to do so.
In this situation the inference that the testator must have of necessity intended to confer on the widow power of alienation for those limited purposes cannot be raised.
In our opinion, even if that suggestion is accepted that for the limited purposes mentioned in the will the widow could alienate, this power would fall far short of the powers that a Hindu widow enjoys under Hindu law.
Under that law she has the power to alienate the estate for the benefit of the soul of the husband, for pilgrimage and for the benefit of the estate and for 855 other authorized purposes.
It cannot be said that a Hindu widow can only alienate her husband 's estate for payment of debts, to meet maintenance charges and for her own maintenance.
She represents the estate in all respects and enjoys very wide power except that she cannot alienate except for necessity and her necessities have to be judged on a variety of considerations.
We therefore hold that the estate conferred on Ranganayaki Ammal was more like the limited estate in the English sense of the term than like a full Hindu widow 's estate in spite of the directions above mentioned.
She had complete control over the income of the property during her lifetime but she had no power to deal with the corpus of the estate and it had to be kept intact for the enjoyment of the daughter.
Though the daughter was not entitled to immediate possession of the property it was indicated with certainty that she should get the entire estate at the proper time and she thus got an interest in it on the testator 's death.
She was given a present right of future enjoyment in the property.
According to Jarman (Jarman on Wills), the law leans in favour of vesting of estates and the property disposed of belongs to the object of the gift when the will takes effect and we think the daughter got under this will a vested interest in the testator 's properties on his death.
It was strenuously argued by Mr. K. section Krishnaswami Iyengar that Lakshminarayana Iyer was a Brahmin gentleman presumably versed in the sastras, living in a village in the southernmost part of the Madras State, that his idea of a restricted estate was more likely to be one analogous to a Hindu woman 's estate than a life estate a, , understood in English law wherein the estate is measured by use and not by duration, and that if this will was construed in the light of the notions of Lakshminarayana Iyer it should be held that the widow got under it a Hindu widow 's estate and the daughter got under it a contingent remainder in the nature of spes and on her death there was nothing which could devolve on the plaintiff and he thus had no locus standi to question the alienations made by the widow, 856 The learned counsel in support of his contention drew our attention to a number of decisions of different High Courts and contended that the words of this will should be construed in the manner as more or less similar words were construed by the courts in the wills dealt with in those decisions.
This rule of construction by analogy is a dangerous one to follow in construing wills differently worded and executed in different surroundings.
[Vide Sasiman vs Shib Narain (1)].
However, out of respect for learned counsel on both sides who adopted the same method of approach we proceed to examine some of the important cases referred to by them.
Mr. Krishnaswami Iyengar sought to derive the greatest support for his contention from the decision in Ram Bahadur vs Jager Nath Prasad (2 ).
The will there recited that if a daughter or son was born to the testator during his lifetime, such son or daughter would be the owner of all his properties but if there was no son or daughter, his niece section would get a bequest of a lakh of rupees, and the rest of the movable and immovable properties would remain in possession of his wife until her death, and after her these would remain in possession of his niece.
The remainder was disposed of in the following words: "If on the death of my wife and my niece there be living a son and a daughter born of the womb of my said brother 's daughter, then two thirds of the movable property will belong to the son and one third to the daughter.
But as regards the immovable property none shall have the lest right of alienation.
They will of course be entitled to enjoy the balance left after payment of rent".
This will was construed as conveying an absolute estate to the son and the daughter of the niece.
It was remarked that in spite of an.
express restriction against alienation, the estate taken by section (the niece) was an estate such as a woman ordinarily acquires by inheritance under the Hindu law which she holds in a completely representative character but is unable to (1) 491.
A. 2 5.
(2) 857 alienate except in case of legal necessity and that such a construction was in accordance with the ordinary notions that a Hindu has in regard to devolution of his property.
The provisions contained in this will bear no analogy to those we have to construe.
The restraint against alienation was repugnant to both a life estate and a widow ', , estate and was not, therefore, taken into account.
But there were other indications in that will showing that a widow 's estate had been given.
The fact that the gift over was a contin gent bequest was by itself taken as a sure indication that the preceding bequest was that of a widow 's estate.
There is no such indication in the will before us.
Reliance was next placed on the decision in Pavani Subbamma vs Ammala Rama Naidu (1).
Under the will there dealt with, the widow S, was to enjoy the properties and after her lifetime the properties were to be taken in the ratio of three to five by the son 's daughter and the daughter 's son respectively.
A suit was instituted by the son 's daughter for the recovery of possession of her share in one item of property forming, part of the estate which had been sold by section The question for decision in that case was whether section was at all entitled to sell anything more than her life interest even for purposes of meeting a necessity binding upon the estate.
Varadachari J. held that since in the will the gift over to the grand children was of the entire Properties, and not a mere gift by way of defeasance, it had to be held that it indicated that the prior gift in favour of the widow was only of a limited interest.
This decision therefore goes against the contention of the learned counsel but he placed reliance on the observations made in the judgment when the learned Judge proceeded to say " In deference to the view taken in Maharaja of Kolhapur vs sundaram Iyer (2), it may be possible to create an interest analogous to a woman 's estate in Hindu law notwithstanding the addition of a gift over and that the estate taken by section need not necessarily be only a life estate in the English law (1) (2) Mad.
1. 111 858 sense of the term.
" We do not understand how such passing observations can be helpful in deciding the present case.
Assuming that it is possible to create a Hindu woman 's estate not with standing the addition of a gift over, the question nevertheless whether that had been done in a given case must depend on the terms of the particular instrument under consideration.
The following remarks in the Privy Council decision in Nathu, Ram Mahajan vs Gangayabai(1) were next cited: As the will gave her the right to 'enjoy ' the income of the estate during her lifetime, it was evidently contemplated that she should, as provided by the Hindu law in the case of a widow, be in possession of the estate.
" Such casual observation made in respect of a will couched in entirely different terms cannot afford much assistance in the decision of the case.
In Vasantharao Ammannamma vs Venkata Kodanda Rao Pantalu(2), the next case cited, a Hindu testator who was a retired subordinate judge provided by his will as follows: "Out, of the aforestated ancestral lands, the oneninth share to which I am entitled shall be enjoyed after my death by my wife till her death, and after her death it shall pass to section son of my second elder brother deceased.
My self acquired properties shall on my death be enjoyed by my wife till her death and after her death they shall pass to my daughter.
Thereafter they shall pass to my grandson through my daughter".
The will was construed as giving the self acquired properties ultimately to the grandsons, and the estate of the daughter was likened to an estate which she would take under the law of inheritance, that is a limited estate analogous to a widow 's estate.
At page 193 of the report it was observed as follows : "The question therefore arises, did he intend to confer only a life estate or a daughter 's estate ? It seems (1) (2) , 859 to us that he meant to give a daughter 's estate rather than a life estate.
He omits the words 'during her life ' with reference to the disposition in favour of the daughter.
The words 'pass to my daughter ' would rather indicate that in the ordinary course of devolution the estate should pass to her, that is, the daughter and then to the grandsons.
The words used in favour of the grandsons seem to indicate that the estate conferred on the daughter was not a life estate because there is no direct gift in favour of the grandsons, but on the other hand, what he says is that through his daughter the estate shall pass to his grandsons.
Either he must have intended that the daughter should convey the property either by will or inter vivos to the grandsons or she having taken the estate, through her it should pass to the grandsons in the ordinary course of devolution.
If it was the daughter 's estate that was intended to be conferred, there can be no question that the estate taken by the grandsons is not a vested interest".
This line of reasoning which appealed to the learned judges is not of much he] ) to us here as the language hi this will is quite different.
If the same line of reasoning is adopted here, the decision of the case would go against the client of Mr. K. section K. Iyengar because in the will in this case the widow 's estate is delimited by the words " till your lifetime.
" Reliance was next placed on Maharaja of Kolhapur vs Sundaram Iyer (1).
That was a case of a government grant on the special terms set out therein and the question arose as to the nature of the grant.
There it was said that " the widows of Sivaji Raja got the gift of a life estate very much resembling the ordinary estate of a Hindu widow and with all the incidents of a widow 's estate except the liability to be divested, but nevertheless a life estate rather than an estate of inheritance." These remarks do not throw much light on the point before us.
The last decision referred to was the decision of the Privy Council in Mahomed Shumsool vs Shewukram(2) There a Hindu inhabitant of Bihar by a document of (1) Mad. 1.
(2) (1874 75) 2 I.A. 7. 860 a testamentary character declared his daughter who had two daughters, as his heir, and after her two daughters together with their children were declared heirs and malik.
One daughter of the daughter predeceased the testator without issue and the other daughter died after the death of the testator leaving an only son, the respondent in that case.
In a suit by the respondent against his grandmother the daughter of the 'testator for a declaratory order preserving unmolested his future right and title to the said lands, it was held that the daughter took an estate subject to her daughters succeeding her.
In this judgment the following observations were emphasized as relevant to this enquiry : " It has been contended that these latter expressions qualify the generality of the former expressions, and that the will, taken as a whole, must be construed as intimating the intention of the testator that Mst.
Rani Dhun Kaur should not take an absolute estate, but that she should be succeeded in her estate by her two daughters.
In other words, that she should take an estate very much like the ordinary estate of a Hindu widow.
In construing the will of a Hindu it is not improper to take into consideration what are known to be the ordinary notions and wishes of Hindus with respect to the devolution of property.
It may be assumed that a Hindu generally desires that an estate, especially an ancestral estate, shall be retained in his family; and it may be assumed that a Hindu knows that, as a general rule, at all events, women do not take absolute estates of inheritance which they are enabled to alienate.
" These observations are unexceptionable but it may also be pointed out that it is open to a Hindu to confer a limited life estate on his widow or even a larger estate than a widow takes as an heir and that in every case he may not confer upon her by will a Hindu widow 's estate which she would otherwise get by inheritance.
Generally speaking, there will be no point in making a will if what is to be given to a widow is what she would get on intestacy and cases do arise 861 where a Hindu wishes to give to his widow a more restricted estate than she would get on intestacy or a much larger estate than that.
The question in every case cannot be determined merely on the theory that every Hindu thinks only about a Hindu widow 's estate and no more.
What is given must be gathered from the language of the will in the light of the surrounding circumstances.
The learned counsel for the respondent followed the line adopted by Mr. Krishnaswami Iyengar.
He also on the analogy of other wills and the decisions given on their terms wanted a decision on the construction of this will in his favour.
In the first instance, he placed reliance on a decision of the Madras High Court in Ratna Chetty vs Narayana swami Chetty(1).
There the testator made a will in favour of his wife providing, inter alia, "all my properties shall after my death be in possession of my wife herself and she herself should be heir to everything and Mutha Arunachala Chetty (nephew) and my wife, should live together amicably as of one family.
If the two could not agree and live together amicably, my wife would pay Rs. 4,000 and separate him and then my wife would enjoy all the remaining properties with absolute rights.
If both of them would live together amicably, Muthu Arunachala Chetty himself would enjoy the properties which remain after the death of the widow.
" It was held upon the construction of the will that the nephew, who lived amicably with the widow till his death, had a vested interest at testator 's death which could not be defeated by a testamentary disposition by the widow in favour of a stranger.
This decision only decides that case and is not very relevant in this enquiry.
Reference was also made to the decision of their Lordships of the Privy Council in Mst.
Bhagwati Devi vs Chowdry Bholonath Thakur(2).
This was a case of a gift inter vivos.
The gift to Mst.
Chunderbutti, his wife, was in these terms (1) (19I4) (2) (1874 75) 2 I.A 256.
862 "the remaining 'milkiut ' and 'minhai ' 'estates, together with the amount of ready money, articles, slaves, and all household furniture I have placed in the possession of Mst.
Chunderbutti Thakurain, my wife, to be enjoyed during her lifetime, in order that she may hold possession of all the properties and milkiut possessed by me, the declarant, during her lifetime, and by the payment of Government revenue, appropriate the profits derived therefrom, but that she should not by any means transfer the milkiut estates and the slaves; that after the death of my aforesaid wife the milkiut and household furniture shall devolve on Girdhari Thakur, my karta (adopted son).
" The subordinate judge held that Chunderbutti got an estate for life with the power to appropriate profits and Girdhari got a vested remainder on her death.
The High Court took a different view and held that Chunderbutti took the estate in her character as a Hindu widow.
The Privy Council on this will held as follows " Their Lordships do not feel justified, upon mere conjecture of what might probably have been intended, in so interpreting it as materially to change the nature of the estate taken by Chunderbutti.
If she took the estate only of a Hindu widow, one consequence, no doubt, would be that she would be unable to alienate the profits, or that at all events, whatever she purchased out of them would be an increment to her husband 's estate, and the plaintiffs would be entitled to recover possession of all such property, real and personal.
But, on the other hand, she would have certain rights as a Hindu widow; for example, she would have the right under certain circumstances, if the estate were insufficient to defray the funeral expenses or her maintenance, to alienate it altogether.
She certainly would have the power of selling her own estate; and it would further follow that Girdhari would not be possessed in any sense of a vested remainder, but merely of a contingent one.
It would also follow that she would completely represent the estate, and under certain circumstances the statute 863 of limitations might run against the heirs to the estate, whoever they might be.
Their Lordships see no sufficient reason for importing into this document words which would carry with them all these consequences, and they agree with the subordinate judge in construing it according to its plain meaning.
" These observations have to a certain extent relevance to the present case but on the facts this case is also distinguishable.
This will was couched in different language than the will in the present case.
There was a clear prohibition, forbidding the widow to make any transfers of the milkiuit estates and the slaves.
Reference was also made to a decision of the Bombay High Court in Lallu vs Jagmohan(1).
The will there ran as follows: " When I die, my wife named Suraj ' is owner of that property.
And my wife has powers to do in the same way as I have absolute powers to do when I am present, and in case of my wife 's death, my daughter Mahalaxmi is owner of the said property after that.
" It was held that Suraj took only a life estate under the will, with remainder over to Mahalaxmi after her death and the bequest to Mahalaxmi was not contingent on her surviving Suraj, but that she took a vested remainder which upon her death passed to her heirs.
After considering the rival contentions of the parties, we are of the opinion that no sufficient grounds have been made out for disturbing the unanimous opinion of the two courts below on the construction of this will.
Both the learned counsel eventually conceded that the language used in the will was consistent with the testator 's intention of conferring a life estate in the English sense as well as with the intention of conferring a Hindu widow 's estate.
It was, however, urged by Mr. Rajah Iyer that as no express or implied power of alienation for purposes of all legal necessities was conferred on the widow, that circumstance (1) Bom.
409. 864 negatived the view that the testator intended to confer upon his widow a Hindu widow 's estate as she would get in case of intestacy.
He also emphasized that the words of the gift over to the daughter as supporting his construction which was further reinforced by the words of the will limiting the widow 's estate " till your lifetime " and of the omission from therein of words such as nialik etc., while describing the widow 's estate.
Mr. Krisbnaswami lyengar, on the other hand, contended that the absence of any words in the will restricting her powers of alienation and putting a restraint on them, suggested a contrary intention and that the daughter 's estate was described as coming into being after the estate of the widow and was not conferred on her simultaneously with the widow, and this connoted according to the notions of Hindus a full Hindu widow 's estate.
In our judgment, there is force in the contention of Mr. Rajah Iyer for reasons already stated and in the result, therefore, we dismiss this appeal with costs.
Appeal dismissed.
Agent for the respondent Ganpat Rai.
[/INST]A Hindu Brahmin governed by the Mitakshara law made a will in which he gave the following directions: " After my life time, you, the aforesaid Ranganayaki Ammal, my wife, shall till your lifetime enjoy the aforesaid entire properties .
After your lifetime, Ramalakshmi Ammal, our daughter and her heirs shall enjoy them with absolute rights and powers of alienation such as gift, exchange and sale from son to grandson and so on for generations.
As regards the payment of maintenance to be made to C, wife of my late son, H, my wife Ranganayaki Ammal shall pay the same as she pleases and obtain a release deed." After the death of the testator his wife entered into possession of his properties but before the death of his wife, his daughter and all her children died: Held, (i) that on a proper construction of the will in the light of surrounding circumstances, the testator bad conferred on his 849 wife only an ordinary life estate, and alienations made by her would not endure beyond her lifetime ; (ii) that the testator 's daughter obtained under the will a vested interest in the properties after the lifetime of the widow, to which her husband succeeded on her death.
The rule of construction by analogy is a dangerous one to follow in construing wills differently worded, and executed in different surroundings.
Ram Bahadur vs Joger Nath Prasad , Pavani Subbamma vs Arumala Rama Naidu ([1937] , Nathu Rain Mahajan vs Ganga Bai ([1938] , Vasanta Rao Ammennamma vs Venkata Kodanda Rao ([1940] , Maharaja of Kolhapur vs Sundaram Iyer (I.L.R. 48 Mad. 1), Mahoned Shumsool vs Shewakram (2 I.A. 7), Ratna Chetty vs Narayana swami Chetty , Mst.
Bhagwati Devi vs Choudry Bholonath Thakur (2 I.A. 256) and Lallu vs Jagmohan (I.L.R. referred to.
Judgment of the Madras High Court affirmed.
</s> |
<s>[INST] Summarize the judgementAppeal No. 339/60.
Appeal from the judgment and decree dated November 17, 1955, of the Andhra Pradesh High Court in A. section No. 51/1951.
A. Banganadham Chetty, A. V. Rangam, A. Vedavalli and K. R. Chaudhri.
for the appellants.
B. Ganapathy Iyer, R. Thiagarajan and G. Gopalakrishnan, for the respondent No. I. 1962.
December 12.
The judgment of ' the Court was delivered by 997 MUDHOLKAR, J. This is an appeal by a certificate granted by the High Court of Andhra Pradesh under article 133 (1) (a) of the Constitution.
The relevant facts arc these The plaintiff respondent Ramaswamy & Co who carry on business in tobacco at Guntur instituted a suit against the appellant firm which also carries on similar business at that place and its alleged partners Kurapati Venkata Mallayya and Mittapalli Abbayya, for the recovery of the price of 112 bales of DB tobacco strips (hereafter referred to as DB strips) sold to them on June 5, 1946, amounting to Rs. 14,099/ and interest thereon from the date of purchase to the date of suit.
In addition, the respondent firm claimed interest from the date of suit to the date of realization.
It is the respondent firm 's case that the tobacco weighed 28,196 pounds and that the appellant firm purchased it by agreeing to pay its price at 8 annas per pound.
Further according to the respondent firm the appellant firm agreed to pay interest on the amount at 9% per annum.
The appellant firm denied having purchased 112 bales of tobacco from the respondent firm and denied also having agreed to pay its price at annas per pound or at any other rate.
They also denied the existence of any agreement to pay any interest.
According to the appellant firm in May, 1946 it secured a contract to supply to the Russian Government 3,000 bales of inferior tobacco at the rate of 8 annas per pound.
One Kottamasu Venkateswarlu (who was distantly 'related to the partners of the appellant firm) was managing partner of the respondent firm.
This firm had some inferior tobacco and Venketashswarlu pressed the appellant firm to take over 112 bales of the tobacco from it and tender them towar ds the contract with the Russian Government saying that the appellent firm may deduct one 998 anna per pound from the price received from the Russian Government towards their expenses and commission.
The appellant firm had reluctantly agreed to this request and despatched 97 out of the 112 bales to Kakinada after getting Agmark certificate with respect to them, with the assistance of Venkateswarlu The representative of the Russian Government, however, rejected the goods on the ground that they were of inferior quality.
Five bales out of these 97 bales were rejected by the Agmark authorities after re inspection of the goods at Kakinada.
Those bales were returned to Guntur along with other rejected bales which belonged to the appellant firm but they were consumed in an accidental fire in the godown of the a pellant firm.
The remaining 92 bales are said to be apeal lying with the shipping agent at Kakinada and that as the tobacco is of very poor quality no purchaser had yet been found for it.
Fifteen bales out of the 112 bales which had not been sent to Kakinada got damaged and had to be rebaled.
As a result of the rebaling they were reduced to ten bales and these are still lying with the appellant firm, which the appellantfirm was willing to return to the respondent firm on its paying the godown charges.
Thus, the main defence of the appellant firm is that it never purchased 112 bales of tobacco from the respondent firm and, therefore, the respondent firm could not sue it for the price of those bales.
It may be mentioned that before the institution of the suit a Receiver had been appointed in another suit for realization of the debts due to the 'respondent firm The court before which the suit was pending had made an order on June 22, 1949 permitting the ]Receiver to collect the debts due to the respondentfirm.
In pursuance of this order the Receiver Suryanarayana instituted the suit out of which this appeal arises, describing himself thus in the plaint: " 'I, Suryanarayana Garu, Receiver appointed 'in O.S. 999 275 of 1948 on the file of the District Munsif 's Court, Guntur".
The appellant firm contended that the suit was untenable because a Receiver has no right to institute a suit in his own name and further that the Receiver had not been expressly authorised by the court to institute the suit in question.
The appellantfirm also contended that the suit was barred by time.
It specifically contended that the respondent firm was not entitled either to the alleged price or to any interest.
The appellant firm further contended that Mittapalli Abbayya ceased to be a Partner of the firm since the vear 1942 because as a result of a partition between Abbayya and his son ., Abbayya 's interest in the appellant firm fell to the share of one of his sons, Kotilingam.
In consequence of the plea taken by the appellant firm that the suit was not tenable the respondentfirm amended the plaint with the leave of the court on December 27, 1949 by describing the plaintiff as ""Messrs. Thondepu Ramaswami & Co., represented by Suryanarayana Garu receiver appointed in O.S. 275 of 1948 on the file of the District Munsif 's Court, Guntur" in place of the original "I. Suryanarayana Garu, Receiver appointed in O.S. 275 of 1948 on the file of the District Munsif 's Court, Guntur".
Thereupon the appellant firm filed an amended written statement in which it contended that the amendment was made long after the period of limitation and that it does not cure the initial defect in the suit of having been filed by a person other than the one who was entitled to institute a suit and that consequently the suit was barred by limita.
The trial court held that the respondent firm had established the contract alleged by it but that it had not established that the appellant firm had agreed to pay the price at the rate of 8 annas per pound.
It, however, held that the price of tobacco 1000 was Rs. 5,639 3 0, but it, dismissed the suit on the ground that I, Suryanarayana was not entitled to institute a suit in his capacity as Receiver in 0.
section 275 of 1948, that the amendment of the plaint was made beyond the period of limitation and that, therefore, the suit was barred by time.
In appeal the High Court held that the Receiver was entitled to institute the suit having been authorised by the court to collect the debts of T. Ramaswami & Co., that at the most 'there was a misdescription of the plaintiff firm in the cause title of the suit which could be corrected any time and that consequently the suit was within time.
It further held that the price of tobacco agreed to between the parties was 8 annas per pound and that the plaintiff was entitled to a decree for Rs. 14,098/ and interest at 6% p.a. from the date of delivery of the goods till realisation.
The first point urged before us by Mr. Ranganadham Chetty on behalf of the appellant firm is that the High ' Court, as well as the Subordinate judge were in error in holding that the bales in question had been purchased by the appellant firm from the respondent firm.
This, however, is a question of fact and since the two courts below have found against the appellant firm on this point this court would not ordinarily interfere with such a finding.
Mr. Ranganadham Chetty, however, contended on the authority of the decision in Srimati Bibhabati Devi vs Kumur Ramendra Narayan Roy( ') that the practice of the court in appeals by special leave is not a castiron one and that it, would, therefore, be open to this Court to depart from it in, an appropriate case.
The aforesaid decision was referred to by this Court in Srinivas Ram Kumar vs Mahabir Prasad (2 ) and it was pointed out that when the courts below have given concurrent findings on pure questions of fact, this court would not ordinarily interfere with them (1) (1946) L.R. 73 I.A. 246, 259.
(2) (1951] S.C.R 277,281.
1001 and review the evidence for the third time unless there are exceptional circumstances justifying a departure from the normal practice.
Learned counsel contended that this is an unusual case because the reasons given by the High Court for holding that the transaction was a sale are quite different from those given by the trial court and in fact one of the reasons given by the High Court proceeds on a view of an important piece of evidence which is diametrically opposite to that expressed by the trial court.
Mr. Ringanadham 'Chetty pointed out that in support of its claim the respondent firm relied upon two entries in its account books Exs.
A 13 and A 14, that these entries were not relied tin by the trial court, but the High Court has without giving any reason for regarding them as genuine acted upon them.
What the trial court has said in para 14 of its judgment is as follows : " 'In order to establish the sale of 122 bales of flue cured virginia tobacco strips,, Ramaswami relies on certain entries in the account books of his firm.
Exhibit A 13 is the katha on page 27 of the day book of Thondepu Ramaswami & Co., containing an entry in respect of 112 bales weighing 28, 196 pounds at Re 0 8 0 per pound and debiting a sum of Rs. 14,098/ .
The words " 'Re. 0 8 0 per pound" are contai ned in the third line of the entry.
The words "112 bales weighing 28.,196 pounds at Re. 0 8 0 per pound" appear to be written closely.
The sum of Re. 14,098 appears in different ink.
Exhibit A 14 is the katha of the 1st defendant firm found on page 111 of the corresponding, ledger of Thondepu Ramaswami & Co. On 5 6 1964 a sum of Rs. 14,098 was debited in respect of 112 bales of barn tobacco weighing 28 196 pounds at Re. 0 8 0 per pound. ' In the second line of the entry the price therefore (in Telugue) and the debit 1002 of the sum of Rs. 14,098are found.
On 21st August, 1946 interest of Rs. 267 1 9 was added.
Exhibit A 17 is the interest Katha of Messrs. Thoadepu Ramaswami & Co, Exhibit A 16 is the katha at page 41 of the day book of Thondepu Ramaswami & Co. The katha shows that on 21 8 1946 to balancing entries 21 8 1946 two balancing entries for interest of Rs. 267 13 6 were made in the day book.
The entry on the right hand side has been scored out and Ramaswamy has not been able to explain why and under what circumstances the entry happens to be scored out.
The entry on the left hand side however, was not scored out.
The totals do not tally unless the sum of Rs. 267 13 6 is included in the aggegate sum mentioned on the right hand side on page 41.
It has been commented on behalf of the defendants that Ramaswamy himself has no personal knowledge of the entries, that the clerks who made the entries in the account books have not been examined and that Exhibits A 13, A 14 and A 1 6 cannot be relied on in order to come to the conclusion that the transaction relating to 112 bales was a sale and only a sale.
Though Ramaswamy was not present when the entries were made in the several registers of his firm, it is not disputed that the accounts have been maintained in the usual course of business.
" ling with the question of price the trial court has ob served: " 'Much reliance cannot be placed on the rate mentioned in Exhibits A 13 and A 14 and the price has to be determined independently having regard to the fact that the price of tobacco depreciates gradually with its age.
" If will thus be seen that the trial court has not rejected these entries outright but only rejected them in so far as they were intended to establish the price agreed to be paid to the respondent firm.
1003 Dealing with this matter the High Court has observed thus : " 'Exhibit A 13 is the entry in the day book of Thondepu Ramaswami & Co. under date 5 6 1946 wherein a sum of Rs. 14,098 is debited to the defendant firm in respect of 112 bales of tobacco weighing 286196 pounds at 8 annas per pound.
Though the figures "Rs. 14,098" were written in a different ink from the rest of the entry this is not a suspicious circumstance because the rest of the entry which is in the same ink and which is written in a normal manner contains reference to the sale of 28,196 pounds at 8 annas per pound.
The resultant total is entered in the column on the right hand side as Rs. 14,098.
It may be that the figure of Rs. 14 098 was entered a: little later before the accounts for the day were closed.
Exhibit A 14 is the corresponding ledger of Thondepu Ramaswami & Co. and the entries in the day book are duly incorporated in the ledger.
" Then later on the High Court has observed "At the same time the entries in the regularly kept books of the plaintiff firm cannot be thrown overboard particularly when no challenge was made of their genuineness.
" The High Court has also stated : ""It is apparent from Exhibit A 23 that the defendant firm was shown to be a debtor not merely with respect to Rs. 14,098 the price of 28,196 pounds but also in respect of the interest due upon the sum, and the plaintiff firm has paid income tax thereon." toto the High Court has given certain reasons and even though we may not agree with them it cannot be said that there is any unusual circumstance which would warrant our reviewing afresh the evidence on 1004 the point as to whether the transaction in question was a sale or not.
Mr. Ranganadham Chetty next contended that the courts below have not borne in mind the true significance of the words ""no price" occurring in the entry relating to the 112 bales in question in the verification register exhibit A 28.
The Entry reads thus "5 6 46 For 112 bales of Baru tobacco no price at Re. 0 8 0 per pound The entries were in Telugu and the actual words used are and according to Mr. Ranganadham Chetty they mean that there was no sale.
The Courts below, however, which were conversant with the language, have understood the entry to mean "no price" and that is how the ' expression has been translated in the paper book and it is not open to Mr. Ranganadham Chetty to say that the meaning is otherwise than this.
Mr. Chetty then contended that even accepting that the meaning is only " 'no price" the proper inference to be drawn is that there was no transaction of sale and that the rate of 8 annas per pound stated in the entry is given merely for valuing the 112 bales.
That may be so but it does not negative the effect of the other entries which clearly point to the transaction being a sale.
Some point was also sought to be made by Mr. Ranganadham Chetty from the fact that no copy of the transport permit required to be taken for the transfer of excisable articles from one bonded warehouse to another was placed on record.
We fail to see the significance of this because the appellant firm admits that 112 bales of tobacco were actually received by it from the respondent firm.
It will thus be seen that there are no exceptional circumstances or unusual reasons which would induce us to re examine the entire evidence on the point ourselves.
We, therefore, decline to do so.
1005 The next question is whether the suit was in proper form and was within time.
Though the case of section for the suit arose on June 5, 1945, it is admitted before us that the courts were closed on June 5, 1949 and the suit was filed on the day on which they reopened.
It would, therefore, be within time if it was properly constituted on the date on which it was filed.
In Jagat Parini Dasi vs Naba Gopal Chaki (1) which is the leading case on the point it was held by the Calcutta High Court that a court must authorise a Receiver to sue in his own name and a Receiver who is authorised to sue though not expressly in his own name, may do so by virtue of his appointment with full powers under section 503 of the Code of Civil Procedure (Act XIV of 1882).
In coming to this conclusion the learned judges pointed out that though, the object and purpose of the appointment of a Receiver may be generally stated to be the Preservation of the subject matter of the litigation pending judicial determination of the rights of the parties it does not necessarily follow that if he is authorised to sue, he cannot sue in his own name.
Then the learned judges pointed out : ,,Though he is in one sense a custodian of the property of the person, whom in certain respects he is made to supplant, there seems to be no reason why his power should not be held to be co extensive with his functions.
It is clear that he cannot conveniently perform those functions, unless upon the theory that he has sufficient interest in the subject matter committed to him, to enable him to sue in respect thereof by virtue of his office, in his own name.
On the whole, we are disposed to take the view that, although a receiver is not the assignee or beneficial owner of the property entrusted to his care, it is an incomplete and inaccurate statement of his relations to the property to say that (1) Cal.
305. 1006 he is merely its custodian, When a Court has taken property into its own charge and custody for the purpose of administration in accordance with the ultimate rights of the Parties to the litigation, it is in custodia legis.
The title of the property for the time being, and for the purposes of the administration, may, in a sense, be said to be in the Court.
The receiver is appointed for the benefit of all concerned; he is the representative of the Court, and of all Parties interested in the litigation, wherein he is appointed.
He is the rightarm of the Court in exercising the jurisdiction invoked in such cases for administering the property; the Court can only administer through a receiver.
For this reason; all suits to collect obtain possession of the property must be prosecuted by the receiver, and the proceeds received and controlled by him alone.
If the suit has to be nominally prosecuted in the name of the true owners of the property, it is an inconvenient as well as useless form inconvenient, because in many cases, the title of the owners may be the subject matter of the litigation in which the receiver has been appointed useless, because the true owners have no discretion as to the institution of the suit, no control over its management, and no right to the possesion of the proceeds." (pp. 316 317) Later the learned judges pointed out, that for the time being and for the purpose of administration of the assets the real party interested in the litigation is the Receiver and, therefore, there is no reason why the suit could not be instituted in his own name.
The learned Judges then referred to a number of cases in support of their conclusion.
It seems to us that the view of the Calcutta High Court that a Receiver who is appointed with full powers to administer the property which is Custodia legis or 1007 who is expressly authorised by the court to institute a suit for collection of the assets is entitled to institute a suit in his own name provided he does so.
in his capacity as a Receiver.
If any property is in custodia legis the contesting parties cannot deal with it in an manner, and, therefore, there must be some authority competent to deal with it, in the interest of the parties themselves.
A Receiver who is placed in charge of the property on behalf of a court can be the only appropriate person who could do so.
His function cannot be Limited merely to the preservation of the property and it is open to a court if occasion demands, to confer upon him the power to take such steps including instituting suits in the interest of the parties themselves.
Here apparently the Receiver was not a person with full powers but by its order dated June 26, 1949 the, court authorised him to collect debts, particularly as some debts were liable to get barred by time.
The Receiver, therefore, had the right to institute the suit in question.
It is, however, contended that the order does not say specifically that he should institute a suit.
In our opinion, the authority given to the Receiver ",to collect the debts" is wide enough to empower the Receiver to take such legal steps as he thought necessary for collecting the debtsincluding instituting a suit.
The suit as originally instituted, was thus perfectly competent.
The High Court has observed that even assuming that it would have been more appropriate for the Receiver to show in the cause title that it was the firm which was the real plaintiff and that the firm was suing through him it was merely a case of misdescription and that the plaint could be amended at any time for the purpose of showing the correct description of the plaintiffs We agree with the High Court that where there is a case of misdescription of parties it is open to the court to allow an amendment of the plaint at any time and the question of limitation would not arise in such a case.
1008 [His Lordship then dealt with the point regarding the rate of interest.] x x x x x x x x x Accordingly we set aside the decree of the High Court, allow the appeal in part and pass a decree in favour of the respondent firm for Rs. 5,639/3/ with interest at 6 per cent per annum from the date of the transaction till realization.
The respondent firm will proportionate costs throughout from the appellant firm, which would bear its own costs.
Appeal allowed in part.
[/INST]The appellant was convicted under section 379 of the Indian Penal Code.
He was a Superintendent in the Chief Engineer 's office and got a file removed from the Secretariat through a clerk, took it home and made it available to his friend, the co accused, who removed certain documents by substituting others.
The appellant returned the file to the office that next day.
He made a confession when the Chief Engineer threatened that if he did not disclose the truth the matter would be placed in the hands of the Police.
That confession was later retracted.
The three courts below were of the opinion that the statement of the Chief Engineer did not amount to a threat in the circumstances of the case.
Held, that section 24 of the evidence Act waives the stringent rule of proof as laid down by section 3 of the Act and requires the court to form a prima facie opinion on the evidence and circumstances of the particular case whether a confession should or should not be excluded as being involuntary.
It is not possible to lay down any inflexible standard and the Supreme Court acting under article 136 of the Constitution would not ordinarily differ from the concurrent findings arrived at by the courts below.
A retracted confession may form the legal basis of a con viction if the court is satisfied that it was true and voluntarily made.
As a general rule of practice, however, it is unsafe to rely upon a confession, much less a retracted confession, unless the court is satisfied that the retracted confession was true, voluntarily made and corroborated in material particulars.
In the present case there could be no doubt that the necessary ingredients constituting the offence of theft were mad 690 To constitute theft the loss caused need not be permanent Even temporary dispossession, though the person taking the property intended to restore it, may constitute theft.
Illustrations (b) and (1) of section 378 of the Indian Penal Code clearly show that a temporary deprivation of another person of his property may cause wrongful loss to him.
</s> |
<s>[INST] Summarize the judgementiminal Appeals Nos. 150 and 185 of 1961.
Appeals by special leave from the judgment and order dated June 19, 1961 of the former Bombay High Court in Criminal Appeals Nos. 218 and 242 of 1961 respectively.
section Mohan Kumarmangalam, R. K. Garg and M. K. Ramamurthi, for the appellant (in Cr. A. No. 150/61).
B. M. Mistry, Ravinder Narain and J. B. Dadachanji, for the appellant (in Cr. A. No. 185 of 1961).
B. K. Khanna, B. R. G. K. Achar and R. H. Dhebar, for the respondent (in both the appeals).
February 26, 1964.
The Judgment of the Court was delivered by RAGHUBAR DAYAL J.
Shiv Prasad Chunilal Jain, appellant in Criminal Appeal No. 150 of 1961 was accused No. 3 and Pyarelal Ishwardas Kapoor, appellant in Criminal Appeal No. 185 of 1961 was accused No. 2, at the Sessions Trial before the Additional Sessions Judge, Greater Bombay.
Along with them was a third accused, Rameshwarnath Brijmohan Shukla who was accused No. 1 at the trial.
As the two appeals arise from a common judgment, we would dispose of them by one judgment.
The appellants would be referred to as accused No. 3 and accused No. 2 respectively.
The facts leading to the conviction of the appellants are that a large quantity of iron angles was consigned early in February 1959 from Gobind Garh to Raypuram under railway receipt No. 597481, They were despatched in an open wagon bearing E.R. No. 69667.
The labels of the wagon were changed at Itarsi railway station and it was diverted to Wadi Bunder under a label showing that the iron angles had been despatched from Baran to Wadi Bunder under railway receipt No. 43352 dated February 6, 1959.
This wagon reached Wadi Bunder on February 16, 1959.
On February 17 it was unloaded by Baburao 923 Gawade, P.W.I and Shridhar, P.W. 14.
On February 18, accused No. 1 obtained the delivery sheet of the bill and signed it in the name of Shri Datta.
He also obtained delivery of the iron angles from the railway and signed the Railway Delivery Book in the name of Shri Datta.
The railway authorities delivered these on the presentation of the forged receipt No. 43352 and on payment of the charges amounting to Rs. 1,500/ .
These iron angles were then transported to the godown of the National Transport Company at Sewri and stored there.
The entries in the book showed their receipt in the account of accused No. 3 and also contained a further entry indicating the goods to be received in the account of accused No. 2.
The latter entry was made on the receipt of a chit, Exhibit Z8, from accused No. 1 saying that the goods be entered in the name of accused No. 2.
On February 24, 1959 the accused No. 2 signed an application, Exhibit K, addressed to the head office of the National Transport Company for delivering the goods.
Accused No. 1 obtained the goods from the godown of that company on February 26 and March 3, 1959.
A complaint by the original consignee about the nonreceipt of the iron angles sent from Gobind Garh led to an enquiry and eventual prosecution of the three accused.
Six charges were framed.
The first charge was against all the accused for an offence punishable under sections 471 and 467 read with section 34 I.P.C. and stated that in furtherance of their common intention to cheat the railway administration, accused No. 1 had fraudulently or 'dishonestly used the forged railway receipt No. 43352.
The second charge was framed in the alternative.
Firstly it charged all the accused for an offence under section 467 read with section 34 I.P.C. on account of accused No. 1 having forged the bill portion.
In the alternative, accused No. 1 was charged with the offence under section 467 I.P.C. and the other accused Nos. 2 and 3 were charged under section 467 read with section 109 I.P.C. for having abetted accused No. 1 in the commission of that offence.
924 Charges Nos. 3 to 6 were similarly framed in the alternative, i.e., in the first instance all the three accused were charged with certain offences read with section 34 I.P.C. while in the alternative accused No. 1 was charged of the specific offence and the other two accused were charged with that offence read with section 109 I.P.C. The accused were tried by the Additional Sessions Judge, Greater Bombay, with the aid of a jury.
The jury returned a unanimous verdict of guilty against all the accused for the various offences read with section 34 I.P.C.
The verdict of the jury was not recorded with respect to the five alternative charges against accused No. 1 regarding substantive offences and against accused Nos. 2 and 3 with respect to the various offences read with section 109 I.P.C. The Sessions Judge accepted the verdict of the jury and convicted them of the various offences read with section 34 I.P.C. Their appeals to the High Court were unsuccessful and therefore accused Nos. 2 and 3 have preferred these appeals after obtaining special leave from this Court.
The main contention for the appellants is that the learned Sessions Judge misdirected the jury with respect to the requirements of section 34 I.P.C.
The contention is that the various offences were actually committed by accused No. 1 on February 18, that neither accused No. 2 nor accused No. 3 was present when he presented the forged railway receipt, did other criminal acts and took delivery of the iron angles and that therefore even if they had agreed with accused No. 1 for the cheating of the railway administration by obtaining the iron angles dishonestly by presenting the forged receipt, they might have abetted the commission of the various offences, but could not be guilty of those offences with the aid of section 34 I.P.C. whose provisions, it is contended, do not apply in the circumstances of the 'Case.
It is contended that for the applicability of section 34 against an accused, it is necessary that that accused had actually participated in the commission of the crime either by doing something which forms part of the criminal act or by at least doing something which would indicate that be was a participant in the commission of that criminal act 'at the time it was committed.
Reliance is placed on the 925 cases reported as Barendra Kumar Ghosh vs The King Emperor(1) and Shreekantiah Ramayya Munipalli vs The State of Bombay(2).
The learned Sessions Judge in the instant case had told the jury : "In case you come to the conclusion that there was a common intention in the minds of all the three accused and accused No. 1 was acting in furtherance of that common intention, all the accused would be answerable for the offences proved against accused No. 1 by virtue of the provisions of section 34 of the Indian Penal Code, and it would be no answer to the charge to say that the acts were done by accused No. 1 alone.
Therefore, you have first, to consider for yourselves what offences are proved against accused No. 1.
You have next to ask yourselves whether it is proved (and it can also be proved by circumstantial evidence) that there was a common intention in the minds of all the three accused and the acts done by accused No. 1 were done in furtherance of that common intention.
If your answer is 'yes ' all the three accused would be guilty of the charges proved against accused No. 1 by virtue of section 34 of the Indian Penal Code.
" It is contended that in thus putting the case to the jury the learned Sessions Judge was in error as he did not take into consideration the fact that accused Nos. 2 and 3 were not present at all at the time when the various offences were actually committed by accused No. 1.
The two cases relied upon by the appellants support their contention.
In Shreekantiah 's case(2), three persons were convicted on several charges under section 409 read with section 34 I.P.C. for committing criminal breach of trust of certain goods entrusted to them as government servants in charge of the stores depot (1) L.R. 52 I.A. 40.
(2) ; 926 at Dehu Road near Poona.
The stores had illegally passed out of the depot and were handed over to a person who was not authorised to get them from the depot.
It was alleged that those accused had conspired to defraud the Government of those properties and that it was in pursuance of that conspiracy that they had arranged to sell the goods to the other person.
Accused No. 1 in that case was not present when the goods were loaded nor was he present when they were allowed to pass out of the gates, that is to say, he was not present when the offence was committed.
Bose J., delivering the judgment of the Court, said at p. 1189 : "If he was not present, he cannot be convicted with the aid of section 34.
He could have been convicted of the abetment had the jury returned a verdict to that effect because there is evidence of abetment and the charge about abetment is right in law.
But the jury ignored the abetment part of the charge and we have no means of knowing whether they believed this part of the evidence or not.
" In considering the misdirection in the charge to the jury and the requirements of section 34 I.P.C. the learned Judge said at p. 1188 : "The essence of the misdirection consists in his direction to the jury that even though a person 'may not be present when the offence is actually committed ' and even if he remains 'behind the screen ' he can be convicted under section 34 provided it is proved that the offence was committed in furtherance of the common intention.
This is wrong, for it is the essence of the section that the person must be physically present at the actual commission of the crime." Shreekantiah 's case(1) is practically similar to the present case.
Both accused No. 2 and accused No.
3 deny their presence at the railway station on February 18 when the various offences were committed.
None deposed that accused No. 3 was then present.
The presence of accused No. 2 was, however, stated by Babu Rao Gawade, P.W. 1.
(1) ; 927 He had not stated so in his statement before the police during investigation and the summing up by the learned Sessions Judge was that, under those circumstances, it was for the jury to consider whether to believe the statement of the s witness in Court or not.
It cannot be said as there was other evidence against accused No. 2 as well about his connection with this criminal transaction whether the jury believed his presence at the railway station on February 18 or not.
In Jaikrishnadas Manohardas Desai vs The State of Bombay(1), Shreekantiah 's case(2) came up for consideration and was distinguished, on facts.
In that case, the two accused, who were directors of a company, were convicted of an offence under section 409 read with section 34 I.P.C. for committing criminal breach of trust with respect to certain cloth supplied to them.
It was alleged that one of the accused was not working at that factory during the period when the goods must have been removed and that therefore he could not be made liable for the misappropriation of the goods by taking recourse to the provisions of section 34 I.P.C. Shah J., delivering the judgment of the Court, said at p. 326: "But the essence of liability under section 34 is to be found in the existence of a common intention animating the offenders leading to the doing of a criminal act in furtherance of the common intention and presence of the offender sought to be rendered liable under section 34 is not, on the words of the statute, one of the conditions of its applicability. .
A common intention a meeting of minds to commit an offence and participation in the commission of the offence in furtherance of that common intention invite the application of section 34.
But this participation need not in all cases be by physical presence.
In offences involving physical violence, normally presence at the scene of offence of the offenders sought to be rendered liable on the principle of joint liability may be necessary, but such is not the case in respect of other offences where the offence ' consists of diverse acts which may be (1) (2) ; 928 done at different times and places.
In Shree Kantiah 's case(1), misappropriation was com mitted by removing the goods from a Government depot and on the occasion of the removal of the goods, the first accused was not present.
It was therefore doubtful whether he had participated in the commission of the offence, and this Court in those circumstances held that participation by the first accused was not established.
The observations in Shree Kantiah 's case(1) in so far as they deal with section 34 of the Indian Penal Code must, in our judgment, be read in the light of the facts established and are not intended to lay down a principle of universal application." Accused No. 1, in the present case, alone did the various acts on February 18, 1959 which constituted the offences of which he was convicted.
Accused Nos. 2 and 3 took no part in the actual commission of those acts.
Whatever they might have done prior to the doing of those acts, did not form an ingredient of the offences committed by accused No. 1.
They cannot be said to have participated in the commission of the criminal act which amounted to those various offences.
They cannot be therefore held liable, by virtue of section 34 I.P.C., for the acts committed by accused No. 1 alone, even if those acts had been committed in furtherance of the common intention of all the three accused.
The result, therefore, is that the conviction of the appellants, viz., accused Nos. 2 and 3, for the various offences read with section 34 I.P.C. is to be set aside.
We did not hear, at first, the learned counsel for the appellants, on the alternative offences of abetment being made out against the appellants and with respect to which the verdict of the jury was not recorded by the Sessions Judge.
We did not consider it necessary to remit the case for further proceedings with respect to those charges and preferred to dispose of the case finally after giving a further hearing to the learned counsel for the appellants.
We accordingly heard them on the charges relating to the appellants abetting accused No. 1 in the commission of the (1) ; 929 various offences, subject matter of charges Nos. 2 to 6 and now deal with that matter.
We need not discuss the evidence on the record and would just note the various facts which are established from the evidence or which are admitted by the accused.
The relevant facts having a bearing on the question of accused No. 2 abetting the commission of the offences com mitted,by accused No. 1 are : 1.
Accused No. 1 is the servant of accused No. 3 at whose shop accused No. 2, who is a broker, sits.
Accused No. 2 deals in non ferrous goods.
Accused No. 2 went with Baburam Gavade, P.W. 1, a clearing agent, on February 17, 1959, to see the goods.
The godown register showed the angle irons to be received in the account of Shiv Prasad Bimal Kumar and Pyare Lal, accused No. 2.
Accused No. 2 wrote the letter Exhibit K to the National Transport Company for issuing, the delivery order with respect to the angle irons in order to enable him to take delivery thereof.
Accused No. 2 was in possession of the note, Exhibit Z 7 which he delivered to the police during the investigation.
The relevant facts having a bearing on the alleged abetment of the offences by accused No. 3 are 1.
Accused No. 1 is an employee of accused No. 3. 2.
The angle irons were stored at the depot of the National Transport Company at the instance of, accused No. 1. 3 The books of the godown noted their receipt in the account of accused No. 3, though the account Showed further that they were received in the, account of accused No. 2.
This further entry was,made on receipt of Exhibit Z 8 from .lm0 134 159 S.C. 59 930 accused No. 1 when the last lot was delivered at the godown on February 18.
The entire writing on Exhibit Z 7 except the signature of an unknown person and the date below it, was written by accused No. 3.
That document reads: "To Piaraya Lal c/o M/s. Sheopershad Bimal Kumar, Bombay.
No. 43351, dated 4 2 59 Ashoknagar to Carnac Bridge.
No. 43352, dated 6 2 59 Baran to Wadi Bunder.
I have received the material of the above RR which I have handed over to you for clearance.
Sd./ Yashwant 24 2 1959.
" Besides these circumstances, it is urged for the State that the effect of the diversion of the wagon from its right course at Itarsi railway station indicates that the people responsible for it must have a fairly large and influential organization with funds and that such a diversion could no$ have been merely at the instance of accused No. 1, all employee of accused No. 3, who is a substantial merchant About Rs. 1,5001/ were paid as charges to the railway authorities before the angle irons could be taken delivery of Accused No. 1 could not have been in a position to make that payment.
It is further urged that accused No. 1 would not have stored the goods with the National Transport Company unless the storage was on account of his master, accused No. 3.
Accused No. 2 admits his going to see the goods on February 17, but states that he lost his interest in the good$ as they were iron angles and his line of business was in non ferrous goods.
He explains his singing the letter Exhibit 931 K by saying that he did so at the instance of accused No. 3 who represented to him that accused No. 1 had, by mistake, stored the goods in the name of accused No. 2 and of accused No. 3 showing him the document Exhibit Z 7 which he retained with himself.
Accused No. 3 states that he had nothing to do with this matter and that he wrote Exhibit Z 7 at the instance of accused No. 2 who asked him to do so, he himself being unable to write in English or Hindi.
We now discuss the evidence to determine whether the accused Nos. 2 and 3 abetted the commission of the offences committed by accused No. 1.
Exhibit Z 7, as originally written, does not, appear to have had the first line, viz., the writing of 'To, Piaraya Lal C/o '.
This was written subsequently.
This is clear, as urged for accused No. 2, from the facts that it appears to have been written with a different pen and, possibly, with different ink also, and because the word 'C/o ' has been written at an unusual place.
In ordinary writing, it should have been in line with the latter expression 'M/s. Sheopershad Bimal Kumar '.
It follows therefore that this document was first written by accused No. 3 to show that a third person had entrusted him with the railway receipt No. 43352, dated February 6, 1959, and that that person had received the material to which the railway receipt related.
In this original form, the only conclusion possible from the original contents of the document can be that M/s. Sheopersbad Bimal Kumar, of which accused No. 3 is the proprietor, received this receipt from the third person in order to clear the good.
& from the railways.
This would amply explain accused No. 1 taking delivery of the goods on February 18 and storing them with the National Transport Company in the account of accused No. 3 and the entries in the godown register.
Himmatlal, P.W. 13, is the godown keeper.
He issued the receipt Exhibit PI which records: "We have today received the under mentioned goods for storage with us in our godown No. IPL on behalf of and under lien to Shiv Prasad Bimal Kumar.
" 932 This is a clear indication of the fact that the goods were stored on behalf of Sheopershad Bimal Kumar, i.e., accused No. 3.
The words 'under lien ' are of great significance in this respect and show that the storage was not shown to be on behalf of accused No. 3 merely because the angle irons were sent by accused No. 1 who was an employee of accused No. 3.
The expression 'under lien ' points to there being some specified transaction between accused No. 3 and the National Transport Company for the storing of the articles.
This note further confirms the statement of Himmatlal that he had all first written in the accounts that the goods were received on account of Sheopershad Bimal Kumar and that it was on receipt of Exhibit Z 8 from accused No. 1 that he noted the words 'Account Pyare Lal ' in the entries with respect to those goods.
The circumstance that accused No. 3 was in a better position to finance the transaction than accused No. 1, is also consistent with the aforesaid conclusion from the original contents of Exhibit Z 7.
Apart from the apparent later noting of the first line in this document, Exhibit Z 7, there appears no good reason why the receipt should have been written in this form if it was to be written at the instance of accused No. 2.
There was no reason to give the address of Pyare Lal as c/o M/s. Sheopershad Bimal Kumar.
The later entry in this document must have been therefore for a purpose And that could have only been to show that the railway receipt No. 43352 was dealt with by accused No. 2 and not by accused No. 3.
Mention may be made here of the fact that certain witnesses who had, during their police statements, referred to certain actions of accused No. 3, stated in Court that those acts were committed by accused No. 2.
No reliance can be placed on any of the statements of those witnesses and this fact is just mentioned to show that it fits in with the very first attempt in converting the document originally prepared to show that accused No. 3 had dealt with this forged railway receipt into a document showing that it was 933 not accused No. 3 but accused No. 2 who dealt with that receipt.
Accused No. 2 has been acting as a broker.
He signed Exhibit K.
He must be conversant with the language in which he signed.
It was not necessary that the receipt Exhibit Z 7 should have been written in English or in Hindi even if accused No. 2 did not know any of those languages.
We are therefore not prepared to accept the explanation of accused No. 3 with respect to his recording the document Exhibit Z 7.
We hold, as admitted by him, that he had written this document.
It makes reference to the forged receipt of which advantage was taken in getting delivery of the iron angles.
Accused No. 3, writing such a receipt, clearly points to his being concerned with the taking delivery of the iron angles, by accused No. 1, his employee.
Once the forged receipt is traced to accused No. 3, from his own writing, the natural conclusion is that it was he who passed it on to his employee accused No. 1 for the purpose of getting delivery of those goods from the railway authorities.
He thus aided accused No. 1 in obtaining delivery of those goods, and in his committing the various offences for achieving that object.
The further fact that the receipt was endorsed in the name of Datta and not in the name of accused No. 1, also proves that accused No. 3 must have known that the receipt he was dealing with was not a genuine receipt for the goods which were to be taken delivery of.
If he had believed the receipt to be a genuine one, he would have endorsed it or got it endorsed in the true name of his employee.
His employee too would not have taken delivery under a false name.
We are therefore of opinion that it is established from these various circumstances and facts that accused No. 3 had abetted the commission of the offences, the subject matter of charges Nos. 2 to 6, by accused No. 1.
The points in favour of accused No. 2 are that he does not deal in non ferrous metals and therefore he would not have taken any interest in the transaction after he had found out on February 17 that the goods were ferrous and not non ferrous.
The fact that the goods were not stored in his name in the accounts of the godown of the National Trans 934 port Company, but were stored in the first instance in the name of No. 3, also goes in his favour.
If accused No. 3 had nothing to do with it and accused No. 1 was simply acting for accused No. 2, he would have sent instructions in the very first instance to Himmatlal that goods were to be stored in the account of accused No. 2.
He did not do so.
He sent intimation for storing the goods in the name of Pyarelal with the last lorry transporting the iron angles to the godown.
Pyarelal had no previous dealings with the National Transport Company.
In this connection, the exact direction given by accused No. 1 is of some significance.
The direction given by him in Exhibit Z 8 was 'Please give a receipt in the name of a/c Pyare Lal '.
The request was not that the goods were of Pyare Lal and so be stored on his account.
That should have been the natural direction.
The receipt would have then been issued in the name of Pyare Lal and of nobody else.
The direction given by accused No. 1 therefore indicates that for certain purposes he desired the receipt alone to be in the name of Pyare Lal.
Naturally, Himmatlal had to make some entry in the books of the godown which would be consistent with a receipt issued in the name of Pyare Lal.
Himmatlal therefore noted the words 'account Pyare Lal ' below the original note 'account Sheopershad Bimal Kumar ', but saw no reason to make a statement in the receipt Exhibit P that the goods were stored on behalf of Pyare Lal and noted in it that they were stored on behalf and under lien to Sheopershad Bimal Kumar.
Accused No. 2 signed the letter Exhibit K for the issue of the delivery order.
His explanation is that he did so when accused No. 3 insisted and told him that his employee had by mistake stored the goods in his name.
Ordinarily, this should not have been believed by accused No. 2 as there was no reason why accused No. 1 should store the goods in his name by mistake.
He could have and might have suspected something not straight, but could shake off such suspicion by his being shown the receipt Exhibit Z 7, which showed that the goods had been cleared by A 3 on behalf of certain person who had passed on that receipt.
He was under an obligation to accused No. 3 and it is possible that he could 935 not have strongly resisted the request of accused No. 3 sign the letter Exhibit K.
Accused No. 3 had necessar to obtain a letter signed by Pyare Lal when the goods has not been shown to be stored in his account but were not in the account of Pyare Lal or of both Sheopershad Bin Kumar and Pyare Lal.
It is significant that accused No. 2 himself did not to take delivery of the goods.
It was accused No. 1 was took the delivery in two lots and each time signed the receipt in the name of Pyare Lal.
If accused No. 2 was also a party to the dishonest obtain ing of the goods from the railway, there would not ha been any occasion for such duplication of names on who behalf the goods were stored with the National Transport Company or for such a document as Exhibit Z 7 commitment into existence or for accused No. 2 keeping the document with himself.
He kept it with himself for his protection an produced it for that purpose during investigation.
It may be that when accused No. 3 tried to dispel his doubts wh.
he was requested to sign the letter Exhibit K, accused No. himself suggested the receipt Exhibit Z 7 to be address, 'in his name, as only then that receipt could be of any he to him.
In these circumstances, we are of opinion that the complicity of accused No. 2 in the commission of the varios offences by accused No. 1 is not established beyond reason able doubt.
We therefore allow the appeal of Pyare Lal and acquired him of the offences he was convicted of.
We dismiss tl.
appeal of accused No. 3, Shiv Prasad Chunilal Jain, by alter his conviction for the various offences read with section 3, I.P.C. to those offences read with section 109 I.P.C., and mainta.
the sentences.
Appeal No. 185 allowed at, Appeal No. 150 dismisses Conviction altered and sentence maintained.
[/INST]The appellants and the five respondents were displaced persons.
The Deputy Custodian of Nizamabad District allotted about 60 acres of land to the five respondents.
The allotment was by way of lease.
There was no condition imposed upon them that they should cultivate the lands personally.
While the lease was continuing in force, the Government of India issued a Press Note on November 13, 1953 by which they announced that they had decided to allot evacuee agricultural land in Hyderabad State to displaced persons whose claims for agricultural land had been verified under the Displaced Persons (Claims) Act, 1950.
The appellants made an application in pursuance of this notifi cation and on May 4, 1954 the land now in dispute, though under a subsisting lease in favour of the respondents, was allotted to them.
In the mean time the , came into force on October 9, 1954.
Under Section 20 of this Act, the Regional Settlement Com missioner issued Sanads in favour of appellants in respect of these lands.
Both the appellants and the respondents claimed these disputed plots.
The matter went up to the Deputy Chief Settlement Commissioner.
He referred the case of both parties to the Government of India for action under section 33 of the Act.
The matter was considered under section 33 of the Act by the Deputy Secretary in the Rehabilitation Ministry who upheld the contentions of these respondents.
The result was that the allotment made in favour of the appellants was set aside.
It is the legality of this order that is challenged in this appeal.
Held (i) The order of the Central Government was covered by section 33 of the Act as one dealing with and rectifying an error committed in relation to a "thing done or action taken" with respect to a rehabilitation grant to a displaced person.
Not merely the order of the Regional Settlement Commission rebut the entire question as to whether the respondents as original allottees by way of lease were entitled to the relief of restoration was referred to the Central Government by reason of the order of the Deputy Chief Settlement Commissioner.
Both the parties were heard on all the points by the Central Government before the orders were passed and it would not therefore be right to consider that the matter in issue before the Central Government was namely the correctness of the order of the Regional Settlement Commissioner, which read in vacuo might not be comprehended within section 39 of the Act.
(ii) It is manifest that a Sanad can be lawfully issued only on the basis of a valid order of allotment.
If an order of allotment which is the basis upon which a grant is made 104 is set aside it would follow, and the conclusion is inescapable that the grant cannot survive, because in order that grant should be valid, it should have been effected by a competent officer under a valid order.
If the validity of that order is effectively put an end to, it would be impossible to maintain unless there were any express provision in the Act or in the rules, that the grant still stands.
On the facts of this case it was held that where an order making any allotment was set aside the title which was obtained on the basis of the continuance of that order also fell with it.
Partumal vs Managing Officer, Jaipur, I.L.R. , distinguished.
Balwant Kaur vs Chief Settlement Commissioner (Lands), I.L.R. [1964] Punjab 36, approved.
</s> |
<s>[INST] Summarize the judgementiminal Appeal No. 186 of 1956.
Appeal by special leave from the judgment and order dated February 18, 1955, of the Punjab High Court in Criminal Appeals Nos. 389 and 406 of 1954, arising out of the judgment and order dated June 16, 1954, of the Court of the Additional Sessions Judge, Ferozepur, in Sessions Case No. 5 of 1954 and Trial No. 5 of 1954.
726 Jai gopal Sethi, Vidya Dhar Mahajan and K. L. Arora, for the appellants.
N.S. Bindra, B. H. Dhebar and T. M. Sen, for the respondent.
December 4.
The Judgment of the Court was delivered by SARKAR, J.
Eight persons were tried ::or offences under sections 148, 307 and 364 both read with sections 149 and 34 of the Indian Penal Code, by the Additional Ses.
sions Judge, Ferozepur.
The learned Sessions Judge acquitted four of the accused, namely, Het Ram, Teja Ram, Manphul and Surja Ram as he did not think that their presence at the occurrence had been proved beyond reasonable doubt.
He convicted the remaining four, namely, Narain, Jot Ram, Gheru and Jalu under sections 307 and 364 read with section 34.
He sentenced Narain, Jot Ram and Gheru to rigorous imprisonment for three years under section 307 and two years under section 364.
He sentenced Jalu to two years ' rigorous imprisonment under each section.
On appeal by the convicted persons the High Court of Punjab maintained the convictions but reduced the sentences passed on Jot Ram and Gheru to one year 's rigorous imprisonment and Jalu to the term of imprisonment already undergone.
It maintained the sentence passed on Narain and dismissed his appeal.
Narain, Jot Ram and Gheru have appealed To this Court from that judgment.
The prosecution case is that one Sultan was the proprietor of a field described in the proceedings as plot No. 97.
Sahi Ram had been a tenant of the land.
The land had not been cultivated in the year preceding the occurrence with which this case is concerned and the owner had thereupon resumed possession of it.
On June 14, 1953, Mani Ram a son of the proprietor, arrived at the field on a tractor accompanied by a Tabourer, Moola Ram, with the object of Ploughing it and found Sahi Ram actually ploughing.
Mani Ram turned Sahi Ram out of the field.
Sahi Ram raised a protest but eventually left abandoning his plough on the field.
Mani Ram then began to plough the field 727 with his tractor.
A little later the tractor developed mechanical trouble and Mani Ram stopped ploughing and started attending to it.
While Mani Ram was so engaged, Sahi Ram arrived at the spot accompanied by seven persons, being the accused earlier named other than Narain, variously armed.
Jalu had come on a horse.
They fell upon Mani Ram and assaulted him.
Moola Ram who ran to his rescue was also assaulted.
Moola Ram then attempted to run away whereupon Sahi Ram and his party chased him.
While Sahi Ram and his party had their attention on Moola Ram, Mani Ram got into his tractor and began to drive away from the field.
At this point of time Narain arrived on a horse with a gun in his hand.
He told the pursuers of Moola Ram to leave him as he was merely a hired man and pointed out that the real culprit Mani Ram was about to escape in the tractor.
The party then turned round and pursued Mani Ram.
Narain on his horse soon overtook Mani Ram and fired at him while he was still on the tractor in the driver 's seat.
Mani Ram fell down from the tractor which, being in motion, proceeded on its own and ran into a tree and stopped.
Narain 's horse fell against the cultivator of the tractor and was injured.
Mani Ram picked himself up and staggered for shelter into the hut of one Mukh Ram, which was nearby.
The pursuers then came up and Jot Ram fired a shot at Mani Ram inside the hut and so did Gheru.
Mani Ram fell down in the hut.
Mukh Ram threw himself on the body of Mani Ram to protect him.
Gheru and Narain then said that they would burn the hut with Mani Ram inside it.
Sahi Ram suggested that it would be better to carry Mani Ram to their house and there kill him and burn his body.
Mukh Ram 'was then dragged away and Mani Ram 's body was put on a horse and Jalu mounted it.
The party then proceeded towards the village by a foot path with Mani Ram, who was then unconscious, as their captive.
After they had gone some distance Raghbir, the younger brother of Mani Ram, having heard of the incident came to rescue Mani Ram.
He met Jalu on the horse with Mani Ram and Sahi Ram walking close behind, 728 the rest of the party being at some distance.
Raghbir asked Jalu to put down Mani Ram on which Jalu threatened to kill, and Sahi.
Ram pointed his sela at Raghbir.
Raghbir then shot at Sahi Ram with the pistol he was carrying and the latter fell down and died soon after.
Jalu got off the horse and ran away.
Before the others could arrive Raghbir carried Mani Ram to the house of one Birbal from where he, was later taken to the hospital.
The defence was that the prosecution case was wholly false and the real facts were as follows: On the date of the occurrence Sahi Ram was ploughing the field when Mani Ram and Raghbir came there and tried to stop him.
There was an altercation.
Jot Ram and Gheru who were in a field nearby came up and advised Sahi Ram not to dispute over the matter with Mani Ram but have it decided by Panchayat.
Sahi Ram, Jot Ram and Gheru then left the field and proceeded towards the village.
While going Jot Ram noticed that Sahi Ram was carrying a pistol and took it away from him to prevent him from using it in his excitement.
Mani Ram and Raghbir also went towards the village but by a different route.
The par.
ties again met at the village Shamlat.
Raghbir abused Sahi Ram and fired a shot at him killing him outright.
Jot Ram apprehending that he might also be shot at, fired the pistol which he had taken from Sahi Ram and might have injured Mani Ram.
There were two unknown persons with Raghbir and Mani Ram at this time and they also used their fire arms.
Mani Ram might have received injuries from these firings also.
The accused denied that any of them except Jot Ram and Gheru were present at the incident.
There were thus two conflicting versions of the same incident and there were two cross cases based on these separate versions.
We are concerned with the case started on the complaint of Mani Ram and concerning the injuries suffered by him and his abduction.
The other case was against Mani Ram, Raghbir, Sultan and Dalip also a son of Sultan and was based on what the defence version of the incident in the present case was.
In that case Raghbir and Mani 729 Ram were charged under section 302 read with section 34 of the Indian Penal Code for having caused the death of Sahi Ram and Sultan and Dalip were charged under section 302 read with section 109 of the same Code in the same connection.
The learned Sessions Judge who heard both the cases, acquitted Mani Ram, Raghbir, Sultan and Dalip of the charges brought against them and convicted the appellants and Jalu in the present case accepting the prosecution version of the incident.
As we have earlier stated, the conviction was upheld by the High Court.
In view of the concurrent findings of fact in the Courts below, the learned Advocate for the appellants confined himself in this Court to a question of law which we now proceed to discuss.
It has to be remembered that we are concerned only with the case in which the appellants had been tried for offences against Mani Ram.
With the other case we are not concerned.
In the trial Court, the prosecution had cited Raghbir as a witness.
Raghbir however refused to give evidence claiming protection under article 20 of the Constitution.
The learned Sessions Judge held that Raghbir could not be compelled to give evidence and rejected the contention of the accused that he was not entitled to the protection.
The prosecution in the end did not offer Raghbir as a witness and dropped him.
When the matter came up before the High Court in appeal, it was said on behalf of the appellants, that the learned Sessions Judge was wrong in holding that Raghbir was entitled to the protection of article 20 and that the trial had been vitiated by this decision as a result of which the accused had been deprived of the benefit of Raghbir 's evidence.
The High Court however held that the fact that Raghbir was not examined did not vitiate the trial in any way.
It is this part of the High Court judgment that has been challenged before us by the learned Advocate for the appellants.
The High Court observed as follows: " We may assume that Raghbir would 92 730 not have supported the prosecution story or that he would have admitted to having shot Sahi Ram.
The fact that he was unwilling to make a statement does not constitute an irregularity in the trial.
Had he been compelled to say something, he would, in all probability, not have told the truth, and the question is how the case would have been affected by his statement? In my view, whatever he had stated would not have rebutted the convincing testimony of the other witnesses in the case and therefore the failure of the Court to examine him does not in any way affect the ultimate decision of the case.
" The learned Advocate contended that the High Court had in view the provisions of section 167 of the Evidence Act though the section was not in terms referred.
We think this is a fair view to take.
The learned Advocate said that what the High Court has done is to say that even assuming that Raghbir 's evidence did not support the prosecution story, that would not have made any difference to the result, because, what ever he stated would not have rebutted the convincing testimony of the other witnesses.
According to the learned Advocate, this view was not justified by section 167.
It seems to us that the expression of the opinion of the High Court on this matter has not been happily worded.
The question under section 167 is not so much whether the evidence rejected would not have been accepted against the other testimony on the record as whether that evidence " ought not to have varied the decision.
" It is clear that if what Raghbir had said in his evidence had gone to support the defence version, then a, serious question would arise as to whether the decision of the trial Court would have been in favour of the accused instead of against them, as it happened to be.
It seems to us however that section 167 does not help the appellants.
It is clear from the record that the prose cution, though it had cited Raghbir as a witness, was not very keen to examine him When Raghbir objected to give evidence, the prosecution dropped him.
Therefore it seems to us that this is not a case in which evidence can be said to have been rejected 731 within section 167 of the Evidence Act.
The prosecution did not in fact tender Raghbir as a witness.
Nor have we any idea as to what he would have said had he given evidence.
Nor is it a case where the defence wanted to call him as a witness.
It is not necessary for us, nor have we been asked, to decide the question whether Raghbir was entitled under article 2o of the Constitution to refuse to give evidence.
It is amply clear from the record that the prosecution did not offer him as a witness upon his claiming protection under article 20.
The learned Advocate for the appellants then argued that in this view of the matter, it must be held that a material witness had been kept out of court by the prosecution and that would give rise to an adverse inference against the prosecution case and cast serious reflection on the fairness of the trial.
We were referred by learned Advocate to Habeeb Mohammad vs The State of Hyderabad (1) in this connection.
We agree that if a material witness has been deliberately or unfairly kept back, then a serious reflection is cast on the propriety of the trial itself and the validity of the conviction resulting from it may be open to challenge, The question then is, was Raghbir a material witness ? It is an accepted rule as stated by the Judicial Committee in Stephen Seneviratne vs The King (2) that " witnesses essential to the unfolding of the narrative on which the prosecution is based, must, of course, be called by the prosecution.
" It will be seen that the test whether a witness is material for the present purpose is not whether he would have given evidence in support of the defence.
The test is whether he is a witness " essential to the unfolding of the narrative on which the prosecution is based ".
Whe ther a witness is so essential or not would depend on whether be could speak to any part of the prosecution case or whether the evidence led disclosed that he was so situated that he would have been able to give evidence of the facts on which the prosecution relied.
It is not however that the prosecution is bound to call all witnesses who may have seen the occurrence and (1) ; (2) A.I.R. (1936) P.C. 289.
732 so duplicate the evidence.
But apart from this,.
the prosecution should call all material witnesses.
Was Raghbir then a witness essential to the unfolding of the prosecution case ? That clearly Raghbir was not.
The prosecution case, as we have seen, was concerned with the injuries caused to Mani Ram and his abduction.
According to the prosecution case, Raghbir arrived after these offences had been committed ; after Mani Ram had been assaulted and shot at and after he had been put on a horse and had been carried some distance.
The prosecution no doubt admits that Raghbir shot Sahi Ram but says that he did so in self defence.
This incident is an entirely separate incident.
It is not necessary to prove it in order to prove the offences with which the appellants were charged.
Raghbir therefore was not a witness whom the prosecution was bound to call to establish its case.
The fact, assuming it to have been so, that Raghbir would have said in his evidence that the incidents did not happen as the prosecution stated, may no doubt have established a good defence.
But if it was so, then he would have been only a witness material for the defence and not a witness essential to the unfolding of the narrative on which the prosecution case is based.
The prosecution is not bound to call witnesses to establish the defence but only witnesses who are material for proving its own case.
Indeed, since according to the prosecution case Raghbir arrived after the alleged offences were committed, he could not have given any evidence about the prosecution case.
We, therefore, think that the contention of the learned Advocate for the Appellants that the prosecution should have called Raghbir to ensure a fair trial or that he was a witness material to the prosecution case, is unfounded.
We do not think that the trial has at all been vitiated by the failure to call Raghbir.
It may be pointed out that the appellants had not sought to produce Raghbir as a witness on their behalf The learned Advocate then addressed us on the question of the sentence passed on Narain.
He said that the High Court passed a higher sentence on him 733 because it was under the impression that he had caused the only grievous injury that was found on the body of Mani Ram.
The learned Advocate pointed out that there was no evidence to show that the grievous injury had been caused by Narain.
It seems to us that this contention is justified.
There is however evidence to show that Narain merited the higher sentence.
It was he who directed the attack against Mani Ram.
He called the other members of the attacking party to desist from pursuing Moola Ram as Mani Ram was the real enemy and should be dealt with.
It is upon that the serious injuries on Mani Ram came to be inflicted.
We, therefore, think that the higher sentence imposed on the appellant Narain was justified.
No other question arises in this appeal.
The result is that the appeal fails and is dismissed.
Appeal dismissed.
[/INST]Several persons attacked and seriously injured one M.
After assaulting him the assailants were carrying him away when M 's brother R came to rescue him and in self defence shot dead one of the assailants and carried M away.
For the assault on M eight persons, including the appellants, were tried for offences under (1) C.B.N.S. 161; (1862)133 R.R. 311.
725 sections 148, 307 and 364 both read with sections 140 and 34 Of the Indian Penal Code.
At the trial R was cited as a witness by the prosecution, but R refused to give evidence claiming protection under article 20 Of the Constitution.
The Sessions judge upheld R 's objection and the prosecution gave him up as a witness.
After trial, the Sessions judge acquitted four of the accused but convicted the appellants and one other person.
In appeal before the High Court the appellants urged that the Sessions judge was wrong in holding that R was entitled to the protection of article 2o and that the trial was vitiated by this decision whereby the accused had been deprived of the benefit of R 's evidence.
The High Court was of the view that if R had been compelled to give evidence he would not have supported the prosecution but whatever he would have stated would not have rebutted the convincing testimony of the other witnesses and that therefore the failure to examine R did not in any way affect the ultimate decision of the case.
The High Court apparently had section 167 Of the Evidence Act in view.
In the result the High Court upheld the convictions.
The appellants appealed and contended that the view of the High Court was not justified by section 167 and that the trial was not fair as R, a material witness, had been kept out of Court.
Held, that the trial was not vitiated by the failure of the prosecution to examine R as a witness.
Section 167 did not help the appellants as it was not a case in which evidence could be said to have been rejected within the meaning of that section.
Further, R was not a witness material to the prosecution inasmuch as he arrived on the scene after the assault was over and it was not necessary for the prosecution to examine him to ensure a fair trial.
Where a material witness has been deliberately or unfairly kept back, a serious reflection is cast on the propriety of the trial and the validity of the conviction resulting from it may be open to challenge.
The test whether a witness is material is whether he is essential to the unfolding of the narrative on which the prosecution is based and not whether he would have given evidence in support of the defence.
Habeeb Mohammad vs The State of Hyderabad, [1954] S.C.R. 475; Stephen Seneviratne vs The King, A.I.R. 1936 P.C. 289.
</s> |
<s>[INST] Summarize the judgementvil Appeal No. 262 (NC) of 1976.
From the Judgment and Order dated 24.4.1975 of the Rajasthan High Court in D.B. Civil I.T.R. No. 45 of 1969.
Mrs. Anjali Verma for JBD & Co. and D.N. Misra for the Appellant.
O.P. Vaish, section Rajappa, Vinay Vaish, S.K. Aggarwal and Ms. A. Subhashini for the Respondents.
The Judgment of the Court was delivered by SINGH, J.
This appeal is directed against the judgment and order of the High Court of Rajasthan dated 24.4.1975 answering the question referred to it by the Income Tax Appellate Tribunal in the negative, in favour of the Revenue and against the assessee.
The question referred to the High Court was as under: "Whether on the facts and in the circumstances of the case, the Tribunal was right in holding that the payment of Rs.3 lakhs to the Northern Railway was a revenue expenditure and was a deduction allowable under the Income Tax Act.
1961?" The circumstances leading to the reference and the appeal was necessary to be stated.
The Natural Science (India) Ltd. predecessor ininterest of the assessee acquired a lease from the Maharaja of the 317 erstwhile Bikaner State on September 29, 1948 for mining of gypsum for a period of 20 years over an area of 4.27 square miles at Jamsar.
The lease was liable to be renewed after expiring of 20 years.
The Natural Science (India) Ltd. by a deed of assignment dated December 11, 1948 assigned the rights under the lease to the Bikaner Gypsums Ltd., a compa ny wherein the State Government owned 45 per cent share.
The Bikaner Gypsums Ltd. (hereinafter referred to as the asses see) carried on the business of mining gypsum in accordance with the terms of conditions stated in the lease.
The asses see entered into an agreement with Sindri Fertilizers, a Government of India Public Undertaking for the supply of gypsum of minimum of 83.5 per cent quality.
Under the lease, the assessee was conferred the liberties and powers to enter upon the entire leased land and to search for win, work, get, raise, convert and carry away the gypsum for its own benefits in the most economic, convenient and beneficial manner and to treat the same by calcination and other proc esses.
Clause 2 of Part II of the lease authorised the lessee to sink, dig, drive, quarry, make, erect, maintain and use in the said lands any borings, pits, shafts, in clines, drifts, tunnels, trenches, levels, water ways, airways and other works and to use, maintain, deepen or extend any existing works of the like nature in the demised land for the purpose of winning and mining of the mineral.
Clause 3 granted liberty to erect, construction, maintain and use on or under the land any engines, machinery, plant, dressing, floors, furnaces, brick kilns, like kilns, plaster kilns etc.
Clause 4 conferred liberty on the lessee to make roads and ways and use existing roads and ways.
Clause 7 granted liberty to the assessee to enter upon and use any part of parts of the surface of the said lands for the purpose of stacking, heaping or depositing thereon any produce of the mines or works carried on and any earth materials and substance dug or raised under the liberties and powers.
Clause 8 conferred liberty on the lessee to enter upon and occupy any of the surface lands within the demised lands other than such as are occupied by dwelling houses or farms and the offices, gardens and yards.
Clause 9 conferred power on the lessee to acquire, take up and occupy such surface lands in the demised lands as were then in the occupation of any body other than the Government on payment of compensation and rent to such occupiers, and if the lessee is unable to acquire such land from the tenants and occupiers, the Government undertook to acquire such surface land for the lessee at the lessee 's cost.
Clause 15 of Part II conferred liberty and power on the lessee to do all things which may be necessary for winning, working getting the said minerals and also for calcining, smelting, manufac turing, converting and making merchantable.
318 Part III of the lease contained restrictions and condi tions to the exercise of the liberties and powers and privi leges as contained in Part II of the lease.
Clause 2 of Part III provided that the lessee shall not enter upon or occupy surface of any land in the occupation of any tenant or occupier without making reasonable compensation to such tenant or occupier.
Clause 3 prescribed restriction on mining operation within 100 yards from any railway, reser voir, canal or other public works.
It reads as under: "Clause 3: No mining operations or working shall be carried on or permitted to be carried on by the lessee in or under the said lands at or to any point within a distance of 100 yards from any railway, reservoir, canal or other public works or any buildings or inhabited site shown on the plan hereto annexed except with the previous permission in writ ing of the Minister, or some officer authorised by him in that behalf or otherwise then in accordance with such in structions, restrictions and conditions either general or special which may be attached to such permission.
The said distance of 100 yards shall be measured in the case of a Railway Reservoir or canal horizontally from the outer of the bank or of outer edge of the cutting as the case may be and in the case of a building horizontally from the plinth thereof.
" The above clause had been incorporated in the lease to protect the railway track and railway station which was situate within the area demised to the lessee.
Clause 5 of Part VIII of the agreement stated as under: "Clause 5: If any underground or mineral rights in any lands or mines covered and leased to the lessee in accordance with the provisions of those presents be claimed by any 'Jagir dar ' 'Pattedar ', 'Talukdar ', tenant or other person then and in all such cases the Government shall upon notice from the lessee forthwith put the lessee in possession of all such lands and mines free of all costs and charges to the lessee and any compensation required to be paid to any such "Jagir dar", 'Pattedar ', 'Talukdar ', tenant or other person claim ing to have any underground or mineral rights shall be paid by the Government." The assessee company exclusively carried on the mining of 319 gypsum in the entire area demised to it.
The Railway author ities extended the railway area by laying down fresh track, providing for railway siding.
The Railways further con structed quarters in the lease area without the permission of the assessee company.
The assessee company filed a suit in civil court for ejecting the Railway from the encroached area but it failed in the suit.
The assessee company, there upon, approached the Government of Rajasthan which had 45 per cent share of it and the Railway Board for negotiation to remove the Railway Station and track enabling the asses see to carry out the mining operation under the land occu pied by the Railways (hereinafter referred to as the 'Rail way Area ').
Since, on research and survey the assessee company found that under the Railway Area a high quality of gypsum was available, which was required as raw material by the Sindri Fertilizers.
All the four parties namely, Sindri Fertilizers, Government of Rajasthan, Railway Board and the assessee company negotiated the matter and ultimately the Railway Board agreed to shift the railway station, track and yards to another place or area offered by the assessee.
Under the agreement the Railway authorities agreed to shift the station and all its establishments to the alternative site offered by the assessee company and it was further agreed and all the four parties, Sindri Fertilizers, Govern ment of Rajasthan, Indian Railway and the assessee company shall equally bear the total expenses of Rs. 12 lakhs in curred by the Railways in shifting the railway station, yards and the quarters.
Pursuant to the agreement, the assessee company paid a sum of Rs.3 lakhs as its share to the Northern Railway towards the cost of shifting of the Railway Station and other constructions.
In addition to that the assessee company further paid a sum of Rs.7,300 to the Railways as compensation for the surface rights of the leased land.
On the shifting of the Railway track and Sta tion the assessee carried out mining in the erstwhile Rail way Area and it raised gypsum to the extent of 6,30,390 tons and supplied the same to Sindri Fertilizers.
The assessee company claimed deduction of Rs.3 lakhs paid to the Northern Railway for the shifting of the Railway Station for the assessment year 1964 65.
The Income Tax Officer rejected the assessee 's claim on the ground that it was a capital expenditure.
On appeal by the assessee, the Appellate Assistant Commissioner confirmed the order of the Income Tax Officer.
On further appeal by the assessee the Income Tax Appellate Tribunal held that the payment of Rs.3 lakhs by the assessee company was not a capital expenditure, instead it was a revenue expenditure.
On an application made by the Revenue the Income Tax Appellate Tribunal (hereinaf ter referred to as the 320 Tribunal referred the question as aforesaid to the High Court under section 256 of the Income Tax Act, 1961.
The High Court held that since on payment of Rs.3 lakhs to the Rail way the assessee acquired a new asset which was attributable to capital of enduring nature, the sum of Rs. 3 lakhs was a capital expenditure and it could not be a revenue expendi ture.
On these findings the High Court answered the question in the negative in favour of the Revenue against the asses see and it set aside the order of the Tribunal by the im pugned order.
Learned counsel for the appellant contended that since the entire area had been leased out to the assessee for carrying out mining operations, the assessee had right to win, the minerals which lay under the Railway Area as that land had also been demised.
to the assessee.
Since, the existence of railway station, building and yard obstructed the mining operations, the assessee paid the amount of Rs.3 lakhs for removal of the same with a view to carry on its business profitably.
The assessee did not acquire any new asset, instead, it merely spent money in removing the ob struction to facilitate the mining in a profitable manner.
On the other hand, learned counsel for the Revenue urged that in view of the restriction imposed by Clause 3 of Part III of the lease, the assessee had no right to the surface of the land occupied by the Railways.
The assessee acquired that right by paying Rs.3 lakhs which resulted into an enduring benefit to it.
It was a capital expenditure.
Both the counsel referred to a number of decisions in support of their submissions.
The question whether a particular expenditure incurred by the assessee is of Capital or Revenue nature is a vexed question which has always presented difficulty before the Courts.
There are a number of decisions of this Court and other courts formulating tests for distinguishing the capi tal from revenue expenditure.
But the tests so laid down are not exhaustive and it is not possible to reconcile the reasons given in all of them, as each decision is rounded on its own facts and circumstances.
Since, in the instant case the facts are clear, it is not necessary to consider each and every case in detail or to analyse the tests laid down in various decisions.
However, before we consider the facts and circumstances of the case, it is necessary to refer to some of the leading cases laying down guidelines for deter mining the question.
In Assam Bengal Cement Co. Ltd. vs The Commissioner of Income Tax, West Bengal, , 'this Court observed that in the great diversity of human affairs and the complicated nature of business opera tion, it is difficult to lay down a test which would apply to all situations.
One has, therefore, to apply the criteria from the business 320 point of view in order to determine whether on fair appreci ation of the whole situation the expenditure incurred for a particular matter is of the nature of capital expenditure or a revenue expenditure.
The Court laid down a simple test for determining the nature of the expenditure.
It observed: the expenditure is made for acquiring or bringing into existence an asset or advantage for the enduring bene fit of the business it is properly attributable to capital and is of the nature of capital expenditure.
If on the other hand it is made not for the purpose of bringing into exist ence any such asset or advantage but for running the busi ness or working it with a view to produce the profits it is a revenue expenditure.
If any such asset or advantage for the enduring benefit of the business is thus acquired or brought into existence it would be immaterial whether the source of the payment was the capital or the income of the concern or whether the payment was made once and for all or was made periodically.
The aim and object of the expenditure would determine the character of the expenditure whether it is a capital expenditure or a revenue expenditure.
" In K.T.M.T.M. Abdul Kayoom and Another vs Commissioner of Income Tax, , this Court after consider ing a number of English and Indian authorities held that each case depends on its own facts, and a close similarity between one case and another is not enough, because even a single significant detail may alter the entire aspect.
The Court observed that what is decisive is the nature of the business, the nature of the expenditure, the nature of the right acquired, and their relation inter se, and this is the only key to resolve the issue in the light of the general principles, which are followed in such cases.
In that case the assessee claimed deduction of Rs.6, 111 paid by it to the Government as lease money for the grant of exclusive rights, liberty and authority to fish and carry away all chank shells in the sea off the coast line of a certain area specified in the lease for a period of three years.
The Court held that the amount of Rs.6,111 was paid to obtain an enduring benefit in the shape of an exclusive right to fish; the payment was not related to the chanks, instead it was an amount spent in acquiring an asset from which it may collect its stockin trade.
It was, therefore, an expenditure of a capital nature.
In Bombay Steam Navigation Co. Pvt. Ltd. vs Commissioner of Income Tax, Bombay, ; , the assessee pur chased.
the 321 assets of another Company for purposes of carrying on pas senger and ferry services, it paid part of the consideration leaving the balance unpaid.
Under the agreement of sale the assessee had to pay interest on the unpaid balance of money.
The assessee claimed deduction of the amount of interest paid by it under the contract of purchase from its income.
The court held that the claim for deduction of amount of interest as revenue expenditure was not admissible.
The Court observed that while considering the question the Court.
should con . sider the nature and ordinary course of business and the object for which the expenditure is in curred.
If the outgoing or expenditure is so related to the carrying on or conduct of the business, that it may be regarded as an integral part of the profit earning process and not for acquisition of an asset or a right of a perma nent character, the possession of which is a condition for the carrying on of the business, the expenditure may be regarded as revenue expenditure.
But, on the facts of the case, the Court held that the assessee 's claim was not admissible, as the expenditure was related to the acquisi tion of an asset or a right of a permanent character, the possession of which was a condition for carrying the busi ness.
The High Court has relied upon the decision of this Court in R.B. Seth Moolchand Suganchand vs Commissioner of Income Tax, New Delhi, , in rejecting the assessee 's contention.
In Suganchand 's case the assessee was carrying on a mining business, he had paid a sum of Rs. 1,53,800 to acquire lease of certain areas of land bearing mica for a period of 20 years.
Those areas had already been worked for 15 years by other lessees.
The assessee had paid a sum of Rs.3,200 as fee for a licence for prospecting for emerald for a period of one year.
In addition to the fee, the assessee had to pay royalty on the emerald excavated and sold.
The assessee claimed the expenditure of Rs.3,200 paid by it as fee to the Government for prospecting licence as revenue expenditure.
The assessee further claimed that the appropriate part of Rs. 1,53,800 paid by it as lease money was allow able as revenue expenditure.
The Court held that while considering the question in relation to the mining leases an empirical test is that where minerals have to be won, extracted and brought to surface by mining operations, the expenditure incurred for acquiring such a right would be of a capital nature.
But, where the mineral has already been gotten and is on the surface, then the expenditure incurred for obtaining the right to acquire the raw material would be a revenue expenditure.
The Court held that since the payment of tender money was for acquisition of capital asset, the same could not be treated as a revenue expenditure.
As regards the claim relating to the prospecting licence 322 fee of Rs.3,200 the Court held that since the licence was for prospecting only and as the assessee had not started working a mine, the payment was made to the Government with the object of initiating the business.
The Court held that even though the amount of prospecting licence fee was for a period of one year, it did not make any difference as the fee was paid to obtain a licence to investigate, search and find the mineral with the object of conducting the business, extracting ore from the earth necessary for initiating the business.
The facts involved in that case are totally dif ferent from the instant case.
The assessee in the instant case never claimed any deduction with regard to the licence fee or royalty paid by it, instead, the claim relates to the amount spent on the removal of a restriction which obstruct ed the carrying of the business of mining within a particu lar area in respect of which the assessee had already ac quired mining rights.
The payment of Rs.3 lakhs for shifting of the Railway track and Railway Station was not made for initiating the business of mining operations or for acquir ing any right, instead the payment was made to remove ob struction to facilitate the business of mining.
The princi ples laid down in Suganchand 's case do not apply to the instant case.
In British Insulated and Helsby Cables Ltd. vs Atherton, , Lord Cave laid down a test which has almost universely been accepted.
Lord Cave observed: ". when an expenditure is made, not only once and for all, but with a view to bringing into existence an asset or an advantage for the enduring benefit of a trade, I think that there is very good reason (in the absence of special circum stances leading to an opposite conclusion) for treating such an expenditure as properly attributable not to revenue out to capital." This dictum has been followed and approval by this Court in the cases of Assam Bengal Cement Co. Ltd. (supra); Abdul Kayoom (supra) and Seth Sugancha.nd (supra) and several other decisions of this Court.
But, the test laid down by Lord Cave has been explained in a number of cases which show that the tests for considering the expenditure for the purposes of bringing into existence, as an asset or an advantage for the enduring benefit of a trade is not always true and perhaps Lord Cave himself had in mind that the test of enduring benefit of a trade would be a good test in the absence of special circumstances leading to an opposite conclusion.
Therefore, the test laid down by Lord Cave was not a conclusive one as Lord Cave himself did not regard his test 323 as a conclusive one and he recognised that special circum stances might very well lead to an opposite conclusion.
In Gotan Lime Syndicate vs C. I. T., Rajasthan & Delhi, 18, the assessee which carried on the busi ness of manufacturing lime from limestone, was granted the right to excavate limestone in certain areas under a lease.
Under the lease the assessee had to pay royalty of Rs.96,000 per annum.
The assessee claimed the payment of Rs.96,000 to the Government as a revenue expenditure.
This Court after considering its earlier decision in Abdul Kayoom 's case (supra) and also the decision of Lord Cave in British Insu lated (supra), held that the royalty paid by the assessee has to be allowed as revenue expenditure as it had relation to the raw materials to be excavated and extracted.
The Court observed that the royalty payment including the dead rent had relation to the lime deposits.
The 'Court observed although the assessee did derive an advantage and further even though the advantage lasted at least for a period of five years there was no payment made once for all.
No lump sum payment was ever settled, instead, only an annual royal ty and dead rent was paid.
The Court held that the royalty was not a direct payment for securing an enduring benefit, instead it had relation to the raw materials to be obtained.
In this decision expenditure for securing an advantage which was to last at least for a period of five years was not treated to have enduring benefit.
In M.A. Jabbar vs C.I.T. Andhra Pradesh, Hyderabad; , , the assessee was carrying on the business of supplying lime and sand, and for the purposes of acquiring sand he had obtained a lease of a river bed from the State Government for a period of 11 months.
Under the lease he had to pay large amount of lease money for the grant of an exclusive right to carry away sand within, under or upon the land.
The assessee in proceedings for assessment of incometax claimed deduction with regard to the amount paid as lease money.
The Court held that the expenditure incurred by the assessee was not related to the acquisition of an asset or a right of permanent character instead the expenditure was for a specific object of ena bling the assessee to remove the sand lying on the surface of the land which was stock in trade of the business, there fore, the expenditure was a revenue expenditure.
Whether payments made by an assessee for removal of any restriction or obstacle to its business would be in the nature of capital or revenue expenditure, has been consid ered by courts.
In Commissioner of Inland Revenue vs Carron Company, [1966 69] 45 Tax Cases 13 the assessee carried on the business of iron founders which was incor 325 porated by a Charter granted to it in 1773.
By passage of time many of its features had become archaic and unsuited to modern conditions and the company 's commercial performance was suffering a progressive decline.
The Charter of the company placed restriction on the company 's borrowing powers and it placed restriction on voting rights of certain mem bers.
The company decided to petition for a supplementary Charter providing for the vesting of the management in Board of Directors and for the removal of the limitation on compa ny 's borrowing powers and restrictions on the issue and transfer of shares.
The company 's petition was contested by dissenting share holders in court.
The company settled the litigation under which it had to pay the cost of legal action and buy out the holdings of the dissenting share holders and in pursuance thereof a supplementary Charter was granted.
In assessment proceedings, the company claimed deduction of payments made by it towards the cost of obtain ing the Charter, the amounts paid to the dissenting share holders and expensed in the action.
The Special Commissioner held that the company was entitled to the deductions.
On appeal the House of Lords held that since the object of the new Charter was to remove obstacle to profitable trading, and the engagement of a competent Manager and the removal of restrictions on borrowing facilitated the day to day trading operation of the company, the expenditure was on income account.
The House of Lords considered the test laid down by Lord Cave L.C. in British Insulated Company 's case and held that the payments made by the company, were for the purpose of removing of disability of the company trading operation which prejudiced its operation.
This was achieved without acquisition of any tangible or intangible asset or without creation of any new branch of trading activity.
From a commercial and business point of view nothing in the nature of additional fixed capital was thereby achieved.
The Court pointed out that there is a sharp distinction between the removal of a disability on one hand payment for which is a revenue payment, and the bringing into existence of an advantage, payment for which may be a capital payment.
Since, in the case before the Court, the Company had made payments for removal of disabilities which confined their business under the out of date Charter of 1773, the expendi ture was on revenue account.
In Empire Jute Company vs C.I. T, [1980] 124 ITR I, this Court held that expenditure made by an assessee for the purpose of removing the restriction on the number of working hours with a view to increase its profits, was in the nature of revenue expenditure.
The Court observed that if the advantage consists merely in facilitat ing the assessee 's trading operations of enabling the man agement and conduct of the assessee 's business to be carried on more efficiently or more profitably while leaving 326 he fixed capital untouched, the expenditure would be on revenue account even though the advantage may endure for an indefinite future.
We agree with the view taken in the aforesaid two decisions.
In our opinion where the assessee has an existing right to carry on a business, any expendi ture made by it during the course of business for the pur pose of removal of any restriction or obstruction or disa bility would be on revenue account, provided the expenditure does not acquire any capital asset.
Payments made for remov al of restriction, obstruction or disability may result in acquiring benefits to the business, but that by itself would not acquire any capital asset.
In the instant case the assessee had been granted mining lease in respect of 4.27 square miles at Jamsar under which he had right to sink, dig, drive, quarry and extract mineral i.e. the gypsum and in that process he had right to dig the surface of the entire money, licence fee and other charges for securing the right of mining in respect of the entire area of 4.27 square miles including the right to the miner als under the Railway Area.
The High Court has held that on payment of Rs.3 lakhs, the assessee acquired capital asset of an enduring nature.
The High Court failed to appreciate that Clause 3 was only restrictive in nature it did not destroy the assessee 's right to the minerals found under the Railway Area.
The restriction operated as an obstacle to the assessee 's right to carry on business in a profitable man ner.
The assesse paid a sum of Rs.3 lakhs towards the cost of removal of the obstructions which enabled the assessee to carry on its business of mining in an area which had already been leased out to it for that purpose.
There was, there fore, no acquisition of any capital asset.
here is no dis pute that the assessee completed mining operations on the released land (Railway Area) within a period of 2 years, in the circumstances the High Court 's view that the benefit acquired by the assessee on the payment of the disputed amount was a benefit of an enduring nature is not sustain able in law.
As already observed, there may be circumstances where expenditure, even if incurred for obtaining advantage of enduring benefit may not amount to acquisition of asset.
The facts of each case have to be borne in mind in consider ing the question having regard to the nature of business its requirement and the nature of the advantage in commercial sense.
In considering the cases of mining business the nature of the lease the purpose for which expenditure is made, its relation to the carrying on of the business in a profitable manner should be considered.
In the instant case existence of Railway Station, yard and buildings on the surface of the demised land operated as an obstruction to 327 the assessee 's business of mining.
The Railway Authorities agreed to shift the Railway establishment to facilitate the assessee to carry on his business in a profitable manner and for the purposes the assessee paid a sum of Rs.3 lakhs towards the cost of shifting the Railway construction.
The payment made by the assessee was for removal of disability and obstacle and it did not bring into existence any advan tage of an enduring nature.
The Tribunal rightly allowed the expenditure on revenue account.
The High Court in our opin ion failed to appreciate the true nature of the expenditure.
We are, therefore, of the opinion that the High Court committed error in interfering with the findings recorded by the Income Tax Appellate Tribunal.
We, accordingly, allow the appeal, set aside the order of the High Court and re store the order of the Tribunal.
The appellant is entitled to its costs.
N.V.K. Appeal allowed.
[/INST]The appellant, a distiller of country liquor, carried on the business of selling liquor to licensed wholesalers.
Due to shortage of bottles during the war a scheme was evolved, where under the distiller could charge a wholesaler a price for the bottles in which liquor was supplied at rates fixed by the Government, which lie was bound to repay to the wholesaler on his returning the bottles.
In addition to this the appellant took a further sum from the wholesalers described as 'security deposit ' for the return of the bottles.
Like the price of the bottles these moneys were also repaid as and when the bottles were returned with this difference that the entire sum was refunded only when go% of the bottles covered by it had been returned.
The appellant was assessed to income tax on the balance of the amounts of these additional sums left after the refunds made there out.
Held, that the amounts paid to the appellant and described as 'security deposit ' were trading receipts and therefore income of the appellant assessable to tax.
These amounts were paid as an integral part of the commercial transaction of the sale of liquor in bottles and represented an extra price charged for the bottles.
They were not security deposits as there was nothing to secure, there being no right to the return of the bottles.
684 K. M. section Lakshmanier & Sons vs Commissioner of Income tax and Excess Profits Tax, Madras, ; , followed.
Davies vs The Shell Company of China Ltd., (1951) Tax Cas. 133; and Morley vs Tattersall, , distinguished.
Imperial Tobacco Co. vs Kelly, , referred to.
</s> |
<s>[INST] Summarize the judgementpeals from the judgments and decrees dated the 23rd February, 1945, of the High Court of Judicature at Calcutta (Akram and Blank JJ.) in Second Appeals Nos. 861 to 885 of 1939 from the judgments and decrees dated the 16th December, 1938, of the Court of the District Judge, Birbhum, in Title Appeals Nos. 23 to 47 of 1938.
Sitaram Bannerjee (Arun Kumar Dutta and Amiya Kumar Mukherjee, with him) for the appellant in Civil Appeals Nos.
68 to 74 of 1951.
Urukramdas Chakravarthy (section N. Mukherjee, with him) for the respondent No. 1 in Civil Appeals Nos.
68 to 74 of 1951.
Sitaram Bannerjee (Arun Kumar Dutta and Amiya Kurnar Mukherjea, with him) for the appellant in Civil Appeals Nos.
75 to 92 of 1951.
Panchanan Ghose (Chadra Nath Mukherji, with him) for the respondents Nos. 1 to 3 in Civil Appeals No. 75 to 92 of 1951.
April 2.
The Judgment of the Court was delivered by MAHAJAN J.
These appeals are directed against the judgment and decrees of the High Court of Judicature at Calcutta, dated 23rd February, 1945, reversing the judgment and decrees passed by the District Judge of Birbhum dated 16th December, 1938.
The principal questions for determina tion are the same in 102 784 all of them and can be conveniently disposed of by one judgment.
It is necessary to set out briefly the history of this half a century old litigation I The seven suits out of which arise Appeals Nos.
68 to 74 were filed in September, 1904, by Maharaja Bahadur Singh in the court of the differ ent Munsifs at Rampurhat, against Raja Ranjit Singh Bahadur, deceased, and others, for a declaration of his title to the lands mentioned in the different suits and for mesne profits from the year 1899 till recovery of possession.
It was alleged that the lands in the several suits were chowkidari chakran lands within the plaintiff 's patnidari, granted to his predecessors in interest on 14th November, 1853, by the ancestors of the defendant, that as the lands were in the possession of village watchmen on service tenures, they were excluded from assessment of land revenue and no rent was paid on them, that in the year 1899 under the provisions of sections 50 and 51 of Bengal Act VI of 1870 Government resumed the lands, terminated the service tenures and settled them with the zamindar, that in this situation the plaintiff as patnidar became entitled to their actual physi cal possession, that the zamindar wrongfully took physical possession of them and denied the right of the plaintiff and hence he was entitled to the reliefs claimed.
The suits were decreed on 17th August, 1905, and 19th August, 1905, by the two courts respectively and the decisions were affirmed on appeal by the District Judge.
On special appeal to the High Court, the suits were remanded for trial on the ques tion of limitation, and after remand they were dismissed by the trial court and the Court of appeal as barred by limita tion.
On second appeal, it was held that the suits were within limitation and were then decreed for the second time.
This decision was affirmed on appeal to His Majesty in Council.
The plaintiff actually obtained possession of the lands involved in these suits in August, 1913.
An applica tion was made for ascertainment of mesne profits on 785 6th November, 1918.
This was resisted by the defendant and it was pleaded that the plaintiff was not entitled to inter est on mesne profits, that the zamindar was entitled to receive the profits of the disputed lands and that deduc tion should be made out of the amount of the mesne profits on account of munafa and the amount of chowkidari dues as well as cesses due to him or paid by him.
Five years later, on 24th June, 1927, another set of objections was filed by the zamindar claiming deduction out of mesne profits by way of equitable set off of the payments made by him subsequent to the date of delivery possession as well as for the amount of munafa that became payable to him after that date.
After a prolonged enquiry the trial court on 18th December, 1937, decreed the plaintiff 's claim for mesne profits after allow ing the zamindar the deductions claimed by him up to the date of assessment of mesne profits but disallowed the amount claimed by way of equitable set off for the subse quent period.
The learned District Judge on appeal reversed this decision and allowed the defendant the amount claimed by him by way of equitable set off, subject, however, to the condition that the dues of the defendant should be deducted from the dues of the plaintiff till the defendant 's dues were wiped off.
The relevant part of his judgment runs thus : "The broad fact is that they (plaintiffs) have been in possession of the lands since 1910 and have been in enjoy ment of rent from the tenants from that date and according to law they are not entitled to possess the land uncondi tionally.
Now that all the facts are before the court and the time has come for final adjustment of accounts between the parties the court should try to do substantial justice between the parties.
It is not sufficient answer to say that the plea of equitable set off was not raised in the beginning.
The circumstances in all these cases are pecul iar and it could hardly be expected that such plea would have been taken in the very beginning.
The course of liti gation in these cases has not run along 786 easy and smooth channels: on the contrary its course has been extremely tortuous and disturbed frequently by con flicting decisions.
No one could have reason ably antici pated in the beginning that the litigation would be pro tracted in this extraordinary way.
It is the duty of the court to take notice of the subsequent events in order to do justice between the parties .
As we are dealing with the question of equitable set off, no question of time barred debts or unascertained sum can arise .
The plea of equitable set off in respect of time barred debts can be set up as a shield by way of defence nor can any question of payment of court fees arise.
There is, in my opinion, no substantial difference in the character of the respective parties during the entire period and it would be futile to make an attempt at distinction by oversubtle argument where there is really no difference in substance.
There is considerable force in the argument advanced on the side of the appellant, namely, the appellant 's claim to the equitable set off is really in the nature of cross demand arising out of the same transaction and connected in its nature and circumstances .
From whatever standpoint the matter may be looked at I am of the opinion that the claim of the appellant for equitable set off for the subsequent period by way of deduction of the chowkidari revenue and cess paid by him as well as on account of munafa should be allowed.
This amount will also carry interest at 6 per cent per annum up to date.
The subsequent period means the period since the date of delivery of possession up to 1927 28.
" Against the judgment and decrees of the District Judge the plaintiff preferred appeals to the High Court at Calcut ta.
The High Court by the judgment under appeal modified the decrees of the District Judge and disallowed the claim for equitable set off in its entirety for the subsequent period and restored the decree of the trial court.
The zamindar filed applications for leave to appeal to His Majesty in Council.
These applications were consolidated with similar applications filed in the second batch of suits.
A certifi cate 787 was granted for leave to appeal to His Majesty in Council.
By an order dated 9th June, 1947, all the appeals were admitted and it was directed that the proceedings be printed and.
transmitted to England.
During the pendency of the proceedings in the High Court, Raja Bhupendra Narayan Singh died and the present appellant was impleaded as his heir and representative.
An application was also made in the High Court for permission to urge additional grounds not already taken.
After the abolition of the jurisdiction of the Privy Council these appeals were transmitted to this Court.
An application under Order XIX, rule 4, of the Supreme Court Rules was presented at the hearing of the appeals that the appellant be allowed to urge the following additional grounds in support of the appeals, viz. : (1) That the munafa (rent) should not be calculated on the basis of the principles laid down in Radhacharan vs Maharaja Ranjit Singh(1).
(2) That the said munafa should have been assessed on a fair share of the profits from the land.
The second batch of appeals (Nos. 75 to 92 of 1951) arises out of 18 suits instituted in the court of the Munsif of Rampurhat on 22nd December, 1909, by Ganpat Singh and Narpat Singh, predecessors in interest of respondents 1 to 3 against the predecessor in interest of the appellant, late Raja Ranjit Singh Bahadur, and also some other persons who were tenants under him, for a declaration of the plaintiffs ' title to the resumed chowkidari chakran lands and for khas possession of the same and for mesne profits.
The allega tions in these suits were the same as in the first set of suits.
The defence to the suits was also the same.
The suits were decreed by the trial Judge on 30th September, 1910, in the following terms : "The plaintiffs ' title is declared to the lands in suit and they will get khas possession of the same by ejecting the tenant defendants; on condition of paying (1) 788 to the defendant No. 1 an additional rent, to be deter mined on the principle that the original patni rent should bear the same ratio to the patni rent now payable by the plaintiffs as the original Hustbood at the time of the creation of the patni should bear to the present increased Hustbood, or any other fair and equitable rent which may be determined at the time of assessing the mesne profits.
The plaintiffs will get Wasilat from defendant No. 1 up to the date of delivery of possession of the land in suit to them.
The amount will be determined in a separate enquiry." The District Judge on appeal remanded the cases for determination of the conditions and terms under which the patnidar was to hold the lands under the zamindar and directed ascertainment of profits.
The plaintiffs ob tained delivery of possession of the lands in the mean while on 23rd November, 1910.
Against the remand order appeals were preferred to the High Court and the High Court decreed the appeals in these terms : "We set aside the portion of the decision of the Dis trict Judge which remands the cases to the original court to determine the conditions under which the patnidar is to hold the lands under the zamindar.
Rest of the remand order will stand.
That portion of the Munsif 's decree, which imposes on the appellant, as a condition of obtain ing khas possession, the payment of additional rent to the zamindar will be set aside.
" Against these decrees appeals were preferred to His Majesty in Council by special leave.
The Privy Council set aside the decrees of the High Court and observed as follows : "Their Lordships, therefore, see no reason for inter fering with the long series of authorities commencing as far back as the year 1900, which have established the right of the zamindar to have an additional rent fixed for such lands nor can their Lordships overlook the fact that in the cases already referred before this Board no exception was taken by the patnidar to the 789 fixing of such rents as a condition of being put into pos session.
" On 8th December, 1922, the plaintiffs filed applications in these suits for ascertainment of mesne profits for the years 1906 to 1910.
Objections were taken on behalf of the defendant on the 17th April, 1923, and it was contended that the plaintiffs may be allowed mesne profits to the extent of the amount that would be found due after deduction of the amount of rent to which the defendant was entitled in re spect of the lands in suit according to the judgment of the munsif.
On the 28th May, 1927, another application was filed by the zamindar claiming deduction by way of equitable set off of the amounts due to him for rent from 1910 onwards and on account of subsequent payment made by him towards revenue and cesses.
After a prolonged enquiry the munsif ultimately on the 18th December, 1937, decreed the plaintiff 's claim for mesne profits after allowing deduc tions for the amounts claimed by the defendant up to the date of delivery of possession.
He held that the appellant was not entitled to get any amount by way of equitable set off in respect of sums of money spent by him in payment of revenue and cesses or for the amount of munafa or profits for the period subsequent to the date of delivery of posses sion.
The District Judge on appeal by his judgment dated the 16th December, 1938, allowed the claim of equitable set off for the period subsequent to delivery of possession and directed that "from the plaintiffs dues, the dues of the defendant are to be deducted and if after these deduc tions any sum is due to the plaintiffs they will get a decree for that sum.
If it is found on calculations in some cases that the dues of the defendant exceed the dues of the plaintiffs, in such cases the prayer of the plaintiffs for mesne profits must be dismissed.
" Against this decision special appeals were preferred to the High Court and by the judgment under appeal the decision of the trial court was restored.
Applications were then made for leave to appeal to His Majesty in Council and 790 those were allowed and a certificate was granted for pre ferring those appeals.
Because of the abolition of the jurisdiction of the Privy Council those appeals are now before us for decision.
The points for decision in all these appeals are the following : 1.
Whether the appellant is entitled to deduct by way of equitable set off from the amount of mesne profits the amounts due to him on account of rent, revenue and cesses for the period subsequent to the dates of delivery of pos session.
Whether interest should be allowed on the amount of mesne profits found due, and if so, at what rate.
Whether the rent due to the appellant from the patnidar on those funds should be calculated on the basis of annual assets of the land (as in Radhacharan vs Maharaja Ranjit Singh (1), or on a fair and equitable basis.
The claim for set off for the period for which mesne profits were claimed has been allowed and is not in these appeals.
As regards the amounts due to the appellant by way of rent subsequent to the date of transfer of possession, the claim is unconnected with the subjectmatter of the different suits.
It seems clear that a plea in the nature of equita ble set off is not available when the cross demands do not arise out of the same transaction.
Mesne profits due to the plaintiff relate to the period during which the appellant was in wrongful possession of the lands and the amounts claimed by the defendant relate tO a period when he was no longer in possession and had ceased to be a trespasser.
No mesne profits are claimable for that period.
The right of the appellant to recover additional rents from the plaintiff arises out of a different cause of action and independently of the claim for mesne profits.
If the patnidar after having entered into possession had defaulted in the payment of the (1) (1918)27 C.L J. 532, 791 additional rents due for any period, nothing stood in the way of the appellant from recovering the.
in by appropriate legal proceedings.
The prolongation of the enquiry for ascertainment of the mesne profits cannot support a claim for equitable set off for the period subsequent to the delivery of possession to the plaintiff.
It is obvious that no claim for equitable set off against mesne profits during the pendency of the suits could be made for the sums deduction of which is now sought, as the amounts had not then accrued due and his right to them had not yet arisen.
The learned District Judge was in error in holding that the appellant 's claim for equitable set off was in the nature of a cross demand arising out of the same transaction and connected in its nature and circumstances.
He failed to appreciate that the transaction which led to plaintiff 's demand resulted from the defendant 's wrongful act as a trespasser, while the transaction giving rise to the appellant 's demand arises out of the relationship of landlord and tenant and the obligations resulting therefrom.
A wrongdoer who has wrongfully withheld moneys belonging to another cannot invoke any principles of equity in his favour and seek to deduct therefrom the amounts that during this period have fallen due to him.
There is nothing improper or unjust in telling the wrongdoer to undo his wrong, and not to take advantage of it.
Such a person cannot be helped on any principles of equity to recover amounts for the recovery of which he could have taken action in due course of law and which for some unexplained reason he failed to take and which claim may have by now become barred by limitation.
It was contended that it was only after the decree of the Privy Council that the appellant 's rights to the addi tional rent was finally established and till then no legal steps could be taken to enforce this demand.
The contention is without force.
The appellant 's right to additional rent had been established by the decree of the trial court in execution of which possession passed from him to the patni dar.
The Privy 103 792 Council only affirmed this.decision.
The patnidars under the decree were entitled to possession of the lands conditional on payment of the additional rent due for the period they had been out of possession.
That condition having been fulfilled (by adjustment of the appellant 's claim against the mesne profits), the decree must be held to have been satisfied, thus completely settling the cross demands.
The landlord 's demand for subsequent rents has to be enforced in the ordinary way in the civil court if any default has been committed in the payment of these rents.
This claim cannot for ever remain linked with the demand for mesne profits for any anterior period.
The result is that the decision of the High Court on this point is maintained.
On the question of future interest payable on the decretal amount, the learned District Judge observed as follows : "I may state, however, at this stage that if I were to rule out the fact that I am allowing the claim of the appel lant for equitable set off, I would have allowed interest to the plaintiffs at the uniform rate of 4 per cent.
per annum throughout, i.e., from the beginning of the Washilat period up to date.
As I am allowing the prayer for equitable set off, I am of opinion, however, that interest at the usual rate at 6 per cent.
per annum should be granted for the whole of this period.
" The High Court disallowed equitable set off but yet maintained this decision.
When the claim for equitable set off is being disallowed, there is no justification for allowing future interest at the rate of more than four per cent.
for such a long period, particularly in a case where the plaintiff himself has not been prompt in getting, the amount of mesne profits ascertained.
The plaintiff did not even ask for an enquiry into this question for a period of about twelve years.
Taking into consideration all the circumstances of the case we think that future interest should not have been allowed to the plaintiff in the several suits at a higher rate than four per cent.
on the amount decreed in the various Suits by way of mesne profits.
793 The appellant 's last contention that the munafa (rent) should not be calculated on the principle laid down in Radhacharan vs Maharaja Ranjit Singh (1) but should have been assessed on a fair share of the profits of the land has no substance because the claim was not made in the grounds of appeal to the Privy Council and was not even mentioned in the additional grounds of appeal.
It was for the first time made before us at the hearing and we see no valid grounds for entertaining it at this late stage.
Moreover, it seems to us that the claim has no substance in the absence of any evidence about the proportion the original patni rent bore to the revenue and cesses.
For the reasons given above all these appeals fail except to the extent that the decree of the High Court is modified in that the amounts decreed by way of mesne profits in the various suits will bear interest at the rate of four per cent.
instead of six per cent.
The parties will bear their own costs in all these appeals.
Appeals dismissed.
Agent for the appellant in Civil Appeals No. 62 to 74 and 75 to 92: P.K. Bose.
Agent for respondent No. 1 in Civil Appeals Nos.
68 to 74: Ganpat Rai.
Agent for the respondents Nos.
1 to 3 in Civil Appeals Nos.
75 to 92: Sukumar Ghose.
[/INST]Where a patnidar has obtained a decree against his zemindar for possession of resumed chaukidari chakran lands with mesne profits from the date on which the zemindar wrongfully took 783 possession of them, the zemindar is not entitled to deduct by way of equitable set off from the amount of mesne profits payable by him under the decree, the amounts due to him on account of rent, revenue and cesses for a period subsequent to the date of delivery of possession of the lands inasmuch as the two cross demands do not arise out of the same trans action.
The transaction which led to the plaintiff 's demand for mesne profits resulted from the defendant 's wrongful act as trespasser, while the transaction which gave rise to the zemindar 's demand arose out of the relationship of landlord and tenant and the obligations resulting therefrom.
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<s>[INST] Summarize the judgementiminal Appeal No. 16 of 1959.
Appeal from the judgment and order dated November 18, 1958, of the Allahabad High Court in Criminal Reference No. 452 of 1956.
B. V. section Mani, for the appellants.
G. C. Mathur and C. P. Lal, for the respondent.
January 20.
The Judgment of the Court was delivered by AYYANGAR, J.
Having heard the learned Counsel for the appellants in full we did not consider it necessary to call on the respondent since, we were clearly 565 of the opinion that the contentions raised in the appeal possessed no merit.
The legality of a prosecution for contravention of the notification fixing the maximum prices at which certain categories of iron & steel could be sold is the subject matter of this appeal.
The appellants are two in number, related to each other as husband and wife.
The second appellant Sushila Devi is " a Registered Stockholder " and is stated to be the proprietor of the firm " Balwanta Devi Sushila Devi " situated in Sultanpur in Uttar Pradesh and the first appellant Bhagwati Saran, her husband, the manager of the said firm.
There has been some previous history before the present prosecution was initiated but it is sufficient for the purposes of this appeal to start with the report to the Judicial Magistrate, Amathi, by the officer incharge of the Police station, Sultanpur, dated August 20,1955.
It was headed " Offence Section II B Iron &Steel Control Order, 1941" and set out the following facts: " Bhagwati Saran used to work as a Karinda in the firm of Balwanta Devi Sushila Devi and had all along been doing sales and purchases at the shop, and also issued receipts under his signatures.
Shrimati Sushila Devi is the wife of accused Bhagwati Saran and she was the proprietor.
Balwanta Devi has died.
Hence she alone is the proprietor.
In the course of investigation it was also revealed that Bhagwati Saran had from time to time sold some iron bark; on behalf of this firm after receiving price more than the control rate, which he had all along been getting printed, and ' had been getting some other receipts checked fictitiously under the Control Act from the office of the Supply Officer.
An information relating to it was given to Shri P. N. Kapoor, the then D. M., Sultanpur by his munim Kalapnath and on it a case was registered at this police station and the investigation was made. . . .
On the report of the P.P. the S.P. ordered another charge sheet to be submitted under section 8 of Essential Commodities Ordinance of 1955.
Hence this charge sheet under section 11 B 566 (III) Iron and Steel Control of Production and Distribution Order, 1941, read with s ' 8 of Essential Commodities Ordinance of 1955 is sent against both the accused.
The accused persons after being arrested were released on bail.
It is, therefore, prayed.
that the accused persons after being summoned may be punished.
" The report further stated that 4 volumes of cash memos, and 5 volumes of register of Permits were deposited in the Malkhana and would be produced in evidence and followed it with a list of 13 prosecution witnesses.
The Judicial Magistrate registered the case and issued summons to the accused on September 16, 1955, the case being directed to be called on September 30, 1955.
The accused were thereafter examined before the Magistrate under section 364 of the Criminal Procedure Code on March 23, 1956, and on the next day the Magistrate framed a charge against them which read as follows: " That you between 10th January 1952 and 27th February 1952 in Sultanpur sold 11 Cwt.
12 lb.
iron bars on 11th January 1952 %ad 3 Cwt.
iron bars on 18 2 52 and Cwt.
iron bars on 26th February 1952 at the rate of Rs. 21 13 9 per Cwt.
though the controlled rate as notified in Government of India Gazette dated 1st July 1952 for the commodity was Rs. 21 2 4 per Cwt.
and thus you charged Rs. 1 15 0, Rs. 2 2 3 and Rs. 4 4 6 respectively excess and more than the controlled price and thereby committed an offence punishable under section 7 E. section Temp.
P. Act 1946 read with section 1 1 B (iii) of Iron and Steel Control of Production and Distribution Order of 1941 and I hereby direct that you be tried by the said Court on the said charge.
" The two appellants thereupon moved the.
Court of the Sessions Judge, Sultanpur, to revise the order of the Magistrate dated March 24, 1956, framing charges against them under section 7 of the Essential Supplies (Temporary Powers) Act, 1946 Act XXIV of 1946 (referred to hereafter as the Act).
The points urged at that stage were mainly two: (1) That the notification by the Controller under 567 cl.
11 B(1) fixing the maximum prices which were stated to have been contravened not having been filed before the Court, the Magistrate erred in framing a charge, and (2) that the report of the police was not in conformity with the provisions of section 11 of the Act.
The learned Sessions Judge upheld the second of the above contentions which was, that the report made by the police officer did not set out " the facts constituting the offence" as required by section II of the Act.
He rejected the other point put forward by the appel lants but in view of his conclusion that there was a defect in the report which went to the root of the jurisdiction of the Magistrate to take cognizance of the case, he made a reference to the High Court with a recommendation that the charge framed against the appellants be quashed.
This reference was heard by a Single Judge of the High Court, who disagreed with the learned Sessions Judge in his view that the report did not satisfy the requirements of section 11 of the Act.
Before the learned Judge, however, a further point was urged, that section 11 B of the Iron & Steel Control of Production and Distribution Order, 1941 (which will be referred to hereafter as the Control Order) was itself ultra vires.
This further objection was referred to a Division Bench for decision.
The point urged before the learned Judges of the Division Bench was that the power to fix prices vested in the Steel Controller by cl. 11 B of the Control Order was unconstitutional, as violative of the right to carry on business guaranteed by article 19(1) (g) of the Constitution.
The learned Judges answered this point against the appellants and the case thereafter came back before the learned Single Judge for final disposal of the reference by the Sessions Judge.
The learned Counsel for the appellants once again made a submission to the learned Judge regarding the report of the police officer dated August 20, 1955, not satisfying the requirements of section 11 of the Act and pressed before him the view which found favour with the learned Sessions Judge.
In a more detailed judgment, the learned Judge again rejected this contention and dismissed the reference and directed the prosecution to continue.
It is this 73 568 order of the High Court.
of Allahabad that is the subject matter of appeal now before us.
on a certificate granted by that Court.
It would be seen that the only two points in controversy before the High Court were: (1) whether the report of the police officer dated August 20, 1955, contained " the facts constituting the offence " with which the appellants were charged, as to satisfy the requirements of section 11 of the Act, and (2) whether el. 11 B of the Control Order, violated the fundamental right to carry on business guaranteed by article 19(1)(g).
In the grounds of appeal to this Court and in the statement of case, however, the appellants have raised various other grounds and have also filed a petition for leave to urge these additional grounds, We desire to make it clear that grounds additional to those urged before the High Court would not be permitted to be raised before this Court as a matter of course and that petitions for such purpose would not be granted save in exceptional cases.
It has to be noticed that in hearing and dealing with such additional grounds the Court is handicapped in not having the advantage of the opinions of the High Court on the points urged.
It is the correctness of the decisions of High Courts that are sought to be challenged in appeals and it is but proper that the correctness of these judgments should, save in exceptional cases like for instance subsequent legislation or questions of fundamental and general importance etc., be assailed only on grounds urged before such Courts.
Besides, when among the grounds thus urged as in this case is includ ed a violation of article 14, the handicap is accentuated, since the material facts on which the classification might rest could not be properly, investigated or evaluated on the basis of the affidavits filed in this Court without a careful sifting of the facts which a consideration by the High Court would afford.
If in the appeal now before us, we have departed from this rule, and permitted the appellants to urge the additional grounds it was because of the circumstance that the prosecution was pending and learned Counsel submitted that he would seek to sustain his contention 569 regarding the violation of fundamental rights on the materials already on record.
The ground regarding the constitutionality of el.
11 B of the Control Order has been the subject of elaborate consideration by this Court in Union of India vs Messrs. Bhana Mal Oulzari Mal (1) and is, therefore, no longer open to argument.
Learned Counsel for the appellant therefore did not challenge the correctness of the judgment of the High Court upon this point.
Besides the ground based on a non compliance with section 11 of the Act which we shall consider later, learned Counsel urged before us two points with reference to the notification issued by the Steel Controller fixing the maximum prices at which the several categories of iron and steel could be sold by producers and stockholders.
These were: (1) that the notification of the Controller dated July 1, 1952, for the contravention of which the appellants were being prosecuted, was ultra vires the rule making power conferred upon him by el. 11 B(1) of the Control Order, (2) if, however, the notification was held to be within his power, the same was unconstitutional in that it was discriminatory and violated article 14 of the Constitution.
As we have indicated earlier, these grounds of challenge to the validity of the notification were not made in any of the Courts below including the High Court, but for the reasons indicated we permitted learned Counsel to argue them before us.
In order to appreciate the contention presented in the two forms, it is necessary to set out the terms of el. 11 B(1) which conferred power upon the Controller to fix the maximum base prices at which the several varieties of iron and steel could be sold.
Clause 11 B(1) runs: " 11 B. Power to fix prices. (1) The Controller may from time to time by notification in the Gazette of India fix the maximum prices at which any iron or steel may be sold (a) by a Producer, (b) by stockholder including a Controlled Stockholder and (c) by any other person or class of persons.
Such price or prices may differ for iron and steel obtainable from (1) ; 570 different sources and may include allowances for contribution to and payment from any equalization fund established by the Controller for equalising freight, the concession rates payable to each producer or class of producers under agreements entered into by the Controller with the producers from time to time, and any other disadvantages.
" Clause (2) of the Control Order defines " producer as " a person carrying on the business of manufacturing iron or steel ", and " registered producer " as " a producer who is registered as such by the Controller ".
The same clause defines " stockholder " as " a person holding stocks of iron or steel for sale who is registered as a stockholder by Controller " and " Controlled stockholder " as " a stockholder appointed by the Con.
troller to hold stocks of iron or steel under such terms and conditions as he may prescribe from time to time ".
The notification of the Controller dated July 1, 1952, impugned in these proceedings runs in these terms, quoting only the material words: " Under Ministry of Commerce and Industry Notification. . the prices of all items of steel under columns 1, 11 and III in the schedule of Base Prices of the attached price circular No. 1 of 1951 have been increased by Rs. 50/ per ton with effect from 1st July, 1952, except item 19(b), i.e., Billets which has been increased by Rs. 45/ per ton. .
The other General and Special Conditions of sale mentioned in the attached Price circular remain the 571 The price circular dated July 1, 1951, referred to here consisted of eight columns which ran thus: (Price in rupees per ton) Maximum Base Prices at Calcutta, Bombay and Madras Base Materials Column I Column II Column III Price Item For sales by For sales by For sales by Registered controlled all persons No. Producers.
stockholders.
other than Registered Producers and controlled stockholders.
Untested Untested Untested Untested Untested Te sted Rs. Rs. Rs. Rs. Rs. Rs. A Bars, Structural and plates etc.
Bars and Rods 303 333 328 363 348 383 (Rounds and squares below 3" and flats up to and including 5" wide) 2 to 42. . . . . . .
This was followed by General Conditions and Special Conditions which inter alia made provision for the purpose of rounding off inequalities in freight caused by places being situated at varying distances from the place of production etc.
It was the operation of some of these conditions that was urged as giving rise to the discrimination complained of, but it will, however, be convenient to deal with them later, after disposing of the argument regarding the notification not being within the powers of the Controller under cl. 11 B (1).
The 'ground urged in support of the contention that the notification by the Controller was not in conformity 572 with cl. 1 1 B (1) was this: Whereas under cl. 1 1 B (1) the Controller was directed to fix the maximum prices which could be charged by three different classes, viz., (a) Producers, (b) Stockholders including Controlled stockholders, and (c) Other persons, the impugned ,notification departed from this scheme in two respects: (1) The clause contemplated that the notification should apply to all " producers " whereas " producers " other than " Registered producers " were wholly left out by the Controller with the result that no limitation was placed upon the price they could charge, (2) Whereas the clause directed the Controller to include both the types of stockholders" Registered " as well as " Controlled " within the same class and make the same limit of prices applicable to both, the notification had included only " Controlled stockholders " as the second category of dealers and " registered stockholders " had not been specified eo nomine by him.
This meant either that "Registered stockholders " were wholly outside the class of dealers governed by the notification or that they were intended to be included in the residuary class in column III.
On these premises learned Counsel urged that if " registered stockholders " like the second appellant were not within the notification, the prosecution must fail because the maximum prices chargeable by her had not been fixed.
If on the other hand such dealers had been separated from " Controlled stockholders " and included in the residual category, such a classification was not countenanced by cl.
11 B(1) and was therefore ultra vires.
We consider that these submissions are wholly without any substance.
Before the argument that " producers " other than " registered producers " had not been included in the notification can be accepted, it has to be established that there is any such producer.
There is a list of " registered producers " appended to the notification and learned Counsel admitted that he could not say that there were any besides these, who were "Producers" of iron and steel within the meaning of the Control Order.
If therefore, every " producer " was registered, there is no scope for the argument that 573 any persons had been left out and permitted to sell at prices of their choice.
The other part of learned Counsel 's argument that registered stockholders " were not governed by the notification because they were not included in column II thereof and that dealings by them were not subjected to the maxima of prices fixed by it, has only to be stated to be rejected.
The heading of the last column shows that all categories of dealers other than "registered producers.," and " controlled stockholders " were included in the residuary category.
The related contention that the Controller acted outside his powers in differentiating between " controlled stockholders " and " registered stockholders " and in fixing different maxima of prices that could be charged by the two categories of dealers, does not deserve serious consideration either.
If we understand the classification aright, it is like one between wholesale dealers and retailers and it is on this basis that the maximum price that could be charged by the " Registered Stockholders " who fall under column III is fixed at Rs. 20/ per ton above that permissible to " Controlled Stockholders " in respect of the category of steel which we have extracted earlier.
The classification which gives persons in the category of the appellants this advantage is certainly not one regarding which a complaint could be made.
Even when this advantage conferred on registered stock holders by the classification by the Controller was pointed out to learned Counsel for the appellant he persisted in his argument that "registered stock.
holders".
should have been put in column II along with " controlled stockholders " and should have been permitted to sell only at the same maximum prices.
This is sufficient to show that the argument regarding the classification was frivolous and could not have been urged with any seriousness.
This apart, we consider that even on the terms of cl. 11 B (1), the Controller is not prevented from drawing a distinction within the three classes which are specified in it.
The purpose and policy of the enactment is to ensure that an essential commodity like iron and steel is made available, to 574 the consumer at reasonable prices and in the achievement of this objective classification of producers or of other stockholders based upon rational grounds would obviously be within the power of the Controller.
Taking for instance the last class (c) " any other person or class of persons," it cannot be that this group could not be sub classified, if there was any reason or necessity to do so.
If head (c) is susceptible of this interpretation, as it obviously must, we see no reason why head (b) should not be similarly construed.
We have therefore no hesitation in rejecting the contention of learned Counsel, that the notification of the Controller fixing maximum prices is beyond his power, as not warranted by the terms of el.
11 B (1) of the Control Order.
The argument next advanced in challenge of the validity of the notification was, that some of the General Conditions appended to the notification were discriminatory of the class of "registered stockholders" as compared with the " controlled stockholders " invoking for this purpose article 14 of the Constitution.
Learned Counsel did not challenge the legality of the creation of the equalisation fund by the allowances for what is termed as " place extra ".
Learned Counsel, however, urged two matters wherein facilities had been afforded or price increases permitted, to " controlled stockholders" which were denied to " registered stockholders " and that these had been done without any rational basis.
These were: (1) The 3rd of the special conditions for sale by " controlled stockholders " read: "The question of credit facilities will be a matter for negotiation between the customers and the controlled stockholders. " (2) Similarly, Condition 5 also relating to " controlled stockholders" read: ,The base prices are.
for sizes and length available in Size.
Customers requiring material cut to length or size not available in stock will be required to pay cutting and wastage charges agreed between the customers and the stockholders. " Coming now to the special conditions for sale " by persons other than producers and controlled stock holders, " i.e., the conditions which governed sales like those by the second appellant, special condition 1 575 read: " The base rates given in column III above are ex site and apply to sales by all persons other than Producers and Controlled Stockholders. . and are not subject to additional charges for cutting or for credit facilities.
" Neither of these points cutting charges or credit facilities could be held to be discriminatory without a full investigation of the facts and circumstances which led to the imposition of these special conditions.
Differentiation could never per se be discrimination, nor is there any presumption that the adoption of different rules for groups differently situated is unequal treatment violative of article 14.
On the other hand, the presumption is the other way and the party that alleges unjustifiable discrimination should establish it to the satisfaction of the Court.
We consider that there is no material on the basis of which an argument could be sustained that the special conditions to which learned Counsel adverted contained any element of unfair or irrational discrimination to attract article 14.
There was a slight and subsidiary point raised in regard to the allowance of credit facilities and cutting charges.
It was said that these charges were indeterminate and that the Controller having been directed by cl. 11 B (1) to fix definite maximum prices had departed therefrom by permitting increases of undefined amounts.
This argument again has no substance.
The base price for the commodity having been fixed, there are incidentals which by their very nature were incapable of definite quantification, since they were dependent on each individual case.
This contention also we therefore reject.
In passing, we might observe that the matter before this Court in Union of India vs Messrs. Bhana Mal Gulzari Mal (1) related to a prosecution for a contravention of a notification of an earlier date, but in terms identical with the present, except as to the prices, wherein the dealers in the commodity were classified in the same manner as has been done in the notification now before us and with the same general and special conditions.
The respondent then before this Court was " a registered (1) ; 74 576 stockholder " who was being prosecuted for effecting sales in excess of the maximum prices fixed.
The fact that on that occasion no contention was urged challenging the validity of the notification as beyond the powers of the Controller, on the grounds now put forward clearly indicates, that the matters now urged never appeared then, as a possible source of grievance to a party situated similarly as the second appellant.
We hold that the notification fixing the prices together with the conditions appended thereto are valid and enforceable.
The last point that remains to be dealt with, is the contention that the initiation of the prosecution against the appellants was invalid for non compliance with the requirements of section 11 of the Act.
This Section runs : " 11.
Cognizance of offences.
No Court shall take cognizance of any offence punishable under this Act except on report in writing of the facts constituting such offence made by a person who is a public servant as defined in section 21 of the Indian Penal Code (XLV of 1860).
" Learned Counsel for the appellants urged that though two of the conditions specified by the statute, viz., (1) a report in writing, (2) by a public servant were satisfied, the third requisite, viz., that the report should set out the " facts constituting such offence " was lacking and that by reason of this defect the Magistrate could not lawfully take cognizance of the case against the appellants.
In elaboration of this point learned Counsel pointed out that the report did not specify: (a) the date when the alleged sales took place, (b) the quantity sold, (c) the person in question who was the buyer and who paid the excess over the controlled price, (d) the class or category of iron and steel which was the subject of the sale by the appellants, (e) the precise maximum price which had been fixed for such variety, (f) the amount which the appellants were alleged to have received in excess.
The learned Judge of the High Court rejected this contention and, in our opinion, correctly.
In the report which we have already extracted the provision 577 of the law which the appellants were stated to have contravened was set out, and it was there stated that being " registered stockholders " they had sold the goods above the price notified and that they had further, in order to conceal their crime, fabricated evidence.
It is to be noticed that the report is required to contain only " a statement of facts constituting the offence " and its function is not to serve as a chargesheet against the accused.
The function or purpose of the second of the above three requirements of section 11 is to eliminate private individuals such as rival traders or the general public from initiating a prosecution and for this purpose before cognizance is taken the complaint is required to emanate from " a public servant ".
The two further requirements, viz., that the report should be in writing and regarding the contents of the report, are to ensure that there shall be a record that the public servant is satisfied that a contravention of the law has taken place.
If the contravention in question is sufficiently designated in the report, and in the present case that cannot be disputed, since besides a reference to the notification stated to have been contravened, the report states that the accused had effected sales above the maximum prices specified in the notification, the requirements of the section are satisfied.
The details which would be necessary to be proved to bring home the guilt to the accused and which comprised the several matters enumerated by learned Counsel which we have set out, will be details which would emerge at a later stage, when after notice to the accused a charge is framed against them, and of course at the stage of the trial.
They would all be matters of evidence and section 11 does not require the report to be or to contain either the charge sheet or the evidence in support of the charge, its function being merely to afford a basis for enabling the magistrate to take cognizance of the case.
In support of his submission regarding the construction of section 11 reliance was placed on two decisions: Dr. N. G. Chatterji vs Emperor (1) and Rachpal Singh vs (1) 578 Rex (1).
Both these were cited before the learned Judge and we agree with the manner in which he has dealt with and distinguished them.
No doubt, in both these cases it was held that the requirement of r. 130 (1) of the Defence of India Rules (whose language was similar to is.
11 of the Act) as to the Statement of " facts constituting the contravention " was not complied with, but the " reports " dealt with in them, bear no resemblance to the report in the case before us.
In the first of these decisions, the recital in the report was that the accused was guilty of a " prejudicial act to the interest of the public " and " had prejudiced the success of financial measures with a view to the efficient prosecution of the war ".
These words were held to be absolutely vague, even the particular rule or provision of law which was said to have been contravened, not even being mentioned in the report.
The other decision in 50 Criminal Law Journal does not bear any analogy to the present case either.
The report there in question ran: "On the statement of the informant an offence under section 81(2), Defence of India Rules, has been committed for which the charge sheet is being submitted." On this it was held that the facts alleged to constitute the contravention were not set out in the report and that the Magistrate had therefore no jurisdiction to take cognizance of the case.
Obviously this case could not assist the learned Counsel to sustain a contention that the report in the present case was defective.
We consider that the report on which the prosecution was launched satisfied the requirements of section 11 of the Act.
In the result the appeal fails and is dismissed.
Appeal dismissed.
[/INST]A police officer made a report under section 11 of the Essential Supplies (Temporary Powers) Act, 1946, regarding a contravention of cl. 11 B(III), Iron and Steel (Control of Production and Distribution) Order, 1941, read with section 8 of the Essential Commodities Ordinance, 1955, to the Magistrate against the appellants who were registered stockholders that they had sold iron bars at prices higher than the controlled rate.
After enquiry the Magistrate framed a charge against the appellant under section 7, Essential Supplies (Temporary Powers) Act, 1946, read with cl. 11 B(III) of the Control Order.
The appellants contended that the charge ought to be quashed on the grounds, (i) that the notification of the Controller fixing the maximum sale price of the several categories of iron and steel was ultra vires the rule making power in cl.
11 B(i) of the Control Order, (ii) that the notification was discriminatory and violated article 14, and (iii) that the complaint could not be taken cognisance of by the Magistrate because the report of the police officer did not set out the facts constituting the offence as required by section II of the Act.
The first two grounds were raised for the first time before the Supreme Court.
Held, that the notification fixing the rates was intra vires cl.
11 B(i) of the Control Order.
The notification did not omit any class mentioned in cl.
11 B(1) from its purview; it included 564 "registered producers" and it was not shown that there were any "producers " other than " registered producers " enumerated in the notification.
The notification governed " registered stockholders " also as they were included in the residuary category of persons other than " registered producers " and " controlled stockholders ".
The notification was not discriminatory and did not offend article 14 of the Constitution.
The notification no doubt permitted the grant of credit facilities and the right to charge for cutting and wastage in sales to " controlled stockholders " but not to " registered stockholders " in regard to sales by them.
Differentiation was not per se discrimination.
There was no material to show that there was any unfair or irrational discrimination which could attract article 14.
Held, further, that the police report on which the prosecu tion was launched satisfied the requirements of section II of the Act.
The purpose of section II was to eliminate private persons from initiating prosecutions and to confine it to public servants.
The requirement of the section that the report should be in writing and should set out the facts constituting the offence was to ensure that there was a record that the public servant was satisfied that a contravention of the law had taken place.
If the contravention was sufficiently designated in the report the requirements of the section were satisfied.
Section II did not require the mention in the report of details which would be necessary to be proved to bring home the guilt to the accused.
Dr. N. G. Chatterji vs Emperor and Rachpal Singh vs Rex , not applicable.
Additional grounds, other than those urged before the High Court, would not be permitted to be raised before the Supreme Court as a matter of course, but only, in exceptional circumstances like cases of subsequent legislation or where questions of fundamental and general importance were raised.
</s> |
<s>[INST] Summarize the judgementPetition for Special Leave to Appeal (Civil) No. 4679 of 1980,.
From the Judgment and order dated the 24th July, 1979 of the High Court of Madhya Pradesh at Jabalpur in Misc.
Petition No. 119 of 1975.
Gopal Subramaniam and D. P. Mohanty for the Petitioner.
J., Since we are clearly of the view that the special leave petition should be dismissed in 1975 on merits, I would not like to go any further into the details of the facts of the case.
r would, therefore, refrain from expressing any opinion on the observations made by my learned brother Chinnappa Reddy, J. 395 CHINNAPPA REDDY, J.
This special leave petition has to be dismissed.
There is no merit in it.
The respondent was a teacher employed in a municipal school.
The school was taken over by the Government in June 1971.
The respondent was absorbed in Government service by an order dated February 28, 1972.
The order recited that the absorption was subject to 'verification of antecedents ' and medical fitness The services of the respondent were terminated on November S, 1974.
Though the order terminating the services of the respondent did not purport to stigmatise him in any manner, it was not disputed before the High Court and it is no longer disputed before us that the order was founded on a report made by the Superintendent of Police, Raigarh on October 31, 1974, to the effect that the respondent was not a fit person to be entertained in Government service, as he had taken part in 'RSS and Jan Sangh activities '.
The High Court held that the order of termination of service was of a punitive character and quashed it on the ground that the provisions of article 311 of the Constitution had not been complied with.
The State of Madhya Pradesh has sought leave to appeal to this court under article 136 of the Constitution.
India is not a police state.
India Is a democratic republic.
More than 30 years ago, on January 26, 1950, the people of India resolved to constitute India into a democratic republic and to secure to all its citizens "Liberty of thought, expression, belief, faith and worship; Equality of status and opportunity", and to promote "Fraternity, assuring the dignity of the individual".
This determination of the people, let us hope, is not a forgotten chapter of history.
The determination has been written into the articles of the Constitution in the shape of Fundamental Rights and they are what makes India a democratic republic and what marks India from authoritarian or police States.
The right to freedom of speech and expression, the right to form associations and unions, the right to assemble peaceably and without arms.
the right to equality before the law and the equal protection of the right laws, the right to equality of opportunity in matters relating to employment or appointment to any office under the State are declared Fundamental Rights.
Yet the Government of Madhya Pradesh seeks to deny employment to the respondent on the ground that the report of a Police officer stated that he once belonged to some political organisation.
It is important to note that the action sought to be taken against the respondent is not any disciplinary action on the ground of his present involvement in 396 political activity after entering the service of the Government, contrary to some Service Conduct Rule.
It is further to be noted that it is not alleged that the respondent ever participated in any illegal, vicious or subversive activity.
There is no hint that the respondent was or is a perpetrator of violent deeds or that he exhorted anyone to commit violent deeds.
There is no reference to any addition to violence or vice or any incident involving violence, vice or other crime.
All that is said is that before he was absorbed in Government service, he had taken part in some 'RSS or Jan Sangh activities. ' What those activities were has never been disclosed.
Neither the RSS nor tho Jan Sangh is alleged to be engaged in any , subversive or other illegal activity; nor are the organisations banned.
Most people, including intellectuals, may not agree with the program me and philosophy of the Jan Sangh and the RSS or, for that matter of many other political parties and organisations of an altogether different hue.
But that is irrelevant.
Everyone is entitled to his thoughts and views.
There are no barriers.
Our Constitution guarantees that.
In fact members of these organisations continue to be members of Parliament and State Legislatures.
They are heard, often with respect inside and outside the Parliament.
What then was the sin that the respondent committed in participating in some political activity before his absorption into Government service.
What was wrong in his being a member of an organisation which is not even alleged to be devoted to subversive or illegal activities.
The whole idea of seeking a Police report on the political faith and the past political activity of a candidate for public employment appears to our mind to cut at the very root of the Fundamental Rights of equality of opportunity in the matter of employment, freedom of expression and freedom of association.
It is a different matter altogether if a police report is sought on the question of the involvement of the candidate in any criminal or subversive activity in order to find out his suitability for public employment.
But why seek a police report on the political faith of a candidate and act upon it.
Politics is no crime.
Does it mean that only True Believers in the political faith of the party in power for the time being are entitled to public employment ? Would it not lead to devastating results, if such a policy is pursued by each of the Governments of the constituent States of India where different political parties may happen to wield power, for the time being ? Is public employment reserved for "the cringing and the craven" in the words of Mr. Justice Black of the United States Supreme Court ? Is it not destructive of the dignity of the 397 individual mentioned in the preamble of the Constitution ? Is it to be put against a youngman that before the cold climate of age and office freezes him into immobility, he takes part in some political activity in a mild manner.
Most students and most youngmen are exhorted by national leaders to take part in political activities and if they do get involved in some form of agitation or the other, is it to be to their ever lasting discredit i Sometimes they get involved because they feel strongly and badly about injustice, because they are possessed of integrity and because they are fired by idealism.
They get involved because they are pushed into the forefront by elderly leaders who lead and occasionally mislead them.
Should all these youngmen be debarred from public employment ? Is Government service such a heaven that only angels should seek entry into it ? a We.
do not have the slightest doubt that the whole business of seeking police reports, about the political faith, belief and association and the past political activity of a candidate for public employment is repugnant to the basic rights guaranteed by the Constitution and entirely misplaced in a democratic republic dedicated to the ideals set forth in the preamble of the Constitution.
We think it offends the Fundamental Rights guaranteed by articles 14 and 16 of the Constitution to deny employment to an individual because of his past political affinities, unless such affinities are considered likely to affect the integrity and efficiency of the individual 's service.
To hold otherwise would be to introduce 'McCarthysim ' into India. 'McCarthyism ' is obnoxious to the whole philosophy of our constitution.
We do not want it.
In the fifties the practice of baiting and crucifying teachers, public servants and a host of others in the United States, as Communists came to be known as 'McCarthyism.
Its baleful effects were described by late President Eisenhower, himself an anticommunist as follows : 'McCarthyism took its toll on many individuals and on the Nation.
No one was safe from charges recklessly made from inside the walls of congressional immunity.
Teachers, Government employees, and even ministers became vulnerable.
Innocent people accused of Communist associations or party membership have not to this day been able to clear their names fully.
For a few, of course, the cost was little where the accused was a figure who stood high in public trust and respect, personal damage, if any could be ignored or laughed away.
But where, without 398 proof cf guilt, or because of some accidental or early in life association with suspected persons, a man or woman had lost a job or the confidence and trust of superiors and associates, the cost was often tragic, both emotionally and occupationally" .
The late President also said, "They. fear other people 's ideas every new idea.
They. talk about censoring tho sources and the communication of ideas. without exhaustive debate even heated debate of ideas and programmes, free Government would weaken and wither.
But if we allow ourselves to be persuaded that every individual, or party, that takes issue with our own convictions is necessarily wicked or treasonous then we are approaching the end of freedom 's road. " In Wieman V. Updegraff (1), Black J. said, in one of the notorious loyalty oath cases and, it is worth quoting in full. "History indicates that individual liberty is intermittently subjected to extraordinary perils.
Even Countries dedicated to government by the people are not free from such cyclical dangers.
The first years of our Republic marked such a period.
Enforcement of the Alien and Sedition Laws by zealous patriots who feared ideas made it highly dangerous for people to think, speak, or write critically about government, its agents, or its policies, either foreign or domestic our Constitutional liberties survived the ordeal of this regrettable period because there were influential men and powerful organized groups bold enough to champion the undiluted right of individuals to publish and argue for their beliefs however unorthodox or loathsome.
Today however, few individuals and organizations of power and influence argue that unpopular advocacy has this same wholly unqualified immunity from governmental interference.
For this and other reasons the present period of fear sees more ominously dangerous to speech and press than was that of the Alien and Sedition Laws, Suppressive laws and practices are the fashion.
The Oklahoma 399 oath statute is but one manifestation of a national network A of laws aimed at coercing and controlling the minds of men.
Test oaths are notorious tools of tyranny.
When used to shackle the mind they are, or at least they should be, unspeakably odious to a free people.
Test oaths are made still more dangerous when combined with bills of attainder which like this Oklahoma statute impose pains and penalties for past lawful associations and utterances.
"Governments need and have ample power to punish treasonable acts But it does not follow that they must have a further power to punish thought and speech as distinguished from acts.
Our own free society should never forget that laws which stigmatize and penalize thought and speech of the unorthodox have a way of reaching, ensnaring and silencing many more people than at first intended.
We must have freedom of speech for all or we will in the long run have it for none but the cringing and the craven.
And I cannot too often repeat my belief that the right to speak on matters of public concern must be wholly lost.
"It seems self evident that all speech criticizing government rulers and challenging current beliefs may be dangerous to the status quo.
With full knowledge of this danger the Framers rested our First Amendment on the premise that the slightest suppression of thought, speech, press, or public assembly is still more dangerous.
This means that individuals are guaranteed an undiluted and unequivocal P right to express themselves on questions of current public interest.
It means that Americans discuss such questions as of right and not on sufferance of legislatures, courts or any other governmental agencies.
It means that courts are without power to appraise and penalize utterances upon their notion that these utterances are G dangerous.
In my view this uncompromising interpretation of the Bill of Rights is the one that must prevail if its freedoms are to be saved.
Tyrannical totalitarian governments cannot safely allow their people to speak with complete 400 freedom.
I believe with the Framers that our free Government can".
In another loyalty oath case, Garner vs Board of Public Works, (l) Douglas, J had this to say: "Here the past conduct for which punishment is exacted is single advocacy within the past five years of the overthrow of the Government by force and violence.
In the other cases the acts for which Cummings and Garland stood condemned covered a wider range and involved some conduct which might be vague and uncertain.
But those differences, seized on here in hostility to the constitutional provisions, are wholly irrelevant.
Deprivation of a man 's means of livelihood by reason of past conduct, not subject to this penalty when committed, is punishment whether he is a professional man, a day labourer who works for private industry, or a Government employee.
The deprivation is nonetheless unconstitutional whether it be for one single past act or a series of past acts . . "Petitioners were disqualified from office not for what they are today, not because of any program they currently espouse (cf.
Grende vs Board of Supervisors ; not because of standards related to fitness for the office, cf: Dcnt vs West Virginia ; ; Hawker vs New York, ; , but for what they once advocated. . .
In the same case, Frankfurter, J. Observed: "The needs of security do not require such curbs on what may well be innocuous feelings and associations.
Such curbs are indeed self defeating.
They are not merely unjustifiable restraints on individuals.
They are not merely productive of an atmosphere of repression uncongenial to the spiritual vitality of a democratic society.
The inhibitions which they engender are hostile to the best conditions for securing a high minded and high spirited public service.
" In Lerner vs Casey, (a) Douglas, J. said: 401 "We deal here only with a matter of belief.
We have no evidence in either case that the employee in question ever committed a crime, ever moved in treasonable opposition against this country.
The only mark against them if it can be called such is a refusal to answer questions concerning Communist Party membership.
This is said to give rise to doubts concerning the competence of the teacher in the Beilan case and doubts as to the trustworthiness and reliability of the subway conductor in the Lerner case. " "There are areas where government may not probe But government has no business penalizing a citizen merely for his beliefs or associations.
It is government action that we have here.
It is government action that the Fourteenth and First Amendments protect against . .
Many join association, societies, and fraternities with less than full endorsement of all their aims.
" In Speiser vs Randall, (1) Black, J said: "This case offers just another example of a wide scale effort by Government in this country to impose penalities and disabilities on everyone who is or is suspected of being a 'Communist ' or who is not ready at all times and all places to swear his loyalty to State and Nation.
I am convinced that this whole of business of penalizing people because of their views and expressions concerning Government is hopelessly repugnant to the principles of Freedom upon which this Nation was founded .
Loyalty oaths, as well as other contemporary 'security measures, ' tend to stifle all forms of unorthodox or unpopular thinking or expression the kind of thought and expression which has played such a vital and beneficial role in the History of this Nation.
The result is a stultifying conformity which in the end may well turn out to be more destructive to our free society than foreign agents could ever hope to be." In the same case, Douglas, J., said: 402 "Advocacy which is in no way brigaded with action should always be protected by the First Amendment.
That protection should extend even to the ideas we despise.
As Mr. Justice Holmes, wrote in dissent in Gitlow.
vs New York.
(l) 'If in the long run the beliefs expressed in proletarian dictatorship are destined to be accepted by the dominant forces of the community, the only meaning of free speech is that they should be given their chance and have their way '.
It is time for government state or federal to become concerned with the citizen 's advocacy when his ideas and beliefs move into the realm of action".
We may end our excursion to the United States of America with a reference to the words of wisdom uttered by Thomas Jefferson more than two centuries ago: ". the opinions of men are not the object of civil government, nor under its jurisdiction;. it is time enough for the rightful purposes of civil government for its officers to interfere when principles break out into overt acts against peace and good order.
" We are not for a moment suggesting that even after entry into Government service, a person may engage himself in political activities.
All that we say is that he cannot be turned back at the very threshold on the ground of his past political activities.
Once he becomes a Government servant, he becomes subject to the various rules regulating his conduct and his activities must naturally be subject to all rules made in conformity with the Constitution.
Let us once more remained ourselves of what Gurudev Rabindranath Tagore said: "Where the mind is without fear and the head is held high: where knowledge is free,. 403 Where the clear stream of reason has not lost its way into the dreary desert sand of dead habit: Where the mind is led forward by thee into ever widening thought and action let my country awake".
The application is dismissed.
P.B.R Petition dismissed.
[/INST]Consequent upon the taking over by the Government of the municipal school in which the respondent worked as a teacher, he was absorbed in Government service.
The order stated that his absorption in Government service was subject to verification of his antecedents.
Sometime later, on the basis of the report of the Superintendent of Police that before being absorbed in Government service the respondent had taken part in RSS and Jan Sangh activities his services were terminated on the ground that he was not a fit person to be entertained in Government service.
On the view that the order of termination of his service was of a punitive character, passed without complying with the provisions of article 311 of the Constitution, the High Court quashed that order.
Dismissing the special leave petition under article 136 of the Constitution, ^ HELD: per section Murtaza Fazal Ali, J.
The special leave petition should be dismissed in limine.
[394 H] per o. Chinnappa Reddy, J.
The respondent cannot be turned back at the very threshold on the ground of his past political activities.
Once he becomes a Government servant, a he becomes subject to the various rules regulating his conduct and his activities must naturally be subject to all rules made in conformity with the Constitution.
[402 E P] The determination of the people of this country to constitute India into a democratic republic and to secure to all its citizens "liberty of thought, expression.
belief, faith and worship; Equality of status and opportunity" has been written into the articles of the Constitution in the shape of fundamental 394 rights and they are what makes India a democratic republic and what marks India from authoritarian or police states.
The right to form associations and unions, among other rights, is declared as a fundamental right; yet the State Government sought to deny employment to him on the ground that the report of a police officer stated that he once belonged to some political organisation.
[395 F H] The action sought to be taken against the respondent was not any disciplinary action on the ground of his present involvement in political activities contrary to some service conduct rule nor was there any allegation that he ever participated in any illegal or subversive activity or that he was a perpetrator of violent deeds.
All that was said was that before he was absorbed in Government service he had taken part of RSS and Jan Sangh activities.
What those activities were had never been disclosed.
Neither the RSS nor the Jan Sangh was alleged to be engaged in any subversive or other illegal activities, nor were they banned organisations.
Most people may not agree with the programme and philosophy of the Jan Sangh or RSS but that is irrelevent.
Everyone is entitled to his thought and views.
Members of these organisations continue to be members of Parliament and State legislatures.
They are heard often with respect both inside and outside the Parliament.
[395 H; 396 A D] The whole idea of seeking a police report on the political faith and the past political activity of a candidate for public employment appears to cut at the very root of the fundamental rights of equality of opportunity in the matter of employment and freedom of association.
It offends the fundamental rights guaranteed by articles 14 and 16 of the Constitution to deny employment to an individual because of his past political affinities, unless such affinities are considered likely to affect the integrity and efficiency of the individual 's service.
[397 D E] Wieman vs Updegraff, ; & Speisar vs Randall, ; , referred to.
</s> |
<s>[INST] Summarize the judgementAppeal Nos. 38 and 39 of 1964.
Appeals from the judgment and order dated April 10, 1961 of the Madhya Pradesh High Court in Miscellaneous Civil Case No. 63 of 1961.
C. K. Daphtary, Attorney General, R. Ganapathy Iyer and R. N. Sachthey, for the appellant (for both the appeals).
N. D. Karkhanis, Rameshwar Nath, section N. Andley and P. L. Vohra, for the respondent (in both the appeals).
The Judgment of the Court was delivered by Subba Rao, J.
These two appeals by certificate arise out of the judgment of the High Court of Madhya Pradesh, Jabalpur, in Miscellaneous Case No. 63 of 1961 from a reference under section 66(2) of the Indian Income tax Act, 1922, made by the Income tax Appellate Tribunal, Bombay.
To appreciate the contention of the parties the following genealogy will be useful: Kalooram Todi : : : : Govindram Gangaprasad (d. in January 1943) (d. in 1933) : : : : : Bachhulal : : : : : : Madanlal (predeceased his Nandlal Babulal father) (d. 9 12 1945) (b. 25 1 1935) : : Jankibai Banarsibai : : : : Radheyshyam (predeceased Venkatlal his father) (b. 13 12 1931) : : Shantibai : : Vishwanath (adopted) (b. 13 4 1941) 490 After the death of Kalooram Todi, his two sons by name Govindram and Gangaprasad constituted a joint Hindu family which owned extensive property in Jaora State and a sugar mill called "Seth Govindram Sugar Mills" at Mahidpur Road in Holkar State.
In the year 1942 Bachhulal filed a suit for partition against Govindram and obtained a decree therein.
In due course the property was divided and a final decree was made.
We are concerned in these appeals only with the Sugar Mills at Mahidpur Road.
After the partition Govindram and Bachhulal jointly worked the Sugar Mills at Mahidpur Road.
After the death of Govindram in 1943, Nandlal, the son of Govindram, and Bachhulal, as kartas of their respective joint families, entered into a partnership on September 28, 1943 to carry on the business of the said Sugar Mills.
Nandlal died on December 9, 1945, leaving behind him the members of his branch of the joint family, namely, the three widows and the two minor sons shown in the genealogy.
After the death of Nandlal, Bachhulal carried on the business of the Sugar Mills in the name of "Seth Govindram Sugar Mills".
For the assessment year 1950 51, the said firm applied for registration on the basis of the agreement of partnership dated September 28, 1943.
The Income tax Officer refused to register the partnership on the ground that after the death of Nandlal the partnership was dissolved and thereafter Bachhulal and the minors could be treated only as an association of persons.
On that footing he made another order assessing the income of the business of the firm as that of an association of persons.
Against the said orders, two appeals one being Appeal No. 21 of 1955 56 against the order refusing registration and the other being Appeal No. 24 of 1955 56 against the order of assessment were filed to the Appellate Assistant Commissioner.
The Appellate Assistant Commissioner dismissed both the appeals.
In the appeal against the order of assessment, the Appellate Assistant Commissioner exhaustively considered the question whether there was any partnership between the members of the two families after the death of Nandlal and came to the conclusion that in fact as well as in law such partnership did not exist.
Two separate appeals, being Income tax Appeal No. 8328 of 1957 58 and Income tax Appeal No. 8329 of 1957 58, preferred to the Income tax Appellate Tribunal against the orders of the Appellate Assistant Commissioner were dismissed.
The assessee made two applications to the Tribunal for referring certain questions of law to the High Court, but they were dismissed.
Thereafter, at the instance of the assessee the High Court directed the Tribunal to submit the following two questions for its decision and it accordingly did so: "(1) Whether on the facts and in the circumstances of the case, the status of the assessee, "Seth Govindram Sugar Mills, Mahidpur Road, Proprietor Nandlal Bachhulal, Jaora", is an Association of Persons or a firm within the meaning of Section 16(1)(b) of the Income tax Act.
" 491 "(2) Whether the order of the Appellate Tribunal is illegal on account of the Tribunal having committed an error of record and having omitted to consider the relevant material in the case.
" The High Court, for reasons given in its judgment, held on the first question that in the assessment year 1949 50 the status of the assessee was that of a firm within the meaning of section 16(1),(b) of the Income tax Act and on the second question it held that the Tribunal misdirected itself in law in reaching the conclusion that the parties could not be regarded as partners.
The present two appeals are preferred against the said order.
At the outset we must make it clear that the question of registration could not be agitated in these appeals, as that question was not referred to the High Court.
We shall, therefore, only consider the points raised by the questions referred to the High Court and held by the High Court against the appellant.
Indeed, the only effective question is whether during the assessment year 1950 51 the assesee was a firm or an association of persons.
The first question raised by the learned Attorney General is that on the death of Nandlal the firm of Seth Govindram Sugar Mills was dissolved and thereafter the income of the said business could only be assessed as that of an association of persons.
To appreciate this contention some more necessary facts may be stated.
The deed of partnership dated September 28, 1943, was executed between Nandlal and Bachhulal.
It is not disputed that each of the said two partners entered into that partnership as representing their respect;, joint families.
Under cl.
(3) of the partnership deed, "The death of any of the parties shall not dissolve the partnership and either the legal heir or the nominee of the deceased partner shall take his place in the provisions of the partnership" The question is whether on the death of Nandlal his heirs, i.e., the members of his branch of the family, automatically became to partners of the said firm.
The answer to the question turns upon section 42 of the (Act 9 of 1932).
the material,part of which reads: "Subject to contract between the partners a firm is dissolv ed by the death of a partner.
" While for the appellant the leaned Attorney General contended that section 42 applied only to a partnership consisting of more than two partners, for the respondent Mr. Karkhanis argued that the section did not impose any such limitation and that on its terms it equally applied to a partnership comprising only two partners.
It was argued that the contract mentioned in the over riding clause was a contract between the partners and that, if the parties to the contract agreed that in the event of death of either of them his successor would be inducted in his place, the said contract would be binding 492 on the surviving member.
On the death of one of the partners, it was said, his heir would be automatically inducted into the partnership, though after such entry he might opt to get out of it.
This conclusion the argument proceeded was also supported by section 31 of the Partnership Act.
Section 31 of the Partnership Act reads: "(1) Subject to contract between the partners and to the provisions of section 30, no person shall be introduced as a partner into a firm without the consent of all the existing partners." Converting the negative into positive, under section 31 of the Partnership Act if there as a contract between the partners, a person other than the partners could be introduced as a partner of the firm without the consent of all the existing partners.
A combined reading of sections 42 and 31 of the Partnership Act, according to the learned counsel, would lead to the only conclusion that two partners of a firm could by agreement induct a third person into the partnership after the death of one of them.
There is a fallacy in this argument.
Partnership, under section 4 of the Partnership Act, is the relation between persons who have agreed to share the profits of a business carried on by all or any of them acting for all.
Section 5 of the said Act says that the relation of partnership arises from contract and not from status.
The fundamental principle of partnership, therefore, is that the relation of partnership arises out of contract and not out of status.
To accept the argument of the learned counsel is to, negative the basic principle of law of partnership.
Section 42 can be interpreted without doing violence either to the language used or to the said basic principle.
Section 42(c) of the Partnership Act can appropriately be applied to a ' partnership where there are more than two partners.
If one of them dies, the firm is dissolved; but if there is a contract to the contrary, the surviving partners will continue the firm.
On the other hand, if one of the two partners of a firm dies, the firm automatically comes to an end and, thereafter, there is no partnership for a third party to be introduced therein and, therefore, there is no scope for applying cl.
(c) of section 42 to such a situation.
It may be that pursuant to the wishes of the directions of the deceased partner the surviving partner may enter into a new partnership with the heir of the deceased partner, but that would constitute a new partnership.
In this light section 31 of the Partnership Act falls in line with section 42 thereof.
That section only recognizes the validity of a contract between the partners to introduce a third party without the consent of all the existing partners: it presupposes the subsistence of a partnership; it does not apply to a partnership of two partners which is dissolved by the death of one of them, for in that event there is no partnership at all for any new partner to be inducted into it without the consent of others.
There is a conflict of judicial decisions on this question.
The decision of the Allahabad High Court in Lal Ram Kumar vs 493 Kishori Lal(1) is not of any practical help to decide the present case,.
There.
from the conduct of the surviving partner and the heirs of the deceased partner after the death of the said partner, the contract between the original partners that the partnership should not be dissolved on the death of any of them was inferred.
Though the partnership there was only between two partners, the question of the inapplicability of section 42(c) of the Partnership Act to such a partnership was neither raised nor decided therein.
The same criticism applies to the decision of the Nagpur High Court in Chainkarcin Sidhakaran Oswal v Radhakisan Vishwnath Dixit(2).
This question was directly raised and clearly answered by a Division Bench of the Allahabad High Court in Mt. Sughra vs Babu(3) against the legality of such a term of a contract of partnership consisting of only two partners.
Agarwala, J., neatly stated the principle thus: "In the case of a partnership consisting of only two partners, no partnership remains on the death of one of them and, therefore, it is a contradiction in terms to say that there can be a contract between two partners to the effect that on the death of one of them the partnership will not be dissolved but will continue . .
Partnership is not a matter of status, it is a matter of contract.
No heir can be said to become a partner with another person without his own consent, express or implied.
" This view accords with that expressed by us earlier.
In Narayanan vs Umayal(4).
Ramachandra lyer J., as he then was, said much to the same effect when he observed thus: ". . . if one of the partners died, there will not be any partnership existing to which the legal representatives of the deceased partner could be taken in.
In such a case the partnership would come to an end by the death of one of the two partners, and if the legal representatives of the deceased partner joins in the business later, it should be referable to a new partnership between therein." But Chatterjee J., in Hansraj Manot vs Messrs. Gorak Nath Pandey(5) struck a different note.
His reasons for the contrary view are expressed thus: "Here the contract that has been referred to s the contract between the two partners Gorak Nath and Champalal Therefore, it cannot be said that the contract ceased to have effect because a partner died.
The contract was there.
There was no new contract (1) A.T.R. 1946 All. 259.
(2) A.T.R.1956 nag.
46 (3) A.I.R. 1952 All. 506, 507.
(4) A.I.R, 1959 Mad. 283,284.
(5) , 264.
(N)4SCI 5 494 with the heirs and there was no question of a new contract with the heirs because of the original contract, and by virtue of the original contract the heirs become partners as soon as one of the partners died. . .
As soon as there is the death, the heirs become the partners auto matically without any agreement between the original Partners by virtue of the original agreement between the Partners while they were surviving.
there is no question of interregnums.
As soon as the death occurs the right of somebody else occurs.
The question of interregnums does not arise.
The heirs become partners not because of a contract between the heirs on the one hand and the other partners on the other but because of the contract between the original partners of the firm.
" With great respect to the learned Judge, we find it difficult to appreciate the said reasons.
The learned Judge seems to suggest that by reason of the contract between the original partners, the heirs of the deceased partner enter the field simultaneously with the removal by death of the other partner from the partnership.
This implies that the personality of the deceased partner projects into that of his heirs, with the result that there is a continuity of the partnership without any interregnums.
There is no support either on authority or on principle for such a legal position.
In law and in fact there is an interregnums between the death of one and the succession to him.
We accept the view of the Allahabad and Madras High Courts and reject the view expressed by Nagpur and Calcutta High Courts, The result of the discussion is that the partnership between Nandlal and Bachhulal came to an end on the death of Nandlal on December 9, 1945.
The next question is whether after the death of Nandlal a new partnership was entered into between the representatives of the two branches of the families, i.e., Nandlal 's and Bachhulal 'section Before we consider this question it is as well that we advert to incidental questions of law that were raised.
One is whether the widow of Nandlal could under Hindu law be a karta of the joint Hindu family consisting of three widows and two minors.
There is conflict of view on this question.
The Nagpur High Court held that a widow could be a karta: see Commissioner of Income tax, C. P. & Berar vs Seth Laxmi Narayan Raghunathdas(1); Pandurang Dahke vs Pandurang Gorle(2), The Calcutta High Court expressed the view that where the male members are minors and their natural guardian is the mother, the mother can represent the Hindu undivided family for the purpose of assessment and recovery of taxes under the Income tax Act: see Sushila Devi Rampurla vs Income tax Officer(2); and (3) 495 Sm.
Champa Kumari Singhi vs Additional Member, Board of Revenue, West Bengal(1) The said two decisions did not recognize the widow as a karta of the family, but treated her as the guardian of the minors for the purpose of income tax assessment.
The said.
decisions, therefore, do not touch the question now raised.
The Madras and Orissa High Courts held that coparcenership is a necessary qualification for the managership of a joint Hindu family and as a widow is not admittedly a copartner, she has no legal qualifi cations to become the manager of a joint Hindu family.
The decision of the Orissa High Court in Budhi Jena vs Dhobai Naik(2) followed the decision of the Madras High Court in V.M.N. Radha Ammal vs Commissioner of Income tax, Madras(2) wherein Satyanarayana Rao J., observed: "The right to become a manager depends upon the fundamental fact that the person on whom the right devolved was a copartner of the joint family Further, the right is confined to the male members of the family as the female members were not treated as copartner though they may be members of the joint family.
" Viswanatha Sastri J., said: "The managership of a joint Hindu family is a creature of law and in certain circumstances, could be created by an agreement among the copartner of the joint family.
Coparcenership is a necessary qualification for managership of a joint Hindu family.
" Thereafter, the learned Judge proceeded to state: "It will be revolutionary of all accepted principles of Hindu law to suppose that the senior most female member of a joint Hindu family, even though she has adult sons who are entitled as copartner to the absolute ownership of the property, could be the manager of the family . . . .
She would be the guardian of her minor sons till the eldest of them attains majority but she would not be the manager of the joint family for she is not a copartner.
" The view expressed by the Madras High Court is in accordance with well settled principles of Hindu law, while that expressed by the Nagpur High Court is in direct conflict with them.
We are clearly of the opinion that the Madras view is correct.
Another principle which is also equally well settled may be noticed.
A joint Hindu family as such cannot be a partner in a firm, but it may, through its karta enter into a valid partnership with a stranger or with the karta of another family.
This Court in Kshetra (1) (2) A.I.R. 1956 Orissa 6.
(3) , 230, 232, 233.
496 Mohan Sanyasi Charan Sadhukhan vs C.E.P.T.(1) pointed out that when two kartas of different families constituted a partnership the other members of the families did not become partners, though the karta might be accountable to them.
The question, therefore, is whether after the death of Nandlal the representatives of the two families constituted a new partnership and carried on the business of the Sugar Mills.
Admittedly no fresh partnership deed was executed between Banarsibai, acting as the guardian of the minors in Nandlal 's branch of the family and Bachhulal.
It is not disputed that partnership between the representatives of two families can be inferred from conduct.
Doubtless the accounts produced before the income tax authorities disclosed that Bachhulal was carrying on the business of "Seth Govindram Sugar Mills Ltd." in the same manner as it was conducted before the death of Nandlal.
Therein Kalooram Govindram and Gangaprasad Bachhulal were shown as partners, Govindram having 10 annas share and Bachhulal having 6 annas share.
There were separate current accounts for the two parties.
The Appellate Assistant Commissioner, who examined the accounts with care, gave the following details from the accounts ason November 1, 1948: Joint capital account of Kalooram Govindram and Gangaprasad Bachhulal in the ratio of 10 : 6 Rs. Credit balance 10,78,660 Current Accounts: Gangaprasad Bachhulal Do.
10,46,797 Kalooram Govindram Do.
8,30,348 Profit & Loss Account Debit balance 14,01,669 No profit or loss was adjusted to the current account of the parties.
Thereafter the accounts were closed as on 31 3 1950, when the capital account was squared up by transferring that much loss from the profit and loss account and balance in the profit and loss account was transferred in the ratio of 10:6 to the current accounts of the two parties.
Thus the profit and loss account showed: Net debit balance including current Rs. year 's loss 17,51,992 Loss set off against capital account 10,78,666 . . . .
Rs. 6,73,326 Transferred to partners ' accounts: Messrs. Kalooram Govindram 4,20,829 Messrs. Gangaprasad Bachhulal 2,52,497 6,73,326 . . . .
Balance Nil (1)[1954] S.C.R. 497 The accounts only establish that Bachhulal was doing the business of Govindram Sugar Mills Ltd. But Banarsibai 's name was not found in the accounts.
If she was a partner, her name should have found a place in the accounts.
Not a single document has been produced on behalf of the assessee which supports the assertion that Banarsibai acted as a partner or was treated by the customers of the firm as a partner.
There is not a little of evidence of conduct of Bachhulal, Banarsibai or even of third parties who had dealings with the firm to sustain the plea that Banarsibai was a partner of the firm.
Indeed, the conduct of the parties was inconsistent with any such partnership between Banarsibai and Bachhulal.
After the death of Nandlal, Banarsibai and Shantibai applied to Jaora District Court for the appointment of guardians to look after the properties and the persons of the two minors; and on January 21, 1946, four persons other than these two widows were appointed as guardians of the minors.
If Banarsibai was acting as a guardian of the minors representing the family in the business, she would not have applied for the appointment of others as guardians.
On October 4, 1952, a partnership deed was drawn up between Bachhulal on the one hand and the minors represented by the said four guardians on the other.
If Banarsibai was the representative of the family in the business, this document would not have come into being Banarsibai also had no place in another partnership deed which was executed on March 27, 1953, between Venkatlal represented by the aforesaid guardians and Bachhulal.
The evidence, therefore, demonstrates beyond any reasonable doubt that Banarsibai was nowhere in the picture and that Bachhulal carried on the business of the Sugar mills on behalf of the two families.
Nor is there any evidence to show that from 1943 till the assessment year the guardians of the minors appointed by the District and Sessions Judge, Jaora, in 1946 representing the minors entered into a partnership with Bachhulal.
The partnership deeds of 1952 and 1953 were subsequent to the order of assessment and they contain only self serving statements and they cannot, in the absence of any evidence, sustain the plea of earlier partnership.
Indeed, the guardians were only appointed for the properties situated within the jurisdiction of the District Judge, Jaora, and they could not act as guardians in respect of the properties outside the said jurisdiction.
If they were acting as partners with Bachhulal, their names would have been mentioned either in the accounts or in the relevant documents pertaining to the business.
The conflicting version given by the assessee in regard to person or persons who actually represented the family in the partnership in itself indicates the falsity of the present version.
It must, therefore, be held that the Court guardians did not enter into a partnership with Bachhulal.
But, Venkatlal became a major on December 13, 1949, i.e., during the accounting year 1949 50.
On October 17, 1951, an application for registration was received by the Income tax Officer 498 signed by Venkatlal and Bachulal who are shown as partners representing their respective joint families.
The return of income submitted along with the application for registration was signed by Venkatlal on August 29, 1951.
After Venkatlal became a major, there was no obstacle in his representing his branch of the family, in the partnership.
Indeed, it was conceded in the High Court that there was a partnership from December 13, 1949, when Venkatlal, attained majority.
Having regard to the said circumstances and the concession, we must hold that from December 13, 1949, the business was carried on in partnership between Venkatlal, representing his branch of the family, and Bachhulal, representing his branch of the family.
In the result we set aside that part of the finding of the High Court holding that the partnership business was carried on by the representatives of the two families after the death of Nandlal, but confirm the finding to the extent that such a partnership came into existence only after December 13, 1949.
In this view, we answer the two questions referred to the High Court as under: (1)For the assessment year 1950 51 the status of the, assessee was that of a firm within the meaning of section 16 (1)(b) of the Income tax Act, 1922.
(2)The Tribunal misdirected itself in law in reaching the conclusion that the parties could not be regarded as partners.
In the result the appeals are dismissed.
But as the respondent failed in its main contentions, the parties will bear their own costs in this Court.
Appeals dismissed.
[/INST]The respondents were the owners of certain premises in New Delhi.
The lessee a company of these premises assigned the lease to the appellant.
Alleging that the transfer was done without their consent, the respondents filed an application against the lessee and the appellant under section 14(1) proviso (b) of the Delhi Rent Control Act, 1958, for recovery of possession.
Pending the proceedings, the lessee went into liquidation and its name was struck off from the record.
The Controller thereafter, passed an order in favour of the respondents.
Having moved unsuccessfully the Rent Control Tribunal and the High Court, the appellant, appealed to the Supreme Court contending that: (i) the order made against the appellant, after the lessee ceased to be a party, was incompetent, as the only person against whom an order for recovery of possession can be made under the clause, is the tenant who assigned the tenancy, and (ii) the clause in the lease by which the term "lessee" included the lessee 's assignee operated as a consent by the respondents, to assign.
HELD: (i) (Per Sarkar, J.).
The Act contemplates orders for recovery of possession also against persons other than a tenant who has assigned or sub let without the landlord 's consent, so that, where the tenant becomes extinct without leaving any successor, an order can be made against a person who took an assignment of the lease from the tenant before the lease became extinct.
[833C, D E] The proviso expressly states when an order of ejectment can be made and the clauses of the proviso are not intended to indicate the persons against whom an order for recovery of possession could be made, but only the circumstances in which an order for recovery of possession may be made.
[832E G] The expression "the tenant" in cl.
(b) is used only to emphasise that the tenant assigning must be the tenant of the landord seeking eviction.
So read, the effect of the clause is that a land lord can recover possession if his tenant assigns or sub lets without his consent.
[832H, 833A B] Since the object of the proviso is to enable the landlord to recover possession in the specified cases, orders against all "persons in occupation" must have been contemplated so that the landlord might without further trouble recover possession.
Section 18 plainly implies that an order for recovery of possession against a sub tenant is contemplated by the proviso.
Further.
the order for recovery of possession would, under section 25, be binding on the assignee or sub tenant, and therefore, they would be interested in showing that there was the requisite consent, and hence would be entitled to be made parties to the proceedings.
If they are thus entitled to be heard to oppose the order of eviction, such an order could be made against them also.
[833F G, H; 834C, E, H 835A] 830 Per Bachawat J.(i): Both the tenant and the assignee were properly parties to the proceedings for possession and if the tenant company had been dissolved, there is no reason why the proceedings could not continue against the assignee alone.
[839G] It is true that other clauses of the proviso contemplate eviction of the tenant on the ground of some act on the part of the tenant against whom the proceeding for possession is brought, but under cl.
(b), the assignment is a ground of eviction of both the assigning tenant and the assignee and the Controller has jurisdiction to make an order for possession not only against the assigning tenant but also against the assignee.
[839H 840B] Per Mudholkar J. (Dissenting) The right which the respondents possessed to evict the defunct company from the premises, because the company had assigned the tenancy to the appellant without the respondents ' consent could not be availed of by them, and the appellant could therefore continue in possession.
[838B C] The ban against eviction of a tenant in section 14(1) is lifted by the proviso only with respect to the tenant and not to any other person, because, a proviso is subservient to the main provision.
Therefore, the tenant must be a party to the proceeding right up to the date of making of the order of eviction.
Unless an order is obtained against the tenant there would be no occasion for pressing in aid section 25.
Unlike the case of death of or assignment by, a tenant, an anomalous position results where the tenant happening to be a company is dissolved during the pendency of proceedings and cannot be represented by any one, because of a lacuna in the law: But such lacuna cannot be removed by the Courts without assuming a power to legislate.
[836H, 837F H] (ii) Per Sarkar J.: The clause in the lease according to which "the lessee" includes his assignee, does not lead to the conclusion that the lessor consented to the assignment.
Besides, the consent contemplated by the proviso is a direct consent to a contemplated assignment to a particular assignee.
[835F G] Regional Properties Ltd. vs Frankenchwerth, , applied.
Per Bachawat J: The consent contemplated by cl.
(b) may be either general or special, but the clause in the lease would not amount to a consent by the landlord to an assignment either expressly or by necessary implication.
[840D E]
</s> |
<s>[INST] Summarize the judgementvil Appeal Nos.
379 1988 and 3660 82/1987.
From the Judgment and Order dated 26.10.87 of the Customs Excise and Gold (Control) Appellate Tribunal in Appeal Nos.
ED/943/83 D Order No. 838/87 D ED(SB) A. No. 411 and 412/81 D ' and 787/80 D in Order No. 786 to 788/6 D. Kuldip Singh, Additional Solicitor General, A.K. Srivastava and P.Parmeswaran and Mrs. Sushma Suri for the Appellants.
Soil J. Sorabjee, section Ganesh, J.R. Gagrat, P.G. Gokhale, B.R. Agarwala and C.M. Mehta for the Respondents.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI,J.
These appeals are under Section 35L(b) of the Central Excises and Salt Act, 1944(hereinafter to as 'the Act ') against the decision of the Customs Excise and Gold (Control) Appellant Tribunal, New Delhi ( 'Tribunal ' for short) dated 26the October,1987.
The respondent company has its factory at Chakala Andheri and is engaged in the manufacture of non alcoholic beverage bases falling under Tariff Item 68 of Central Excise Tariff.
During the course of enquiry, it was found that the company had during the period from Ist March, 1975 to 18th April,1979 manufactured non alcoholic beverage bases without holding proper Central Excise licence and had cleared the said goods without payment of the duty due thereon and had thereby evaded the duty amounting to PG NO 937 Rs.3,50,963.22.
According to the revenue, prima facie it appeared that the respondent had contravened the provisions of Rules 9(1), 53, 173 pp(I), 173 pp(3), ]73 pp(6) and 174 of the Central Excise Rules, 1944 (`Rules ' for short) inasmuch as during the period from 1st March, 1975 to 18th April, 1979 the respondent company had manufactured without valid licences required under Section 6 of the Act read with Rule 174 of the Rules, goods not elsewhere specified and falling under Tariff Item 68 of the First Schedule of the Act, viz., non alcoholic beverage bases.
The respondent company had further cleared the said goods without filing list of goods manufactured as required by Rule 173 pp(3) of the Rules.
The respondent had cleared the said goods without preparing gate passes as required under Rule 173 pp (6) of the Rules.
and had further cleared the said goods without maintaining accounts as required under Rule 53 of the Rules.
In the circumstances.
notices were issued by the relevant officer asking the respondent company to show cause for recovery of the dues and also for imposition of penalty.
When the matter came up for consideration before the Collector, Central Excise, he found that non alcoholic beverage bases were not themselves food or food products and accordingly did not quality for exemption under Notification No. 55/75 as amended.
He accordingly confirmed the demand of central excise duty of Rs.3,50,963.22 under Rule 9(2) read with Rule 10 of the Rules.
He also imposed a penalty of Rs.25,000 under Rule 173Q of the Rules.
Aggrieved thereby,the respondent company filed an appeal before the Tribunal and contended that the question of the dutiability of non alcoholic beverage bases manufactured by the respondent had been settled by the Tribunal in its decision in the case of respondent itself, i.e.
,Parle Exports (P)Ltd. vs Collector of Central Excise, Baroda, which are the subject matter of the connected appeals, i.e. C.A. Nos. 3680 82 of 1987 The Tribunal following its earlier order allowed the appeal and hence the present appeal by the Revenue.
The First Schedule of the Act which provides for the dutiability and the rates of duty applicable to various goods mentioned therein contains the expressions "Food and Beverages It provides therein description of various types of goods and the rates of duties applicable thereto.
In the said description "Food and Beverages" many items are included, viz., sugar produced in a factory ordinarily using power in the course of production of sugar, (1A) confectionery, cocoa powder and chocolates, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power namely.
boiled sweets, toffees, caramels, candies, nuts (including almonds) and fruit kernels coated with sweetening agent, and PG NO 938 chewing gums, cocoa powder, drinking chocolates etc.
It also includes items (1B) prepared or preserved foods put up in unit containers and ordinarily intended for sale, including preparations of vegetables, fruit, milk, cereals, etc., and as item (1C) food products, in or in relation to the manufacture of which any process is ordinarily carried on with the aid of power, namely, biscuits, pasteurised butter, pasteurised or processed cheese, aerated waters, whether or not flavoured or sweetened and whether or not containing vegetable or fruit juice or fruit pulp etc.
Tariff Item 68 of the First Schedule of the Act provides for duty on "All other goods not elsewhere specified and manufactured in a factory" but excluding, inter alia alcohol, all sorts, including alcoholic liquor for human consumption and other items not necessary for our present purpose.
The exemption Notification No. 55/75 C.E. dated 1st March, 1975 reads as follows: "In exercise of powers conferred by sub rule (10) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods of the description specified in the q Schedule annexed hereto and falling under Item No. 68 of the First Schedule to the (1 of 1944), from the whole of the duty of excise leviable thereon .
THE SCHEDULE 1.
All kinds of food products and food preparations,including (i) meat and meat products; (ii) dairy products; (iii) fruit and vegetable products; (iv) fish and sea foods; (v) bakery products; and (vi) grain mill products.
Electric light and power.
" PG NO 939 The question is, whether by the notification of exemption non alcoholic beverage bases have been exempted from payment of duty.
The only question, therefore, in other words, is whether non alcoholic beverage bases are `food products ' or `food preparations ' covered by the exemption notification No. 55/75 CE of Ist March, 1975.
We are not concerned with the question whether in a broad general sense non alcoholic beverage base is food or not.
In Brooke Bond (India) Limited vs Union of India, the question arose before a learned Single Judge of the High Court of Andhra Pradesh whether coffee chicory blend was food product and is an item which fell under Tariff Item 68 of the Tariff.
The identical notification involved herein came up for consideration in that case.
The question was whether it was food product or food preparation, and as such exempt from excise duty.
It was held by the learned Single Judge that what was exempt under the said notification was not food but food products and food preparations and it was further held that coffee chicory blend was neither food nor food preparation.
Therefore, it was not exempt from payment of excise duty under the said notification.
The word food has no definition of universal application and it varied from statute to statute.
In some cases the dividing line between the two might be thin and in some cases it might be varied but so far as coffee chicory blend was concerned there was little doubt that it was beverage and not food.
The learned Judge referred to paragraph 109 of Volume 18 of Halsbury 's Laws of England (4th Edn).
In that paragraph, coffee chicory products are mentioned under the general heading `Food, Dairies and Salaughter Houses ' and sub heading `Food generally.
Coffee chicory blend is also mentioned in that paragraph.
But the coffee and coffee products under the heading `Food generally were in the context of the law of Food Adulteration and the Coffee and Coffee Produce Regulations, q1967 in force in England.
Reference was also made by the learned Judge to Corpus Juris Secundum, Volume 36 at page 1041.
The learned Judge, in our opinion, rightly observed that the aforesaid passage from the Halsbury 's Laws of England and Corpus Juris Secundum could not be mechanically imported into the present case more particularly when we are concerned with the situation under the Tariff Schedule.
`Food ', as has been noted, has no fixed definition of universal application and its meaning varies from statute to statute.
The dividing line, the learned Judge observed, between the beverage and food might be thin and in some case it might overlap.
The learned Judge,, however, observed that it was beverage rather than food.
The accordingly held that the notification exempted not food but food products and food preparations and as such coffee chicory blend did not come within the purview of the exemption.
The said decision was affirmed by the Division PG NO 940 Bench of that Court in Brooke Bond (lndia) Limited vs Union of India & Ors., The Division Bench after exhaustively discussing the points in controversy and after referring to several authorities referred to the decision of Justice Vivian Bose of this Court in The State of Bombay vs Vir Kumar Gulabchand Shah, [1982] SCR/877, wherein he had observed in his own and inimitable language at pages 880 883 of the report as under: "Much learned judicial thought has been expended upon this problem what is and what is not food and what is and what is not a foodstuff, and the only conclusion I can draw from a careful consideration of all the available material is that the term 'foodstuff is ambiguous.
In one sense it has a narrow meaning and is limited to articles which are eaten as food for purposes of nutrition and nourishment and so would exclude condiments and spices such as yeast, salt, pepper, baking powder and turmeric.
In a wider sense, it includes everything that goes into the preparation of food proper (as understood in the narrow sense) to make it more palatable and digestible.
In my opinion, the problem posed cannot be answered in the abstract and must be viewed in relation to its background and context.
But before I dilate on this, l will examine the dictionary meaning of the words The Oxford English Dictionary defines foodstuff a follows: "that which is taken into the system to maintain life and growth and to supply waste to tissue".
In Webster 's international Dictionary `food is defined as: "nutritive material absorbed or taken into the body of an organism which serves, for purposes of growth.
work repair and for the maintenance of the vital processes".
Then follows this explanation: "Animals differ greatly from plants in their nutritive processes and require in addition to certain inorganic substances (water, salts etc.) and organic.
substances of unknown composition (vitamins) not ordinarily ' classed as food 'though absolutely indispensable to life, and contained in greater of less quantities in the substances eaten) complex organic substances which fall into three principal groups, Proteins, Carbohydrates and Fats.
" PG NO 941 Next is given a special definition for legal purposes, namely "As used in laws prohibiting adulteration etc.
, `food ' is generally held to mean any article used as food or drink by man, whether simple, mixed or compound, including adjuncts such as condiments, etc., and often excluding drugs and natural water.
" The definition given of `foodstuff ' is "1.
Anything used as food, 2.
Any substance of food value as protein, fat etc.
entering into the composition of a food.
" It will be seen from these definitions that "foodstuff" has no special meaning of its own.
It merely carries us back to the definition of "food" because "food stuff" is anything which is used as "food".
So far as "food" is concerned, it can be used in a wide as well as a narrow sense and, in my opinion, must depend upon the context and background.
Even in a popular sense, when one asks another "Have you had your food?", one means the composite preparations which normally go to constitute a meal curry and rice, sweetmeats, pudding, cooked vegetables and so forth.
One does not usually think separately of the different preparations which enter into their making, of the various condiments and spices and vitamins, any more than one would think of separating in his mind the purely nutritive elements of what is eaten from their non nutritive adjuncts.
So also, looked at from another point of view, the various adjuncts of what I may term food proper which enter into its preparation for human consumption in order to make it palatable and nutritive, can hardly be separated from the purely nutritive elements if the effect of their absence would be to render the particular commodity in its finished state unsavoury and indigestible to a whole class of persons PG NO 942 whose stomachs are accustomed to a more spicely prepared product.
The proof of the pudding is, as it were, in the eating, and if the effect of eating what would otherwise be palatable and digestible and therefore nutritive is to bring on indigestion to a stomach unaccustomed to such unspiced fare, the answer must, I think, be that however nutritive a product may be in one form it can scarcely be classed as nutritive if the only result of eating it is to produce the opposite effect; and if the essence of the definition is the nutritive element, then the commodity in question must cease to be food, within the strict meaning of the definition to that particular class of persons, without the addition of the spices which make it nutritive.
Put more colloguially, "one man 's food is another man 's poison".
I refer to this not for the sake of splitting hairs but to show the undesirability of such a mode of approach.
The problem must, I think, be solved in a commonsense way.
" Justice Bose noted that a comparison of war time measure in English and Indian Statutes might not be safe.
But food is one which nourishes and sustains human body for the purposes of growth, work or repair and for the maintenance of the vital process.
In the Brooke Bond Ltd. 's case (supra), the Division Bench considered the meaning of the expression "coffee chickory blend" and upheld the decision of the learned Single Judge as mentioned hereinbefore.
Mr. Sorabjee, learned counsel appearing for the respondent, drew our attention to several items including Item 68 and the Central Excise Trade Notice dated 18th June 1975 which deals with exemption.
The said Trade Notice, inter alia, reads as follows: "A number of doubts have been raised about the general scope of the terms `food products/preparations ' vide Entry No. I in the Schedule to Notification No. 55/75 dated 1.3.75.
Specific queries have also been raised as to whether items like oil cakes, rice bran.
scented chunam, katna, starch, quargum, gur, flour, ice cream and ice candy, ice, supari, groundnut kernels, and cashew kernels could be regarded as covered under the above entry as claimed by the manufacturers of these goods.
The matter has been examined and the following clarifications are used for the information of the trade.
PG NO 943 The word `food ' is a general term and applies to all that is eaten by men for nourishment and takes in subsidiaries, further; (i) preparations for use, either directly or after processing such as cooking, dissolving or oiling in water, milk etc.
for human consumption; and (ii) preparations used because of their nutritional or flavouring properties in the making of beverages or food stuffs for human consumption, are classiable as food preparations.
But such preparations which because of their ingredients and small proportion in which they are normally used, are clearly added for other purposes, or not classiable as food preparations." (underlined by us).
Mr. Sorabjee also drew our attention to the explanatory note in Heading No. 21.07 of CCCN which states, inter alis as follows: "21.07 FOOD PREPARATIONS NOT ELSEWHERE SPECIFIED OR lNCLUDED.
Provided that they are not covered by any other heading of the Nomenclature the present heading covers: (A) Preparations consisting wholly or partly of foodstuffs, used in the making of beverages or food preparations for human consumption.
The heading includes preparations consisting of mixtures of chemicals (organic acids, calcium salts, lecithin etc.) with food stuffs (flour, sugar, milk, milk powder, etc.) for incorporation in food preparations either as ingredients or to improve some of their characteristics (appearance keeping qualities etc.)" Clause (2) of the said explanatory notes in heading No. 20.17 of CCCN contains the following: "(2) Flavouring powders for making beverages, whether or not sweetened with a basis of bicarbonate of soda and glycyrrhizin or liquorice extract (sold on the Continent as "Cocoa powder").
" PG NO 944 Our attention was also drawn to Item ( 12) of the same which runs as follows: "(12).
Non alcoholic compound preparations (often known as "concentrated extracts") used for making beverages (liqueurs, etc.) unless they are included elsewhere in the Nomenclature.
These preparations are obtained by compounding vegetable extracts of heading 13.03 with lactic acid, tartaric acid, citric acid, phosphoric acid, preserving agents, foaming agents, fruit juices, etc., and sometimes with essential oils.
Alcoholic preparations of this type are excluded (heading 22.09)" Mr. Sorabjee further drew our attention to the Appendix 17 of Import Policy of 1981 82 which was relied upon by the Tribunal in the second decision, i.e. the Parle Exports (P) Ltd. case which is the subject matter of the connected appeals, i.e. C.A. Nos. 3680 82 of 1987.
It was pleaded that it was always understood and treated as a part of the food product.
Reliance was also placed on the reports of the Chief Chemist of the Central Excise Regional Laboratory, Baroda to which Mr. Sorabjee drew our attention.
The reports dealing inter alia with some items stated as follow: "Gold Spot Base: S.R.No. 1 Base A (Lab. No.10) The sample is in the form of orange coloured liquid containing flavouring agents free from Alcohol.
(Please see note attached).
No 2 Base (Lab. No. 11) The sample is in the form of white powder.
It is sodium Benzoate a chemical known to be used as a preservative.
S.R. No.3 .
Base C (Lab. No. 12) The sample is in the form of white powder.
It is vitamin `C '(ascorbic acid) an organic chemical.
Limca Base: PG NO 945 S.R. No. 4 Base A (Lab. No. 13) The sample is in the form of white liquid containing flavouring agents.
It is free from Alcohol.
(Please see note attached.) S.R. No. 5 Base B (Lab. No. 14) The sample is in the form of white powder.
It is sodium Benvonate a chemical known to be used as a preservative.
" The note appended to these reports stated inter alia the following: "NOTE" "The term "food ' ' as defined in the meant any article used as food or drink for human consumption other than drugs and water and includes: (a) Any article which ordinarily enters into, or is used in the composition or preparation of human foods; and (b) any flavouring matter or condiments.
Food products which are excluded from item (C) would fall under Item 68 of Central Excise, Tariff read with the Notification 62/78 dated 1.3.78 excluded as amended.
The term "Food preparations" on the other hand would cover; (a) Preparation for use either directly or after processing (such as cooking, dissolving or boiling in water, milk etc.) for human consumption.
(b) Preparation consisting wholly or partly of food stuffs used in making of Beverages or food preparation for human consumption.
This would also include concentrated extract for making non alcoholic beverages.
B.T.N. heading 21.07) PG NO 946 In this connection attention is also invited to Bangalore Collectorate trade notice No. 103/75 dated 18.6.75.
In view of that has been stated above samples at Sl.
No. 1, 4, 8, 9, 13 and 15 may be deemed to fall in the category of food preparations.
However, before finalising the assessment, it may be worthwhile ascertaining whether the above products are also known as food preparations in common parlance and trade.
The views of the Director.
Drugs & Food Laboratory, Baroda may also sought, if necessary." Mr. Sorabjee submitted that the Tribunal has relied on the Bangalore Collectorate Trade Notice as referred hereinbefore, order of the Appellate Collector in the case of Bush Boake Allan (India) Limited, and Heading No. 21.07 of CCCN, Import Policy of the Government of India for 1981 82 as well as the observations in Encyclopaedia Britannica, Volume 13 at pages 420 421.
It was submitted that the said orders of the Tribunal had considered and taken into consideration all the relevant factors.
The Tribunal has acted on the varied materials, and therefore, such decision of the Tribunal should not be altered or deviated from.
Reliance was placed on the observations of this Court in Collector of Customs, Bombay v, Swastic Woollen (P) Ltd. and Ors., at paragraph 9.
The expression "food products" is not defined in the Act The product exemption includes `food and food preparations ' and provides an inclusive definition of `food products ' and 'food preparations '.
But the correct and the appropriate meaning of the expressions covered in the said notification has to be found out.
The question is whether non alcoholic beverage base is either `food product ' or `food preparation ' in terms of the notification in question.
Mr. Sorabjee tried to suggest that fruit and vegetable juice might become fruit or vegetable products to come under Item 1(iii) of the Schedule to the exemption notification.
Learned Additional Solicitor General, Mr. Kuldip Singh, on the other hand submitted that non alcoholic beverage base though having some food value, is not food product or food preparation, at any rate, in the context of the Act and notification as such.
lle drew our attention to the first heading in the First Schedule to the Act dealing with "Food and Beverages" and pointed out that items 1 to IC deal with Food and Food Products while item 1D deals with beverages separately.
He submitted before us that this indicates that PG NO 947 the expression "food products and food preparations" are used in contrast to "beverages" so far as the present Act and notifications thereunder are concerned.
There is force in the submissions of the learned Additional Solicitor General.
Our attention was drawn to a decision of the Government of India in Re: Asian Chemical Works, where the Government of India opined that `Food flavours ' and `food preparations, might improve taste or appearance of food products and/or food preparations, but by themselves could not be legitimately consumed directly or after processing such as cooking, dissolving, or boiling in water for human consumption independently.
Mr. Singh submitted that in ordinary common and commercial parlance also the goods in question are not known as food products and/or food preparations as such, therefore, these are not to be treated as exempt under the notification.
Mr. Singh submitted that when a person says "I have consumed food" he does not mean or says that he has consumed non alcoholic beverage bases.
Therefore, those goods cannot be understood as covered by the notification of exemption.
It was submitted that how Government understood a matter at the time of the notification, is a relevant factor and that is a factor which one should bear in mind in view of the principles enunciated by this Court in K.P. Verghese vs Income Tax Officer, Ernakulam & Anr., ; It is a well settled principle of interpretation that courts in construing a statute or notification will give much weight to the interpretation put up on it at the time of enactment or issue, and since by those who have to construe.
execute and apply the said enactments.
How then should the courts proceed? The expressions in the Schedule and in the notification for exemption should be understood by the language employed therein bearing in mind the context in which the expressions occur.
The words used in the provision, imposing taxes or granting exemption should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them.
It is, however, necessary to bear in mind certain principles.
The notification in this case was issued under Rule 8 of the Central Excise Rules and should be read along with the Act.
The notification must be read as a whole in the context of the other relevant provisions.
When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself.
See in this connection the PG NO 948 observations of this Court in Orient Weaving Mills (P) Ltd. vs The Union of India, [1962] Supp.
3 SCR 481.
See also Kailash Nath vs State of U.P., AIR The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment.
But in this connection, it is well to remember the observations of the Judicial Committee in Coroline M. Armytage & Ors.
vs Federick Wilkinson, at 370 that it is only, however, in the event of there being a real difficulty in ascertaining the meaning of a particular enactment that the question of strictness or of liberality of construction arises.
The Judicial Committee reiterated in the said decision at page 369 of the report that in a taxing Act provisions establishing an exception to the general rule of taxation are to be construed strictly against those who invoke its benefit.
While interpreting an exemption clause, liberal interpretation should be imparted to the language thereof, provided no violence is done to the language employed.
It must, however, be borne in mind that absurd results of construction should be avoided.
In Hindustan Aluminium Corporation Ltd. vs State of Uttar Pradesh & Anr., [1982] l SCR 129 this Court emphasised that the notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context.
This Court reiterated that the expression should be construed in a manner in which similar expressions have been employed by those who framed relevant notification.
The Court emphasised the need to derive the intent from a contextual scheme.
In this case therefore, it is necessary to endeavour to find out the true intent of the expressions "food products and food preparations" having regard to the object and the purpose for which the exemption is granted bearing in mind the context and also taking note of the literal or common parlance meaning by those who deal with those goods, of course bearing in mind.
that in case of doubt only it should be resolved in favour of the assessee or the dealer avoiding, however.
an absurd meaning.
Bearing the aforesaid principles in mind, in our opinion, the revenue is right that the nonalcoholic beverage bases in India cannot be treated or understood as new `nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process ' and an average Indian will not treat non alcoholic beverage bases as food products or food preparations in that light.
PG NO 949 We have also noted how these goods were treated by the Government as mentioned hereinbefore.
There is no direct evidence as such as to how in commercial parlance unlike in ordinary parlance, non alcoholic beverage bases are treated or whether they are treated as food products or food preparations.
The purpose of exemption is to encourage food production and also give boost to the production of goods in common use and need.
After all the purpose of exemption is to help production of food and food preparations at cheaper price and also help production of items which are in common use and need, like electric light and power.
The question of interpretation involves determining the meaning of a text contained in one or more documents.
Judges are often criticised for being tied too closely to the statutory words and for failing to give effect to the intention of the Parliament or the lawmaker.
Such language, it has been said, in Cross 's "Statutory Interpretation" (Second Edn.) at page 21, appears to suggest that there are two units of enquiry in statutory interpretation the statutory text and the intention of the Parliament and the Judge must seek to harmonise the two.
This, however, is not correct.
According to the tradition of our law, primacy is to be given to the text in which the intention of the law giver has been expressed.
Cross refers to Blackstone 's observations that the fairest and most rational method to interpret the will of the law maker is by exploring his intentions at the time when the law was made, by signs the most natural and probable.
And these signs are either the words, the context, the subject matter, the effects and consequences, or the spirit and reason of the law.
We have no doubt, in our opinion, that having regard to the language used it would not be in consonance with the spirit and the reason of law to give exemption for non alcoholic beverage bases under the notification in question.
Bearing the aforesaid purpose, in our opinion, it cannot be contended that expensive items like Gold Spot base, Limca base or Thumps up base were intended to be given exemption at the cost of public exchequer.
For the aforesaid reasons, the appeals have to be allowed and the decision of the Tribunal reversed.
We, however.
need not go into the question of penalty as well as the question of limitation which have been left open by the Tribunal in its order.
It will be open for the parties to urge these points afresh before the Tribunal.
We express no opinion on these aspects.
The appeals to the extent indicated above are allowed.
There will, however, be no order as to costs.
R.S.S. Appeals allowed.
[/INST]The respondent company was engaged in the manufacture of nonalcoholic beverage bases falling under Tariff Item 68 of Central Excise Tariff.
According to the Revenue, the company manufactured the nonalcoholic beverage bases without holding proper Central Excise Licence, and had cleared the said goods without payment of the duty due thereon.
The stand of the company was that the goods were exempt from duty under Notification No. 55/75 C.E. dated 1st March, 1975 which inter alia exempted "all kinds of food products and food preparations".
The Customs and Excise Collector confirmed the demand of central excise duty against the company.
In appeal, the Confirmed the demand of and Gold (Control) Appellate Tribunal accepted the contention of the company.
The Additional Solicitor General on behalf of the appellants contended that (i) non alcoholic beverage base though having some food value, was not food product or food preparation.
at any rate, in the context of the Act and notification as such; (ii) the expression "food products and food preparations" was used in contrast to "beverages" so far as the present Act and notifications thereunder were concerned; (iii) in ordinary common and commercial parlance also the goods in question were not known as food products and/or food preparations as such, and therefore these were PG NO 933 PG NO 934 not to be treated as exempt under the notification; and (iv) how Government understood a matter at the time of the notification, was a relevant factor and that was a factor which one should bear in mind.
K.P. Verghese vs Income Tax Officer Ernakulam, ; and Government of India 's decision in Re: Asian Chemical Works, , relied upon.
On behalf of the respondent it was contended that the Tribunal had acted on the varied materials, and therefore, such decision of the Tribunal should not be altered or deviated from.
Collector of Customs, Bombay vs Swastic Woollen (P) Ltd., , relied upon.
Allowing the appeals, it was, HELD: (1) The word `Food ' has no fixed definition of universal application and its meaning varies from statute to statute.
But food is one which nourishes and sustains human body for the purposes of growth, work or repair and for the maintenance of the vital process.[939D] Brooke Bond (India) Limited vs Union of India, ; Brooke Bond (India) Limited vs Union of India.
119%41 and The State of Bombay vs Virkumar Gulabchand Shah, ; , referred to.
(2) The expression `food products ' is not defined in the Act.
The exemption includes food products and food preparations ' and provides an inclusive definition of `food products ' and food preparations '.
[946E] (3) The words used in the provision, imposing taxes or granting exemptions, should be understood in the same way in which these are understood in ordinary parlance in the area in which the law is in force or by the people who ordinarily deal with them.
[947F] (4) It is a well settled principle of interpretation that courts in construing a statute or notification will give much weight to the interpretation put upon it at the time of enactment or issue, and since by those who have to construe, execute and apply the said enactments.
l947E] PG NO 935 (5) The notification should not only be confined to its grammatical or ordinary parlance but it should also be construed in the light of the context.
The expression should be construed in a manner in which similar expressions have been employed by those who framed the relevant notification, [948E] Hindustan Aluminium Corporation Ltd. vs State of Uttar Pradesh, ; , referred to.
(6) The question of interpretation involves determining the meaning of a text contained in one or more documents.
Judges are often criticised for being tied too closely to the statutory words and for failing to give effect to the intention of the Parliament or the law maker.
[949C] (7) According to the tradition of our law, primacy is to be given to the text in which the intention of the law giver has been expressed.
[949D] (8) The principle is well settled that when two views of a notification are possible, it should be construed in favour of the subject as notification is part of a fiscal enactment avoiding, however, as absurd meaning.
[948F] Coroline M. Armytage & Ors.
vs Frederick Wilkinson, , referred to.
(9) The notification must be read as a whole in the context of the other relevant provisions.
When a notification is issued in accordance with power conferred by the statute, it has statutory force and validity and, therefore, the exemption under the notification is, as if it were contained in the Act itself [947G H] Orient Weaving Mills (P) Ltd. vs Union of India, [1962] Supp.3 SCR 481 and Kailash Nath vs State of U.P., AIR 1975 SC 790, referred to.
(10) The purpose of exemption is to encourage food production and also give boost to the production of goods in common use and need.
After all, the purpose of exemption is to help production of food and food preparations at cheaper price and also help production of items which are in common use and need, like electric light and power.
[949A B] PG NO 936 (11) Having regard to the language used it would not be in consonance with the spirit and the reason of law to give exemption for non alcoholic beverage bases under the notification.
Bearing the aforesaid purpose, it cannot be contended that expensive items like Gold spot base, Limca base or Thumps up base were intended to be given exemption at the cost of the public exchequer.[949E F] (12) Non alcoholic beverage bases in India cannot be treated or understood as new 'nutritive material absorbed or taken into the body of an organism which serves for the purpose of growth, work or repair and for the maintenance of the vital process ' and an average Indian will not treat non alcoholic beverage bases as food products or food preparations in that light.[948G H]
</s> |
<s>[INST] Summarize the judgementvil ,Appeal No. 2525 of 1966.
Appeal from the judgment and order dated October 30, 1963 of the Gujarat High Court in Special Civil Application No. 94 of 1962.
C.K. Daphtary, Attorney General and 1.
N. Shroff, for the appellant.
H.R. Gokhale, S.B. Vakil, Janendralal and B.R. Agarwala, for the respondent.
The Judgment of the Court was delivered by Hegde J.
The only question that falls for decision in this appeal is whether on the basis of the notice issued by the Bombay State Electricity Board on January 8, 1959 under section 7 of the (to be hereinafter referred to as the: Act) prior to its amendment in 1959, the appellant can compulsorily purchase from the respondent his concern 'The Bilimora Electric Power Supply Co. '.
In his application before the High Court under article 226 of the Constitution the respondent challenged the vires of section 7 of the Act.
But that contention remains to be examined.
The High Court has chosen to allow the petition.
solely on the ground that as the requirements of section 7 have not been complied with, the appellant cannot compel the respondent to sell the undertaking.
If we come to the conclusion that that conclusion is unsustainable then the matter will have to go back to the High Court for deciding the constitutionality of section 7.
The respendent was given a licenee on.
February 11, 1932, under the provisions of the Baroda Electricity Act Samvat 1983 for supplying electricity within the area mentioned.
in the licenee.
Clause 27 of that licenee provided that the option of purchase 582 given by section 9 of the Baroda Electricity Act shall be exercisable first on the expiration of thirty years computed from the commencement of the licence and thereafter on the expiration of every subsequent period of ten years during the subsistence of the licence.
The manner in which the undertaking should be valued is laid down in that Act.
On the merger of the former Baroda State with the Province of Bombay, the Act as well as the (Act 54 of 1948) were made applicable to the territories of the former State of Baroda, and the corresponding Baroda Acts were repealed with the saving clause that the licences issued under the repealed Act shall continue to remain in force as if issued under the Act, until the expiration of the period of those licences.
In exercise of the powers conferred by section 5 of the Electricity Supply Act, 1948 the Government of Bombay constituted the Bombay State Electricity Board on January 31, 1945.
On January 8, 1959 that Board issued to the respondent a notice under section 7 of the Act.
That notice is important for our present purpose.
Hence we shall quote the relevant portion thereof.
It runs thus: "In exercise of the powers conferred on the Bombay State Electricity Board by virtue of section 71 of the Electri city (Supply) Act, 1948 read with section 7 of the , you are hereby notified that the Bombay State Electricity Board has decided to exercise and shall exercise the option of purchasing your under taking on the expiry on 10 2 1962 of the licence granted to you .
The receipt of this notice may please be acknowledged.
" As a result of the Bombay Re organization Act, 1960, the present Gujarat State came into existence.
In exercise of the powers conferred by section 5 of the read with sub section 4 of section 68 of the Bombay Reorganization Act, 1960 the appellant Corporation was constituted by the Government of Gujarat by means of a notification dated May 1, 1960.
The Central Government by the notification No. EL 1I 1(22)/60 dated the 17th June, 1960 made in exercise of the powers conferred by cl.
(a) of sub section
(4) of section 68 of the Bombay Reorganization Act, 1960 directed that the appellant Corporation shall "with effect from 1st May 1960" take over from the Bombay State Electricity Board all its undertakings, assets, rights and liabilities in the area comprised in the State of Gujarat.
The said notification was amended in some respect by notification of the Government of India dated October 3, 1960 providing therein that the amendment thereby made in the notification dated June 17, 1960 shall be deemed always to have been made.
On the basis of the aforementioned notifications, the appellant is claiming the right to compulsorily purchase the undertaking.
583 The respondent is contesting the right of the appellant to compulsorily purchase his undertaking.
With a view to forestall the appellant from taking action against him, the respondent an application under article 226 of the Constitution in the High Court of Gujarat seeking directions to the appellant to forbear from compelling him to sell or deliver his undertaking, refrain the appellant from ceasing to supply electricity to him for the purpose of his said undertaking and also refrain the appellant from preventing him from supplying electric energy in the area mentioned in his licence.
Some other incidental reliefs were also sought.
The High Court came to the conclusion that though the notice issued by the appellant on January 8, 1959 is a valid notice under section 7(4) of the Act but that by itself is not sufficient to compel the respondent to sell his undertaking to the appellant; before the respondent can be compelled to sell his undertaking to the appellant it was necessary for the appellant to exercise its option to purchase the undertaking on the expiration of the period of licence.
As the appellant had failed to exercise that option on the expiration of the period of licence it cannot compel the respondent to sell his undertaking.
On the basis of these findings the High Court has substantially granted the relief prayed for by the respondent.
The appellant challenged the correctness of this conclusion.
On the other hand the respondent is supporting the judgment of the High Court not only on the ground accepted by the High Court but also on some of the other grounds advanced on his behalf before the High Court but rejected by that Court.
We shall first take up the question whether the High Court was right in holding that the appellant had to take two independent steps viz. ( 1 ) an election to purchase the undertaking followed up by a notice to the respondent in pursuance of that election within the period mentioned in section 7(4) of the Act and (2) exercise its option to purchase on the expiration of the period of licence and communicate the same to the respondent.
Before addressing ourselves to that question it is necessary to mention that the High Court 's finding that the rights of the Shriman Sarkar, (Baroda Government) to purchase the undertaking under section 9 of the Baroda Electricity Act had devolved on the State Government was not challenged before us.
Therefore it is not necessary for us to trace how the rights of the Baroda Government came to devolve on the then State of Bombay.
But the respondent did contest the appellant 's claim to exercise that right.
That question we shall separately consider.
For the present we shall proceed on the basis that the appellant is entitled to exercise the right of purchase conferred on the Baroda Government under the licence read with section 9 of the Baroda Electricity 584 Act.
We may also state at this stage that the conclusion of the High Court that the licence issued under s, 9 of the Baroda Electricity Act should be considered as a licence issued under section 7 of the Act was also not challenged before us.
Now we shall proceed to consider the true scope of section 7 of the Act.
For our present purpose only sub sections 1, 2 and 4 of section 7 of the Act are relevant.
They read as follows: "Section 7 ( 1 ).
Where a license has been granted to any person not being a local authority, and the whole of the area of supply is included in the area for which a single local authority is constituted, the local authority shall, on the expiration of such period, not exceeding fifty years and of every such subsequent period not exceeding twenty years, as shall be specified in this behalf in the license, have the option of purchasing the undertaking, and, ff the local a uthority, with the previous sanction of the State Government, elects to purchase, the licensec shall sell the undertaking to the local authority on payment of the value of all lands, buildings, works, materials and plant of the licensee suitable to, and used by him for, the purposes of the undertaking, other than a generating station declared by the license not to form part of the undertaking for the purpose of purchase,.
such value to be, in case of difference or dispute, determined by arbitration: (4) Not less than two years ' notice in writing of any election to purchase under this section shall be served upon the licensee by the local authority or the State Government as the case may be.
In our opinion sub section
(4 ) of section 7 is complementary to sub as.
(1) and (2) of that Section and therefore they must be read together.
On an analysis of these provisions it is seen that before a licensec can be compelled to sell his undertaking, the authority entitled to purchase must elect to purchase the same by exercise of the option given to it under the licence read with section 7 of the Act followed by a notice as required by section 7 (4) of the Act.
In section 7 the expression "option of purchasing an undertaking" merely means the right of purchasing the undertaking.
The word 'option ' is 'used because two courses are open to the concerned authority namely, either to purchase the undertaking or renew the licenee.
Once the authority elects to purchase then, the notice prescribed in sub section 4 should be given before the period mentioned thereto.
We are not able to agree with the High Court that the Section contemplates two stages namely (1) to elect to purchase the 585 undertaking at least two years before the expiration of the licenee and (2 ) exercise the option to purchase at the end of the licence period.
The exercise of option to purchase as well as electing to purchase is one integral process and not two independent steps.
By the very act of electing to purchase the authority exercises its option to purchase.
In our opinion sub sections 1, 2 and 4 of section 7 are plain and unambiguous.
They do not lend them selves to any subtleties.
In construing a provision, all its relevant parts should be considered together and their true effect ascertained.
One can easily find out the reasons behind the procedure prescribed in section 7.
In view of the term of the licenee read with section 7 (1 ) and (2 ) the concerned authority has two courses open before it.
It can either decide to purchase the undertaking or renew the licence on the expiration of the period for which the licence is granted.
The licensee must know in good time what course the authority is going to adopt so that he may so arrange his affairs as to Cause least inconvenience to himself.
Hence though the power to exercise the option to purchase arises on the expiration of the period of licence as per the terms of the licenee, section 7 lays down that if the authority wants to purchase the undertaking it must elect to do so at least two years before the expiration of the licence and communicate the same to the licensec.
Once the concerned authority exercises its option and communicates the same to the licensee, the same is binding on the authority as well as the licensec.
Otherwise there is bound to be considerable inconvenience both to the licensee and to the public.
We are not able to find any good reason for reading into section 7 a requirement that after a notice under section 7(4) is issued the authority must again exercise its option to purchase on the expiration of the period of licence.
It is no doubt true that the right to purchase the undertaking accrues only at the expiration of the period of licenee but for exercising that right, the authority must make its election within the period prescribed in section 7 (4) and issue a notice as required by that sub section.
The requirements of section 7 were fully complied with by the notice issued by the Bombay State Electricity Board on January 8, 1959.
We shall.
now take up the other contention advanced by Mr. H.R. Gokhale, learned Counsel for the respondent in support of the decision under appeal.
One of his contentions was that whether the State Government was competent to purchase the undertaking or not, neither the Bombay State Electricity Board nor the appellant was competent to exercise that right.
His .argument on this question proceeds thus: Section 7(1) prior to its amendment in 1959 empowered the local authority or the State Government to make the purchase 586 contemplated under that Section; the Electricity Board is not within the contemplation of that Section; the finding of the High Court that the provisions contained in sub sections 1, 2 and 4 of section 7 of the Act read with section 71 of the , confers on the appellant such a power is not correct because the right or option to purchase the undertaking was conferred on the State Government or the appropriate local authority under the licence and not under the provisions of the Act; in other words the said right is merely a contractual right and not a right flowing from the provisions contained in section 7 of the Act as.
held by this Court in Fazilka Electric Supply Co., Ltd. vs The Commr.
of Income Tax, Delhi(1) and therefore the appellant cannot take any assistance from section 71 of the .
This contention did not commend itself to the High Court.
We shall now proceed to examine how far the same is correct.
Section 71 of the provides: "Rights and options to purchase under Act 9 of 1910 to vest in Board.
Where under the provisions of the Indian Electricty Act, 1910 (9 of 1910), any right or option to purchase the undertaking of a licensec vests in the State Government or a local authority such right or option shall be deemed to be transferred to the Board, and shall be exercisable by the Board in accor dance with the provisions of the said Act applicable to the exercise of such right or option by the State Government or a local authority, as the case may be." Board is defined in section 2(2) of that Act as meaning, State Electricity Board constituted under section 5 thereof.
It is true that before section 71 can be held to be attracted to a case it must be shown that the right or option to purchase the undertaking of the licensec vested in the State Government or a local authority under the provisions of the Act.
It is also true that this Court had held in.
Fazilka Electric Supply Company 's(x) case that from the provisions of the Act read with the rules made thereunder it is manifest that the condition as to the option of purchase either by the local authority or by the Government is the result of an agreement between the applicant who had applied for licenee and the Government who granted the licenee.
In that case this Court was consideting whether the sale concerned in that case fell within the scope of section 10(2)(7) of the Indian Income Tax Act or whether it ' 'can be held 'to be compulsory acquisition as contended by the assessee.
A sale compelled by law may also be a 'sale ' under the Sale of Goods Act.
But that does not mean that the right to purchase the undertaking does not vest in the concerned authority (1) [1962] 3 Supp.
S.C.R. 496.
587 by virtue of section 7.
That right may accrue either because it is directly conferred by section 7 or because it is obtained as a result of a contract compelled by that Section.
In either case it is a right obtained by the authority by virtue of section 7.
There is no dispute that the licence granted must conform to the requirements of section 7.
In Okara Electric Supply Ltd. and Anr.
vs State of Punlab(1) this Court observed that sections 5,.
6 and 7 show that in the case of a licensee, specific provisions have been made for the acquisition of the undertaking in cases of revocation or cancellation of licenses.
For the aforementioned reasons we hold that appellant had acquired the right to purchase the undertaking by the combined operation of section 7 of the Act and section 71 of the .
It was next contended on behalf of the respondent that by the time the licence period expired, section 7 of the Act had been amended and section 71 of the Electric (Supply) Act, 1948 repealed, no provision was made to preserve the rights already acquired under those provisions, hence the appellant is not entitled to purchase the undertaking.
It is not the case of the respondent that either expressly or by necessary implication, the new law had taken away the right acquired earlier.
That being so section 6 of the General Clauses Act comes to the aid of the appellant.
That Section provides that where that Act or any Central Act or Regulation made after the commencement of that Act repeals an enactment hitherto made or hereafter to be made then unless a different intention appears, the repeal shall not affect any right, privilege, obligation or liability acquired, 'accrued or incurred under any enactment so repealed.
It also saves the previous operation of any enactment so repealed or anything duly done or suffered thereunder.
The right to purchase the respondent 's undertaking came to vest firsfly in the Bombay State Electricity Board subsequently in the appellant in view.
of the various notifications referred to earlier.
That right has to be worked on the basis of law as it stood on the date the notice under section 7(4) of the Act was given.
In this Court a new contention was taken on behalf of the respondent namely that in any case, the appellant 's right to purchase is conditional on the payment of the price as provided in section 7 and hence the appellant cannot demand possession of the undertaking without paying the price after the same is determined according to law.
This contention had not been taken before the High Court.
The High Court may go into this question while deciding the writ petition.
; 588 For the reasons mentioned earlier we allow this appeal, set aside the order of the High Court and remit the case back to High Court for deciding the issues that were left open.
Costs of this appeal shall be costs in the cause.
G.C. Appeal allowed.
[/INST]The appellant claimed that certain property comprised in an Inam which was abolished by virtue of the Andhra Inams (Abolition & Conversion into Ryotwari) Act 36 of 1956 should be registered in his name.
His contention was that prior to its abolition he was the Inamdar of that Inam though he had the liability to repair a tank in his village from out of the income of Inam was granted for a charitable purpose, the object of assuming the Inam was granted for a charitable purpose, the.
object of the charity being a tank, the same could not be considered a charitable institution.
HELD: (i) It was clear from the evidence that the Inam was granted in favour of the tank and was not a grant in favour of the appellant 's family subject to the liability to 'repair the tank; and furthermore that the ancestors of the appellant and subsequently the appellant were looking after the management of the tank.
(ii) Under Hindu law a tank can be an object of charity and when a dedication is made in favour of a tank, it is considered as a charitable institution.
Once it was held that the Inam in the present case was in favour of the tank, the tank in question must be considered a charitable institution within the meaning of section 2(E) of the Act.
Consequently, after the abolition 'of the Inam, the Inam property is converted into Ryotwari property of the tank, to be managed by its manager.
Admittedly the appellant was the present manager and hence the property in question must be registered in the name of the tank but would ' continue to be managed by the appellant so long as he continued to be its manager.
[628 H 629 C] Minister of National Revenue V. Trusts and Guarantee Co. Ltd., ; Masjid Shahid Ganj and Ors.
V. Shiromani Gurdwara Parbandhak Committee, Amritsar and Anr, ; Jamnabai V. Khimji Vallubdass & Ors., I.L.R. at p. 9; and V. Mariyappa and Ors.
B.K. Puttaramayya and Ors.
I.L.R. [1957] Mys.
291: referred to.
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<s>[INST] Summarize the judgementN: Criminal Appeal No. 227 of 1972 From the Judgment and order dated the 8th September, 1972 of the Madhya Pradesh High Court in Criminal Appeal No. 927/69.
Mohan Behari Lal for the Appellant.
Ram Panjwani, Dy.
Advocate General for the State of M.P., N. section Parihar and I. N. Shroff for the Respondent.
ORDER CHANDRACHUD, J.
The appellants, Munnu Raja and Chhuttan, were tried by the learned Sessions Judge, Chatarpur on the charge that at about 10 a.m. On April 30, 1969 they committed the murder of one Bahadur Singh.
In support of its case, the prosecution relied upon the evidence of Santosh Singh (P.W. 1 ) and Mst.
Gumni (P.W. 4) who claimed to be eye witnesses and on three dying declarations alleged to have been made by the deceased.
The two eye witnesses were permitted to be cross examined by the Public Prosecutor as they supported the case of the prosecution only partly.
Santosh Singh stated that he saw Chhuttan assaulting Bahadur Singh with a spear but that he did not see Munnu Raja at all.
On the other hand, Mst.
Gumni stated that it was Munnu Raja and not Chhuttan who assaulted the deceased.
Since the two principal witnesses turned hostile, the learned Sessions Judge thought it unsafe to rely on their testimony and, in our opinion, rightly.
The learned Judge was also not impressed by any of the dying declarations with the result that he came to the conclusion that the prosecution had failed to establish its case beyond a reasonable doubt.
In that view of the matter, the appellants were acquitted by the learned Judge.
Being aggrieved by the order of acquittal, the State Government filed an appeal in the High Court of Madhya Pradesh, which was allowed by a Division Bench of that Court by its judgment dated September 8, 1972.
The High Court did not discard the evidence of 766 the eye witnesses but utilised it by way of corroboration to the dying declarations alleged to have been made by the deceased.
Setting aside the order of acquittal, the High Court has convicted the appellants under s: 302 read with section 34 of the Penal Code and has sentenced each of them to imprisonment for life.
The appellants have filed this appeal under section 2(1) of the .
We have heard Mr. Mohan Behari Lal on behalf of the appellants at some length and we have considered each of his submissions care fully.
It is however unnecessary to discuss every one of the points made by him because, basically, the scope of this appeal not for getting that the appellants had a right to file this appeal in this Court lies within a narrow compass.
As we have indicated earlier, no exception can be taken to the view taken by the learned Sessions Judge that it is not safe to place reliance on the testimony of Santosh Singh and Mst.
Gumni.
They resiled from their police statements and it is evident that they have no regard for truth.
Their evidence cannot be used to corroborate the dying declarations either.
We are thus left with the three dying declarations made by Bahadur Singh and since the prosecution has placed great reliance on them, we thought it necessary to hear the learned counsel fully on the facts and circumstances leading to the dying declarations.
In regard to these dying declarations, the judgment of the Sessions Court suffers from a patent infirmity in that it wholly overlooks the earliest of these dying declarations, which was made by the deceased soon after the incident in the house of one Barjor Singh.
The second statement which has been treated by the High Court as a dying declaration is exhibit P 14, being the first information report which was lodged by the deceased at the police station.
The learned Sessions Judge probably assumed that since the statement was recorded as a first information report, it could not be treated as a dying declaration.
In this assumption, he was clearly in error.
After making the statement before the police, Bahadur Singh succumbed to his injuries and therefore the statement can be treated as a dying declaration and is admissible under section 32(1) of the Evidence Act.
The maker of the statement is dead and the statement relates to the cause of his death.
The High Court has held that these statements are essentially true and do not suffer from any infirmity.
It is well settled that though a dying declaration must be approached with caution for the reason that the maker of the statement cannot be subject to cross examination, there is neither a rule of law nor a rule of prudence which has hardened into a rule of law that a dying declaration cannot be acted upon unless it is corroborated: [see Khushal Rao vs State of Bombay].
The High Court, it is true, has held that the evidence of the two eye witnesses corroborated the dying declarations but it did not come to the conclusion that the dying declarations suffered from 767 any infirmity by reason of which it was necessary to look out for corroboration.
It was contended by the learned counsel for the appellants that the oral statement which Bahadur Singh made cannot, in the eye of law, constitute a dying declaration because he did not give a full account of the incident or of the transaction which resulted in his death There is no substance in this contention because in order that the Court may be in a position to assess the evidentiary value of a dying declaration, what is necessary is that the whole of the statement made by the deceased must be laid before the Court, without tampering with its terms or its tenor.
Law does not require that the maker of the dying declaration must cover the whole incident or narrate the case history.
Indeed, quite often, all that the victim may be able to say is that he was beaten by a certain person or persons.
That may either be due to the suddenness of the attack or the conditions of visibility or because the victim is not in a physical condition to recapitulate the entire incident or to narrate it at length.
In fact, many a time, dying declarations which are copiously worded or neatly structured excite suspicion for the reason that they bear traces of tutoring.
It was urged by the learned counsel that after the attack, the deceased was all along accompanied by a large number of persons and one cannot therefore exclude the possibility that he was tutored into involving the appellants falsely.
We see no basis for this submission because not even a suggestion was made to any of the witnesses that the deceased was tutored into making the statement.
The deceased, on his own, did not bear any enmity or hostility to the appellants and had therefore no reason to implicate them falsely.
Indeed, none of the persons who were in the company of the deceased after he was assaulted, is shown to have any particular animus for implicating the appellants falsely.
In regard to the second dying declaration, exhibit P 14, the main objection of the learned counsel is that it was made to the investigating officer himself and ought therefore be treated as suspect.
In support of this submission, reliance was placed on a Judgment of this Court in Balak Ram vs State of U.P.
The error of this argument consists in the assumption that the dying declaration was made to an investigating officer.
The statement, exhibit P.14, was made by Bahadur Singh at the police station by way of a first information report.
It is after the information was recorded, and indeed because of its that the investigation commenced and therefore it is wrong to say that the statement was made to an investigating officer.
The Station House officer who recorded the statement did not possess the capacity of an investigating officer at the time when he recorded the statement.
The judgment on which the counsel relies has therefore no application.
768 We are in full agreement with the High Court that both of these dying declarations are true.
We are further of the opinion that considering the facts and circumstances of the case, these two statements can be accepted without corroboration.
Bahadur Singh was assaulted in broad day light and he knew the appellants.
He did not bear any grudge towards them and had therefore no reason to implicate them falsely.
Those who were in the constant company of Bahadur Singh after the assault, had also no reason to implicate the appellants falsely.
They bore no ill will or malice towards the appellants.
We see no infirmity attaching to the two dying declarations which would make it necessary to look out for corroboration.
We might, however, mention before we close that the High Court ought not to have placed any reliance on the third dying declaration.
exhibit P 2, which is said to have been made by the deceased in the hospital.
The investigating officer who recorded that statement had undoubtedly taken the precaution of keeping a doctor present and it appears that some of the friends and relations of the deceased were also present at the time when the statement was recorded.
But, if the investigating officer thought that Bahadur Singh was in a precarious condition, he ought to have requisitioned the services of a Magistrate for recording the dying declaration.
Investigating officers are naturally interested in the success of the investigation and the practice of the investigating officer himself recording a dying declaration during the course of investigation ought not to be encouraged.
We have therefore excluded from our consideration the dying declaration, exhibit P 2, recorded in the hospital.
The High Court was, therefore, justified in reversing the order of acquittal passed by the Sessions Court and in convicting the appellants of the offence of which they were charged.
In so doing, the High Court did not violate any of the principles governing appeals against acquittal, to which our attention was drawn by the appellants ' counsel from time to time In the result, we confirm the judgment of the High Court and dismiss the appeal.
P.H.P. Appeal dismissed.
[/INST]The appellants were tried by the Sessions Judge on the charge of committing murder of Bahadur Singh.
The prosecution relied on the evidence of two eye witnesses and three dying declarations made by the deceased.
The two eye witnesses supported the prosecution case only partly and were, therefor, permitted to be cross examined by the Public Prosecutor.
The Sessions Judge thought it unsafe to rely on the testimony of the two eye witnesses and was also not impressed by and of the dying declarations.
Consequently he acquitted the appellants.
The High Court in appeal did not discard the evidence of the eye witnesses but utilised it by way of corroboration to the dying declarations.
The High Court set aside the order of acquittal and convicted the appellants under section 30 read with section 34 I.P.C. and sentenced each of them to imprisonment for life.
In an appeal under section 2(1) of the .
^ HELD: 1.
The Sessions Court rightly discarded the evidence of the hostile eye witnesses.
They resiled from their Police, Statements and it is evident that they have no regard for truth.
Their evidence cannot be used to corroborate the dying declarations.
[766 C] 2.
In regard to the dying declarations the Sessions Court wholly overlooked the earliest dying declaration which was made by the deceased soon after the incident.
The second dying declaration was the first information report lodged by the deceased at the Police Station.
The Sessions Judge was clearly in error in holding that the first information report cannot be treated as a dying declamation.
After making the statements before the police the deceased succumbed to his injuries and, therefore, the statement can be treated as a dying declaration, and is admissible under section 32(1) of the Evidence Act, The maker of tho statement is dead and the statement relates to the cause of his death.
[766DF] 3.
It is, well settled that though a dying declaration must be approached with caution for the reason that the maker of the statement cannot be subjected to cross examination, there is neither a rule of law nor a rule of prudence that a dying declaration cannot be acted upon unless it is corroborated.
[766G] 4.
Law does not require that the maker of the dying declaration must cover the whole incident or narrate the case history.
What is necessary is that the whole of the statement made by the deceased must be laid before the court without tampering with its terms or its tenor.
[767 C] 5.
The deceased did not bear any enmity or hostility towards the appellants nor did any other persons who were in the company of the deceased after the assault were shown to have any animus for implicating the appellants false.
[767E] 765 6.
The second dying declaration was not made to the Investigating officer.
It was made by way of First Information Report and it was only after the information was recorded that the investigation commenced.
The High Court was right in relying on the first and second dying declarations.
Considering the facts and circumstances of the case these two dying declarations can be accepted without corroboration.
[767F, 768C] 7.
The High Court ought not to have relied on the third dying declaration which is said to have been made by the deceased in the hospital.
The Investigating officer ought to have requisitioned the services of a Magistrate for re cording that dying declaration, Investigating officers are naturally integrated in the success of the investigation and the practice of the Investigating Officer himself recording a dying declaration during the course of investigation ought not to be encouraged.
[768CD] 8.
The High Court in reversing the order of acquittal passed by the Sessions rt did not violate any of the principles governing appeals against acquittal.
[768E]
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<s>[INST] Summarize the judgementCivil Appeal No. 2494 of 1969.
From the Judgment and Decree dated 24 1 1969 of the Calcutta High Court in Appeal from Original Order No. 111/66.
D. N. Mukherjee and N. R. Chaudhary for the Appellants.
P. K. Chatterjee and Sukumar Ghosh for the Respondent.
The Judgment of the Court was delivered by UNTWALIA, J.
This is an appeal by certificate filed by the judgment debtors from the decision of the Calcutta High Court given in appeal from that of a learned single Judge of that Court.
The facts of the case clearly demonstrate the fighting attitude of the judgment debtors to gain time for the satisfaction of the decree.
On August 15, 1925 one Indera Chand Kejriwal instituted on the original side of the Calcutta High Court a suit on the basis of a mortgage against Ram Chander Saragogi, Sewbux Saraogi and Tejpal Saraogi for recovery of Rs. 38,000/ as principal and Rs. 6,082.8 annas as interest.
By an equitable mortgage the property mortgaged consisted of two houses (1) No. 126, Harrison Road and (2) No. 13/2, Syed Salley Lane in the town of Calcutta.
On November 26, 1926 a consent decree was passed for a sum of Rs. 41,000/ together with interest thereon @ 6.3/4% per annum.
On failure of the judgment debtors to pay the amount the mortgaged properties were to be sold.
On 3rd of January, 1929 it was ordered and 158 decreed that the mortgaged property be sold.
On 16th April, 1934 Indera Chand Kejriwal by a deed of assignment assigned his interest in the decree to Mahadeo Prasad Tibrewalla, the respondent in this appeal.
On the application of the assignee decree holder an order was made on the 8th May, 1934 substituting his name in place of the original decree holder and recording some terms of settlement between him and the judgment debtors.
The amount with interest quantified on that date was Rs. 60,023.12 annas which was to carry an interest of 6.3/4% per annum.
Subsequently on an application of the decree holder one Anandilal Poddar was appointed on the 14th June, 1938 a receiver of rents and profits of the mortgaged properties.
A sum of Rs. 10,000/ was paid to the decree holder on the 7th September, 1939 towards part satisfaction of the decree.
On the death of Ram Chander Saraogi, one of the judgment debtors, by order dated the 7th August, 1945 Smt.Parbati Devi, Ananta Kumar Saraogi and Suraj Kumar Saraogi, his heirs and legal representatives, were substituted.
They are appellant Nos. 1 to 3 in this appeal.
No further payment was made to the decree holder and eventually a consent order was passed by the Court on the 17th June, 1953 on the basis of the terms of settlement arrived at between the parties which were incorporated in the letter written by the Solicitor of the judgment debtors to the Solicitor of the decree holder.
The terms of settlement are quoted in full in the appellate judgment of the High Court.
The salient terms of the settlement may be stated as follows: (1) That the total dues on the date came to Rs. 1,10,000/ .
(2) That Shri Anandilal Poddar, the receiver was to pay Rs. 35,000/ .
(3) That a sum of Rs. 40,000/ was to be paid by conveying premises No. 13/2 Syed Salley Lane to the decree holder, and, (4) That a sum of Rs. 35,000/ was to be paid in cash by raising money by execution of an another mortgage of premises No. 126, Harrison Road.
Anandilal Poddar paid the sum of Rs. 35,000/ .
But nothing further was done by the judgment debtors pursuant to the settlement arrived at on the 17th June, 1953.
Sewbux Saraogi, one of the judgment debtors, died leaving a Will in which the universal legatee was his daughter Smt.Kapurbai and the sole executor appointed therein was Motilal Jhunjhunwalla, husband of Kapurbai.
On the 7th 159 June, 1965 the respondent affirmed a tabular statement for execution of the decree.
A learned single judge of the Calcutta High Court dismissed that application mainly on the grounds (1) that the terms of bargain between the parties recorded on the 17th June, 1953 were entirely different from the original decree and had the effect of superseding it; the former decree, therefore, was not executable; (2) that the factum of the death of Sewbux Saraogi was not recorded and his heirs were not substituted in the tabular statement.
In passing, the learned single Judge also expressed the view that the execution was barred under section 48 of the Code of Civil Procedure.
On appeal by the decree holder the Appellate Bench has reversed the decision of the learned single Judge on all the points.
Hence this appeal by the judgment debtors.
We shall first dispose of the point of limitation.
From the facts stated above it is abundantly clear that there was no bar of limitation in the present execution instituted in the year 1965.
At no point of time the mortgage decree had been fully satisfied.
All through steps were being taken and it was not a case where the execution was barred either under section 48 of the Code of Civil Procedure or Article 183 of the Limitation Act 1908.
It was conceded and rightly so by learned counsel for the appellants that the execution was not barred under Article 136 of the .
But the submission was that it was already barred when that Act came into force on the 1st of January, 1964 under Article 183 of the old Act.
We have no difficulty in rejecting the argument of limitation.
All through steps had been taken by the decree holder.
The case was not lying dormant at any point of time for a period of more than 12 years.
When in the year 1929 there was an order for sale of the mortgaged properties it appears some payments were made and finally accounts were settled in the year 1934.
Thereafter the mode of execution proceeded by appointment of a receiver.
A sum of Rs. 10,000/ was paid in the year 1939.
In the year 1945 steps were taken for substitution of the heirs and legal representatives of Ram Chander Saraogi, one of the deceased judgment debtors.
Parbati Devi, appellant No. 1, was allowed to take some steps for the satisfaction of the decree.
But nothing was done.
Eventually a settlement was again arrived at on the 17th June, 1953 for satisfaction of the decree but on the judgment debtors ' failure to fulfil the settlement the present proceedings were started by filing the tabular statement on the 7th of June, 1965 well within 12 years of the 17th June, 1953.
The point of limitation raised on behalf of the appellants, therefore, must be rejected.
160 A statement had been made in the tabular statement that Sewbux Saraogi, one of the judgment debtors, was dead.
Kapurbai, his daughter along with others were sought to be substituted in his place.
Later on it transpired that she was a universal legatee under a will executed by Sewbux Saraogi.
She was, therefore, undoubtedly a legal representative competent to represent the estate of Sewbux Saraogi.
Even in absence of the substitution of Motilal Jhunjhunwalla, the sole executor of the will, the execution was not defective.
Reference in this connection may be made to the decision of this Court in the case of The Andhra Bank Ltd. vs R. Srinivasan and Others, (1) decision relied upon by the Appellate Bench.
Coming to the third and the last point it may be mentioned that the settlement arrived at on the 17th June, 1953 was not an altogether renovation of the old decree.
The amount due was quantified and the mode of satisfaction was prescribed giving liberty to the judgment debtors to satisfy the decree by conveying one of the two mortgaged houses and by paying a sum of Rs. 35,000/ in cash by raising the money by mortgage of the other house.
The judgment debtors did neither.
The terms of settlement were silent as to what was to happen on the failure of the judgment debtors to satisfy the decree in the manner agreed upon.
In such a situation it was quite legitimate to assume that the parties intended that the decree holders would be entitled to realise the dues by execution of the original mortgage decree.
Reading the terms of settlement in the context of the letter of the Solicitor of the Judgment debtors it is plain to us that the order dated 17th June, 1953 had not the effect of passing a new decree in substitution of the old one.
It had merely the effect of giving facility to the judgment debtors for the satisfaction of the decretal dues.
On their failure to do so they were liable to be proceeded with in execution of the original mortgage decree.
For the reasons stated above, we hold that there is no substance in any of the points arising in this appeal.
We accordingly dismiss this appeal with costs.
N.V.K. Appeal dismissed.
[/INST]The act complained of is dishonest misappropriation or conversion of goods by the appellants which they had seized and as such were holding in trust to be dealt with in accordance with law.
This gave a bona fide apprehension to the respondent that the goods have been criminally mis appropriated by the appellants.
The S.D.M. conducted a preliminary enquiry and found a prima facie case under section 120B/409 IPC against the appellants.
The S.D.M. summoned the appellants who appeared before him and prayed for their immediate discharge, which was accepted on the ground that he had no jurisdiction and he discharged the appellants.
A revision petition before the Addl.
Sessions Judge was dismissed on the ground that since the shortage of the goods was discovered at the time when they were produced before the Customs House, there was absolutely nothing to show that the shortage, if any, was due to the act of the appellants.
The respondent went in further revision to the High Court which was allowed on the ground that no sanction was required for the prosecution of the accused appellants because they were certainly not acting in the discharge of their official duties, when they misappropriated these goods.
It was argued on behalf of the appellants that (i) It had been falsely alleged in the complaint that when the S.D.M. inspected the goods and noticed the condition thereof, it was found that the seals of the four boxes were broken while the remaining three packages were completely empty but sealed; that the inventory itself, prepared by the S.D.M. falsified the prosecution allegation; (ii) That it was not alleged in the complaint with particularly as to what goods had disappeared or were removed, nor that the disappearance of some of the goods, if any, occurred after their seizure and before their deposit in the Customs House by the appellant; (iii) That even if for the sake of argument it is assumed that some of the goods were removed and set apart by the appellants after seizure, then also sanction for prosecution u/s 197 Cr.
P.C. was absolutely necessary because, the seizure and removal being integrally connected with each other, the alleged act constituting the offence of criminal mis appropriation/criminal breach of trust could but reasonably be viewed as an act which includes dereliction of duty done or purporting to be done in the discharge of their official duty by the appellants; (iv) That section 197 Cr.
P.C. cannot be construed too narrowly, in the sense that since the commission of offence is never a part of the official duty of a public servant, an act constituting an offence can 112 never be said to have been done or purportedly done in the discharge of official duty, as such a narrow construction, will render the section entirely otiose.
Dismissing the appeal, ^ HELD: The question of sanction u/s 197 Criminal Procedure Code can be raised and considered at any stage of the proceedings.
[116H, 117A] The words "Any offence alleged to have been committed by him while acting or purporting to act in the discharge of his official duty" in section 197(1) of the Code, are capable of a narrow as well as wide interpretation.
If these words are construed too narrowly, the section will be rendered altogether sterile, for it is no part of an official duty to commit an offence, and never can be.
In the wider sense, these words will take under their umbrella every act constituting an offence, committed in the course of the same transaction in which the official duty is performed or purports to be performed.
The right approach to the import of these words lies between these two extremes.
While it is not every offence committed by a public servant while engaged in the performance of his official duty, which is entitled to the protection of sec.
197(1), an act constituting an offence directly and reasonably connected with an official duty will require sanction for prosecution under the said provision.
The sine qua non for the applicability of this section is that the offence charged, be it one of commission or omission, must be one which has been committed by the public servant either in his official capacity or under colour of the office held my him.
[118D H, 119A] In the instant case, there was some foundation for the allegation that the goods in question had been misappropriated by the appellants sometime after their seizure and before their deposit in the Customs House.
There can be no dispute that the seizure of the goods by the appellants and their being thus entrusted with the goods or having dominion over them, was an committed by them while acting in the discharge of their official duty.
But the act complained of is subsequent dishonest, misappropriation or conversion of those goods by the appellants, which is the second necessary element of the offence of criminal breach of trust under section 409, Indian Penal Code.
It could not be said that the act of dishonest, misappropriation or conversion complained of bore such an integral relation to the duty of the appellants that they could genuinely claim that they committed it in the course of the performance of their official duty.[119E H 120A] There is nothing in the nature or quality of the act complained of which attaches to or partakes of the official character of the appellants who allegedly did it.
Nor could the alleged act of misappropriation or conversion be reasonably said to be imbued with the colour of the office held by the appellants.
Therefore, on the facts of the present case, the alleged act of criminal misappropriation complained of was not committed by them while they were acting or purporting to act in the discharge of their official duty, the commission of the offence having no direct connection or inseparable link with their duties as public servant.
At the most, the official status of the appellants furnished them with an opportunity or occasion to commit the alleged criminal act.
Sanction of the appropriate Government was therefore not necessary for the protection of the appellants for an offence under section 409/120B Indian Penal Code.
[120A B, 121D F] 113 Om Parkash vs State of Uttar Pradesh, ; , Amrik Singh vs The State of pepsu; , , Shreekantiah Rammayya Munipalli and Ors.
vs State of Bombay, A.I.R. ; distinguished.
Baijnath vs State of Madhya Pradesh, A.I.R. 1966, S.C. 220 at page 222 and Harihar vs State of Bihar, ; referred to.
</s> |
<s>[INST] Summarize the judgementivil Appeal No. 1134 of 1973.
(From the judgment and Order dated 14 7 1972 of the Cal cutta High Court in Appeal from Original Order No. 253 of 1969).
CRIMINAL APPELLATE JURISDICTION: Criminal Appeal No. 319 of 1974.
(Appeal by special leave petition from the judgment and order dated 4 10 1973 of the Delhi High Court in Criminal Revision No.264 of 1973).
CRIMINAL APPEAL No. 358 of 1976.
(Appeal by Special Leave from the Judgment and Order dated 30 7 1976 of the Special Judge Delhi in criminal C.C. No. 16 of 1975).
V.P. Ratnan, D.N. Mukherjee and G.S. Chatterjee, for the appellant in C.A. No. 1134/73.
760 Niren De and N.C. Talukdar, B.M. Bagaria, Dilip Sinha and D.P. Mukherjee, for respondent No. 1, in CA 1134/73.
R.N. Sachthey, for the respondent No. 3 in CA No. 1134/73.
Praveen Kumar, for the appellant in Crl.
A. No. 319/74.
R.N. Sachthey, for respondent No. 1 in Crl.
A. No. 319/74.
R.H. Dhebar and B.V. Desai for the appellant in Crl.
A. No. 358 of 1976.
V.P. Raman and R.N. Sachthey, for the respondents in Crl.
A. No. 385/76.
The Judgment of the Court was delivered by GOSWAMI, J.
In these appeals a common question of law arises for consideration.
We will therefore refer to the facts as appearing in Civil Appeal No. 1134 of 1973 to decide the issue and our decision will govern these appeals.
We are informed that the sole appellant in Criminal Appeal No. 319 of 1974 died.
The said appeal, therefore, abates and is dismissed.
Civil Appeal No. 1/34 of 1973 is directed against the judgment the Division Bench of the Calcutta High Court whereby the earlier judgment of the single Judge was re versed.
The facts so far as material may be briefly stated: On or about May 27, 1967, a case was lodged by the Deputy Superintendent of Police, Central Bureau of Investi gation, Sub Division, Calcuta, against R.C. Bhattacharjee who was an ex Major of the Indian Army and Manmal Bhutoria (hereinafter, the respondent) who was a businessman.
It was alleged that R.C. Bhattacharjee in collusion and conspiracy with the respondent had accepted certain tenders from a fictitious nominee of the.
said respondent for supply of certain stores to the military authorities at a price ex ceeding the price quoted by the other tenderers and thereby caused substantial loss to the Military Authority and to the Government of India.
It was further alleged that the said Bhattacharjee along with the respondent had committed of fence of conspiracy of criminal misconduct by a public servant in dishonestly abusing his position as a public servant for obtaining undue pecuniary advantage which amounted to an offence under section 5(2) of the Prevention of Corruption Act, 1947.
Accused Bhattacharjee was invalidated from the Military service with effect from February 14, 1966, as permanently unfit for any form of military service.
A case under the Prevention of Corruption Act, 1947 (hereinafter, briefly the Act) can be tried only by a spe cial court constituted under the provisions of the West Bengal Criminal Law Amendment (Special Courts) Act, 1949 (West Bengal Act XXI of 1949) (briefly the Bengal Act).
By a notification in the Calcutta Gazette dated June 15, 1967, the State Government allotted the said case to the Fourth 761 Additional Special Court in Calcutta under sub section (2) of Section 4 of the Bengal Act.
When the Special Court fixed the case for trial on 23rd, 24th and 25th November, 1967, the respondent moved the High Court of Calcutta under Article 226 of the Constitution on November 7, 1967, inter alia, contending that (1 ) at the point of time when the case was distributed to the Special Court the co accused, ex Major Bhattacharjee, had ceased to be a public servant and as such the Bengal Act had no application and the said Court had no jurisdiction to entertain the case; (2) a public officer having ceased to be such an officer at the date of allotment of the case the order of allotment by the State Government was without jurisdiction and void; and (3) the Special Court.
had no jurisdiction to try cases in which two private persons were involved and the allotment of the case to the Special Court was thus illegal.
A point regarding absence of sanction was also taken up but was not pressed before us in view of the decision of this Court in S.A. Venkataraman vs The State(1).
The single Judge of the High Court dismissed the writ application but the Division Bench by two concurring judg ments set aside the said judgment and order of the single Judge.
That is how this matter has come before us on cer tificate under Article 133(1) (c) of the Constitution.
P.B. Mukherjee, J. held " . the only solution is to hold that these two acts, namely, the Special Courts Act and the Prevention of Corruption Act do not apply to a public servant who had ceased to be a public servant on the date the court takes cognisance.
This solution seems all the more proper because it seems to steer clear of Article 14 of the Constitution . ".
The learned Judge further observed "Therefore a person who has ceased to be in office, that is, who has ceased to be a public servant, does not come within the ambit of the expression 'public servant ' and conse quently is not governed by the Prevention of Corruption Act and, as such, cannot commit an offence under section 5(2) of the said Act".
The learned Judge again observed "It will appear that though Major Bhat tacharjee had ceased to be a public servant, the state Government by distributing the present case to the Special Court violated the (1) 762 principle of equal protection clause by deny ing the advantages associated with the office of a public servant but imposing on him the disadvantages and/or disabilities associated with the office of a public servant.
Hence the Act is not discriminatory but the action, allotment and distribution of this case to the Special Court of the State Government is discriminatory.
Therefore it is to be struck down and the order of the distribution quashed".
The learned Judge also observed " . but a public servant who has ceased to be a public servant, can neither be prosecuted in respect of any scheduled offence nor of an offence under section 5(2) of the Prevention of Corruption Act and as such, the trial of such a person cannot be in accordance with the provisions of those two statutes".
* * *.
* " . so far as the appellant Manmal Bhutoria is concerned, he never being 'a public servant ' is dearly not triable by the Special Court under the Prevention of Corrup tion Act and West Bengal Criminal Law Amend ment (Special Courts) Act, 1949 and suffer all the handicaps of being presumed to be guilty".
B.C. Mitra, J. in his concurring judgment observed as follows : "On a careful consideration of the various clauses under section 21 of the Penal Code, I have no doubt that a person who was previously a public servant, but who has ceased t0 be such, do not come within the ambit of that section.
Both section 5(1) and section 5(2) deal with public servants only.
There is no provision in this Act whereby a person who was previously a public servant, but has ceased to be a public servant at the relevant time, can be charged with an offence under section 5(1)(d) or section 5(2) of the Prevention Act".
Before we proceed further we may immedi ately set out what this Court has held in venkataraman 's case (supra) since what was held therein has largely influenced the deci sion of the Division Bench.
At page 1044 of the report in that decision this Court ob served as follows : "These provisions of the Act (namely Act 2 of 1947) indicate that it was the intention of the legislature to treat more severely than hitherto corruption on the part of a public servant and not to condone it in any manner whatsoever.
If section 6 had not found a place in the Act it is clear that cognizance of an offence under section 161,164 or section 165 of the Indian Penal Code or under section 5(2) of the Act committed by a 763 public servant could be taken by a court even if he had ceased to be a public servant.
The mere fact that he had ceased to be a public servant after the commission of the offence would not absolve him from his crime.
Section 6 certainly does prohibit the taking of cogni zance of his offence, without a previous sanction, while he is still a public servant but does that prohibition continue after he has ceased to be a public servant" ? Again at page 1048/1049 this Court observed as follows : "In our opinion, in giving effect to the ordinary meaning of the words used in section 6 of the Act, the conclusion is inevitable that at the time a court is asked to take cognizance not only the offence must have been committed by a public servant but the person accused is still a public servant removable from his office by a competent authority before the provisions of section 6 can apply.
In the present appeals, admittedly, the appellants had ceased to be public servants at the time the court took cognizance of the offences alleged to have been committed by them as public serv ants.
Accordingly, the provisions of section 6 of the Act did not apply and the prosecution against them was not vitiated by the lack of a previous sanction by a competent authority".
A similar view was affirmed by the Court in C.R. Bansi vs State of Maharashtra.(1) This Court held therein as follows : "The policy underlying section 6, and similar sections, is that there should not be unneces sary harassment of public servants.
But if a person ceased to be a public servant the question of harassment does not arise.
The fact that an appeal is pending does not make him a public servant.
The appellant ceased to be a public servant when the order of dismiss al was passed.
There is no force in the contention of the learned counsel and the trial cannot be held to be bad for lack of sanction under section 6 of the Act".
Accepting the position that sanction under section 6 of the Act is not necessary if the public servant ceased to be a public servant on the date the court takes cognizance of the offence, the High Court arrived at the conclusion that there would be discrimination between one class of public servants and another similarly situated when those in office will be protected from harassment on account of the require ment of sanction for prosecution whereas the public servants after they ceased to be in office will be prosecuted and harassed in absence of the requirement of the sanction.
It is in that view of the matter the High Court has held that the Special Court has no jurisdiction to try a public serv ant who has ceased to be a public servant on the date the Court was required to take cognizance of the offence, since, according to the High Court, "it cannot be said that in certain respects he (1) ; 764 is a public servant for the offences under the Prevention of Corruption Act and for certain other respects, he is not a public servant".
It is in taking this view that P.B. Mukher jee, J. observed that "this solution seems all, the more proper because it seems to steer clear of Article 14 of the Constitution".
The High Court, however, did not strike down the Act or any provisions of the Act as unconstitutional.
It has only held the order of allotment of the case to the Special Court as illegal as the case of a public servant who has ceased to be a public servant cannot be allotted to the Special Court since, according to the High Court, to hold otherwise would be violative of Article 14 of the Constitu tion.
It is in the background of such a conclusion that Mr. Niren De, counsel for the respondent, submits that tiffs appeal involves the determination of a question as to the constitutional validity, on the basis of Article 14 of the Constitution, of the provisions of the Bengal Act, particu larly the proviso to section 4(1) of that Act.
He further submits that a person who ceased to be a public servant cannot be treated differently from a person who is a public servant in office for the purpose of the Bengal Act.
He, therefore, submits that in view of Article 144(A), as in serted by the 42nd Amendment, this appeal should be heard by a minimum number of seven Judges of this Court and we should therefore, refer the same to a larger Bench.
This submission is supported by Mr. Dhebar who is appearing in.
an identical matter in Criminal Appeal No. 358 of 1976 and he has submit ted an application to urge additional grounds on the basis of Article 14 of the Constitution.
There is some misconception both in the judgment of the High Court as well as in the submission made by counsel on this point.
In view of the decision in Venkataraman 's case (supra) there is no warrant for including in one category public servants in office and public servants who have ceased to be so.
These two classes of public servants are not similarly situated as has been cleared out in Bansi 's case (supra).
The plea of applicability of Article 14 on the basis of the judgment in Venkataraman 's case (supra) is, therefore, wholly misconceived.
It cannot be argued that the, decision in Venkataraman 's case (supra) is violative of Article 14 of the Constitution.
That decision only says that section 6 of the Act is not applicable to a public servant if at the time of taking cognizance by the court he ceases to be so.
Because a particular section is not applicable to a public servant after he has ceased to be in office, the question of the Act being violative.
of Article 14 of the Constitution will not arise.
This Court has clearly placed a public servant, who has ceased to be in office, in a sepa rate category and that classification has held the field all these years without demur.
There is, therefore, no sub stance in the contention that this appeal should be referred to a larger Bench.
Under section 4(1) of the Bengal Act, the scheduled offences which include an offence under section 5 (2) of the Act as also conspiracy to commit that offence shall be triable by Special Courts only.
No other court can, there fore, try these offences.
The provisions of the Bengal Act are clearly different from those of the West Bengal 765 Special Courts Act which were the subject matter in The State of West Bengal vs Anwar Ali Sarkar(1) Proviso to section 4(1) of the Bengal Act is in the following terms: " 'Provided that when trying any case, a Special Court may also try any offence other than an offence specified in the Schedule, with which the accused may under the Code of Criminal Procedure, 1898, be charged at the same trial".
By this proviso the Special Court, when trying a scheduled offence finds that some other offence has also been commit ted and the trial of the same in one trial is permissible under the Code of Criminal Procedure, may try such a charge.
It is difficult to imagine how such a proviso can at all attract Article 14 of the Constitution.
On merits it is submitted 'by Mr. De that the respondent is a complete outsider and is not a public servant at all.
The Bengal Act is not applicable to him.
It is submitted that the Bengal Act provides for reference to the SpeCial Court only offences mentioned in the Schedule to that Act and all the offences mentioned in the Schedule, according to him, are those which may be committed by a public servant.
He draws our attention to the definition of public servant under section 21 o{ the Indian Penal Code which definition is applicable under section 2 of the Act.
He submits that the public servant in 'view of the definition means a public servant in office and not one who has ceased to be in of fice.
It is true that section 21 IPC enumerates various classes of public servants who are or who happen to be in office.
That is, however, not the true test in determining the present controversy.
The crucial date [c: ' the.
purpose of attract ing the provisions of the Act as well as those of the Bengal Act is whether the offence has been committed by a public servant within the definition of section 21.
The date for determining the offence is the date of the commission of the offence when the person arraigned must be a public servant.
Section 6 of the Act provides that no court shall take cognizance.
of an offence specified in that section alleged to have been committed by a public servant except with the previous sanction.
The section itself makes a clear dis tinction between cognizance of an offence and alleged commission of an offence.
Sanction refers to the date when after submission of a report or a complaint the court takes cognizance of the offence.
That date is necessarily subsequent to the date of commission of the offence and sometimes far remote from that date.
Retirement, resigna tion, dismissal or removal of a public servant would not wipe out the offence which he had committed while in serv ice.
Under section 6(1) of the Act, as in the, case of section 190(1) Cr.
P.C. the court takes cognizance of an offence.
and not an offender (see Raghubans Dubey vs State of Bihar(e).
The crucial date, therefore, for taking cogni zance in this case is the date when the case was received by the Special Court on being allotted by the State Government under section 4(2) of the Bengal Act.
(1) ; (2) ; , 428.
766 Mr. De submits that section 10 of the Bengal Act pro vides that the provisions of the Prevention of Corruption Act shall apply to trials under the Bengal Act.
He, there fore, submits that section 6 of the Act must apply and since this Court has held that that section does not apply and section 6 is also not applicable in the case of the respondent, being not a public servant, the Special Court has no jurisdiction to try the offence.
We are clearly of opinion that section 10 of the Bengal Act will apply when the provisions of that section are clearly attracted.
Section 6 is interpreted by this Court not to apply to a public servant who has ceased to be in office.
That would not affect the interpretation of section 10 of the Bengal Act.
There is no merit in the submission that because of section 10 the Special Court cannot be said to have juris diction to try the offence.
in, this case.
Mr. De further submits that since the respondent is not a public, servant he is outside the provisions of the Bengal Act, as well as the Prevention of Corruption Act.
This argument is entirely misconceived.
Even under the Preven tion of Corruption Act, an outsider can be prosecuted under section 5(3) of the Act when a person habitually commits an offence punishable under section 165A of the Indian Penal Code.
Section 165A provides that "whoever, abets any of fence punishable under section 161 or section 165, whether or not that offence is committed in consequence of the abetment, shall be punished . ".
This section is clear ly applicable to an outsider who may abet a public servant.
Item 8 of the Schedule to the Bengal Act mentions any con spiracy to commit or any attempt to commit or any abetment of any of the offences specified '.
in items 1, 2, 3 and 7.
It is, therefore, clear that under item 8 of the Schedule an outsider can be tried along with a public servant if the former abets or commits an offence of conspiracy to commit an offence under section 5 of the Prevention of Corruption Act which is mentioned in item 7 to the Schedule.
There is, therefore, no merit in the submission that the Special Court cannot try the offence under section 5(2) of the Act read with section 120B IPC against the respondent.
All the submissions of counsel for the respondent fail.
The judgment and order of the Division.
Bench are set aside.
The appeal is allowed but there will be no order as to costs.
In Criminal Appeal No. 358 of 1976 the appellant was charged under section 5(2) read with section 5(1)(e) of the Prevention of Corruption Act.
At the time of commission of the offence he was admittedly a public servant.
He, howev er, ceased to be a public servant on October 30, 1974, when the chargesheet against him was put up before the Special Judge.
The offences are triable only by the Special Judge under the provisions of the Criminal Law Amendment Act 1952 (Act XI, VI of 1952).
For the reasons given above in con nection with Civil Appeal No. 1134 of 1973, the trial before the Special Judge cannot be questioned as illegal.
The appeal fails and is dismissed.
P.B.R. Appeal dis missed.
[/INST]The appellant was convicted along with two other accused under section 302 I.P.C. and sentenced to death while the other two were sentenced to life imprisonment.
In appeal to this Court against the orders of the High Court confirming the death sentence imposed, the special leave was granted limit ed to sentence.
Allowing the Criminal Appeal No. 337 of 1976 in part and modifying the death sentence to one of life imprisonment, the Court, HELD: (1) The object of section is to give a fresh opportunity to the convicted person to bring to the notice of the court such circumstances as may help the court in awarding an appropriate sentence have regard to the per sonal, social and other circumstances of the case.[712 D] (2) Failure to give an opportunity under s" 235(2) Cr.
P.C. will not affect the conviction under any circum stance.
In a murder case where the charge is made out the limited question is as between the two sentences prescribed under the Penal Code.
If the minimum sentence is imposed.
question of providing an opportunity under section 235 would not arise.
[712 F] (3) The hearing contemplated by section 235(2) is not con fined merely to hearing oral submissions but extend giving an opportunity to the prosecution and the accused to place before the court facts and materials of sentence and;if they are contested by either side then to produce evidence for the purpose of establishing the same.
[712 G] Santa Singh vs State of Punjab A.I.R. 1976 S C 2386, reiter ated.
(4) To save time and expense and help produce prompt justice, it may be more appropriate for the appellate court to give an opportunity to the parties in terms of section 235(2) to produce the materials they wish to adduce instead of going through the exercise of sending the case back to the trial court.
1713 A] In the instant case, the Court modified the death sen tence to one of life imprisonment in view of the facts: (i) The death sentence has been inflicted nearly two years ago, and the agony of such a sentence has been an exCruciating experience suffered by the convict for a long period; (ii) The appellant had two other assailants with him who have been awarded life imprisonment; (iii) There was no motive for the appellant to kill the innocent child; and (iv) The other circumstances present indicate that the ends of justice would be met by awarding life imprisonment.
[713 G E] E. Annamma vs State of Andhra Pradesh ; , referred to
</s> |
<s>[INST] Summarize the judgementAppeal No. 1356 of 1956.
Appeal from the judgment and decree dated December 3, 1965 of the Calcutta High Court in Appeal from Original Decree No. 85 of 1965.
295 D.N. Mukherjee, for the appellant.
M.C. Bhandare, Pratap Singh and K. Rajendra Chaudhuri, for respondent No. 1.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgment of the Calcutta High Court.
The facts may be briefly stated.
One Ratanamala Dassi who was governed by the Bengal School of Hindu Law as modified by the , hereinafter called the Act, died intestate in January 1964 leaving no issue or lineal descendants.
Her husband Monmotha Nath Dutt had predeceased her.
The said Ratnamala Dassi left her surviving the appellant and respondents 2 and 3, the brothers of her husband and respondent 1, Urmilla Sundari Dassi her husband 's sister.
In 1964 respondent No. 1 instituted a suit for a declaration that as an heiress of Ratnamala Dassi she had 1/4 share in the movable and immovable property left by her and that she be allotted her share by partition of those properties.
The appellant entered appearance and took up the plea in his written statement that under the Act he and respondents 2 and 3 being the brothers of the husband of the deceased Ratnamala Dassi were the heirs in preference: to respondent 1 who.
was the sister of the deceased 's husband.
The suit was tried on the original side by a learned Single Judge of the Calcutta High Court who granted a preliminary decree on December 23, 1964 in favour of respondent 1 holding that she had 1/4 share in the estate left by Ratnamala Dassi.
The appellant preferred an appeal to a division bench which was dismissed.
The sole point which has to be considered is whether, according to the order of succession as laid down in Class II of the Schedule to section 8 of the Act, brother would succeed in preference to the sister or whether the brother and sister would succeed .jointly having equal shares ? According to section 15(1 ) when a female Hindu dies intestate her property devolves according to the Rules set out in section 16.
Section 15 divides the groups of heirs of a female dying intestate into five categories described as Entries (a) to (e).
We are concerned, in the present case, with Entry (b) which is "secondly, upon the heirs of the husband".
Section 16 provides that the order of succession among heirs referred to in section 15 shall be and the distribution of the intestate 's property among those heirs shall take place according to the following Rules: Rule l: "Among the heirs specified in sub section (1 ) of section 15, those in one entry shall be preferred 296 to those in any succeeding entry, and those included in the same entry shall take simultaneously.
Rule 2 . . . . .
Rule 3.
The devolution of the property of the intestate on the heirs referred to in clauses (b), (d) and (e) of sub section (1) and in sub section (2) of section 15 shall be in the same order and according to the same rules as would have applied if the property had been the father 's or the mother 's or the husband 's as the: case may be, and such person had died intestate in respect thereof immediately after the intestate 's death.
" As the property in the present case was of the husband of Ratnamala Dassi we have to turn to section 8 to find out who would have been his heirs.
Section 8 reads: Section 8 "The property of a male Hindu dying intestate shall devolve according to the provisions of this Chapter : (a) firstly, upon the heirs, being the relatives specified in class 1 of the Schedule.
(b) secondly, if there is no heir of class 1, then upon the heirs, being the relatives specified in class 1I of the Schedule (c) thirdly, if there is no heir of any of the two classes, then upon the agnates of the deceased; and (d) lastly, if there is no agnate then upon ' the cognates of the deceased.
" The Schedule mentioned in section 8 to the extent it is material is reproduced below : CLASS 1 "Son; daughter; widow; mother; son of a predeceased son; daughter of a predeceased son; son of a predeceased daughter; daughter of a predeceased daughter; widow of a predeceased son; son of a predeceased son of a predeceased son; daughter of a predeceased son of a predeceased son; widow of a predeceased son of a predeceased son.
CLASS 11 I. Father.
297 II.
(1) Son 's daughter 's son, (2) son 's daughter 's daughter, (3) brother, (4) sister.
III . . . . VII . . . VIII . . . Explanation . . . " Section 9 lays down that among the heirs specified in the Schedule those in class 1 shall take simultaneously and to the exclusion of all other heirs and those m the first entry in class II shall be preferred to.
those in the second entry and so on.
Section 11 is to the effect that the property of an interstate shall be divided in any one entry in class II of the Schedule so that they share equally.
Before the High Court the contention raised on behalf of the appellant was that "brother" being prefixed by arabic numeral 3 came before "sister" which word had the numeral (4) before it and that the object of using the numerals within a particular group was to prescribe the order of precedence or preference.
It was also argued that the use of the arabic numerals in groups II, III and IV of Class II must have some meaning; otherwise the legislature would have used such numerals in respect of the heirs not only in class II but in class I as well.
The learned judges of the division bench felt that the use of the arabic numerals appeared to be redundant but "the combined effect of this section read with the others seems to.
be that the legislature intended that the heirs named after numerals II,III IV composed three entries only".
We are unable to accede to the argument that the use of arabic numerals is decisive of the point whether or not the heirs specified in entry II of class II succeed simultaneously and equally.
It is inconceivable that a matter of such importance should have been left to the employment of numerals alone.
If the intention of the legislature was that each class of relatives shown against the arabic numerals constituted an entry express and specific provisions to that effect would have been made in the substantive sections of the Act.
Indeed section Il says quite clearly that the property of an intestate shall be divided between the heirs specified in any one entry in class II of the Schedule so that they share equally.
That language would not be consistent with the view that file heirs shown against the arabic numerals constitute an entry within the meaning of section 11.
The Act was meant to lay down a comprehensive and uniform system of inheritance and its scheme is to 298 prescribe a set of rules for succession to the property of male and female Hindus dying intestate.
Sections 8 to 13 contain the general rules relating to succession to the property of a male Hindu including the matter of ascertainment of shares.
Sections 15 and 16 contain the general rules affecting succession to the property of a female Hindu.
The rules relating to preferential heirs are given in s.10.
If the intention was to give preference among the heirs in Class II according to.
arabic numerals treating the same as a separate entry some provision would undoubtedly have been made in s.11 for that purpose.
As noticed before it is that section which deals with the distribution of property among heirs in class II of the Schedule.
Indeed s.11 would be wholly unnecessary if each one of the heirs mentioned in each entry of class II were to take preference to the next one in the.
same entry.
It is also.
significant that in class 1 male and female heirs have been treated as equal.
There is no reason why any distinction should have been made among the heirs in class II on the ground of the heir being male or female.
For instance in entry II in class Il a brother would have preference over the sister and in his presence the later would succeed if the submission on behalf of the appellant is to.
be accepted.
No reason or justification has been suggested for making such a distinction.
Similarly on the appellant 's argument the son 's daughter 's son should have preference over the son 's daughter 's daughter.
That again would run counter to the whole scheme of the Act that male and female heirs should get equal treatment.
It must be remembered that the Act incorporated one of the principal reforms which had become a pressing necessity owing to the changed social and economic conditions in Hindu society that in succession there should be equal distribution between male and female heirs.
It is true that the draftsmen while employing the arabic numerals in entries Il to IV of class II only are likely to have something in mind but on the whole and in view of the reasons which have been given above no particular significance can be given to the use of the arabic numerals.
Generally speaking numbers or numerals are employed in a statute for the sake of convenient and easy reference but their use cannot override the statutory provisions.
Nor is it possible in the 'absence of any indication in the sections or in the Schedule itself to attribute such a radical departure from the general scheme of classification of heirs, as has been suggested, namely, that in case of three entries only in class 11 the legislature intended to create an order of preference and lay down the same by the use of arabic numerals.
There is no merit in this appeal which fails and it is dismissed with costs.
V.P.S. Appeal dismissed.
[/INST]Govan Brothers were since 1943, the managing agents of the Rampur Company.
In May 1964 criminal proceedings which are still pending were lodged against V.H. Dalmia, the managing director of Govan Brothers, pursuant to the report of the Bose Inquiry Commission that V.H. Dalmia was in the year 1946 47 guilty of grossly improper conduct in relation to several companies of which he was a director.
In September 1964 the company applied for approval under section 326 of the Companies Act of the reappointment of Govan Brothers as managing agents.
The Company Law Board approved the extension of the tenure for three years.
When approval was sought for another extension till 1970 the Board rejected the application.
In considering whether Govan Brothers were "fit and proper" within the meaning of section 326(2) (b) of the Act to be reappointed managing agents the Board restricted itself to the findings recorded by the Bose Commission relating 'to the dealings of V.H. Dalmia with the companies of which he was a director between the years 1945 and 1947.
The company moved the High Court by a Writ Petition for an order quashing the decision of the Board 'and for an order directing the Board to extend the managing agency till 1970.
The High Court set aside the Board 's order and directed it to take into consideration the entirety of the "acts and activities" of V.H. Dalmia in forming the requisite opinion under section 326(2) (b).
The Board and the company preferred appeals to this Court.
On the question: (i) whether the decision of the Board under the section based on its satisfaction is immune from the scrutiny of the court and (ii) whether the High Court should have given a direction to the Board to extend the period of the managing agency, HELD: Dismissing the appeals (i) By sub section
(2) of section 326., the Central Government is invested with power to decide whether it is against the public interest to allow the company to have 'a managing agent, whether the person proposed is fit and proper to be appointed managing agent, whether the conditions of the managing agency agreement proposed are fair and reasonable, and whether the managing agent proposed has fulfilled the conditions which the Central Government has required him to fulfill.
The scheme of the section implies investigation and a decision on the matters set out therein.
The power is a quasi judieial power and not administrative: it necessarily implies a duty arising from the nature of the act empowered to be done, the object for which it is to, be done, the conditions in which it is to be done and its repercussion upon the power of the company, the shareholders the creditors and the general public for whose benefit the power is to be 178 exercised.
The satisfaction contemplated by section 326 must therefore be the result of on objective appraisal of the relevant materials because, exercise of the power conferred upon the Central Government is restrictive of valuable rights of the company and of the proposed managing agent and severely restricts their liberty of contract.
The courts are not concerned with the sufficiency of the grounds on which the satisfaction is reached.
The enquiry before the court is whether the Central Government was satisfied as to the existence of the conditions in els.
(a), (b) and (c) of sub section
(2) of section 326.
The existence of the satisfaction cannot be challenged except probably on the ground that the authority acted mala fide.
But: if in reaching its satisfaction the Central Government misapprehends the nature of the conditions or proceeds upon irrelevant materials or ignores relevant materials the jurisdiction of the courts to examine the satisfaction is not excluded, [182 F H; 183 A E H; 184 A B] Barium Chemicals vs The Company Law Board.
[1966] Supp.
S.C.R. 311, Rohtas Industries vs
S.D. Aggarwal, A.I.R. 1969 S.C. 7Q7, referred to.
Ridge vs Baldwin, ; and Padfield vs Minister of Agriculture; , , applied.
The observations of the Judicial Committee in Nakuda Ali vs Jaya Ratne, that the duty to act judicially arises only from an express provision to that effect disapproved.
The section uses the present tense '.
The satisfaction must be with reference to the conditions existing in praesenti, but in adjudging whether a person is fit and proper to be appointed managing agent past actings and conduct cannot be ignored.
The Board is not restricted to a consideration of his acts, conduct 'and activities proximate to the date of the application; it has to consider his acts and activities past and present, the interest of the shareholders and the general interests of the public in allowing the management to be continued by the directors of the company and other circumstances which have a bearing on the question.
[181 G H; 182 A] (ii) In dealing with a petition against an order made by the Board under section 326 the High Court is not constitute.d a court of appeal.
The Court has merely to consider whether in arriving at its decision the Board has restricted itself to the enquiry contemplated to be made and has taken into consideration all the relevant circumstances and that its decision is not vitiated by irrelevant or extraneous matters.
[186 B D]
</s> |
<s>[INST] Summarize the judgementAppeal No. 23 of 1964.
Appeal from the judgment and decree dated May 12, 1961 of the Allahabad High Court in Civil Misc.
Writ No. 3588 of 1958.
M. C. Setalvad, K. C. Jain and B. P. Maheshwari, for the appellant.
972 section N. Andley, Rameshwar Nath and P. L. Vohra, for the res pondent.
The Judgment of P. B. GAJENDRAGADKAR, C.J., K. N.WANCHOO and RAGHUBAR DAYAL JJ., was delivered by WANCHOO J. M. HIDAYATULLAH and J. R. MUDHOLKAR JJ.
delivered separate Opinions.
Wanchoo J.
This is an appeal on a certificate granted by the Allahabad High Court.
The appellant is a public limited company and owns two sugar factories situate in the city of Rampur.
The factories comprise a number of buildings including some for residential purposes also.
The Municipal Board of Rampur (hereinafter referred to as the respondent) decided to impose water tax in Rampur as provided under section 128(1) (x) of the U.P. Municipalities Act, No. 11 of 1916 (hereinafter referred to as the Act).
The procedure for the imposition of tax by the Municipal Board under the Act is provided in sections 131 to 135 of the Act Section 131 provides that when a Board desires to impose a tax, it shall by special resolution frame proposals specifying the tax, the persons or class of persons to be made liable, and the des cription of property or other taxable thing or circumstance in respect of which they are to be made liable, the amount or rate leviable from each such person or class of persons, and any other matter required by the Rules framed by the State Government.
The Board has also to prepare a draft of the rules which it desires the State Government to make in respect of the tax, namely, for assessment, collection, exemption and other matters relating to tax, [section 131(2)].
Section 131(3) which is important for our purposes reads thus : "The Board shall, thereupon publish in the manner prescribed in section 94 the proposals framed under sub section (1) and the draft rules framed under subsection (2) along with a notice in the form set forth in Schedule III.
" Section 132 provides for procedure subsequent to framing proposals and permits any inhabitant of the municipality within a fortnight from the publication of the notice, to submit to the Board an objection in writing to all or any of the proposals.
The Board has to take these, proposals into consideration and pass orders thereon by special resolution and if it thinks necessary it can modify the proposals.
if the proposals and the rules (if any) are modified, the modified proposals and rules are again published.
It is open to any inhabitant of the municipality again to object to the modified proposals, and if any such objection is made, it 973 is dealt with in the same manner as objections to the original proposals.
When the proposals have been finally settled, the Board has to submit them along with the objections to the prescribed authority or the State Government, as the case may be, under section 133 of the Act.
The prescribed authority or the State Government has the power thereunder to sanction the proposals or to return them to the Board for further consideration or sanction them without modification or with such modification not involving an increase of the amount to be imposed as it deems fit.
Section 134 provides that when the proposals have been sanctioned, the State Government has to take into consideration the draft rules submitted by the Board and make such rules under section 296 of the Act as it thinks fit.
When the rules have been made the order of sanction and a copy of the rules has to be sent to the Board, which thereupon by special resolution has to direct the imposition of the tax with effect from the date to be specified in the resolution.
Section 135 then provides that a copy of the above resolution has to be submitted to the State Government or the prescribed authority, as the case may be.
Upon receipt of such copy, the, State Government or the prescribed authority, as the case may be, has to notify in the official gazette the imposition of the tax from the appointed day and the imposition of the tax is in all cases subject to the condition that it has been so notified under section 135 (2).
Then comes section 135 (3), which reads as follows "A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of this Act.
" Section 94 (3) which provides for the manner of publication reads thus : "Every resolution passed by a Board at a meeting shall, as soon thereafter as may be, be published in a local paper published in Hindi and where there is no such local paper, in such manner as the State Government may, by general or special order, direct." According to the respondent, it followed the procedure pro vided under the Act for the imposition of the tax and after following the procedure the tax came to be imposed from April 1, 1957 at the rate of 10 per centum of the annual value of lands and buildings.
After the tax was thus imposed, the respondent sent notices of demand to the appellant requiring it to pay water tax for the years 1957 58 and 1958 59.
This was done on 974 October 7, 1958.
It may be added that under section 129 of the Act there are certain restrictions subject to which water tax can be imposed and one of the restrictions is that the tax shall not be imposed, where the unit of assessment is a plot of land or a building, on any such plot or building of which no part is within a radius to be fixed by rule in this behalf for each municipality from the nearest standing or other waterwork whereat water is made available to the public by the Board.
In the present case this limit has been fixed by the rules at 600 feet.
The appellant objected to the payment of water tax demanded from it, and one of its objections was that it was exempt under section 129 (a), as there was no standpipe or other waterwork whereat water was made available to the public by the respondent within 600 feet of the buildings of the factory, the Central Office or the Govan Colony, except that some buildings outside the main Raza Sugar Factory were within 600 feet.
The respondent however rejected the objections, and threatened to recover the amount by coercive process.
The appellant then filed a writ petition before the High Court in December 1958 and a large number of grounds were taken in the writ petition in support of its case that it was not liable to pay water tax, including certain constitutional objections to the vires of the Act itself.
The appellant failed in the High Court on all points and 'has come up in appeal before us on a certificate granted by the High Court.
In the present appeal however only two points have been urged before us on behalf of the appellant.
We are therefore not ;concerned with the other points raised in the High Court and shall confine ourselves to the two points urged before us, namely (1) There was no publication as provided by section 131(3) read with section 94(3) of the Act, and as the provision of section 131(3) is mandatory and was not complied with, all subsequent action taken for the imposition of the tax was bad for non compliance with a mandatory provision and therefore the tax itself was not levied according to law and could not be realised; and (2) the tax could not be levied on most of the premises belonging to the appellant as there was no standpipe or other waterwork whereat water was made available to the public by the respondent within 600 feet of all of the buildings of the appellant.
975 We shall first consider the ground as to publication and three questions fall to be decided in that behalf : (first), is publication as provided in section 131 (3) mandatory or directory, for it is contended on behalf of the respondent that publication under section 131(3) is merely directory; (secondly), was the publication in this case strictly in accordance with the manner provided in section 94(3); and (thirdly), if the publication was not strictly in accordance with the manner provided in section 94(3), is the defect curable under section 135(3)? The question whether a particular provision of a statute which on the face of it appears mandatory, inasmuch as it uses the word "shall"as in the present case is merely directory cannot be resolved by laying down any general rule and depends upon the facts of each case and for that purpose the object of the statute in making the provision is the determining factor.
The purpose for which the provision has been made and its nature, the intention of the legislature in making the provision, the serious general inconvenience or injustice to persons resulting from whether the; provision is read one way or the other, the relation of the particular provision to other provisions dealing with the same subject and other considerations which may arise on the facts of a particular case including the language of the provision, have all to be taken into account in arriving at the conclusion whether a particular provision is mandatory or directory.
The respondent strongly relies on the State of U.P. vs Man bodhan Lal Srivastava(1), where article 320(3) (c) of the Constitution was held to be directory and not mandatory, and contends that the principle of that case applies with full force to the facts of the present case.
If is therefore necessary to consider that case before we consider the facts of the present case in the light of the circumstances to which we have referred above and which are helpful in determining whether a particular provision is mandatory or directory.
Article 320(3) (c) provides for consultation with the Public Service Commission on all disciplinary matters affecting a person serving under the Government of India or the Government of a State in a civil capacity, and the language of the Article is mandatory in form, as it provides that the Public Service Commission shall be consulted.
This Court relied on the following observations of the Judicial Committee of the Privy Council in Montreal Street Railway Company vs Normandin(2) in that connection: (1) ; (2) ; 976 "The question whether provisions in a statute are directory or imperative has very frequently arisen in this country, but it has been said that no general rule can be laid down, and that in every case the object of the statute must be looked at.
When the provisions of a statute relate to the performance of a public duty and the case is such that to hold null and void acts done in neglect of this duty would work serious general inconvenience, or injustice to persons who have no control over those entrusted with the duty, and at the same time would not promote the main object of the Legislature, it has been the practice to hold such provisions to be directory only, the neglect of them, though punishable, not affecting the validity of the acts done.
" That was a case where the jury., lists had not been revised as required by law.
Following the principle laid down in that case, this Court held that article 320(3) (c) itself contemplates three grounds: (i) that the proviso to article 320 itself contemplates that regulations may be made specifying matters in which either generally, or in any particular class of cases or in particular circumstances it shall not be necessary for a Public Service Commission to be consulted; (ii) that the advice of the Public Service Commission was not binding on the Government, and in the ab sence of such binding character it was difficult to see how non compliance with the provisions of article 320(3) (c) could have the effect of nullifying the final order passed by the Government; and (iii) that article 311 was not in any way controlled by article 320 and there was no provision in the Constitution expressly or otherwise providing that the result of non compliance with article 320(3) (c) would be to invalidate the proceedings ending with the final order of the Government.
It was also pointed out in that case that an examination of the terms of article 320 showed that the word "shall" appeared in almost every paragraph and every clause or sub clause of that Article.
If it were held that the provisions of article 320 (3) (c) were mandatory in terms, the other clauses or sub clauses of that Article would have to be equally held to 'be mandatory.
If they were so held, any appointments made to the public services without observing strictly the terms of these sub clauses in cl.
(3) of article 320 would adversely affect the person so appointed to a public service, without any fault on 'his part and without his having any say in the matter, and this 'could not have been intended by the makers of the Constitution. 'Thus this Court approximated article 320(3) (c) to a statutory 977 provision like the one which came up for consideration in Montreal Street Railway Company 's case(1) and held that if the Article were construed as mandatory, it would cause serious general inconvenience, and injustice to persons who had no control over those entrusted with the duty.
That decision was clearly based on the special facts in that case dealing with appointments and dismissals of public servants and the duty of the Government to consult the, Public Service Commission in that behalf and cannot and should not be extended to cases based on a different set of facts.
As the Judicial Committee itself pointed out the question whether provisions in a statute are directory or mandatory cannot be decided by laying down a general rule and in every case the object of the statute must be looked at.
That case therefore in the circumstances is of little assistance to the respondent, except insofar as it lays down the principle that no general rule can be laid down for determining the question whether a provision in a statute is directory or mandatory, and that every case will have to be judged on the basis of the object of the statute concerned.
This brings us to the examination of the facts and circums tances of the present statute in the light of what we have said above as to the criteria for determining whether a provision in a statute is mandatory or directory.
The provision with which we are concerned, namely, section 131(3), can be divided into two parts.
The first part lays down that the Board shall publish proposals and draft rules along with a notice inviting objections to the proposals or the draft rules so published within a fortnight from, the publication of the notice (see Sch.
The second part provides for the manner of publication and that manner is according to s ' 94(3).
We shall first deal with what we have called the first part of section 131(3).
This provision deals with taxation.
The object of providing for publication of proposals and draft rules is to invite objections from the inhabitants of the municipality, who have to pay the tax.
The purpose of such publication obviously is to further the democratic process and to provide a reasonable opportunity of being heard to those who are likely to be affected by the tax before imposing it on them.
It is true that finally it is the Board itself which settles the proposals with respect to taxation and submits them to Government or the prescribed authority, as the case may be,, for approval.
Even so we have no doubt that the object behind this publication is to find out the reaction of tax payers generally to the taxation (1) ; 978 proposals, and it may very well be in a particular case that the Board may drop the proposals altogether and may not proceed further with them, if the reaction of the tax payers in general is of disapprobation.
Further the purpose served by the publication of the proposals being to invite objections, in particular from the tax payers, to the tax proposed to be levied on them, the legislature in its wisdom thought that compliance with this part of section 131(3) would essentially carry out that purpose.
In the circumstances if we are to hold that this part of section 131(3) was merely directory, the whole purpose of the very elaborate procedure provided in sections 131 to 135 for the imposition of tax would become meaningless, for the main basis of that procedure is the consideration of objections of tax payers on the proposals of the Board.
If such publication is merely directory, the Board can proceed to levy the tax without complying with them and that would make the entire elaborate procedure provided in the Act before a tax is imposed nugatory.
We are therefore of opinion that this part of section 131(3) is mandatory and it is necessary to comply with it strictly before any tax can be imposed.
We shall consider the interpretation of section 135(3) later, but we have no doubt that in the present case, in spite of section 135(3), the legislature intended that there must be publication as provided in what we have called the first part of section 131(3).
We therefore hold that this part of section 131(3) is mandatory considering its language, the purpose for which it has been enacted, the setting in which it appears and the intention of the legislature which obviously is that no tax should be imposed without hearing tax payers.
Lastly we see no serious general inconvenience or injustice to anyone if this part of the provision is held to be mandatory; on the other hand it will be unjust to tax payers if this part of the provision is held to be directory, inasmuch as the disregard of it would deprive them of the opportunity to make objections to the proposals, and the draft rules.
We therefore hold that this part of section 131(3) is mandatory.
Turning now to the second part, which provides for the manner of publication, that manner is provided in section 94(3) already set out above.
It seems to us that when the legislature provided for the manner of publication it did not intend that manner should be mandatory.
So long as publication is made in substantial compliance with the manner provided in section 94(3), that would serve the purpose of the mandatory part of the section which provides for Publication.
It would therefore, not be improper to hold that the manner of publication provided 979 in section 94(3) is directory and so long as there is substantial compliance with that the purpose of the mandatory part of section 131(3) would be served.
In this connection we may refer to K. Kamaraja Nadar vs Kunju Thevar(1).
In that case, a question arose whether section 117 of the Representation of the People Act (No. 43 of 1951) was mandatory or directory.
That section required that a petitioner filing an election petition had to enclose with the petition a Government Treasury receipt showing that a deposit of one thousand rupees had been made by him either in a Government Treasury or in the Reserve Bank of India in favour of the Secretary to the Election Commission as security for the costs of the petition.
This Court analysed this provision and observed that it consisted of three parts : namely, (i) the Government Treasury receipt must show that such deposit had been actually made in a Government Treasury or in the Reserve Bank of India; (ii) it must also show that it had been made in favour of the Secretary to the Election Commission; and (iii) it must further show that it had been made as security for the costs of the petition.
The question then arose whether the words 'in favour of the Secretary to the Election Commission" were mandatory in character so that if the deposit had not been made in favour of the Secretary to the Election Commission as therein specified the deposit even though made in a Government Treasury or in the Reserve Bank of India and as security for the costs of the petition would be invalid and of no avail.
This Court held that these words in section 1 17 were directory and not mandatory in their character, and that the essence of the provision contained in section 117 was that the Petitioner should furnish security for the costs of the petition and should enclose along with the petition a Government Treasury receipt showing that a deposit of one thousand rupees had been made by him either in a Government Treasury or in the Reserve Bank of India to be at the disposal of the Election Commission to be utilised by it in the manner authorised by law and was under its control and payable on a proper application being made in that behalf to the Election Com mission or to any person duly authorised by it to receive the same, be he the Secretary to the Election Commission or any ,one else.
If this essential requirement was complied with, no literal compliance was at all necessary with the words "in favour of the Secretary to the Election Commission" appearing in that section.
Though, therefore, the making of the deposit and the presentation of the receipt thereof along with the petition was (1) L2Sup./65 980 held to be mandatory, this Court hold that the form in which the deposit should be made was only directory.
The principle of that case in our opinion applies to the manner of publication provided in section 94(3) in the present case.
As we have said already the essence of section 131(3) is that there should be publication of the proposals and draft rules so that the tax payers have an opportunity of objecting to them and that is provided in what we have called the first part of section 131,(3); that is mandatory.
But the manner of publication provided by section 94(3) which we have called the second part of section 131(3), appears to be directory and so long as it is substantially complied with that would be enough for the purpose of providing the tax payers a reasonable opportunity of making their objections.
We are therefore of opinion that the manner of publication provided in section 131(3) is directory.
Let us see what section 94(3) requires and what has been done in this case.
That section requires the publication to be made in a local paper and that local paper must be one published in Hindi.
It further provides that where there is no such local paper, the publication may be made in such manner as the State Government may by general or special order direct.
In the present case, the publication has been made in a local paper, but that local paper is not published in Hindi; it is published in Urdu, though the actual publication of the resolution in the present case was in Hindi.
The contention on behalf of appellant is that this is no compliance with section 94(3).
It appears that there is a local paper published in Hindi also in Rampur, but the evidence is that it is published very irregularly.
It is urged that if there was no local paper published regularly in Hindi in Rampur, then the direction of the State Government should have been sought for the manner of publication.
It may be accepted that there has not been strict compliance with the provisions of section 94(3) inasmuch as the publication has not been made in a local paper published in Hindi.
We must however point out that if section 94(3) is interpreted literally, all that it requires is that the publication must be in a local paper and that local paper must be published in Hindi, though the actual publication of the resolution may not be in Hindi.
That does not seem to us to be the real meaning of section 94(3) and what it substantially requires is that the publication should be in Hindi in a local paper, and if that is done that would be compliance with section 94(3).
Now what has happened in this case is that the publication has been made in a local paper which on the evidence seems to have good circulation in Rampur and the actual resolution has been published in Hindi, though the paper itself is published in Urdu.
It seems to us therefore that there is substantial compliance with the provisions of section 94(3) in this case, even though there is a technical defect inasmuch as the local paper in which the publication has been made is published in Urdu and not in Hindi.
But what has happened in this case is in our opinion substantial compliance with section 94(3) and as we have held that provision to be directory it must be held that section 131(3) has been complied with.
This brings us to the third point, namely, the effect and interpretation of section 135(3) which we have already set out.
That sub section provides that a notification made under section 135(2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act.
It has been urged on behalf of the respondent that the publication has been made as required by section 135(2) in the official gazette and therefore is conclusive proof that the tax had been imposed in accordance with the provisions of the Act, i.e., all the provisions of the Act had been complied with.
It is urged that once a notification has been made as required by section 135(2), section 135(3) raises an irrebuttable presumption that all the provisions of the Act have been complied.
with and therefore it was not open to,the appellant to raise the question of non compliance with the provisions of section 131(3) read with section 94(3) at all in the present case.
Reliance in this connection has been placed on the Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon(1).
In that case section 67(8) of the C.P. & Berar Municipalities Act, 1922 came up for consideration.
That section was in terms similar to the terms of section 135(3).
This Court held in that case that as the provision of section 67(7) which correspond to section 135(2) here, had been complied with, that was conclusive evidence of the tax having been imposed in accordance with the provisions of that Act, and it could not be challenged on the ground that all the necessary steps had not been taken.
Now what happened in that case was that the necessary publication was made as required by law and objections were invited to the proposed tax.
Only one objection was filed in that case and that objection was considered by the Board and rejected.
The other procedural provisions were complied with and tax was imposed and a final notification made (1) 982 under section 67 (7) of that Act.
Imposition of the tax was challenged on the ground that the Board did not take into consideration the objections filed.
The evidence in that case was that the Board had taken into consideration the objections filed and had rejected them on grounds which the appellant (in that case) thought were not proper.
It was in those circumstances that this Court held that sub section
(8) of section 67 was conclusive.
The present case is in our opinion similar to that case.
Here also the publication was made, as we have already pointed out in compliance with what we have called the first part of section 131(3).
Further the manner of publication was in substantial compliance with section 94(3).
Therefore, as there was substantial compliance with the provisions of section 94(3), section 135(3) would in our opinion come to the help of the respondent and it must be held that all necessary steps had been taken.
It is however contended on behalf of the respondent that section 135(3) goes further and means that where it applies, the tax must be held to be imposed in accordance with the provisions of the Act, even though none of the procedural provisions may have been complied with at all.
It is enough to say that the question in this form does not arise before us directly for we have held that there was publication in compliance with section 131(3) though the manner was not strictly, in accordance with section 94(3).
We do not think it necessary in the present case to decide what would happen if there was no compliance at all with the various procedural provisions including section 131(3) by a Board before imposing a tax and the evidence consisted only of a notification under section 135(2).
It has been held by the Allahabad High Court in a number of cases that if there is no compliance with the procedural provisions in section 131 to section 134, the mere notification under section 135(2) would not be sufficient to impose a tax and section 135(3) would not save such tax: (see Azimulla vs Suraj Kumar Singh(1) and Municipal Board, Hapur vs Raghuvendra Kripal(2).
These are cases in which certain procedural provisions were not complied with at all and the High Court held that section 135(3) would not save the tax in such cases.
We do not think it necessary to express any opinion on this question for it does 'not arise in the present case.
We may however point out that the decision in the Berar Swadeshi Vanaspathi 's case(1) is not a case where there was no compliance whatsoever with procedural provisions all that had happened in that case was that the objections had (1) A.I.R. (1957) All. 307.
(3) (2) 983 been taken into consideration by the Board though they were rejected for reasons which were considered by the appellant in that case to be not sufficient.
In that case therefore there was compliance with the provisions of the Act and all that we need say is that case is no authority for the proposition that even if there is no compliance whatsoever with a mandatory provision of a statute relating to procedure for the imposition of a tax, a provision like section 135(3) of the Act or section 67(8) of ' the C.P. & Berar Municipal Act would necessarily save such imposition.
If section 135(3) means that where there is substantial compliance with the provisions of the Act that would be conclusive proof that they have been complied with there can be no valid objection to such a provision.
But if the section is interpreted to mean, as is urged for the respondent, that even if there is no compliance whatever with any mandatory provision relating to imposition of tax and the only thing proved is that a notification under section 135(2) has been made, the tax would still be good, the question may arise whether section 135(3) itself is a valid provision.
For present purposes however it is unnecessary to decide that question.
In the present case the mandatory part of section 131(3) has been complied with and its directory part has been substantially complied with and so section 135(3) will apply and the objection that the tax is not validly imposed must fail.
This brings us to the second point raised before us.
So far as that is concerned, it is enough to say that it is mainly a question of fact whether the buildings or any of them belonging to the appellant are within 600 feet of the standpipe.
The restriction imposed in cl.
(a) of section 129 is that water tax can be levied on a building where any part of it is within a radius fixed by rules which in the present case is 600 feet from the nearest standpipe or water work whereat water is made available by the Board to the public.
What is contended on behalf of the appellant is that these words mean that there should be standpipe or water work from which water is made available to the public by the respondent and that it is not enough if underground pipes carrying water are passing within 600 feet.
It seems to us that this contention of the appellant is correct.
The restriction in section 129(a) is that no water tax can be levied on a building which is more than a certain distance fixed by the rules from a standpipe or other water work from which water is made available to the public.
The restriction that water should be made available to the public within the specified distance does not mean that if pipes carrying water pass underground that would be enough.
What is required is that water 984 should be made available to the public from the nearest standpipe or other water work and that requires that there must be something above the ground from which the public can draw water.
But even so, the question is one of fact and the High Court has pointed out that there was dispute on this question of fact and there was no sufficient material before it to enable it to come to a definite finding whether all the buildings of the appellant were beyond the radius of 600 feet from the nearest standpipe.
In this state of the evidence the question must be left open and the appellant can pursue such remedies as he may be advised to take.
The appeal therefore fails and is hereby dismissed with Hidayatullah J.
I agree that this appeal should be dismissed but would like to say a few words about the failure to publish the notice in strict compliance with the provisions of section 94(3) of the U.P. Municipalities Act.
The procedure for the imposition of a tax by the Municipality has been analysed by my learned brother Wanchoo very succinctly.
I agree generally with all he has said but as I view the matter differently on the construction of sections 131 (3), 94(3) and 135(3) of the Act, I shall briefly give the reasons for my decision on that part of the case.
The general scheme of taxation in the Act is this: After the Municipal Committee or Board decides to impose a tax it is required to frame proposals by a special resolution [section 131(1)] and to frame rules which it desires the State Government to make relative to the assessment, collection etc., of the tax [section 131(2)].
Section 131(3) then provides: "The Board shall, thereupon, publish in the manner prescribed in section 94 the proposal framed under subsection (1) and the draft rules framed under subsection (2) along with a notice in the form setforth in Schedule III." This enables any inhabitant affected by the proposal to object.
The Municipal Committee or the Board then considers the objections and passes orders on the objections but if it modifies the proposals or the rules it publishes them a second time and the whole procedure has to be gone through again.
When there is no modification or the proposals or rules are finally settled, the original proposals and rules, if any, have to be forwarded to Government.
Government may accept the proposals and the rules or may send them back for further consideration.
The proposals and the rules when finally sanctioned by Government are returned to the Municipality which imposes the tax with effect from a specified date by passing a fresh resolution.
This does not impose the tax proprio vigore.
The resolution has to be submitted to Government and when it is notified in the official Gazette, the tax is imposed from the appointed date.
Section 153 (3) then provides "A notification of the imposition of a tax under subsection (2) shall be conclusive proof that the tax has been imposed in accordance with the provisions of the Act.
" The tax here was imposed by Rampur Municipality and the notices were published in an Urdu newspaper called "Aghaz" though the notices were in Hindi.
Section 94(3) of the U.l.
Act provides: "Every resolution passed by a Board at a meeting shall, as soon thereafter as may be published in a. local paper published in Hindi and where there is no such local paper in such manner as the State Government may, by general or special order, direct.
" There was in Rampur another newspaper which was published in Hindi but its circulation was admittedly very poor.
The newspaper selected for publication, though in Urdu, was widely read, and the notice itself was in Hindi.
Thus there was a local paper with a wide circulation and there was a notice in Hindi.
The only breach was that the paper was not 'published in Hindi '.
There was, clearly no literal compliance with section 94(3).
Two questions, therefore, arise : (a) Is section 94(3) mandatory ? and (b) If section 94(3) is not strictly complied with whether section 135(3) makes the notification conclusive against the defect ? In my judgment the answers to these questions depend upon the nature of the functions of a Municipal Committee and its powers of imposing a tax.
A Municipal Committee enjoys powers of taxation not as a legislature but as a delegate of the legislature.
Taxes levied by it are in effect levied by Government.
They are allowed to be imposed and retained by the Municipality to perform its functions and to pay for its expenses.
The whole procedure is shortened in this way, otherwise Government would be required to levy taxes and to give the proceeds to the Municipality.
However, the final 986 word lies with Government and the legislature makes this the vital condition in the imposition of the tax.
What the Municipality does in consequence of the power so conferred, it can only effectively do if the conditions laid down with the grant of power are followed and Government finally approves of the tax.
the manner of its imposition and manner of its collection.
Once Government has approved of the Resolution and published it in the Gazette the tax is deemed to be conclusively imposed in accordance with the procedure laid down.
The legislation on the subject is then complete and the tax derives its legislative validity from the legislature 's will.
Now sections 131 135 lay down the procedure.
All the conditions apparently seem equally obligatory because every condition is couched in mandatory language.
The crux of the problem before us is whether all the conditions are to be treated as mandatory or all of them as directory or some of them as of one kind and some of the other kind ? What is the test to apply and if a distinction is to be made, on what principle? In my opinion, the way to look at the matter is this.
A tax to be valid must be imposed in accordance with the Municipalities Act.
The Act lays down conditions some of which are devised for the protection of the taxpayers and some others for ministerial operations connected with the method or system of imposing the tax or for promoting dispatch, efficiency and publicity etc.
All conditions of the first kind must, of course, be regarded as mandatory, because they lie at the very root of the exercise of the power.
Thus preparation of assessment rolls, hearing of objection, framing of assessment rules are all mandatory.
Similarly, conditions involving the passing of resolutions by the necessary majority at special meetings after proper notice to members are fundamental and cannot be overlooked.
If a defect of a fundamental kind occurs it would (in the absence of curative provision) remain even if Government gave its sanction See Scadding vs Lorant(1) (affirming Sub Nom) (2) and Joshi Kalidas vs Dakor Town Municipality(3).
Conditions which promote despatch or provide for ministerial operations are usually directory and although compliance with them is also necessary it is sufficient if the compliance is substantial.
It may be accepted that a provision for a notice to the tax payers informing them about the proposal to impose a Particular tax and the rules made for the imposition, is fundamental.
Such (1) E.R. H.L. 164.
(2) 13 Q.B. 706.
(3) I.L.R. 987 a provision, if ignored, would frustrate the very policy of the law that there should be no tax without an opportunity to object, and to ignore it would ordinarily be fatal.
Similarly the direction at.
The notice should be published in a local newspaper is also an integral part of the Scheme.
The same purpose cannot be achieved by proclaiming by beat of drum or distributing hand bills or publishing a notice in a newspaper not circulating locally.
There is no option there because if the notice cannot be published in a local newspaper the section goes on to provide for alternative modes of publication to be determined by Government.
The sub section, however, goes further and says that the newspaper must be one that is published in Hindi.
I would be disposed to consider this further direction as not fundamental.
If a newspaper is selected which is very widely read in the locality but is not in Hindi and the notice is published in Hindi, I imagine the intention of the law is better promoted than if another newspaper published in Hindi with next to no circulation is selected.
There is no doubt a departure from the letter of the law but the departure promotes the very object and purpose of it.
I would regard such a provision as directory.
It is a provision for the guidance of the Municipality and not something which can be said to be essential to the validity of the imposition.
It seems to me that it is not necessary at all to go into the niceties of the distinction between mandatory and directory provisions in general or in relation to the provisions of the U.P. Municipalities Act in particular.
The legislature has itself furnished the solution by enacting section 135(3) which indicates the consequences of an omission.
It lays down emphatically a rule of evidence which precludes courts from making inquiries into the minutiae of the procedure with a view to declaring the imposition invalid.
The legislature is quite content to enact that Government should review the proposals, the rules and the procedure before accepting the resolution imposing the tax and that after this is done and a notification issues all questions about the procedural part of the imposition must cease.
The legislative will takes over from that stage and the tax is imposed as validly as if the legislature itself imposed it.
Whether one reads section 135(3) as enacting an absolute rule of evidence (and I am in favour of reading it as such See: The Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon) (1) or as merely related to venial defects, errors or omissions, it is plain that it must at least protect the imposition of water tax in Rampur against a flaw in procedure of the (1) 988 kind we are dealing with or it would serve no purpose at all.
This provision, therefore, 'serves to cure the breach of the direction which was intended to serve merely as a guide to the municipalities, and it precludes courts from inquiring into such a breach.
That was a matter for Government to take into consideration before according its approval and Government must be deemed to have approved this other mode of publication which, it is clear enough it could have permitted to be followed in the first instance under the latter part of section 94(3) itself.
Subject to these reasons for holding the tax to be valid I agree that the appeal be dismissed with costs.
Mudholkar J. I agree that the appeal be dismissed but on the point of law urged before us I would like to state my reasons separately.
I find it difficult to construe sub section
(3) of s.131 as partly directory and partly mandatory; that is to say, that the requirement of publication is mandatory but the requirement of the manner of publication is not mandatory but only directory.
To construe the section that way would be giving two different meanings to the verb "shall" occurring in the provision which governs both publication as well as the manner of publication.
"Shall" can, according to the authorities, no doubt be construed literally and, therefore, as being mandatory or, liberally and thus being only directory depending upon the object of the provision in which it occurs, the connected provisions and other similar matters.
But it seems to me on principle that when a verb used in a provision governs two different matters it cannot be given one meaning in so far as it relates to one matter and another meaning insofar as it relates to another matter.
The provisions of section 94(3) are clearly directory inasmuch as a deviation from the mode of publication prescribed therein that is publication in a local newspaper in the Hindi language is contemplated by it.
The requirement of section 131(3) is publication in the manner provided for in section 94 which is actually provided in sub section
(3) of section 94.
Since the latter provision is directory it is immaterial to consider whether section 131(3) is directory or mandatory or to read it as partly one and partly the other and depart from the normal rule of construction which discountenances read ing a word in a provision in two different senses.
While a mandatory provision must be strictly complied with, substantial compliance is sufficient with respect to a directory 989 provision.
There has been substantial compliance with the provisions of section 94(3) since the proposals were in fact published in the Hindi language in a local newspaper.
The only departure from the letter of the law was not obtaining the permission of the State Government for publishing the proposals in an Urdu newspaper.
In my view the essential requirement of section 94(3) is publication in a local newspaper.
Where this requirement is satisfied, the omission to obtain a direction from the State Government permitting publication in a newspaper other than one in the Hindi language is not of much consequence.
Upon this view the question whether section 131(3) is mandatory or whether section 135(3) has become void by reason of article 13(1) of the Constitution or whether it can cure a defect resulting from non compliance with a mandatory provision do not at all arise for consideration.
[/INST]The appellant company challenged the imposition of water tax by the Rampur Municipal Board in a petition under article 226 of the Constitution of India on the ground that the tax had not been imposed according to law inasmuch as the proposals and draft rules had been published by the Board in an Urdu paper whereas according to the mandatory provisions of section 131(3) read with section 93(3) of the U.P. Municipalities Act, 1916, they should have been published,in a Hindi paper.
The High Court dismissed the petition but granted a certificate under article 133(1)(c).
The questions for consideration were whether the whole of section 131(3) was mandatory, or the part of it requiring publication in the manner laid down in section 94(3) i.e., in a Hindi newspaper was merely directory; and whether the publication in the Government Gazette of the notification imposing the tax was not conclusive proof, as provided in section 135(3), of the prescribed procedure having been observed.
HELD: (Per GAJENDRAGADKAR" C. J., WANcHoo and RAGHUBAR DAYAL JJ.) (i) Section 131(3) can be divided into two parts the first one providing that the proposal and draft rules for a tax intended to be imposed should be published for the objections of the public, if any, and the second laying down that the publication must be in the manner laid down in section 94(3).
Considering the object of the provisions for publication namely to enable the public to place its viewpoint before the Board it Is necessary to hold that the first part of the section is mandatory, for to hold otherwise would be to render the whole procedure prescribed for the imposition of taxes nugatory.
The second part of the section is, however, merely directory.
What it substantially requires is that the publication should be in Hindi in a local paper, and if that is done that would be compliance with section 94(3).
In the instant case publication was made in Hindi in a local paper which on the evidence seems to have good circulation in Rampur.
There is no regularly published local Hindi newspaper.
There was, in the circumstances, substantial compliance with the provisions of section 94(3) in this case.
[977 E F; 978 D F; 980 C; 981 A B] (ii) Section 135(3) provides that a notification of the imposition of tax in the Government Gazette was conclusive proof that the tax had been imposed in accordance with the provisions of the Act.
Whether such a notification will save a tax which has been imposed without at all complying with one of the mandatory provisions of the relevant law was a question that did not directly arise in the case.
In the instant case there had been compliance with the mandatory part of section 131(3) and substantial compliance with the second part.
Therefore a. 135(3) applied to the case 971 and the objection that the tax was not validly imposed could not succeed.
[983 B D; 983 D E].
K. Kamaraja Nadar vs Kunju Thevar, , relied on.
State of U.P. vs Manbodhan Lai Srivastva, ; and Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon, , distinguished.
Montreal Street Railway Company vs Normandin, ; , Azimulla vs Suraj Kumar Singh, A.I.R. (1957) All.
307 and Municipal Board, Hapur vs Raghuvendra Kripal, 1960 A.L.I. 185, referred to.
Per HIDAYATULLAH J. A Municipal Committee enjoys powers of taxation not as a legislature but as a delegate of the legislature.
Taxes levied by it are in effect levied by the Government.
What the Municipality does in exercise of the delegated power can be effective only if the conditions laid down with the grant of the power are complied with and the Government finally approves the tax.
Once the Government after giving its approval has notified its imposition in the Government Gazette the tax is deemed to be conclusively imposed in accordance with the procedure laid down.
[985 H to 986 D] Some conditions which are laid down are for the protection of taxpayers and some others are for ministerial operations.
The first kind are fundamental and cannot be overlooked.
Conditions which promote dispatch or provide for ministerial operation are directory and substantial compliance is sufficient.
[986 G] The direction to publish the notice in a paper published in Hindi regarded as sufficient compliance in the case.
[987 C D] The Berar Swadeshi Vanaspati vs Municipal Committee, Shegaon, , relied on.
Per MUDHOLKAR J.
Where a verb used in a provision governs two different matters it cannot be given one meaning insofar as it relates to one matter and another meaning insofar as it relates to another matter.[988 F] Since section 94(3) is clearly directory it is immaterial to consider whether section 131(3) is directory or mandatory or to read it as partly one and partly the other and depart from the normal rule of construction which discountenances reading a word in a provision in two different senses.
[988 G H] The essential requirement of section 94(3) is publication in a local newspaper.
Where the requirement is satisfied, the omission to obtain a direction from the State Government permitting publication in a newspaper other then one in Hindi language is not of much consequence.
Upon this view the question whether section 131(3) is mandatory or whether section 135(3) has become void by reason of article 13(1) of the Constitution or whether it ran cure a defect resulting from non compliance with a mandatory provision does not at all arise for consideration.
[989 B C]
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 1523 of 1988.
From the Judgment and order dated 13.4.1988 of the Bombay High Court in W.P. No. 479 of 1988.
K.K. Venugopal, A.N. Haksar, section Vazifdar, Raian Karanjawala, Mrs. Manik Karanjawala and Hardeep section Anand for the Appellant.
B. Datta, Additional Solicitor General, P. Parmeswaran, S.C. Birala and Ms. A. Subhashini for the Respondents.
The Judgement of the court was delivered by VENKATARAMIAH, J.
This appeal by special leave is filed against an interim order of injunction issued by the High Court of Bombay, Aurangabad Bench on 13th April, 1988 directing the three respondents; (I) Union of India, (2) Ministry of Information and Broadcasting, Parliament House, New Delhi and (3) State of Maharashtra, not to telecast and show episodes 12 and 13 of a serial entitled 'Honi Anhoni ' pending disposal of Writ Petition No. 479 of 1988 filed by Respondent No. 1, Lokvidayan Sanghatana, a registered social organisation of Pune having its branch at Aurangabad and Respondent No. 2 Mahila Sangharsha Samiti, Aurangabad represented by one of its members Smt.
Anagna Patil.
The writ petition was in the nature of a public interest litigation.
The prayer in the writ petition was that the respondents should be directed not to telecast the serial as such telecasting was not in the public interest.
The serial 'Honi Anhoni ' was being telecast by the Doordarshan, which was run by the Union of India, on every Thursday between 9 p.m. and 9.30 p.m.
The 12th episode of the said serial was to be telecast on 14th April, 1988 and the 13th episode was to be telecast on 21st April, 1988.
By virtue of the interim order passed on 13th April, 1988.
episode No. 12 could not be telecast on 14th April, 1988.
Aggrieved by the interim order passed by the High Court the appellant, Odyssey Communication Pvt. Ltd., which was the producer of the serial 'Honi Anhoni ' filed the special leave petition before this Court under Article 136 of the Constitution of India out of which this appeal arises.
The said petition came up before this Court for consideration on April 2 1, 1988.
After hearing the learned counsel for the appellant this Court granted special leave to prefer an appeal against 489 the order passed by the High Court and also stayed the operation of the interim order dated 13th April, 1988 passed by the High Court until further orders and permitted the Doordarshan to telecast the serial in question.
In view of the above order the 12th episode of the serial was telecast on the 21st of April, 1988.
The appeal was heard on the 28th of April, 1988 and this Court reserved judgment on the appeal.
At the end of the hearing of the appeal on 28th April, 1988 the Court expressed that it would set aside the order passed by the High Court against which the appeal had been filed and would give reasons in the course of its judgment.
Since the order of stay passed by the Court was allowed to remain in force the 13th episode, which was the last episode of the serial was telecast on the 28th April, 1988.
The grounds mentioned in the writ petition in support of the prayer made in it were that in each and every episode telecast in the serial an obscure and mysterious atmosphere was being created due to the way of the presentation of the episodes and that it had created fear in the minds of the common viewers and especially of children as the serial had the effect of confirming blinds faiths, superstitious beliefs in stories of ghosts, rebirth, precognition etc.
and of spreading the unscientific way of thinking and blind beliefs.
It was further contended that it was the duty of the State not to encourage blind beliefs amongst the public by telecasting such episodes.
It was on the basis of these grounds the High Court was requested to grant the interim order of injunction.
The appellant was the producer of the said serial, yet the appellant was not made a party to the writ petition.
But on its application the appellant was impleaded as a party on 12.4.1988.
On 13.4.1988 the High Court passed the impugned order of temporary injunction.
The appellant rushed to this Court immediately thereafter with the above said special leave petition.
The appellant has stated before us that the said serial and in particular episodes 12 and 13 did not emphasise superstitious beliefs but on the contrary criticised and condemned superstition and blind faith as was ex facie apparent from the scripts of episodes 12 and 13 produced before this Court.
It is stated that at the end of both the episodes a doctor and a professor gave a scientific explanation for the unusual occurrences portrayed therein and considered by people as supernatural phenomena.
It is alleged that in the 13th episode after a scientific explanation of what had taken place the viewers were told as follows: "All those who without thinking spread blind faith ought to feel ashamed of themselves.
We request all of you that whenever any unusual occurrencces takes place or a 490 seemingly imporbable event occurs, before believing in it, to reflect as to whether there is a scientific reason for it or is it purely psychological by nature.
If all of us exercise such caution we believe that the malady of blind faith will soon be eradicated by our society.
" The appellant further pleaded that the High Court was in error in issuing the order of injunction without giving a reasonable opportunity to it (the producer), which was likely to be affected by the order, to explain that the writ petitioners had no right to move the Court in the circumstances of the case.
It can no longer be disputed that the right of a citizen to exhibit films on the Doordarshan subject to the terms and conditions to be imposed by the Doordarshan is a part of the fundamental right of freedom of expression guaranteed under Article 19(1)(a) of the Constitution of India which can be curtailed only under circumstances which are set out in clause (2) of Article 19 of the Constitution of India.
The right is similar to the right of a citizen to publish his views through any other media such as newspapers, magazines, advertisement hoardings etc.
subject to the terms and conditions of the owners of the media.
We hasten to add that what we have observed here does not mean that a citizen has a fundamental right to establish a private boardcasting station, or television center.
On this question we reserve our opinion.
It has to be decided in an appropriate case.
The relevant part of Article 19 of the Constitution reads thus: "19.
Protection of certain rights regarding freedom of speech, etc. (1) All citizens shall have the right (a) to freedom of speech and expression; . . . . . . (2) Nothing in sub clause (a) of clause (1) shall affect the operation of any existing law, or prevent the State from making any law, in so far as such law imposes reasonable restrictions on the exercise of the right conferred by the said sub clause in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or moral 491 ity, or in relation to contempt of court, defamation or incitement to an offence.
. . . . . . . . ." Freedom of expression is a preferred right which is always very zealously guarded by this Court.
It was not the case of the petitioners in the Writ Petition that the exhibition of serial 'Honi Anhoni ' was in contravention of any specific law or direction issued by the Government.
They had not alleged that the Doordarshan had shown any undue favour to the appellant and the sponsoring institutions resulting in any financial loss to the public exchequer.
The objection to the exhibition of the film had, however, been raised by them on the basis that it was likely to spread false or blind beliefs amongst the members of the public.
They had not asserted any right conferred on them by any statute or acquired by them under a contract which entitled them to secure an order of temporary injunction against which this appeal is filed.
The appellant had denied that the exhibition of the serial was likely to affect prejudicially the well being of the people.
The Union of India and the Doordarshan have pleaded that the serial was being telecast after following the prescribed procedure and taking necessary precaution.
In such a situation, the High Court should not have immediately proceeded to pass the interim orde of injunction.
It was no doubt true that the 12th episode was to be telecast on 14th April, 1988 and the 13th episode was to be telecast on 21st April, 1988.
If the petitioners in the writ petition had felt, as they had alleged in the course of the petition, that all the episodes in the serial were offensive they could have approached the High Court as early as possible within the first two or three weeks after the commencement of the exhibition of the serial.
But they waited till the exhibition of the 11th episode of the serial was over and filed the petition only in the second week of April, 1988.
They had not produced any material apart from their own statements to show that the exhibition of the serial was prima facie prejudicial to the community.
The High Court overlooked that the issue of an order of interim injunction in this case would infringe a fundamental right of the producer of the serial.
In the absence of any prima facie evidence of grave prejudice that was likely to be caused to the public generally by the exhibition of the serial it was not just and proper to issue an order of temporary injunction.
We are not satisfied that the exhibition of the serial in question was likely to endanger public morality.
In the circumstances of the case the balance of convenience lay in favour of 492 the rejection of the prayer for interim injunction.
What we have stated here is sufficient to dispose of this appeal.
The other questions of law which may arise in a case of this nature will have to be dealt with in an appropriate case.
We express no opinion on those questions in this case.
We are, however, of the opinion that the High Court was in error in the present case in issuing the interim order of injunction against which this appeal is filed.
We, therefore, allow this appeal and set aside the interim order of injunction passed by the High Court on the 13th of April, 1988.
There is, however, no order as to costs.
G.N. Appeal allowed.
[/INST]The T.V. Serial 'Honi Anhoni ' was being telecast by Doordarshan on every Thursday between 9.00 P.M. and 9.30 P.M.
A writ petition was filed by the Respondents stating that the telecast was not in public interest as it had the effect of confirming blind faiths, superstitious beliefs in stories of ghosts, rebirth, precognition etc.
and of spreading the unscientific way of thinking and blind beliefs.
The High Court issued an interim order of injunction not to telecast and show episodes 12 and 13 of the serial.
Aggrieved by the interim order, the appellant, producer of the said serial, had come on appeal by special leave.
This Court, while granting special leave stayed the operation of the interim order passed by the High Court.
The appellant contended that the said serial and in particular episodes 12 and 13 did not emphasise superstitious beliefs but on the contrary criticised and condemned superstition and blind faith, and at the end of both the episodes a doctor and a professor gave a scientific explanation for the unusual occurrences portrayed therein and considered by people as supernatural phenomenon.
It was also submitted that the viewers were told that they should search for scientific reason whenever any unusual occurrence takes place.
Allowing the appeal, 487 ^ HELD:1.
Freedom of expression is a preferred right which is always very zealously guarded by this Court.
It can no longer be disputed that the right of a citizen to exhibit films on the Doordarshan subject to the terms and conditions to be imposed by the Doordarshan is a part of the fundamental right of freedom of expression guaranteed under Article 19(1)(a) of the Constitution of India which can be curtailed only under circumstances which are set out in clause (2) of Article 19 of the Constitution of India.
The right is similar to the right of a citizen to publish his views through any other media such as newspaper, magazines, advertisement hoardings etc.
subject to the terms and conditions of the owners of the media.
[491B; 490C E] 2.
The High Court was in error in the present case in issuing the interim order of injunction which is set aside.
[492B] 3.1 The objection to the exhibition of the film was that it was likely to spread false or blind beliefs amongst the members of the public.
The Respondents had not asserted any right conferred on them by any statute or acquired by them under a contract which entitled them to secure an order of temporary injunction.
[491C D] 3.2 As alleged by the Respondents, if all the episodes in the serial were offensive they could have approached the High Court as early as possible within the first two or three weeks after the commencement of the exhibition of the serial.
But they waited till the exhibition of the 11th episode of the serial was over and then filed the petition.
They had not produced any material apart from their own statements to show that the exhibition of the serial was prima facie prejudicial to the community.
[491E G] 3.3 The High Court overlooked that the issue of an order of interim injunction in this case could infringe a fundamental right of the producer of the serial.
In the absence of any prima facie evidence of grave prejudice that was likely to be caused to the public generally by the exhibition of the serial it was not just and proper to issue an order of temporary injunction.
The exhibition of the serial in question was not likely to endanger public morality.
In the circumstances of the case the balance of convenience lay in favour of the rejection of the prayer for interim injunction.
[491G H; 492A] [This Court reserved its opinion on the question whether a citizen has a fundamental right to establish a private broadcasting station, or television centre, to be decided in an appropriate case.] [490E] 488
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 254 of 1954.
Appeal by special leave from the judgment and order dated February 19, 1952, of the Patna High Court in Misc.
Case No. 244 of 1949.
B. Sen, section K. Majumdar and I. N. Shrojj, for the appellant.
M. C. Setalvad, Attorney General for India, B. K. Saran and R. C. Prasad, for the respondent.
May 15.
The Judgment of the Court was delivered by HIDAYATULLAH J.
This appeal, with the special leave of this Court, has been filed by Maharajadhiraja 334 Sir Kameshwar Singh of Darbhanga (hereinafter referred to as the assessee) against the judgment of the High Court of Patna dated February 19, 1952, by which the High Court answered in the affirmative the following: two questions referred to it under section 25(1) of the Bihar Agricultural : (1) " Whether in view of the circumstances of the case, and particularly the manner in which, after due consideration, the learned Agricultural Incometax Officer in his first judgment dated the 5th January, 1946, had held that the assessee was not liable to be assessed for the receipt on account of the zarpeshgi lease, the learned Agricultural Incometax Officer has jurisdiction to revise his own order under section 26 of the Act; and (2) Whether if he had the jurisdiction to revise his own order, under section 26 of the Act, the income from the zarpeshgi lease of the assessee was taxable under the Act.
" The facts of the case lie within a very narrow com.
For the assessment year 1944 45 which corresponded to the year of account 1351 Fasli, the assessee returned Rs. 37,43,520 as his agricultural income.
He claimed a deduction of Rs. 9,42,137 3 10 1/2 on account of land revenue, rent etc., including a sum of Rs. 2,82,192 shown to have been paid to the Tekari Raj from which two leasehold properties were taken on zarpeshgi lease by indentures dated August 15, 1931, and January 31, 1936, respectively.
The amount was sought to be deducted as a capital receipt.
The Agricultural Income tax Officer of Darbhanga by his order dated December 28, 1945 accepted this contention, and exempted the amount from payment of agricultural income tax.
He observed: " Out of Rs. 9,42,137 3 10 1/2 claimed on account of Land Revenue and rent, Rs. 2,82,192 is shown as payment to Tekari Raj and then taken towards the realisation of Zarpeshgi Loan to self.
I have gone through the bond of Gaya Zarpeshgi Lease.
This payment is allowed to the assessee, as it is a capital income according to the terms of the bond.
At the 335 same time, I think, this amount of Rs. 2,82,192 should be treated as income to Tekari Raj and assessed in Gaya Circle along with other income of Tekari Raj as it is credited to that Raj by the assessee and then set off against the Zarpeshgi loan advanced to Tekari Raj.
" The assessment was approved by the Assistant Commissioner of Agricultural Income tax on January 4, 1946, and on the day following, the Income tax Officer passed his formal order and issued a demand notice.
The assessee paid two instalments out of three, when on March 22, 1946, the Agricultural Income tax Officer recorded the following order : " It appears that some agricultural income from Gaya Zarpeshgi lease which should have been taxed for the year 1944 45 (1351 Fasli) has escaped assessment.
Issue notice under section 26 fixing the 20th May 1947.
" After the assessee appeared, a supplementary assessment order was passed and Rs. 39,512 6 0 were assessed as tax on Rs. 2,52,879.
In deciding the matter, the Agricultural Income tax Officer gave the following reasons: According to the terms of the lease the assessee is to remain in possession and enjoy the usufruct of the lands given in lease for a fixed number of years on payment of an annual thica rent of Rs. 1,000 to the lessor and thus satisfy himself for the entire amount of consideration money of the zarpeshgi lease in question.
In fact, by this zarpeshgi lease the assessee has been given the grant of lands for a fixed term on a fixed rent.
Whatever income is derived from these lands during the tenure of this lease, is the income of the assessee and as such it should be taxed in the hands of the assessee and not in the hands of the lessor." The Agricultural Income tax Officer purported to act under section 26 of the Bihar Agricultural (hereinafter referred to as the Act).
The assessee appealed.
The Commissioner of Agricultural Income tax reversed the decision.
He pointed 336 out that the agricultural income from Tekari Raj property was returned by the assessee but was held to be exempt and thus could not be said ' to have escaped assessment so as to bring the case within section 26 of the Act.
The Province of Bihar (as it was then called) ,moved the Board of Revenue, Bihar which by a resolution dated February 7, 1948, referred the two questions to the High Court of Patna.
The Board did not express any opinion on the two questions.
In the High Court, both the questions were answered in favour of the State of Bihar.
Leave having been refused by the High Court, the assessee applied for, and obtained special leave from this Court.
Section 26 of the Act, under which the Agricultural Income tax Officer purported to act is substantially the same as section 34 of the Indian , prior to its amendment.
Necessarily, therefore, the rulings on the interpretation of the latter section were freely cited by the contending parties.
Section 26 of the Act reads as follows: " If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year, or has been assessed at too low a rate, the Agricultural Income tax Officer may, at any time within one year of the end of that financial year, serve on the person liable to pay agricultural income tax on such agricultural income or, in the case of a company, on the principal officer thereof, " a notice containing all or any of the requirements which may be included in a notice under subsection (2) of section 17, and may proceed to assess or re assess such income, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that subsection: Provided that the tax shall be charged at the rate at which it would have been charged if such income had not escaped assessment or full assessment, as the case may be. " For facility of reference, the previous section 34 before the amendment in 1948 of the Indian may likewise be quoted here.
It read: 337 If in consequence of definite information which has come into his possession the Income tax Officer discovers that income, profits or gains chargeable to income tax have escaped assessment in any year, or have been under assessed, or have been assessed at too low a rate, or have been the subject of excessive relief under this Act the Income tax Officer may, in any case in which he has reason to believe that the assessee has concealed the particulars of his income or deliberately furnished inaccurate particulars thereof, at any time within eight years, and in any other case at any time within four years of the end of that year, serve on the person liable to pay tax on such income, profits or gains, or in the case of a company, on the principal officer thereof, a notice containing all or any of the requirements which may be included in a notice under sub section (2) of section 22, and may proceed to assess or re assess such income, profits or gains, and the provisions of this Act shall, so far as may be, apply accordingly as if the notice were a notice issued under that sub section: Provided that the tax shall be charged at the rate at which it would have been charged had the income, profits or gains not escaped assessment, or full assessment, as the case may be:. .
The short question is whether income which was returned but was held to be exempt from tax could be said to have " escaped assessment " so that the Agricultural Income tax Officer could exercise his powers under section 26 of the Act to tax it.
This question arising under section 34 of the Indian has been considered on many an occasion by the High Courts and also by the Privy Council and this Court.
The Patna High Court has correctly pointed out that the preponderance of opinion is in favour of holding that such income can be said to have escaped assessment.
The High Court in deciding that the Agricultural Income tax Officer had jurisdiction to revise his earlier assessment referred to the opening words of section 26, namely, " for any reason " and observed that it was 43 338 not necessary to give a restricted meaning to the word "escaped ", and that if an item of income was not charged to tax due to a mistake or oversight on the part of the taxing authorities, that item could well come within the term " escaped ".
According to the High Court, the phrase " escaped assessment " was not confined to cases where there had been an inadvertent omission, but in view of the later part of the section "where income . has been assessed at too low a rate", included a case where there was a deliberate action.
Learned counsel for the assessee contends that the generality of the words " any reasonhas no bearing upon the construction of the wordsescaped assessment ", that the word " assessment "does not connote the final determination to tax income but the entire process by which the result is reached, and that inasmuch as the income was actually returned and held to be exempt, there was no question of an "escaped assessment " because it passed through the processing of income.
He also contends that the later part of the section which deals with assessment at too low a rate cannot be called in aid to decide when income can be said to have escaped assessment.
He submits that the section has no application to cases where income is returned but is held to be not liable to tax and relied upon the following cases; Maharaja Bikram Kishore vs Province of Assam (1), Commissioner of Income tax vs Day Brothers (2), Madan Mohan Lal vs Commissioner of Income tax (3) (per Dalip Singh, J.) and Chimanram Motilal (Gold and Silver), Bombay vs Commissioner Of Income tax (Central), Bombay (4) (per Kania, J., as he then was).
The learned Attorney General drew the attention of the Court to other cases in which the view has been taken that even if income is returned and deliberately not charged to tax, the condition required for the application of the section is fulfilled.
He cited the following cases in support of his contention: AngloPersian Oil Co. (India) Ltd. vs Commissioner of IncometaX (5), P. C. Mullick and D. 0.
Aich, In re( '), The (1)[1949] (2)[1936] (3)[19351 (4) BOM.
(5) [1933] [ I.T.R. 129.
(6) 339 Commissioner of Income tax vs Raja of Parlakimedi (1) Chimanram Moti Lal (Gold and Silver), Bombay vs Commissioner of Income tax (Central), Bombay (2) and Madan Mohan Lal vs Commissioner of Income tax (3).
The learned Attorney General also relied strongly upon a recent decision of this Court in Kamal Singh vs Commissioner of Income tax, Bihar and Orissa (4), where Gajendragadkar, J., after a review of all the authorities, held that section 34 of the Indian Income tax Act was applicable to a case where an item of income was returned but deliberately and after consideration, was held to be not liable to tax.
Learned counsel for the assessee contends that the point was left open in that case, and refers to Messrs. Chatturam Horilram Ltd. vs Commissioner of Income ' tax, Bihar and Orissa(5) as having held the contrary.
Before referring to the other authorities of the High Courts, it will be proper to see if the two cases of the Supreme Court are in point or not, and if so, which of them.
In Kamal Singh 's case (4), the point arose under the following circumstances.
The father of the appellant in that case was assessed to income tax for the year 1945 46.
The total income assessed to incometax was Rs. 1,00,000 which included a sum of RE;.
93,604 received by him on account of interest on arrears of rent due to him after deduction of collection charges.
It was urged before the Income tax Officer that this interest was not assessable to income tax being agricultural "income, in view of the decision of the Patna High Court in Kamakshya Narain Singh vs Commissioner of Income tax(6).
The Income tax Officer did not accept this contention on the ground that an appeal was pending against the Patna High Court 's decision, before the Privy Council.
On appeal, the Appellate Assistant Commissioner held that the Income tax Officer was bound to follow the decision of the High Court, and he set aside the order and directed the Income tax Officer to make a fresh assessment.
The Income tax Officer thereupon deducted the amount (1) Mad.
(2) Bom.
(3) (4) ; (5) [1955] 2 S C.R. 290.
(6) [I946] 340 and brought only the remaining income (after some minor adjustments) to tax.
His order was passed on August 20, 1946.
In the year 1948, the Privy Council reversed the Patna High Court 's decision.
The judgment of the Privy Council is reported in Commissioner of Income tax vs Kamakshya Narain Singh( ').
The Income tax Officer then issued a notice under section 34 of the Indian , and after hearing the party assessed the sum of Rs. 93,604.
After sundry procedure which it is not necessary to detail, the matter reached this Court, and the question which was before it was " whether in the circumstances of the case, the assessment order under section 34 of the Act of the interest on arrears of rent is legal.
" Two questions were involved.
The first was whether the word " information " was wide enough to include knowledge about the state of the law or about a decision on a point of law.
With that point we are.
, not concerned in this case.
The second was, when income could be said to have escaped assessment.
Emphasis was laid on the word " assessment " in the arguments, and it was contended that it denoted not merely the order of assessment, but included " all steps taken for the purpose of levying of tax and during the process of taxation.
" It was also contended that " escaped " meant that the income must have eluded observation, search etc., or, in other words, eluded the notice of the Income tax Officer.
Gajendragadkar, J., however, did not confine the phrase to such a narrow meaning.
He observed; " Even if the assesse has submitted a return of his income, cases may well occur where the whole of the income has not been assessed and such part of the income as has not been assessed can well be regarded as having escaped assessment.
In the present case, the rents received by the assessee from his agricultural lands were brought to the notice of the Income tax Officer; the question as to whether the said amount can be assessed in law was considered and it was ultimately held that the relevant decision of the Patna High Court 'Which was binding on (1)[1948) 341 the department justified the assessee 's claim that the said income was not liable to be assessed to tax.
There is no doubt that a part of the assessee 's income had not been assessed and, in that sense, it has clearly escaped assessment.
Can it be said that, because the matter was considered and decided on ' the merits in the light of the binding authority of the decision of the Patna High Court, no income has escaped assessment when the said Patna High Court decision has been subsequently reversed by the Privy Council? We see no justification for holding that cases of income escaping assessment must always be cases where income has not been assessed owing to inadvertence or oversight or owing to the fact that no return has been submitted.
In our opinion, even in a case where a return has been ,submitted, if the Income tax Officer erroneously fails to tax a part of assessable income, it is a case where the said part of the income has escaped assessment.
The appellant 's attempt to put a very narrow and artificial limitation on the meaning of the word "escape ' in section 34(1)(b) cannot therefore succeed.
" The assessee seeks to distinguish that case on the ground that this Court,laid down the law in the special circumstances where ' a new interpretation to the law was given, and that it was not a case of the Incometax Officer changing his mind.
He contends that there was at least some information which had come to the Income tax Officer, on which his subsequent action could be rested.
The learned counsel argued that Gajendragadkar, J., had expressly left the question open, where there was no information but the Incometax Officer merely changed his mind without any information from an external source.
Reference in this connection is made to the following observations in the judgment: " It appears that, in construing the scope and effect of the provisions of section 34, the High Courts have had occasion to decide whether it would be open to the Income tax Officer to take action under a. 34 on the ground that he thinks that his original decision in making the order of assessment was 342 wrong without any fresh information from an external source or whether the successor of the Income tax Officer can act under section 34 on the ground that the order of assessment passed by his predecessor was erroneous, and divergent views have been expressed on this point.
Mr. Rajagopala Sastri, for the respondent, suggested that under the provisions of section 34 as amended in 1948, it would be open to the Income tax Officer to act under the said section even if he merely changed his mind without any information from an external source and came to the conclusion that, in a particular case, he had erroneously allowed an assessee 's income to escape assessment.
We do not propose to express any opinion on this point in the present appeal.
" We may say at once that the words of section 26 of the Act do not involve possessing of or coming by some fresh information.
The section says: " If for any reason any agricultural income chargeable to agricultural income tax has escaped assessment for any financial year the Agricultural Income tax Officer may proceed to assess such income The use of the words "any reason" which are of wide import dispenses with those conditions by which section 34 of the Indian is circumscribed.
The point which was thus left over by Gajendragadkar, J., cannot arise in the context of the Act we are dealing with.
In view of this clear opinion, it is hardly necessary for us to consider again the cases which Preceded the decision of this Court.
The most important of them are considered in the judgment of Gajendragadkar, J. Most of the cases are also considered in the judgment of Harries, C. J., and Mukherjea, J. (as he then was) in Maharaja Bikram Kishore vs Province of Assam (1).
In all the cases where a contrary view was taken, reliance was placed upon the decision of the Privy Council in Rajendra Nath Mukerjee vs Income tax Commissioner( ') particularly a passage wherein it was observed: (1) , (2) (1933) L.R. 61 I.A. 10, 16.
343 "The fact that section 34 requires a notice to be served calling for a return of income which had escaped assessment strongly suggests that income which has already been duly returned for assessment cannot be said to have 'escaped ' assessment within the statutory meaning.
" The facts of the case were entirely different.
The income was returned, and was not yet processed when the notice under section 34 was issued.
The key to the case is furnished by the approval by their Lordships of the observations of Rankin, C.J., in In re: Lachhiram Basantlal (1) that: " Income has not escaped assessment if there are pending at the time proceedings for the assessment of the assessees ' income which have not yet terminated in a final assessment thereof.
" Their Lordships held that the expression "has escaped assessment" should not be read as equivalent to "has not been assessed" because so to do "gives too arrow a meaning to the word 'assessment ' and too wide a meaning to the word escaped '." That those observations were related to the facts then before their Lordships is clear from the following passage: " To say that the income of Burn & Co., which in January, 1928, was returned for assessment and which was accepted as correctly returned, though it was erroneously included in the assessment of Martin & Co. ', has escaped ' assessment in 1927 28 seems to their Lordships an inadmissible reading. .
Their Lordships find it sufficient for the disposal of the appeal to hold, as they do that the income of Burn & Co., did not 'escape assessment ' in the year 1927 28 within the meaning of section 34.
" It was in the context of the pendency of assessment proceedings that the remarks were made, and the matter is decisively cleared of any doubt by the following passage: " It may be that if no notice calling for a return under section 22 is issued within the tax year then section Cal.
909, 912.
344 provides the only means available to the Crown of remedying the omission, but that is a different matter.
" In our opinion, the error in the cases relied upon by the assessee arises in using the dicta in the above case, shorn of the context in which they were made and applying them to facts, where they cannot.
The judgment of Gajendragadkar, J., has dealt with the matter, if we may say so respectfully, very adequately and we do not consider it necessary to cover the same ground again.
The preponderance of opinion in the High Courts is also to accept the contrary view, and we think rightly.
The learned counsel for the assessee argued that the decision of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar& Orissa (1) discloses a different view, and that we should follow it in preference to the later view of Gajendragadkar, J.
We do not think that in the case last cited the point was the same.
The same case was relied upon before the Bench of Venkatarama Aiyar, Gajendragadkar and Sarkar, JJ., and Gajondragadkar, J., distinguished it This is what he observed: Mr. Sastri has also relied on the decision of this Court in Messrs. Chatturam Horilram Ltd. vs Commissioner of Income tax, Bihar & Orissa (1) in support of his construction of section 34.
In Chatturam 's case (1) the assessee had been assessed to income tax which was reduced on appeal and was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939, was not in force during the assessment year in Chota Nagpur.
On a reference the decision of the tribunal was upheld by the High Court.
Subsequently the Governor of Bihar promulgated the Bihar Regulation IV of 1942 and thereby brought into force the Indian Finance Act of 1939, in Chota Nagpur retrospectively as from March 30, 1939.
This ordinance was assented to by the Governor General.
On February 8, 1944, the Income Tax Officer passed an order in pursuance of which proceedings were taken against (1)[1955] 2 S.C.R. 290.
345 the assessee under the provisions of section 34 and they resulted in the assessment of the assessee to incometax.
The contention which was raised by the assessee in his appeal to this Court was that the notice issued against him under section 34 was invalid.
This Court held that the income, profits or gains sought to be assessed were chargeable to income tax and that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax.
So far as the decision is concerned, it is in substance inconsistent with the argument raised by Mr. Sastri.
He, however, relies on the observations made by Jagannadhadas, J., that 'the contention of the learned counsel for the appellant that the escapement from assessment is not to be equated to non assessment simpliciter is not without force ' and he points out that the reason given by the learned Judge in support of the final decisions was that though earlier assessment proceedings had been taken they had failed to result in a valid assessment owing to some lacuna other than that attributable to the assessing authorities notwithstanding the chargeability of income to the tax.
Mr. Sastri says that it is only in cases where income can be shown to have escaped assessment owing to some lacuna other than that attributable to the assessing authorities that section 34 can be invoked.
We do not think that a fair reading of the judgment can lead to this conclusion.
The observations on which reliance is placed by Mr. Sastri have naturally been made in reference to the facts with which the Court was dealing and they must obviously be read in the context of those facts.
It would be unreasonable to suggest that these observations were intended to confine the application of section 34 only to cases where income escapes assessment owing to reasons other than those attributable to the assessing authorities.
Indeed Jagannadbadas J., has taken the precaution of adding that it was unnecessary to lay down what exactly constitutes escapment from assessment and that it would be sufficient to place their decision on 44 346 the narrow ground to which we have just referred.
We are satisfied that this decision is of no assistance to the appellant 's case.
" For the reasons we have given, we are of opinion that the Agricultural Income tax Officer was competent under section 26 of the Act to assess an item of income which he had omitted to tax earlier, even though in the return that income was included and the Agricultural Income tax Officer then thought that it was exempt.
The answer given by the High Court was therefore correct.
This brings us to the second question.
The income was received from the leasehold properties, and was agricultural income.
The contention of the assessee is that it may be agricultural income in the hands of the Tekari Raj but in his hands it was capital receipt and in repayment of the loan of about Rs. 17,00,000 paid to Ram Bhuwaneshwari Kuer.
The State of Bihar, however, denies that there was a loan or a mortgage at all.
The assessee, it is contended, was placed in possession for a number of years on a rent of Rs. 1,000 per year and the amount paid was premium and not a loan.
The documents in question are two.
They are plainly indentures of lease between the Rani and the.
assessee.
From these documents it is clear that in consideration of a payment of Rs. 17,16,000 the lessee was placed in possession of the leasehold property for 28 years.
There is no express term which makes the sum a loan returnable either by repayment or by the enjoyment of the usufruct.
There is no interest fixed or right of redemption granted.
There is no provision for any Personal liability in case any amount remained outstanding at the end of the term of 28 years.
These are the tests to apply to find out whether the transaction was one of zarpeshgi lease or a lease with a mortgage.
See Mulla 's ' Transfer of Property Act, 4th Edition, page 352.
The learned counsel for the assessee in his careful argument took us through the two documents and endeavoured to prove that the relation of debtor and creditor subsisted between the parties.
He referred 347 us to cl. 4, which embodies a provision entitling the lessee to deduct 12 1/2 per cent.
of the gross aggregate amount payable by the mokarraridars as expenses of collection and other charges incidental thereto after payment of rent reserved to the I lessor ' and to appropriate to himself the remainder.
He submitted that the payment to the lessor was not a premium but a loan and the intention was that the lessee or creditor would be thus repaid.
The clause by itself may admit of diverse constructions, and possibly one such construction may be the one suggested, but that is not the true purport of the clause read in the context of the rest of the instrument.
To interpret this clause the instrument must be read as a whole, and when so viewed, it is found that it provides for an exemption of the lessor from the liability for collection charges.
It places beyond doubt that the collection charges were not to be debited to the lessor but were to be borne by the lessee.
Unless such a provision was included in the instrument, it might have been a matter of some dispute as to who was to be responsible for this expenditure.
The learned counsel for the assessee next drew our attention to the last clause of the instrument of January 31, 1936.
That, however, was a special covenant, and the provision therein was in relation to matters not covered by the instrument.
That the income from this leasehold property which was land, would fall within the definition of " agricultural income " was not seriously contested before us.
The case of the assessee rests upon the claim that this was a money lending transaction and the receipts represented a capital return.
If, however, the payment to the lessor was premium and not a loan, the income, being agricultural, from these leasehold properties was assessable under the Act.
We are of opinion that it was so, and that the Agricultural Income tax Officer was right when he assessed it to agricultural income tax.
The income was not the income of money lending, and this does not depend upon the character of the recipient.
The Thika 348 profits were clearly agricultural income being actually derived from land.
The answer to the question by the High Court was thus correct.
The result is that the appeal must fail, and it is accordingly dismissed with costs.
Appeal dismissed.
[/INST]The employees of the appellant Bank commenced pen down strikes, which were followed by a general strike, pending arbitration of an industrial dispute between them.
The Government of India intervened and as the result of an agreement that followed the Bank reinstated all the employees except 150, against whom it had positive objections, and the Government referred their cases under section 10 of the Industrial Disputes Act, 1047, to the Industrial Tribunal for adjudication.
The two issues before the Industrial Tribunal were whether the 150 employees had been wrongly dismissed and what wages and allowances would the 807 employees be entitled to on reinstatement.
The case of the employees was that the Bank wanted to penalise the active trade union workers by the said dismissals while the Bank maintained that the employees were guilty of participation in illegal strikes intended to paralyse its business and scare away its customers.
The Industrial Tribunal did not hear evidence and, by its final award, held that, the strikes being illegal, the Bank was, on that ground alone, justified in dismissing the employees.
Even so, it directed the Bank to make certain payments to the employees on compassionate grounds.
The Bank as well as the employees appealed.
The Labour Appellate Tribunal held that even though the strikes were illegal under section 23(b) read with section 24(1) of the , the Bank had, by entering into the agreement with the Government of India, waived its right to take penal action against the employees for joining the illegal strikes and that, therefore, an enquiry should be held on additional evidence to decide the disputes on merits.
Against this interlocutory order the Bank appealed to this Court and it was held by this Court that while the strikes were no doubt illegal under section 23(b) of the Act, the orders of dismissal passed by the Bank were no less so under section 33 of the Act, and it dismissed the appeal.
The Appellate Tribunal, thereafter, heard the cases on merits, directed the reinstatement of 136 of the said employees, but refused to reinstate the rest whom it found guilty of issuing posters and circulars subversive of the credit of the Bank.
Both the parties appealed to this Court.
Preliminary objections were raised on behalf of the said employees that, (1) in view of the decision of this Court dismissing the Bank 's appeal against the said interlocutory order the subsequent inquiry by the Tribunal and the orders of dismissal must be held to be void and, (2) no charges having been admittedly framed nor any proper enquiry held by the Bank against the employees, the orders of dismissal were wholly invalid.
It was urged, inter alia, on behalf of the Bank in the appeals that participation in a pen down strike by itself amounted to misconduct sufficient to disentitle an employee to reinstatement and that the entire body of strikers, being collectively responsible for the publication of the subversive documents in question, the dismissed employees could by no means escape liability.
Held (per curiam), that the preliminary objections must be negatived and the decision of the Appellate Tribunal affirmed with this modification that, in view of its inconsistent findings, the appeal of one of the employees must be allowed.
Per Sinha and Gajendragadkar, JJ.
The purpose the Legislature had in view in enacting section 33 of the , was to maintain the status quo by placing a ban on any action by the employer pending adjudication.
But the jurisdiction conferred on the Industrial Tribunal by section 33 of the Act was a limited one.
Where a proper enquiry had been held and no victimisation or unfair labour practice had been 808 resorted to, the Tribunal in granting permission had only to satisfy itself that there was a Prima facie case against the employee and not to consider the propriety or adequacy of the ,proposed action.
But to such permission, when granted, the Tribunal could attach no conditions; it can either grant or refuse it.
The effect of such permission was only to remove the ban imposed by section 33 of the Act.
It could neither validate a dismissal nor prevent it from being challenged in an industrial dispute; but in such a dispute, when raised, the employer could justify its action only on such grounds as were specified in the original charge sheet and no others.
There was substantial difference between non compliance with section 33 of the Act and that with article 311(2) of the Constitu tion.
Compliance with section 33 only avoided the penalty under section 31(1) of the Act, while compliance with article 311(2) of the Constitution made the order of dismissal final.
Atherton West & Co. Ltd. V. Suti Mills Mazdoor Union, ; , The Automobile Products of India Ltd. vs Rukmaji Bala; , , Lakshmi Devi Sugar Mills Ltd. vs Pt.
Ram Sarup, ; , Indian lron and Steel Co. Ltd. vs Their Workmen, ; and McKenzie & Co. Ltd. vs Its Workmen, referred to.
It was not, therefore, correct to contend that non compliance with section 33 of the Act could render the orders of dismissal wholly void or take away the jurisdiction of the Tribunal to hold the enquiry.
Nor could the failure to hold a proper enquiry have that effect.
Under section 33A of the Act, as construed by this Court, the jurisdiction of the Tribunal was not limited to an enquiry as to the contravention of section 33 of the Act.
Even if such contravention was proved, the employer could still justify the impugned dismissal on merits and there was no difference in this regard between a reference under section 10 of the Act and a dispute raised under section 33A of the Act.
The Automobile Products of India Ltd. vs Rukmaji Bala, ; and Equitable Coal Co.Ltd.
vs Algu Singh, A.I.R. 1958 S C. 761, referred to.
Although there can be no doubt that in proper cases the Industrial Tribunal has the power to direct reinstatement in disputes arising out of dismissal of employees, it is not possible to Jay down any hard and fast rule to be applied to such cases.
In coming to its decision, the Industrial Tribunal has to reconcile the conflicting claims of the employer and the employee, the latter 's right to protection against wrongful dismissal, and in such a case the normal rule is reinstatement, and the interest and safety of the industry itself.
Its approach to such a problem cannot, therefore, be legalistic or doctrinaire or as is permissible 809 in a civil court deciding the validity of dismissals under section 240 of the Government of India Act, 1935, or article 311(2) of the Constitution.
Western India Automobile Association vs Industrial Tribunal, Bombay, and Buckingham & Carnatic Mills Ltd. vs Their Workmen, , referred to.
If no enquiry is held by the employer before it passes an order of dismissal, the propriety of such dismissal can be adjudged by the Tribunal on evidence and no employer can be allowed to object to it on the ground that it interferes with the exercise of its managerial function.
The Madras Electric Tramways, (1904) Ltd. Madras vs Their Workers, , distinguished and held inapplicable.
The propriety of reinstatement in a case of wrongful or illegal dismissal is normally a question of fact and where the Industrial Tribunal on a proper consideration of the relevant factors refuses to pass such an order this Court would be reluctant, in absence of any general or substantial question of law, to interfere under article 136 of the Constitution.
A pen down strike falls within the definition of a strike contained in section 2(q) of the Industrial Disputes Art, 1947, and is not Per se illegal.
Even if it might involve an element of civil trespass as in the present case, that cannot disentitle an employee to reinstatement.
M/s. Burn & Co. Ltd. vs Their Workmen, A.I.R. 1959 S.C. 529, referred to.
It is not safe to extend principles of American decisions to such a strike without a careful scrutiny of the relevant provisions of the American Statute and the facts on which the said decisions are based.
National Labour Relations Board vs Fansteel Metallurgical Corporation, 306 U.S. 238, considered and held inapplicable.
William Truax vs Michael Corrigan, , referred to.
Since in the instant case, the peaceful and non violent conduct of the strikers, as found by the Appellate Tribunal, could not amount to criminal trespass within, the meaning of section 441 of the Indian Penal Code, mere participation in the pen down strike did not disentitle them to reinstatement.
T. H. Bird vs King emperor, (1934) L.R. XIII Pat.
268, held inapplicable.
The mere fact that the employer had engaged new hands during the strike, was not sufficient to defeat the claim to reinstatement of such employees as were subsequently found to have been wrongfully dismissed.
National Transport and General Co. Ltd. vs The Workmen, C.A. NO.
312 of 1956, decided on January 22, 1957, referred to.
810 But where, as in the instant case, the Appellate Tribunal took a common sense view of the matter of evidence and held certain office bearers and leaders of the union liable for subversive acts and refused to extend such liability to the entire body of strikers on theoretical and academic grounds, no principles of natural justice could be said to have been contravened by it.
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<s>[INST] Summarize the judgementl Appeal No. 11 29 of 1965.
Appeal from the judgment and order dated April 15, 16, 17, 1963 of the Bombay High Court in Wealth Tax Reference No. 2 of 1961.
R.J. Kolah, N. D. Karkhanis and 0.
C. Mathur, for the appellant.
B. Sen, R. Ganapathy Iyer and R. N. Sachthey, for the res pondent.
769 The Judgment of the Court was delivered by Shah, J.
For the assessment year 1957 58 the appellant Company claimed in proceedings for assessment of wealth tax that the following four amounts be deducted in the computation of its net wealth: (1)Rs.
29,44,421 in, respect of income tax liability relating to the assessment year 1957 58.
This amount included Rs. 2,95,869 representing the last instalment of advance tax under section 18A in respect of which a notice of demand had been issued.
(2)Rs.
3,70,083 in respect of business profits tax liability.
(3) Rs. 20,23,500 in respect of proposed dividend.
(4) Rs. 25,02,675 "on account of accrued liability for gratuity to workmen and staff as per the award of Industrial Court and Labour Appellate Tribunal.
" The claim was rejected by the Wealth tax Officer.
The Appellate Assistant Commissioner accepted the claim of the appellant Company in respect of the last instalment of the advance tax for which a notice of demand had been issued, and rejected the claim in respect of the rest.
The Income tax Appellate Tribunal upheld the claim of the appellant Company in respect of the 1st, 2nd and the 4th items and rejected the claim in respect of the 3rd item.
At the instance of the Commissioner, the following four questions were referred to the High Court of Judicature at Bombay under section 27(1) of the Wealth tax Act 27 of 1957: "(1) Whether on the facts and circumstances of this case the last instalment of advance tax in the sum of Rs. 2,95,869 paid by the assessee after the valuation date in accordance with the notice of demand dated 20 10 1956 is an admissible deduction under Sections 7(2) and 2(m) of the Wealth tax Act for the purpose of computation of the net wealth of the assessee for the assessment year 1957 58 ? (2)Whether on the facts and circumstances of the case in computing the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act the liability for income tax and business profits tax could be allowed as a deduction? (3) Whether on the facts and circumstances of the case the liability in the sum of Rs. 25,02,675 which arose as a result of the awards dated 28 10 1948, 28 11 1956 and 17 10 1954 before the valuation date or any part thereof is allowable as a deduction in determining the net wealth of the assessee under Section 7(2) read with Section 2(m) of the Wealth tax Act ? (4)Whether on the facts and circumstances of the case of the sum of Rs. 20,23,500 being the provision made for dividends and shown as a liability in the balance sheet of the assessee company could be allowed as a deduction in computing the net wealth of the assessee company?" At the hearing before the High Court, the fourth question was not pressed by the appellant Company.
The High Court answered the first question in the affirmative, the second question in the affirmative insofar as it related to the estimated liability of business profits tax subject to verification by the Wealth tax Officer, and in the negative insofar as it related to the estimated liability of income tax.
The third question was answered in the negative.
In this appeal the Company challenges the correctness of the answers to the second part of the second question and the third question.
The second question insofar as it relates to estimated liability for payment of income tax needs no detailed consideration, for the answer thereto will be governed by the judgment of this Court in Kesoram Industries and Cotton Mills Ltd. vs Commissioner of Wealth tax (Central, Calcutta( ').
It was held by this Court in that case that liability to pay income tax was a present liability though the tax became payable after it was quantified in accordance with ascertainable data: there was therefore a perfected debt at any rate on the last day of the accounting year and not a contingent liability, and the amount of the provision for payment of income tax in respect of the year of account was a "debt owed" within the meaning of section 2(m) on the valuation date and was as such deductible in computing the net wealth.
The view expressed by the High Court on the second question insofar as it relates to provision for income tax cannot therefore be sustained and that part of the question should be answered in the affirmative.
There remains the third question.
Counsel for the Company had conceded before the High Court that the liability to pay gratuity to the employees whose services were not terminated in the relevant year of account was merely contingent, since it arose on the happening of certain events such as death, physical incapacity, voluntary retirement, or resignation, and was on that account not a debt within the meaning of section 2(m) of the Act.
But it was contended before the High Court that the present value of the liability for payment of gratuity was a permissible deduction in valuing the assets of the business of the assessee under section 7(2)(a) of the Act.
The (1)[1966] 2 S.C.R. 688 : ; 772 2.
On voluntary retirement or resignation of an employee After 15 years ' continuous service in the company 15 months ' salary.
On termination of his service by the Company (a)After 10 years ' continuous service but less than 15 years ' service in the company 3/4th of one month 's salary for each year of service.
(b)After 15 years ' continuous service in the company 5 months ' salary.
A gratuity will not be paid to any employee who is dismissed for dishonesty or misconduct.
" The right to obtain gratuity under the awards arises only when there is determination of employment and not before.
The liability does not exist hi praesenti: it is contingent upon the determination of employment.
This Court pointed out in Kesoram Industries & Cotton Mills ' case( ') at p. 703: 'debt is a sum of money which is now payable or will become payable in future by reason of a present obligation: debitum in praesenti, solvendum in futuro. ' The said decisions also accept the legal position that :a liability depending upon a contingency is not a debt in praesenti or infuturo till the contingency happened.
But if there is a debt the fact that the amount is to be ascertained does not make it any the less a debt if the liability is certain and what remains is only the quantification of the amount.
In short, a debt owed within the meaning of section 2(m) of the Wealth tax Act can be defined as a liability to pay in praesenti or in futuro an ascertainable sum of money.
" Observations made by the High Court of Gujarat in Commis sioner of Wealth tax, Gujarat vs Ajit Mills Ltd.,(2) that deduction for an amount claimed on account of liability for gratuity for workers and employees based on awards of the labour courts and agreements will be admissible deductions in the computation of the net wealth are plainly obiter, and in our judgment are not correct.
The decision of the House of Lords in Southern Railway of Peru Ltd. vs Owen (Inspector of Taxes) (3) that the assessee company (1) ; (3) ; : (2) 771 High Court rejected that contention.
Counsel for the Company has in this appeal contended that no such concession as is recorded in the judgment of the High Court was made, and in any event, the concession being on a question of law was not binding upon the appellant Company.
Section 2(m) at the material time provided: .lm15 " net wealth ' means the amount by which the aggregate value computed in accordance with the provisions of this Act of all the assets, wherever located, belonging to the assessee on the valuation date, including assets required to be included in his net wealth as on that date under this Act, is in excess of the aggregate value of all the debts owed by the assessee on the valuation date other than, (i)debts which under Section 6 are not to be taken into account; (ii)debts which are secured on, or which have been incurred in relation to any property in respect of which wealth tax is not chargeable under this Act; " By section 3 the wealth tax is charged for every financial year commencing on and from the first day of April, 1957 on the net wealth on the, corresponding valuation date of every individual, Hindu undivided family and company at the rate or rates specified in the Schedule.
Broadly speaking net wealth is the difference on the valuation date between the aggregate value computed in accordance with the provisions of the Act of the assets belonging to the assessee and the aggregate value of all the debts owed by the assessee.
If there is no debt owed on the valuation date, it can obviously not be deducted in determining the net wealth which is liable to tax under the Wealth tax Act.
Apart from the concession made by counsel for the Company there is little doubt on the plain terms of the awards that the liability to pay gratuity to the employees of the appellant Company on determination of employment is a mere contingent liability which arises only when the employment of the employee is determined by death, incapacity, retirement or resignation.
The relevant terms of the awards dated October 28, 1948, November 28, 1956 and October 17, 1954 are as follows: "Gratuity should be paid. . on the following, scale: 1.On the death of an employee, while in service of the company or on his becoming physically or mentally incapacitated for further service one month 's salary for each year of service . . . 773 was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated, were a permissible deduction in the computation of income tax, have in our judgment no relevance in this case.
In Southern Railway of Peru Ltd 's case( ') under the legislation of Peru a Company operating a railway was bound to pay its employees compensation on the termination of their services.
The right to receive compensation arose on dismissal or on termination of the employment by the employer by proper notice, or on such termination by the death of the employee or on the expiry of the term of ' the employment.
The compensation was an amount equivalent to one month 's salary at the rate in force at the date of determination for every year of service.
The company claimed in the computation of taxable income, under the Income tax Act, 1918, to be entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately 'be thrown on it, calculating what sum would be required to be paid to each employee if he retired without forfeiture at the close of the year and setting aside the aggregate of what was required in so far is the year had contributed to the aggregate.
It was held that the company was not entitled to make the deductions, but the company was entitled to charge against each year 's receipts the cost of making provision for the retirement payments which would ultimately be payable as it had the benefit of the employees ' services during that year, provided the present value of the future payments could be fairly estimated.
The question arose under the English Income tax Act of 1918.
Lord MacDermott observed at p. 345: say that, in computing his taxable profits for a particular year, a trader, who is under a definite obligation to pay his employees for their services in that year ail immediate payment and also a future payment in some subsequent year, may properly deduct, not only the immediate payment, but the present value of the future payment, provided such present value can be satisfactorily determined or fairly estimated.
" Similar observations were made in the judgment of Lord Radcliff.
But the House in that case was concerned to determine the deductibility of the present value of a liability which may arise in future in the computation of taxable profits for the relevant year under the Income tax Act.
The same considerations cannot, however, apply to a case under the Wealth tax Act, where the liability to pay wealth tax is charged upon the net wealth of an assessee.
; 774 In Commissioner of wealth tax, Gujarat vs New Rajpur Mills Ltd.( ') the assessee company claimed to deduct gratuity payable to employees under an agreement entered into with the labour associations before the valuation date.
The Court in that case observed that the liability was not a debt owed by the assessee on the valuation date since the gratuity was not payable on the valuation date, but was payable only on fulfilment of the ,contingencies set out in those agreements.
But the Court proceeded to observe that since contingent liabilities can be taken into account while computing the net wealth of the asseessee under section 7(2)(a) ,the liability for payment of gratuity under such agreements would 'have to be estimated and the estimated value of the contingent liability would be a permissible deduction in computing the net wealth of the assessee.
In our view the first observation of the Court :is correct, but the second is not.
We will presently set out the reasons for that view.
The alternative plea that under section 7(2)(a) of the Act the appellant Company is entitled to claim deduction even if it cannot do so ,under section 2(m) has, in our judgment, no force.
Section 7 deals with the manner of valuation of assets.
It provides insofar as it is material: "(1) The value of any asset, other than cash, for the purposes of this Act, shall be estimated to be the price which in the opinion of the Wealth tax Officer it would fetch if sold in the open market on the valuation date.
(2)Notwithstanding anything contained in subsection (1), (a)where the assessee is carrying on a business for which accounts are maintained by him regularly the Wealth tax Officer may, instead of determining separately the value of each asset held by the assessee in such business, determine the net value of the assets of the business as a whole having regard to the balance sheet of such business as on the valuation date and making such adjustments therein as the circumstances of the case may require;" Section 7 falls in Ch.
II which deals with the charge of wealth tax and assets subject to such charge: it is intended to provide machinery for determination of the value of assets.
It was observed in the minority judgment in Kesoram Industries & Cotton Mills ' case(2) at p.717 : "By the first sub section the Wealth tax Officer is authorised to estimate, for the purpose of determining the (1) (2) ; : ; 775 value of any asset, the price which it would fetch, if sold in the open market on the valuation date.
But this rule in the case of a running business may often be inconvenient and may not yield a true estimate of the net value of the total assets of the business.
The legislature has therefore pro vided in sub section (2)(a) that where the assessee is carrying on a business for which accounts are maintained by him regularly, the Wealth tax Officer may determine the net value of the assets of the business as a whole, having re gard to the balance sheet of such business as on the valua tion date and make such adjustments therein as the circum stances of the case may require.
But the power conferred upon the tax officer by section7(2) is to arrive at a valuation of the assets, and not to arrive at the net wealth of the assessee.
Section 7(2) merely provides machinery in certain special cases for valuation of assets, and it is from the aggregate valuation of assets that the net wealth chargeable to tax may be ascertained.
The power conferred upon the tax officer to make adjustments as the circumstances of the case may require is also for the purpose of arriving at the true valueof the assets of the business.
Sub section (2)(a) of section 7 contemplates the determination of the net value of the assets having regard to the balance sheet and after making such adjustment as the circumstances of the case may require.
It does not contemplate determination of the net wealth, because net wealth can only be determined from the net value of the assets by making appropriate deductions for debts owed by the assessee.
The argument raised by counsel for the assessee is that substantially section 7(2) is a definition section, which extends, for the purposes of the Act, the definition of the 'net wealth ' of assessees carrying on business.
There is no warrant for this argument in the language used in section 7(2).
Counsel was unable to suggest any rational explana tion why, if what he contends was the intention, Parliament should have adopted this somewhat roundabout way of incorporating a definition of net wealth in a section dealing with valuation of assets.
" The majority of the Court did not express any opinion on this question.
From the terms of section 2(m) it appears clear that the tax officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date.
Excess of the aggregate value of the assets over the debts is the net wealth.
The aggregate value of the assets must be 776 computed in accordance with the provisions of section 7.
But in the aggregation of the value of all the debts owed by the assessee on the valuation date, section 7 has no operation.
In holding in New Rajpur Mills ' case() that a contingent liability can be taken into account while computing the net wealth of the assessee under section 7(2) (a), in our judgment, the true function of section 7(2)(a) of the Wealth tax Act was not appreciated.
Section 7 does not deal with the computation of net wealth.
It deals with the computation of the aggregate value of the assets.
Under section 7 the Wealth tax Officer is competent, where the assessee is carrying on business of which accounts are maintained regularly, to determine the net value of the assets of the business as a whole.
But in doing so he determines the value of the assets of the business as a whole, and not the net wealth of the business.
The appeal therefore is partially allowed.
Insofar as the claim relates to deduction of estimated income tax for the assessment year, the answer wilt be in favour of the appellant company, and in so far as the claim relates to deduction of gratuity payable to the employees of the company, the answer will be in the negative.
There will be no order as to costs in this appeal.
V.P.S. Appeal allowed in part.
[/INST]In the computation of the net wealth of the appellant company under section 2(m) of the Wealth Tax Act 1957, two deductions were claimed the company : (i) the amount of estimated income tax for the assessment year and (ii) the amount of gratuity payable by the company to its employees under certain industrial awards.
HELD : The first claim was allowable but not the second.
[776 D] Under section 2(m) of the Act, the Wealth Tax Officer must first determine the aggregate value of all the assets belonging to the assessee on the valuation date, and then determine the aggregate value of all the debts owed by the assessee on the valuation date.
Excess of the aggregate value of the assets over the debts is the net wealth.
But on the terms of the awards the liability to pay gratuity did not exist in present : it was contingent upon the determination of employment by death, incapacity, retirement or resignation of the employee, and not before.
Therefore, it was not a debt owned by the assessee on the valuation date.
[772 C D; 775 H] Nor could the appellant company claim the deduction under section 7(2)(a) of the Act.
The aggregate, value of the assets must be computed in accordance with the provisions of section 7.
But in the aggregation of the value of all the debts owned by the assessee on the valuation date, section 7 has not operation.
Section 7 does not deal with the computation of net wealth but only with the determination of the not value of the assets as a whole.
[776 A C] Kesoram Industries and Cotton Mills Lid.
vs Commissioner of Wealth Tax (Central) (Calcutta), ; , followed.
Observations Contra in Commissioner of Wealth Tax, Gujarat vs Ajit Mills Ltd. and Commissioner of Wealth Tax Gujarat vs New Rajpur Mills , disapproved.
Southern Railway of Peru vs Owen (Inspector of Taxes) ; , explained.
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<s>[INST] Summarize the judgementAppeal No. 1166 of 1971.
Appeal by special leave from the Award dated December 19, 1970 of the Central Government Industrial Tribunal, Jaipur in Case No. CIT 10 of 1968.
M. C. Setalvad, K. K. Jain, C. N. Sharma, C. section Patel and Bishamber Lal, for the appellant.
M. K. Ramamurthi and J. Ramamurthi, for the respondent.
The Judgment of the Court was delivered by Mitter, J.
This is an appeal by special leave from an award of the Central Government Industrial Tribunal, Rajasthan directing the reinstatement of one Bhisham Verma in the service of the appellant with full back wages.
The facts are as follows.
The appellant is a public limited company with its registered office at Sawaimadhopur in the State of Rajasthan.
It has a cement factory at the said place besides a limestone quarry at Phallodi situate at a distance of 24 kms.
from the cement factory.
It has two separate sets of Standing Orders for the workmen employed in the factory and in the quarries.
Both sets of Standing Orders were certified in accordance with the provisions of the Industrial Employment (Standing Orders) Act,1946.
The Standing Orders applicable to the workmen employed in the factory were certified in the year 1954 while those applicable to the workmen of the quarries were certified in the year 1961.Up to April 1967 both sets of Standing Orders provided for superannuation of the workmen at the age of 55 with a stipulation for extension up to 60 years if a workman was found fit to work.
On a dispute having been raised for the raising of the age of superannuation of the workmen at the cement factory, a settlement was arrived at between the appellant and the respondent (a registered trade union of the employees) on 16th December 1966 whereby it was agreed that Standing Order No. 21 applicable to the cement factory be amended by raising the age of superannua(ion from 55 to 58 years without making any provision for further 298 extension.
A joint application following upon the agreement was moved by the appellant and the respondent for modifying the, Standing Order No. 21 with respect to the age of superannuation which was accordingly done.
Nothing was however done with regard to the age of superannuation of the, employees at the quarry, the relevant clause in the Standing Order remaining unaltered.
On April 3, 1968 the appellant intimated the said Bhisham Varma, incline driver at the quarry, that he "had exceeded the age of retirement on 3 4 1968" and as such he was given "notice of retirement in accordance with clause 21 of the Standing Orders of the quarries with effect from the close of work on 2 5 1968".
On April 30, 1968 the said workman wrote to the appellant that although according to the service file he had completed the age of 55 years as indicated, his proper age according to his horoscope was about 50 years and his service record should be amended accordingly.
The appellants ' reply to the above dated July 9, 1968 was to the effect that his case had been reexamined and that his retirement, as already intimated on 3 4 1968 would stand.
The Union took up the cause of the worker and addressed a letter on July 18, 1968 to the Regional Labour Commissioner requesting that arrangements may be made to put the worker back to work and take proper legal proceedings.
On behalf of the workman it was represented that he had been working in the company since October 11, 1957, that the Personnel Manager of the, quarry had, given orders dismissing him from service on April 3, 1968 and that in spite of objections made by the workman that there was a mistake in the papers of the company with regard to his age which was 50 as supported by his horoscope and doctor 's certificates the action of the quarry manager was illegal and contrary to service contract.
The record does not show what if any other steps were taken by the parties when the Central Government made an order of reference under section 10(1) (d) of the Industrial Disputes Act ,reading : "Whether the action of the management of the Jaipur Udyog Limited, P.O. Phallodi Ouarry, Sawaimadhopur in terminating the services of Bhisham Varma, incline driver, with effect from 9th July 1968, on grou nds of superannuation was legal and justified ? If not to what relief is he entitled ? Before the Tribunal, the respondent Union filed a statement of claim wherein after reciting the action taken by the appellant and the representation made by the workman it was stated that the quarry and the cement factory were under one and the same management and there was complete financial integrality between the activities of the company at both the places.
It was also said 299 that workmen could be transferred from one place to another and that a,.
a result of the settlement mentioned, the company could not retire any workman before he attained the age of 58 years.
The settlement was said to apply to the workmen employed.
at both the places.
The Union further submitted that the company could not insist on two sets of conditions of service covering different sections of the same workmen in the same establishment, that the age of retirement was not a subject mentioned in the Schedule to the Industrial Employment (Standing Orders) Act and as such.
no Standing Order could be certified on this topic.
In its reply to the above, the company took the stand that the settlement arrived at in respect of the cement works Karmachari Sangh, Sawai Madhopur was not ipso facto applicable to the quarry inasmuch as the proper authority under the in respect of the cement works was the Government of Rajasthan whereas the appropriate Government in respect of the quarries was the Government of India.
It was said further that in pursuance of the settlement arrived at in 1966 the Standing Orders were amended by the Certifying Officer of the Government of Rajasthan as a result whereof the age of superannuation in the works at Sawai Madhopur was raised to 58.
This however did not alter or modify the position prevailing in the quarries which were governed by a separate set of orders certified by the Certifying Officer of the Government of India.
The Tribunal took the view that the cement factory and the quarries were two units of the same establishment and that consequently there should be a uniform set of rules for the workmen of the company as a whole and it was immaterial that in the case of one unit the Standing Orders had to be certified by the Certifying Officer of the Government of India and in the other by the Officer appointed by the Government of Rajasthan.
The Tribunal was further of the view that the clause as to superannuation could not be provided in the Standing Orders under the relevant Act and certification could not attach enforceability to them even on the ground that the workers did not challenge such provision before the Certifying Officer.
In the result the Tribunal held that there could not be a lower age limit of superannuation for workmen at the Phallodi Quarry specially in view of the fact that workmen were admittedly transferable from one place to the other.
As a consequence of the above finding, the Tribunal quashed the order and directed the reinstatement of the workman with full back wages.
On behalf of the company the first contention raised by Mr. Setalvad was that the Tribunal had gone wrong in construing the order of reference to include a dispute as to whether it was open to the company to have two sets of Standing Orders providing for 300 different ages of superannuation.
Mr. Setalvad argued that in view of the correspondence terminating with the representation by the Union to the Conciliation Officer, it was abundantly clear that the dispute between the parties was whether or not the company was justified in coming to the conclusion +hat the workman concerned had reached the age of 55 on April 3, 1968 and as such was to be superannuated in terms of the Standing Orders.
The letter of the 9th July 1968 by the Company to the workman reads as follows Please refer to your application dated 30 4 1968 received by us on 8 5 1968 along with a copy of your horoscope in Hindi.
The Management has reexamined your case and come to a final conclusion that your retirement from the service of the company as intimated to you vide our memo No. Pq/B/186 dated 3 4 68 should stand.
You are, therefore, directed to collect your dues, if any, from our Accounts Department on any working day after producing necessary clearance certificate.
" Of necessity, reference had to be made by the Tribunal to ,the application of the workman dated April 30, 1968 with a copy of his horoscope.
The said latter expressly complained of the alleged inaccuracy in the service record pertaining to him according to which the writer had not completed the age of 55 years on the 3rd April.
The workman 's representation was that his age had been inaccurately recorded, , ',hat his proper age was 50 and that the records should be corrected accordingly.
In our view, if the Tribunal had taken care to examine what was the dispute between the parties when the Government made ,the order of reference it would have had no difficulty in realising that no dispute was raised either by the workman or the Union that the age of superannuation governing the workman was not 55 years.
It was certainly open to the workman to contend that his age of superannuation should be fixed at 58 and not 55 years and it would have been equally open to the Union to raise the point in their representation to the Conciliation Officer.
If that had been done, the Government of Rajasthan could have property made a reference of a dispute between the parties regarding the correct age of superannuation and the adjudication of the dispute regarding the superannuation of the workman concerned on that basis.
Nothing was however shown to us, apart from the documents already referred to, to enable us to find that any question had been raised before the Government of Rajasthan relating to the age of superannuation of the workmen at the quarries or that there was any basis for apprehension of such a dispute and it was therefore not open to the Tribunal to enlarge the ambit of the dispute between the parties by reference to the difference in the 301 age of superannuation under the two sets of Standing Orders.
Mr. Setalvad drew our attention to the judgment of this Court in Tile Sindhu Resettlement Corporation Ltd. V. The Industrial Tribunal of Gujarat & Ors.(1) for the proposition that unless a dispute was raised by the workman with their employer it could not become an industrial dispute.
Respondent No. 3 before this Court in that case was employed by the appellant as an accounts Clerk at Gandhidham in the year 1950.
Some years thereafter his services were placed at the disposal of the subsidiary.
company of the appellant.
The respondent was appointed in the said subsidiary company on a different set of conditions of service.
He worked with that company up to February 1958 when his services were terminated after payment of retrenchment compensation and other dues by the said subsidiary company.
The respondent then went to the appellant and requested that he might be given posting orders.
The appellant declined to do so on the ground that the post which he was occupying in 1953 had been permanently filled up.
Thereupon the respondent demanded retrenchment compensation from the appellant also.
As the representations of the respondent were not fruitful, conciliation proceedings were started and ultimately, on the report of the Conciliation Officer, the State of Gujarat referred the dispute to, the Industrial Tribunal.
The matter referred for adjudication was, "whether the said respondent should be reinstated in the service of the appellant and be paid back wages from 21st February, 1958.
" The Tribunal directed reinstatement and payment of back wages.
In allowing the appeal, this Court observed that the respondent workman had only asked for payment of retrenchment compensation and did not raise any dispute for reinstatement.
According to this Court (see p. 522): ".
the evidence produced clearly showed that no such dispute (i.e. relating to reinstatement) had ever been raised by the respondent with the management of the appellant.
If no dispute at all was raised by the respondents with the management, any request sent by them to the Government would only be a demand by them and not an industrial dispute between them and their employer.
Relying on the above decision Mr. Setalvad argued that in order that a reference can be construed to embrace a particular dispute it must be shown that a demand had been made by the workman and not accepted by the employers so as to give rise to a dispute which in the view of the Government required adjudication.
Mr. Ramamurty on behalf of the respondents drew our attention to the provisions of section 10(1) of the and in particular to clauses (c) and (d) thereof.
He argued that it was open to the appropriate Government in an appropriate case to (1) ; 302 refer a dispute along with any matter appearing to be connected with or relevant to the dispute and no objection could be taken to the award of a Tribunal where the Tribunal had not transgressed the limits of cls.
(c) and (d) of section 10(1) of the Act.
It was further contended that the proper age of superannuation applicable to the company as a whole was so intimately connected with or relevant to the dispute which actually arose between the parties prior to the order of reference as to lead us to hold that the Tribunal had not gone beyond its jurisdiction in construing the order of reference to embrace an adjudication as to proper age of superannuation of a workman like Bhisham Verma.
In our view, the finding of the Tribunal that the Company could not fix a lower age limit of superannuation for workmen at the quarries went beyond the scope of reference which had to be gathered from the circumstances preceding the Government Order.
The Tribunal never addressed itself to the point of view of the workman that his proper age was only 50 and not 55; nor did it come to a finding that the true age of the workman being 50 years in 1968 there was no question of his superannuation in that year.
Mr. Setalvad raised a further point that so, long as the quarried, had a different set of Standing Orders prescribing a different age of superannuation from that fixed under,the Standing Orders relating to the cement works, the tribunal could not have disregarded the Standing Orders as it had purported to do and lay down that the age of superannuation of all workmen should be 58 as found" by it.
Our attention was drawn to section 2 (g) of the Industrial Employment (Standing Orders) Act and to section 3(2) of the said Act under which provision had to be made in Standing Orders for all matters set out in the Schedule to the Act.
According to Mr. Setalvad, item 8 of the Schedule reading: "Termination of employment, and the notice thereof to be given by employer and workmen." allowed the framing of Standing Orders with regard to age of superannuation.
Mr. Ramamurty on the other hand contended that this item could not possibly embrace such a matter as the age of superannuation but was limited to voluntary acts of the employer or the workmen to put an end to the employment without any question of superannuation.
Arguments were advanced at some length by counsel on either side on this point, but in the view which we have taken on the first point as to the jurisdiction of the Tribunal, we find it unnecessary to decide this point.
in the result we hold that the award of the Tribunal was in competent as the dispute which it sought to adjudicate upon was not the one referred.
The award will therefore be set aside, but in the circumstances of the case, we make no order as to costs.
S.C. Award set aside.
[/INST]The appellant, who was less than 20 years was convicted for an offence under section 7(1) of the , and was ordered to furnish a bond under section 4 of the .
The High Court revised the sentence, because section 16 of the Prescribed a minimum sentence of imprisonment for 6 months and a fine of Rs. 1000.
Allowing the appeal to this Court, HELD : Section 4(1) of the contains the non obstante clause notwithstanding anything contained in any other law for the time being in force, and hence the section would have overriding effect and shall prevail if its other conditions are fulfilled; especially when the was enacted in 1958 subsequent to the enactment in 1954 of the .
[317 A C; 318 D E] According to section 18 of the , that Act shall not affect section 5(2) of the Prevention of Corruption Act which also prescribes a minimum sentence of imprisonment.
The fact that only one offence for which a minimum sentence of imprisonment is prescribed, has been specified shows that in the case of other such offenses, the provisions of the can be invoked [317H; 318 A C] Assuming there is some ambiguity, the principle to be applied in construing a penal statute is that such doubt should be resolved in favour of the person who would be liable to the penalty.
[318 D] Adulteration of food is a menace to public health and the has been enacted to eradicate the evil.
Therefore, courts should not lightly resort to the provisions of the probation of Offenders Act in the case of persons above 21 years of age; but the Act makes a distinction between offenders below 21 years and those above that age.
As regards person under 21 years, the policy of the law is that such a person, even in the case of conviction under the , should not be deprived of the advantage of the which is a beneficent measure and reflects and incorporates the modern approach and latest trend in penology.
[318 G H; 319 A C] As the object of the is to avoid imprisonment of a person covered by its provision, ,, that object cannot be set at naught by imposing a sentence of fine which would entail imprisonment in case of default.
[319 D] Rattan Lal vs State of Punjab ; and Ramji Missir vs State of Bihar [1962] Supp. 2 S.C.R. 745, referred to. 313
</s> |
<s>[INST] Summarize the judgementAppeal from a judgment and decree of the Patna High Court dated 25th March, 1949, in A.S. 2280 of 1948 reversing an appellate _decree of the Subordinate Judge in Suit No. 62 of 1948.
Baldev Sahay (T. K. Prasad, with him) for the appel lant.
N.C. Chatterjee (H.J. Umrigar, withhim) for the respond ent. 1951.
February 2.
The judgment of the Court was deliv ered by FAZL ALL J.
This is an appeal from a judgment and decree of the High Court of Judicature at Patna reversing the appellate decree of a Subordinate Judge in a suit insti tuted by the respondents.
The facts of the case are briefly these.
The respondents have been in occupation as a monthly tenant of several blocks of premises belonging to the appellants at a monthly rental of Rs. 112.
The rent for the months of March, April and May, 1942, having fallen into arrears, they remitted it along with the rent for June, on 28th June, 1947, by means of two cheques.
As the appellants did not accept the cheques, on 4th August, 1947, the re spondents remitted the amount subsequently by postal money order.
On 12th August, 1947, the appellants, maintaining that there was non payment of rent and hence the respond ents were liable to be evicted, under section 1 1 (1) (a) of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947 (Bihar Act III of 1947), applied to the House Control ler for the eviction of the respondents from the premises.
Section 11 (1) (a) of the Act runs as follows : "Notwithstanding anything contained in any agreement or law to the contrary and subject to the provisions of section 12, where a tenant is in possession of any building, he shall not be liable to be evicted therefrom, whether in execution of a decree or otherwise, except 147 (a) in the case of a month to month tenant, for non payment of rent or breach of the conditions of the tenancy, or for subletting the building or any portion thereof with out the consent of the landlord, or if he is an employee of the landlord occupying the building as an employee, on his ceasing to be in such employment ;" On 30th August, 1947, the respondents, whose money order had in the meantime been returned by the appellants, deposited the rent up to the month of June in the Office of the House Controller.
Notwithstanding this deposit, the House Controller passed an order on the both November, directing the eviction of the respondents by 10th May, 1948, and holding that they had made themselves liable to eviction by reason ' of non payment of rent.
The order of the House Controller was upheld by the Commissioner on appeal on the 27th April, 1948, and thereupon the respondents filed the present suit in the Patna Munsif 's Court for a declaration that the order of the ContrOller dated the 10th November, 1947, was illegal, ultra vires and without jurisdiction.
The suit was dismissed by the Munsif and his decree was upheld on appeal, but the 'High Court decreed the suit holding that the order of the Rent Controller was without jurisdiction.
The appellants were thereafter granted leave to appeal by the High Court, and they have accordingly preferred this appeal.
The High Court has delivered a somewhat elaborate judg ment in the case, but it seems to us that the point ' aris ing in this appeal is a simple one.
The main ground on which the respondents have attacked the order of eviction passed by the House Controller is that in fact there was no non payment of rent, and, since no eviction can be ordered under the Bihar Act unless non payment is established, the House 'Controller had no jurisdiction to order eviction.
On the other hand, one of the contentions put forward on behalf of the appellants is that there was non payment of rent within the meaning of that expression as used in the Act, since the rent was not paid as and when it 148 fell due.
It was pointed out that the rent for the month of March became due in April and the rent for April became due in May, but no step was taken by the respondents to pay the arrears until the 28th June, 1947.
It appears that at the inception of the tenancy, the respondents had paid one month 's rent in advance, and it had been agreed between them and the appellants that the advance rent would be adjusted whenever there was default in payment of rent for full one month.
It was however pointed out that the advance payment could be adjusted only for one month 's rent, but, in the present case, the rent for three months had become due, and, since in a monthly tenancy the rent is payable for month to month, the rent for each month becoming due in the subse quent month, non payment of that rent at the proper time was sufficient to attract the provisions of section 11(1) (a) of the Act.
The appellants also raised a second contention, namely, that having regard to the scheme of the Act, the House Controller was fully competent to decide whether the condition precedent to eviction had been satisfied, anal once that decision had been arrived at, it could not be questioned in a civil court.
This contention was accepted by the first two courts, and the first appellate court dealing with it observed as follows : "But the Buildings Control Act has authorised the Con troller to decide whether or not there is nonpayment of rent and it is only when he is satisfied that there has been nonpayment of rent that he assumes jurisdiction.
If the question of jurisdiction depends upon the decision of some fact or point of law, and if the court is called upon to decide such question, then such decision cannot be collater ally impeached (vide 12 Patna 117).
In my opinion when the Controller assumed the jurisdiction on being satisfied that there was non payment of rent and proceeded to pass an order of eviction.
I think the Civil Court can have no jurisdic tion to challenge the validity of such order.
" The High Court did not however accept this view, and after referring to section 111 of the Transfer of 149 Property Act, proceeded to propound its own view in these words: "Regard being had to the circumstances in which the Act under consideration was enacted and its object, as stated in the preamble as being 'to prevent unreasonable eviction of tenants ' from buildings, it would seem that the expres sion 'non payment of rent ' in section 11 in the context in which it is used must be given an interpretation which would have the effect of enlarging the protection against determi nation of a tenancy enjoyed by a tenant under the ordinary law.
The Legislature, therefore, by enacting that a tenant shall not be liable to be evicted 'except for nonpayment of rent ' should be held to have intended to protect a tenant from being evicted from a building in his possession for being a defaulter in payment of rent, if he brings into Court all the rent due from him before the order of his eviction comes to be passed .
If, as contended for on behalf of the respondents, section 11 of the Act were to be construed as entitling a landlord to apply for eviction of a tenant on the ground of irregular payment of rent amounting to ' non payment ' of rent and as empowering the Controller to determine as to whether irregular payment of rent amounts to non payment of rent within the meaning of sub section (1)of section 11, and subsection (3) of section 18 were to be construed as making the decision of the Controller on this question of law a final one, it will appear that not only this Act will have conferred a right upon the landlord very much in excess of the right that he enjoys under the ordinary law in the matter of determination of tenancies, but that it will have conferred very much larger power on the Controller than that possessed by the Civil Courts under the ordinary law in the matter of passing decrees for eviction of tenants.
The principle of law and equity on which relief against forfei ture for ',non payment of rent ' is based, will have been completely abrogated, and the protection of a tenant in possession of a building instead of being enlarged will 150 have been very much curtailed.
A construction of these provisions, which is calculated to bring about these conse quences, cannot and is not in accordance with the circum stances to which this Act was intended to apply and indeed cannot be accepted.
The contention of Mr. Lalnarain Sinha on behalf of the respondent that the circumstances disclosed in the petition raised the question for determination by the Controller whether a case of non payment of rent in law was established, and his decision of that question, even if wrong in law, is not liable to be questioned in the Civil Court must be over ruled.
" It seems to us that the view taken by the High Court is not correct.
Section 11 begins with the words "Notwithstand ing anything contained in any agreement or law to the con trary," and hence any attempt to import the provisions relating to the law of transfer of property for the inter pretation of the section would seem to be out of place.
Section 11 is a self contained section, and it is wholly unnecessary to go outside the Act for determining whether a tenant is liable to be evicted or not, and under what condi tions he can be evicted.
It clearly provides that a tenant is not liable to be evicted except on certain conditions, and one of the conditions laid down for the eviction of a month to month tenant is non payment of rent.
Sub section (8) (b) of section 11 provides that the "Controller shall, if he is satisfied that the claim of the landlord is bona fide, make an order directing the tenant to put the landlord in possession of the building" and if he is not so satisfied he shall make an order rejecting the application.
Section 16 empowers the Controller to make enquiries and inspections and to summon and enforce the attendance of witnesses and compel the production of documents in the same manner as is provided in the Code of Civil Procedure.
Section 18 pro vides that any person aggrieved by an order passed by the Controller may within 15 days of the receipt of such order by him, prefer an appeal to the Commissioner of the Divi sion, and it also prescribes the procedure for the hearing of the appeal.
Sub section (3) 151 of this section states that "the decision of the Commission er and subject only to such decision, an order of the Con troller shall be final, and shall not be liable to be ques tioned in any Court of law whether in a suit or other pro ceeding by way of appeal or revision.
" The Act thus sets up a complete machinery for the investigation of those matters upon which the jurisdiction of the Controller to order eviction of a tenant depends, and it expressly makes his order final and subject only to the decision of the Commis sioner.
The Act empowers the Controller alone to decide whether or not there is non payment of rent, and his deci sion on that question is essential before an order can be passed by him under section 11.
Such being the provisions of the Act we have to see whether it is at all possible to question the decision of the Controller on a matter which the Act clearly empowers him to decide.
The law on this subject has been very lucidly stated by Lord Esher M.R. in The Queen vs Commissioners for Special Purposes of the Income Tax(1), in these words : "When an inferior court or tribunal or body, which has to exercise the power of deciding facts, is first estab lished by Act of Parliament, the legislature has to consider what powers it will give that tribunal or body.
It may in effect say that, if a certain state of facts exists and is shown to such tribunal or body before it proceeds to do certain things, it shall have jurisdiction to do such things, but not otherwise.
There it is not for them conclu sively to decide whether that state of facts exists, and, if they exercise the jurisdiction without its existence, what they do may be questioned, and it will be held that they have acted without jurisdiction.
But there is another state of things which may exist.
The legislature may intrust the tribunal or body with a jurisdiction, which includes the jurisdiction to determine whether the preliminary state of facts exists as well as the jurisdiction, on finding that it does exist, to proceed further or do (1) , at .319.
20 152 something more.
When the legislature are establishing such a tribunal or body with limited jurisdiction, they also have to consider, whatever jurisdiction they give them, whether there shall be any appeal from their decision, for otherwise there will be none.
In the second of the two cases I have mentioned it is an erroneous application of the formula to say that the tribunal cannot give themselves jurisdiction by wrongly deciding certain facts to exist, because the legis lature gave them jurisdiction to determine all the facts, including the existence of the preliminary facts on which the further exercise of their jurisdiction depends; and if they were given jurisdiction so to decide without any appeal being given, there is no appeal from such exercise of their jurisdiction.
" On the same lines are the following observations of Sir James Colville in The Colonial Bank of Australasia vs Wil lan(1), which is a case dealing with the principles on which a writ of certiorari may be issued : "Accordingly, the authorities. establish that an adju dication by a Judge having jurisdiction over the subject matter is, if no defect appears on the face of it, to be taken as conclusive of the facts stated therein; and that the Court of Queen 's Bench will not on certiorari quash such an adjudication on the ground that any such fact, however essential, has been erroneously found.
" There can be no doubt that the present case falls within the second category mentioned by Lord Esher, because here the Act has entrusted the Controller with a jurisdiction, which includes the jurisdiction to determine whether there is non payment of rent or not, as well as the jurisdiction, on finding that there is nonpayment of rent, to order evic tion of a tenant.
Therefore, even if the Controller may be assumed to have wrongly decided the question of non payment of rent, which by no means is clear, his order cannot be questioned in a civil court.
It seems to us that on this short ground this appeal must succeed, and we (1) , at p. 443.
153 accordingly allow the appeal, set aside the judgment and decree of the High Court and restore the decree of the courts below.
The appellants will be entitled to costs throughout.
Appeal allowed.
[/INST]Section 11 of the Bihar Buildings (Lease, Rent and Eviction) Control Act, 1947, has entrusted the Controller with a jurisdiction, which includes the jurisdiction to determine whether there is non payment of rent or not, as well as the jurisdiction, on finding that there is non payment of rent, to order eviction of a tenant.
Therefore, even if a Controller has wrongly decided the question wheth er there has been non payment of rent, his order for evic tion on the ground that there has been non payment of rent cannot be questioned in a civil court.
Queen vs Commissioners for Special Purposes of Income Tax (21 O.B.D. 313) and Colonial Bank of Australasia vs Willan (L.R. P.C. 417) relied on. 146
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<s>[INST] Summarize the judgementivil Appeal No. 591 of 1974.
Appeal by Special Leave from the Judgment and order dated the 15th February, 1974 of the Gujarat High Court in Civil Revision Appln.
No. 326/71.
P. H. Parekh and Manju Jaitley, for the appellant.
section section Khanduja and R. N. Bhalgoha, for respondents 2 4.
The Judgment of the Court was delivered by RAY, C.J.
This appeal is by special leave from the judgment dated 15 February, 1974 of the Gujarat High Court dismissing the revision petition filed by the appellant.
536 The appellant filed a Revision Petition in the High Court against the judgment and decree passed by the District Judge dismissing his appeal against the decree for eviction of the appellant from the suit premises.
The respondent filed the suit against the appellant for possession of the premises on the ground that the appellant had sublet a portion of the premises.
Section 13(1) (e) of the Bombay Rents, & Hotel and Lodging House r Rates Control Act, 1947 which is the relevant section for the purpose of this appeal runs as follows : "13(1)(e) That the tenant has, since the coming into operation o this Act, unlawfully sublet, or after the date of Cr commencement of the Bombay Rents, Hotel and Lodging House Rates Control (Amendment) Act, 1973, unlawfully given on licence, the whole or part of the premises or assigned or transferred in any other manner his interest therein".
The appellant took on lease on 1 January, 1960 the premises, namely, first floor consisting of four rooms at a rent of Rs. 50/ per month.
The respondent alleged that the appellant sublet a portion thereof, namely, two rooms, in the month of August, 1965.
The respondent on 1 April, 1967 gave a notice to the appellant terminating the tenancy.
The appellant denied that there was any unlawful subletting of two rooms to respondent No. 5 Jitendra Shankerji Desai.
The appellant further alleged that the respondent No. 5 Desai vacated the suit premises on 14 April, 1967.
At the trial the issues were whether the appellant unlawfully sublet two rooms to respondent Desai.
The Trial Court held that the appellant sublet the suit premises to respondent No. section The Trial Court gave the plaintiff respondent a decree for possession of the suit premises.
The appellant preferred an appeal.
The appeal was dismissed.
The appellant, thereafter, filed a revision petition in the High Court.
In the High Court the contentions were these.
The expression "the tenant has sublet" in section 13(1)(e) of the above mentioned Act means that the subletting must continue at the date of the suit for passing the decree.
The notice was given on 1 April, 1967.
The respondent No. 5 vacated the premises in suit on 14 April, 1967.
When the suit was filed the sub tenant was not in occupation of the premises.
Therefore, the plaintiff respondent was not entitled to a decree.
The High Court relied on a Bench Decision of that High Court Maganlal Narandas Thakkar & Anr.
vs Arjan Bhanii Kanbi(1) (1) 1969 G.L.R. Vol.
10 p. 837.
537 where it was held that the words "has sublet" in section 13(1) (e) of the Saurashtra Rent Control Act mean that a subletting has take place and as a result of that subletting the impediment in the way of the landlord to recover possession has been removed.
The provisions contained in section 13(1)(e) of the Saurashtra Rent Control Act are r similar to the provisions contained in the Bombay Act; 1947.
The High Court also held that the wards 'has sublet ' do not include any element of the sub tenancy being in existence at the date when the suit is filed.
The appellant relied on a decision on this Court in Goppal vs Thakurji Shriji Shriji Dwarkadheeshji & Anr support of the proposition that the words "has sublet" means that the subletting is to subsist at the date of the suit.
This Court in Goppulal 's case (supra) considered section 13(1) of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
Section 13(1) (e) of the Rajasthan Act provides that no decree evicting the tenant shall be passed unless the Court is satisfied "(e) that the tenant has assigned, sublet or otherwise parted with the possession of the whole or part of the premises, without the permission of the landlord".
The High Court in Goppulal 's case (supra) held that two.
shops were sublet after October 15, 1947 when the Jaipur Rent Control order, 1947 came into force.
Subletting was a ground for ejectment under paragraph 8 (1) (b) (ii) of the Jaipur Rent Control order, 1947.
The High Court held that the tenant 's liability for eviction on this ground continued after the promulgation of the Rajasthan Premises (Control of Rent and Eviction) Act, 1950.
This Court said that the High Court was in error that there was one "integrated tenancy" for six shops.
The facts found were that four shops were let out in 1944 and two shops were let out after 1945.
This Court found that the High Court was in error in holding that two shops were sublet after 15 October, 1947.
This Court held that the plaintiffs in Goppulal 's case (supra) did not establish that the subletting was after 15 October, 1947 and on the Date of the subletting in 1944, no Rent Control Legislation was in force.
lt is in that context that it is said that the words "has sublet" contemplate a completed event connected in some way with the present time".
This Court said that the words "has sublet" take within their sweep any subletting which was made in the past and has continued upto the present time".
What is meant by these observations is that the vice of subletting which fell within the mischief of the Act continues to be a mischief within the Act.
In Goppulal 's case (supra) there was no subletting in 1947 to violate the 1947 Jaipur Rent Control order and therefore there could not be any subletting which could continue upto the 1950 Rajasthan Act.
On the date of the subletting in 1944, this Court found in Goppulal 's case (supra) that there was no Rent Control Legislation in (1) ; 4 L925SupCI/75 538 force This Court did not consider the question as to whether subletting to be within the mischief of the relevant statute was to subsist at the date of the suit.
This Court held that section 13(1)(e) of the Rajasthan Act would include any subletting which though made in the past would continue at the point of the time when the Act came into force.
The appellant repeated the same contentions which had been advanced before the High Court.
The provisions of the Bombay Rents, Hotel and Lodging House Rates Control Act, 1947 indicate that a tenant is disentitled to any protection under the Act if he is within the mischief of the provisions of section 13(1)(e), namely, t that he has sublet.
The language is that if the tenant has sublet, the protection ceases.
To accede to the contention of the appellant would mean that a tenant would not be within the mischief of unlawful subletting if after the landlord gives a notice terminating the tenancy on the ground of unlawful subletting the sub tenant vacates.
The landlord will not be able to get any relief against the tenant in spite of unlawful subletting.
In that way the tenant can foil the attempt of landlord to obtain possession of the premises on the ground of subletting every time by getting the sub tenant to vacate the premises.
The tenant 's liability to eviction arises once the fact of unlawful subletting is proved.
At the date of the notice, if it is proved that there was unlawful subletting, the tenant is liable to be evicted.
The High Court rightly rejected the revision petition.
The appeal is dismissed with costs. ] P.H.P. Appeal dismissed.
[/INST]The appellant in this appeal had been assessed to Income Tax which was reduced on appeal but that assessment was set aside by the Income Tax Appellate Tribunal on the ground that the Indian Finance Act of 1939 was not in force during the assessment year in Chota Nagpur.
On a reference by the Tribunal the High Court con firmed the setting aside of this assessment.
By the promulgation of Bihar Regulation IV of 1942 by the Governor of Bihar (which was assented to by the Governor General) the Indian Finance Act of 1939 was brought into force in Chota Nagpur retrospectively as from the 30th March 1939.
On the 8th February 1944 the Income Tax Officer passed an order in pursuance of which a fresh notice was issued under section 34 which resulted in the assessment of the appellant to income tax.
The question for determination in this appeal was whether the notice under section 34 was validly issued.
Held (i) that for the purposes of section 34 of the Act the income, profits or gains sought to be assessed were chargeable to income tax according to the scheme of the Act and the provisions of sections 3 and 4 of the Act; (ii) that it was a case of chargeable income escaping assessment within the meaning of section 34 and was not a case of mere non assessment of income tax because the earlier assessment proceedings in the present case had in fact been taken but failed to result in a valid assessment owing to some lacuna which was not attributable to the assessing authorities.
C.I.T., Bombay vs Sir Mahomed Yusuf Ismail ([1944] , Fazal Dhala vs C.I.T., B. & O. ([1944] 12 I.T.R. 341), Baghavalu Naidu & Sons vs C.I.T., Madras ([1945] , Raja Benoy Kumar Sahas Boy vs C.I.T., West Bengal ([1953] , Chatturam vs C.I.T., Bihar ([1947] F.C.R. 116), Whitney vs Commissioners of Inland Revenue ([1926] A.C. 37), C.I.T. Bombay & Aden vs Khemchand Ramdas ([1938] at 428), Sir Rajendranath Mukherjee vs C.I.T., Bengal ([1934] , Madan Mohan Lal vs C.I.T., Punjab ([1935] , C.I.T., Bombay vs Pirojbai N. Contractor ([1937] , Kunwar 291 Bishwanath Singh vs C.I.T., C.P. ([1942] , Raja Bahadur Kamakshya Narain Singh vs C.I.T. B. & 0.
([1946] and Chatturam vs C.I.T., B. & 0.
([1946] , referred to.
</s> |
<s>[INST] Summarize the judgementAppeal No. 65 of 1952.
Appeal from an award dated 17th November, 1951, made by the Labour Appellate Tribunal of India, Calcutta, in Appeal No.
280 of 1951.
K. P. Khaitan (Harnam Das, with him) for the appellant.
H. B. Asthana for the respondents.
Gopalji Mehrotra for the Intervener.
December 2.
The Judgment of the Court was delivered by BHAGWATI J.
This is an appeal by special leave against the decision of the Labour Appellate Tribunal, Calcutta, upholding the award made by the State Industrial Tribunal, Uttar Pradesh, with certain modifications.
An industrial dispute arose between the appellant, the Vishwamitra Press Karyalaya, Kanpur, and the respondents, the workers of the Vishwamitra Press as represented by the Kanpur Samachar Patra Karamchari Union, Kanpur, in regard to the alleged victimisation of certain workmen under the guise of 'retrenchment.
That industrial dispute was referred to the Industrial Tribunal, by a notification dated the 24th April, 1951.
The time for making the award expired on the 9th June, 1951, and on the 9th June.
1951, a further notification was issued extending the time for making the award up to the 30th June, 1951.
The 30th June, 1951, was a public holiday and the 1st July was a Sunday.
The Industrial Tribunal made its award on the 2nd July, 1951, and pronounced it in open court on that day.
It was however thought by the Uttar Pradesh Government that the award was beyond time and invalid and on the 18th July, 1951, a notification was issued extending the period up to the 3rd July, 1951.
This award was challenged by the appellant before the Labour Appellate Tribunal.
The Labour Appellate.
Tribunal negatived the Contentions of the appellant.
The appellat applied 274 for special leave which was granted by this Court on the 21st December, 1951, limited to the following grounds: " (1) The Government had no power to extend the time of the making of award after the expiry of the time originally fixed, and the award made by the Adjudicator after such time is illegal, ultra vires, inoperative and void.
(2)In any case the State Government I had extended the time for making the award till 30th June, 1951, and the Adjudicator 's award made after that date is void.
(3)That the extension of time by the Government on.
21st July, 1951, after even the time extended previously had expired, was ultra vires, and it could not make a void award a valid award.
" The industrial dispute which arose between the appellant and the respondents was referred by the Uttar Pradesh Government to the Industrial Tribunal in exercise of the powers conferred by sections 3 and 4 of the Uttar Pradesh .
The Uttar Pradesh Government had in exercise of the powers conferred by section 3 (d) of the Act promulgated an order inter alia providing for the adjudication of the industrial disputes referred by it to the Industrial Tribunals.
Paragraph 16 of that order ran as under : " The Tribunal or the Adjudicator shall hear the dispute and pronounce its decision within 40 days (excluding holidays observed by courts subordinate to the High Court) from the date of reference made to it by the State Government, and shall thereafter as soon as possible supply a copy of the same to the parties to the dispute, and to such other persons or bodies as the State Government may in writing direct.
Provided that the State Government may extend the said period from time to time." Paragraph 9 which prescribed the powers and functions of Tribunals inter alia provided: 275 "(9).
The decision shall be in writing, and shall be pronounced in open court and dated and signed by the member or members of the Tribunal, as the case may be, at the time of pronouncing it.
" It was not disputed before us that the original period calculated in accordance with paragraph 16 above expired on the 9th June, 1951, and the Uttar Pradesh Government validly extended the period up to the 30th June, 1951.
It was however contended that the Industrial Tribunal should have made its award on the 30th June, 1951, and not on the 2nd July, 1951, as it purported to do.
It was urged that the provision as to excluding holidays observed by courts subordinate to the High Court which obtained in paragraph 16 above did not apply when the period was extended up to a particular date.
It would apply only if the period was extended by a particular number of days when for the purpose of the computation of those days the holidays would have to be excluded in the manner therein mentioned.
The Uttar Pradesh Government having extended the period up to the, 30th June, 1951, it was submitted that the award, should have been made by the 30th June, 1951, and, not later and having been made on the 2nd July, 1951, was therefore beyond time and invalid.
This argument might well have prevailed but for the provisions of section 10 of the U. P. General Clauses Act, 1904.
That section provides: " Where, by any United Provinces Act, any act or proceeding is directed or allowed to be done or taken in any court or office on a certain day or within a prescribed period, then, if the court or office is closed; on that day or the last day of the prescribed period, the act or proceeding shall be considered as done or taken in due time if it is done or taken on the next day afterwards on which the court or office is open.
" The Industrial Court was closed on the 30th June, 1951, which was declared a public holiday.
The 1st July, 1951, was a Sunday and it was competent to the 'Industrial Court to pronounce its decision on the next 276 afterwards on which the Industrial Court was n, i.e., the 2nd July, 1951.
Prima facie therefore award which was pronounced on the 2nd July, 1, was well within time.
The only thing which Shri Khaitan counsel for the appellant urged before us therefore was that the Industrial Court was not a court within the meaning of section 10 of the U. P. General Clauses Act, "The court" according to his submission could only be construed mean a court in the hierarchy of the civil courts the State and an Industrial Court did not fall hin that category.
We are unable to accept this intention of Shri Khaitan.
The Uttar Pradesh industrial Disputes Act, 1947, was an Uttar Pradesh t.
The General Order dated the 15th March, 1951, which provided inter alia for the reference of the industrial dispute for adjudication and the manner in which it was to be adjudicated, was promulgated by e U. P. Government in exercise of the powers conferred upon it by section 3 (d) of the Act.
Paragraph (9) of the General Order provided for the decision ing pronounced by the Industrial Tribunal in open urt and we fail to understand how it could ever be ged that the Industrial Tribunal was not a court ithin the meaning of section 10 of the U. P. General lauses Act.
If the Industrial Tribunal was thus a ourt within the meaning of section 10 of the U. P. General Clauses Act the court was closed on the 30th ane, 1951, as also on the 1st July, 1951, and the decion could be pronounced by the Industrial Court on i.e next day afterwards on which it was open, i.e., on ne 2nd July, 1951.
In our opinion therefore the ecision which was pronounced on the 2na July, 951, 'was well within time and was valid and binding ' in the parties.
The above decision is determinative of this appeal, and the appeal will therefore stand dismissed with costs.
Appeal dismissed.
Agent for the respondents and the intervener: C. P. Lal.
[/INST]The time prescribed for making an award under the U. P. , expired on the 9th June, 1951.
The Government extended the period up to 30th June, 1951.
The 30th June was a public holiday and 1st July was a Sunday and the Industrial Tribunal pronounced its award on the 2nd July: Held, that an Industrial Tribunal to which a dispute is referred under the U. P. , is a " Court " within the meaning of section 10 of the U.P. General Clauses Act, 1904, and, as the 30th June and 1st July were holidays, the award pronounced on the 2nd July was not invalid on the ground that it was not pronounced within the period fixed. 273
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<s>[INST] Summarize the judgementAppeals Nos. 746 and 747 of 1957.
Appeals by special leave from the judgments and orders dated June 3, 1955, and May 21, 1956, of the Labour Appellate Tribunal of India, Calcutta, in Appeal No. Cal. 366/52 and Misc.
Case No. 145 of 1955 respectively, arising out of an Award dated September 22, 1952, of the Industrial Tribunal, Bihar, and published in the Bihar State Government Gazette on October 21, 1952.
M. C. Setalvad, Attorney General for India and R. C. Prasad, for the appellant.
The respondent did not appear.
April 29.
The Judgment of the Court was delivered by WANCHOO, J.
These are two appeals by the management by special leave in an industrial matter arising out of two applications under section 33 of the Industrial Disputes Act (hereinafter called the Act).
The facts of the case are briefly these : The appellant, Messrs. Sasa Musa Sugar Works (Private) Ltd. is a sugar factory in District Saran (Bihar).
The factory was established in 1932.
In June 1942, a trade union was formed in this factory.
In July 1943, trouble arose between the workmen and the management resulting in the discharge of three office bearers of the union, including one Shams ud din, who was then the 838 joint secretary.
That matter ",as referred to adjudication and the discharged workmen were ordered to be reinstated in the beginning of 1944.
In December 1944, there was trouble again and a large number of workmen were dismissed, including Shams ud din, who had by now become the president of the union.
This dispute was again referred to an Industrial Tribunal, which again ordered reinstatement of the dismissed workmen in August 1947.
There was peace for some time after this.
But in June 1951, the management again discharged seventeen workmen, including Shams ud din, who was at that time secretary of the union.
The trouble continued up to December 1951, when an agreement was arrived at between the union and the management, as a result of which twelve of the workmen were reinstated but five, including Shams ud din, were not and their cases were to be referred to adjudication.
It appears, however, that another reference between the management and its workmen was already pending since September 8, 1951, before an Industrial Tribunal, when this agreement was arrived at.
Thereafter the work in the factory proceeded smoothly for some time.
But on January 1, 1952, a notice was issued by the union to the management enlisting as many as 40 demands and it was threatened that if the demands were not met within seven days, the union would have to advise the work men to adopt go slow and call upon them to offer passive resistance with effect from January 9, 1952, and take all legitimate means to see that the decision of go slow was carried out till the demands of the union were fulfilled.
This notice was received by the management on January 4, which immediately contacted the officers of the Labour Department as well as the Sub Divisional Magistrate at Gopalganj.
On January 8, the Deputy Labour Commissioner wrote to the union that as the conciliation officer was busy in the general elections, the status quo should be maintained till the elections were over, so that the matter might be looked into by the conciliation officer.
The union, however, gave no heed to this advice and go slow began from January 9 and 839 was continued till January 12, 1952.
Then the Labour Commissioner himself came to the factory on January 12 and advised Shams ud din who was the s moving spirit behind all this to call off the go slow, as it was proposed to start conciliation proceedings at Patna on January 17, 1952.
Conciliation proceedings then began on January 17 and an agreement was arrived at as to some of the demands on January 23, and it was decided that further conciliation proceedings would be held in February.
But in spite of this agreement go slow was again resorted to from January 24 to January 31.
In the meantime, the Labour Officer had arrived at the factory on January 28, 1952, and further talks took place.
The workmen, however, did not pay heed to the advice of the Labour Officer.
He, therefore, reported on January 31 to the Labour Commissioner that go slow was still continuing.
The Labour Commissioner then ordered the Labour Officer to tell the workmen that no further conciliation proceedings would take place until the goslow was called of.
The Labour Officer then informed the management that it could take disciplinary action against the workmen concerned with the permission of the Industrial Tribunal.
Consequently, the management suspended thirty three workmen by a notice given on the night of January 31 as from February 1.
It was said in the notice that these thirty three workmen had been found taking a leading part in the unjustified go slow which was in contravention of the Act and they were therefore suspended from service until further orders.
This notice had some good effect and work improved for four days; but from February 5 goslow was started again.
Consequently, the management suspended seven more workmen from February 6 and eight more from February 7 by giving notice to them in the same terms in which the notice had been given to the thirty three workmen, on January 31.
As adjudication proceedings were pending since September 1951 between the management and its workmen, the former applied on February 6, 1952, under section 33 of the Act for permission to dismiss the thirty three workmen and on February 11, 1952, for permission to 840 dismiss the remaining fifteen workmen who had been suspended later.
The forty eight workmen in their turn applied on March 29, 1952, under section 33 A of the Act to the Industrial Tribunal and their case was that they had been suspended as a measure of punishment and that as this was done without the sanction of the Industrial Tribunal, the management had committed a breach of section 33.
The three applications were tried together by the Industrial Tribunal and the contentions raised before it were these : (1) The management 's applications under section 33 had not been preceded by any enquiry into the misconduct of the workmen and were, therefore, liable to be rejected ; (2) The order of suspension in this case amounted to punishment and therefore section 33 had been contraven ed; and (3) There was an unjustified go slow by the workmen in January and February 1952.
On the first point, the Industrial Tribunal found that Do enquiry had been held by the management before the two applications, under section 33 were made; but it held that all the evidence which could have been taken in the enquiry by the management had been led before it and it was in full possession of the facts, and no question of any prejudice to the workmen arose, as it would be open to it on a review of the entire evidence before it to decide whether the applica tions for permission to dismiss should be granted or not.
On the second point, it held that the order of suspension was not as a measure of punisment in the circumstances of this case and that it was an order pending enquiry by the management and proceedings under section 33 before the tribunal and that, as there were no Standing Orders as to suspension in this factory, the management 's liability to pay the workmen their wages during the period of suspension remained.
On the third point, the Industrial Tribunal, after an elaborate discussion of the evidence, came to the ' conclusion that there was a deliberate go slow resorted to by the workmen in January and February 1952 and 841 that it was unjustified as it took place while conciliation proceedings were pending.
Having given these findings, the Industrial Tribunal had then to decide what orders it should pass on the applications under section 33 and section 33 A.
It held that there was no evidence to show that of the forty eight workmen concerned, sixteen workmen named by it had taken part in the go slow or instigated it.
It therefore refused the application under section 33 with respect to these sixteen workmen.
As to the remaining thirtytwo workmen it held that as some Standing Orders which were under contemplation at the time provided either dismissal or suspension for seven days in case of misconduct, it was proper to grant leave to the management to suspend the workmen for seven days, in view of some opinion expressed by a Go Slow Committee appointed some time before by the Bihar Central (Standing) Labour Advisory Board.
In effect, therefore, it rejected the prayer of the management for dismissal with respect to these thirty two workmen also.
Finally, it rejected the application under section 33 A.
This award led to two appeals before the Labour Appellate Tribunal; one was by the management against the entire award so far as it related to its applications under section 33, and the other by the workmen against the dismissal of their application under section 33 A and against the award relating to the applications of the management under section 33.
When the matter came up for hearing before the Appellate Tribunal, the workmen withdrew their appeal with respect to their application under section 33 A and it was consequently dismissed.
The result of the dismissal of the appeal of the workmen was that the finding of the Industrial Tribunal that the suspension was not a punishment and was only pending enquiry by the management and the proceedings before the tribunal, stood confirmed.
As to the *appeal by the management with respect to the applications under section 33, it was contended on its behalf before the Appellate Tribunal that the Industrial Tribunal had gone wrong on two substantial questions of law, namely (1) the Industrial Tribunal could either grant or 106 842 refuse permission to dismiss on an application for such permission under section 33 and it could not substitute its own judgment about the quantum of punishment; and (2) it was wrong in rejecting the applications against sixteen workmen on the ground that there was no evidence.
The Appellate Tribunal was of the opinion that the contention of the management on both these points was correct and that the appeal involved substantial questions of law.
It also found that the Industrial Tribunal 's finding that the workmen had resorted to go slow was not perverse and could be the only finding on the evidence.
It then went on to say that go slow was insidious in nature and could not be countenanced, and that it was serious misconduct normal punishment for which was dismissal.
It also held that the Industrial Tribunal was not right in relying upon the recommendations of the Go Slow Committee and the contemplated Standing Orders which were not till then in force.
Having said all this, we should have expect ed that the Appellate Tribunal would set aside the order of the Industrial Tribunal and grant permission to the management to dismiss the workmen for what was serious misconduct of an insidious nature which could not be countenanced.
But it went on to say that it was well settled that where an employer could not punish a workman without obtaining permission from the tribunal under section 33, an application for permission would be mala fide if it was made after any punishment had already been meted out to the workman.
It held that in the present case, the suspension of the workmen by the management was substantive punishment, because the notice did not in so many words state that it was pending enquiry and therefore the applications for permission having been made after punishment had been meted out were mala fide.
In coming to this conclusion, the Appellate Tribunal seems to have forgotten that it had already dismissed the appeal of the workmen from the order of the Industrial Tribunal on their application under section 33 A, which in effect amounted to confirming the order of the Industrial Tribunal that the suspension was not a punishment but was rightly made pending enquiry by 843 the management and proceedings before the tribunal.
The Appellate Tribunal supported its decision on this question of punishment by stating that the mala fides of the management were clear from the fact that though the suspensions had been made between January 31 and February 7, 1952, the application was filed by the management on March 29, 1952, after the application by the workmen under section 33 A had been filed.
This observation was clearly wrong, for the applications under section 33 were filed on February 6 and 11 by the management, and it was the application of the workmen under section 33 A which was filed on March 29.
Having thus inverted the order in which the applications were made to the Industrial Tribunal, the Appel.
late Tribunal held that the applications of the management under section 33 were Dot bona fide.
It then dismissed the appeal of the management, thus upholding the order of the Industrial Tribunal so far as the suspension of thirty two workmen for seven days was con cerned on the ground that the workmen had withdrawn their appeal, though in the earlier part of the judgment all that was said was that the workmen had withdrawn their appeal against the order under section 33 A.
As the Appellate Tribunal had obviously made a mistake and inverted the order in which the applications under sections 33 and 33 A had been made, a review application was filed by the management.
It, however, held that though the dates had been wrongly mentioned by accident, it saw no reason to review its order.
That is how the management filed two special leave petitions in this Court.
We are of opinion that on the findings of the Industrial Tribunal on the three points formulated by it which have not been upset by the Appellate Tribunal, the only order possible on the applications of the management under section 33 was to permit it to dismiss the forty eight workmen, provided there was evidence against them all.
It was not open to the Industrial Tribunal when it was asked to give permission to dismiss to substitute some other kind of punishment and give permission for that.
The Industrial Tribunal was satisfied that there was misconduct and that finding has been upheld by the Appellate Tribunal.
As such 844 if there was evidence that these forty eight workmen were guilty of misconduct, the Industrial Tribunal was bound to accord permission asked for.
We cannot agree with the Appellate Tribunal that the suspension in this case was substantive punishment and was not an interim order pending enquiry and proceedings before the Industrial Tribunal under section 33.
We have already pointed out that the Labour Officer told the management on January 31, 1952, that it was free to take disciplinary action with the permission of the Industrial Tribunal.
It was thereafter that thirtythree workmen were suspended on January 31 and the notice clearly said that the suspension was pending further orders, thus intimating to the workmen that the order of suspension was an interim measure.
This notice of January 31 was followed by an application on February 6 to the Industrial Tribunal for permission to dismiss the thirty three workmen involved in it, and this also clearly shows that the suspension was pending enquiry (if any) by the management and proceedings before the Industrial Tribunal.
Similarly, the suspension notices of February 5 and 6 relating to fifteen workmen said that they were suspended till further orders and were followed on February II by an application under section 33 to the Industrial Tribunal for permission to dismiss them.
In the circumstances it is quite clear that suspension in this case was not a punishment but was an interim measure pending enquiry and proceedings before the tribunal.
We have already pointed out that this was the finding of the Industrial Tribunal on the basis of which the application under section 33 A was dismissed and this finding stood confirmed when the workmen withdrew their appeal with respect to their application under section 33 A.
The Appellate Tribunal therefore was clearly in error in holding .
that the suspension was punishment.
The only question that remains is about the sixteen workmen about whom the Industrial Tribunal held that there was no evidence to connect them with the go slow.
The Appellate Tribunal 's view in this matter was that the contention of the management that the Industrial Tribunal was wrong in holding that there was no evidence against these sixteen workmen was 845 correct.
It has been shown to us that evidence against these sixteen workmen is of exactly the same witnesses and of the same kind as the evidence against the remaining thirty two.
The finding, therefore, of the Industrial Tribunal that there was no evidence against the sixteen workmen is patently perverse, for there was the same evidence against them as against the remaining thirty two.
It follows, therefore, that all the forty eight workmen (two of whom are since said to have died) are exactly in the same position.
As held by the.
Appellate Tribunal, go slow is serious misconduct which is insidious in its nature and cannot be countenanced.
In these circumstances as these fortyeight workmen were taking part in the go slow and were thus guilty of serious misconduct, the management was entitled to get permission to dismiss them.
But as the management held no enquiry after suspending the workmen and proceedings under section 33 were practically converted into the enquiry which normally the management should have held before applying to the Industrial Tribunal, the management is bound to pay the wages of the workmen till a case for dismissal was made out in the proceedings under section 33; (see the decision of this Court in the Management of Ranipur Col liery vs Bhuban Singh (1) ).
As already pointed out, this is the view taken by the Industrial Tribunal while dealing with the application under section 33 A which stood confirmed by the dismissal of the appeal by the workmen in that behalf.
The management will therefore have to pay the wages during the period of suspension till the award of the Industrial Tribunal.
We therefore allow the appeals and set aside the orders of the two Tribunals so far as the applications under section 33 are concerned and grant the appellant the permission sought for by it in these applications subject to the workmen being paid all their wages during the period of suspension up to the date of the award of the Industrial Tribunal, i. e., 22 9 1952.
As the workmen did not appear to contest these appeals, we pass no order as to costs.
Appeals allowed.
(1) [1959] Suppl.
2 S.C.R. 719.
[/INST]The workmen were originally employed by M/s. M.M. Ispahani Ltd., which shortly before the partition of India transferred its registered office from Calcutta to Chittagong.
The appellant company was incorporated on September 5, 1947 and took over the good will and trading rights of M/s. M. M. Ispahani Ltd. and, also purchased its stock in trade, properties and assets.
Most of the shares of the appellant were held by M/s. M. M. Ispahani Ltd. and the business of the appellant was of the same nature carried on in the same premises with the same workmen on the same remuneration.
On the transfer of M/s. M. M. Ispahani Ltd. to Chittagong the question arose of retrenching those workmen who were not willing to go to Chittagong and when the appellant company came into existence it agreed to employ those workmen.
The workmen apparently agreed to the termination of their services with M/s. M. M. Ispahani Ltd., and after receiving their provident funds and arrears of salaries they were appointed by the appellant.
M/s. M. M. Ispahani Ltd. used to pay puja bonus to the workmen at the rate of one month 's wages and the appellant also paid the same from 1948 up to 1952, even in the years in which the appellant suffered losses.
As the appellant did not pay puja bonus for 1953, a dispute arose and was referred for 25 adjudication.
The workmen also claimed benefits from the appellant for the period of service rendered by them under M/s. M. M. Ispahani Ltd. Held, that the workmen were entitled to the puja bonus equal to one month 's wages as it was an implied term of the employment of the workmen.
Puja was a special festival in Bengal and it had become usual with many firms there to give bonus before Puja to their workmen.
A claim for puja bonus was based either on implied agreement or on customary payment.
An implied agreement could be inferred if the following circumstances were established: (i) that the payment was unbroken (ii) that the payment had been made for a sufficiently long period; and (iii) that it was not paid out of bounty.
The payment: need not necessarily be at a uniform rate throughout, and it was for the Tribunal to decide the quantum in a particular year taking into account the various payments made in previous years.
In the present case the payment was unbroken and was not made out of bounty as it was made even in years of loss.
The sufficiency of the length of the period depended on the circumstances of each case and in the present case the appellant had paid the bonus since its birth.
Mahalaxmi Cotton Mills Ltd., Calcutta vs Mahalaxmi Cotton Mills Workers Union, approved.
Held further, that the workmen were not entitled to any benefits arising out of their employment with M/s. M. M. Ispahani Ltd. The workmen had agreed to the termination of their service with that company, and there was no express or implied undertaking given by the appellant regarding continuity of service when employing the workmen.
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<s>[INST] Summarize the judgementvil Miscellaneous Peti tion No. 25533 of 1986.
IN THE MATTER OF T.V. CHOUDHARY, A MEMBER OF 148 THE INDIAN ADMINISTRATIVE SERVICE (UNDER SUSPENSION) WITH Special Leave Petition No. 14045 of 1985.
From the Judgment and Order dated 18.10.1985 of the Andhra Pradesh High Court in W.P. No. 891 of 1985.
P.P. Rao, Mrs. Shyamla Pappu, B. Kanta Rao, Ms. Malini Poduval, B. Parthasarthi, Mrs. Indra Sawhney and B.B. Sawh ney for the Petitioner.
Dr. Y.S. Chitale, T.V.S.N. Chaff, Ms. Vrinda Grover and Ms. Sunila Monigude for the Respondents.
The Judgment of the Court was delivered by SEN, J.
This is an application made by one T.V. Choud hary, a Member of the Indian Administrative Service, under suspension, for recalling the Court 's orders dated May 5, 1986 and August 11, 1986 passed in Special Leave Petition No. 14045 of 1985.
We shall first deal with the Special Leave Petition of E.S. Reddi, a member of the Indian Administrative Service belonging to Andhra Pradesh cadre and who worked as the Vice Chairman cum Managing Director of the Andhra Pradesh Mining Corporation.
It is directed against a judgment of the Division Bench of the High Court dated October 18, 1985 reversing the judgment and order of a learned Single Judge dated September 2, 1985 and dismissing his petition under article 226 of the Constitution.
By the writ petition, the petitioner had called in question the validity of an order of the State Government of Andhra Pradesh dated February 11, 1985 placing him under suspension under sub r.
(1) of r. 13 of the Andhra Pradesh Civil Services (Classification, Con trol & Appeal) Rules, 1963.
The main grievance of the peti tioner before the High Court was that the impugned order of suspension was wholly mala fide, arbitrary and irrational and violative of article 14 of the Constitution as there was no justification for the differential treatment meted out to him while the applicant T.V. Choudhary, also a member of the Indian Administrative Service, who worked in various capaci ties viz. as General Manager, Functional Director, Member, Board of Directors and Vice Chairman cure Managing Director and 149 was involved in the commission of the alleged irregulari ties, had merely been transferred from the Corporation and posted as Managing Director, Andhra Pradesh State Textile Development Corporation.
That objection of his was sustained before the learned Single Judge who by his judgment dated September 2, 1985 quashed the impugned order of suspension.
The Division Bench however by the judgment under appeal has reversed that judgment and dismissed the writ petition holding that the findings arrived at by the learned Single Judge are not warranted by the material on record.
Civil Miscellaneous Petition No. 255 10/86 is filed by R. Parthasarthy, a member of the Indian Administrative Service who was Vice Chairman cum Managing Director of the Corporation for the period from March 1979 to October 1979 and was working as the Commissioner of Commercial Taxes, while Civil Miscellaneous Petition No. 25533/86 is by T.V. Choudhary, also a member of the Indian Administrative Serv ice and who was working as the Managing Director of the Andhra Pradesh State Textile Development Corporation.
These two applications are for recalling the Court 's orders dated May 5, 1986 and August 11, 1986 on the ground that they prejudicially affect the applicants.
The matter relates to defalcation of a huge amount of Rs. 1.50 crores by certain officers of the State Government whose services were placed on deputation with the Corporation.
Admittedly, the Anti Corruption Bureau, Andhra Pradesh has registered a case against these officers for having committed alleged offences punishable under section 120B read with section 420 of the Indian Penal Code and section 5(1)(d) of the Prevention of Corruption Act, 1947 as its preliminary report revealed a prima facie case against them.
On December 12, 1985 the Court issued notice on the Special Leave Petition.
It appeared from the counter affida vit filed by the State Government that the Anti Corruption Bureau had finalised the investigation and the Director General had submitted his report dated March 25, 1986 which was under consideration of the Government.
It also appeared that the State Government of Andhra Pradesh had addressed letters dated May 2, 1984 for sanction of the Central Gov ernment under section 6(1)(a) of Prevention of Corruption Act, 1947 for the prosecution of R. Parthasarthy and of the State Government of Maharashtra for the prosecution of P. Abraham, I.A.S. as he is borne on the Maharashtra cadre and was on deputation to the Andhra Pradesh.
In compliance with the Court 's order, the State Government placed before us the letter of the State Government dated May 2, 1984 150 as also the report of the Director General, Anti Corruption Bureau, Andhra Pradesh dated May 25, 1986.
After hearing the parties on May 5, 1986, we made the following order: "In compliance to this Court 's order, Shri P. Ram Reddy, learned counsel for the State Government places before us the letter of the State Government dated May 2, 1984 as also the report of the Director General, Anti corrup tion Bureau, Andhra Pradesh dated March 25, 1986.
It appears from the letter that sanction of the Central Government is necessary under section 6(1)(a) of the Prevention of Corruption Act, 1947 for the prosecution of R. Partha sarthy, IAS and that of the State Government of Maharashtra for the prosecution of P. Abraham we have perused the report of the Director General and it cannot be said that the charges levelled against the petitioner are groundless.
It is somewhat surprising that the petitioner alone should have been placed under suspension by the State Government pending contemplated departmental enquiry under r. 13 of the A.P. Civil Services (Clas sification, Control & Appeal) Rules, 1963 and not the other two officers T.V. Choudhary and S.M. Rao Choudhary, the then Managing Director who it appears are equally culpable.
The matter is adjourned till after vacation to enable the State Government to obtain the requisite sanction from the Central Government for the prosecution of R. Partha sarthy and that of the State Government of Maharashtra for the prosecution of P. Abraham under section 6(1)(a) of the Act.
Shri P. Ram Reddy learned counsel for the State Government shall in the meanwhile convey to the State Govern ment the concern expressed by this Court that the petitioner alone could have been placed under suspension and not the other officers who are alleged to be co accused.
We are afraid, if the State Government does not pass any order placing the other officers under suspension it may become necessary for the Court to revoke the suspension of the peti tioner at the next hearing.
" When the matter came up after vacation on August 18, 1986 it had to be adjourned with a direction that the State Government should in the meanwhile pass necessary orders for suspension of the delinquent officers.
In anticipation of action by the State Government, the 151 two applicants R. Parthasarthy and T.V. Choudhary moved applications on September 2 and September 3, 1986 for re calling the directions made on May 5, 1986 and August 11, 1986.
The applications were listed for directions on Septem ber 5, 1986.
On motion being made by learned counsel appear ing for the applicants, it was directed that the applica tions be placed for heating on September 9, 1986.
The State Government in the meanwhile on September 6, 1986 passed orders for suspension of P. Parthasarthy and T.V. Choudhary under r. 13(1) of the Rules.
We were apprised of this fact when the applications came up for heating on September 9, 1986 that the State Government had already placed them under suspension.
In the special leave petition, the only contention of the petitioner E.S. Reddi was that the action of the State Government in making selective suspension suffered from the vice of arbitrariness and offended against article 14 of the Constitution inasmuch as persons like the applicant T.V. Choudhary who were equally culpable have merely been trans ferred while he has been singled out and placed under sus pension under sub r.
(1) of r. 13 of the Rules without any rational basis and that such arbitrary action of the State Government was tantamount to denial of equal treatment to persons similarly placed.
In view of the subsequent order passed by the State Government on September 6, 1986 placing other officers including the applicant .T.V.
Choudhary under suspension under r. 13(1) of the Rules pending their prose cution, the special leave petition has become infructuous.
It is accordingly dismissed.
That takes us to C.M.P. Nos.
25510/86 and 25533/86 filed by R. Parthasarthy and T.V. Choudhary respectively.
We impressed upon the learned counsel appearing for them that the proper course for the applicants was to move the Govern ment by way of appeal and/or representation against their suspension and not by these applications for recalling the Court 's orders.
After the matter was heard at a considerable length, Smt.
Shyamala Pappu, learned counsel appearing for R. Parthasarthy very properly prayed for leave to withdraw C.M.P. NO.
255 10/86 as the applicant had already made a representation to the State Government.
She prayed that a direction be made requiring the Government to consider the representation at an early date.
Dr. Y.S. Chitale, learned counsel appearing for the State Government fairly agreed that the said representation would be considered by the Government on merits.
Turning next to C.M.P. No. 25533/86.
We must strongly depre 152 cate the conduct of the applicant T.V. Choudhary, a member of the Indian Administrative Service and working as Managing Director of the Andhra Pradesh State Taxtile Development Corporation, to have made reckless allegations and cast aspersions on the Court.
After denying his complicity, the applicant T.V. Choudhary goes on to assert: "The Order of this Hon 'ble Court directing the Government to suspend the other delinquent officers is made without affording an opportu nity to the Applicant and presumably without considering the relevant provisions of law, case law and the parameters of judicial power and the necessity to observe the principles of natural justice.
It is submitted that the Order of this Hon 'ble Court dated 11th August 1986 is illegal, insofar as it directed the Government to suspend the applicant and others, in view of the fact that the Government has exercised its discretion and transferred the applicant taking into consideration the recommendation of the Anti corruption Bureau.
It is well settled that a Court of law cannot compel a statutory authority to exercise its statutory discretion in a particular manner.
The legis lative will in conferring discretion in an essentially administrative function cannot be interfered with by Courts.
" To say the least, the averments are highly objectionable.
It was expected that the applicant, who is a very senior member of the Indian Administrative Service, should have shown greater responsibility before making such unfounded allega tions and uncalled for aspersions.
On a motion being made on September 5, 1986 by Shri P.P. Rao, learned counsel for the applicant, it was directed that the application shall be listed for hearing on September 9, 1986.
At the same time, we drew the attention of the learned counsel to the improper and objectionable averments made by the applicant.
We were given the impression that the application had been settled by the learned counsel without noticing the offending aver ments.
We wish we could have rested content with concluding the judgment with the operative portion of our conclusions on the merits of the case but we find with a sense of anguish and heaviness of heart that we have to express our disap proval of the manner in which the arguments were advanced before us on behalf of the applicant T.V. Choudhary.
153 Not only were the arguments advanced with undue vehemence and unwarranted passion, reflecting identification of inter est beyond established conventions but were of degrees not usual of enlightened senior counsel to adopt.
The majesty of law and the dignity of courts cannot be maintained unless there is mutual respect between the Bench and the Bar and the counsel act in full realisation of their duty to the Court alongside their duty to their clients and have the grace to reconcile themselves when their pleas and arguments do not find acceptance with the Court.
It is needless for us to say that neither rhetoric nor tempestuous arguments can constitute the sine qua non for persuasive arguments.
By virtue of the pre eminence which senior counsel enjoy in the profession, they not only carry greater responsibili ties but they also act as a model to the junior members of the profession.
A senior counsel more or less occupied a position akin to a Queen 's counsel in England next after the Attorney General and the Solicitor General.
It is an honour and privilege conferred on advocates of standing and experi ence by the Chief Justice and the Judges of this Court.
They thus become leading counsel and take precedence on all counsel not having that rank.
A senior counsel though he cannot draw up pleadings of the party, can nevertheless be engaged "to settle" i.e. to put the pleadings into "proper and satisfactory form" and hence a senior counsel settling pleadings has a more onerous responsibility as otherwise the blame for improper pleadings will be laid at his doors.
Lord Reid in Rondel vs Worsley, ; has succinctly set out the conflicting nature of the duties a counsel has to perform in his own inimitable manner as follows: "Every counsel has a duty to his client fear lessly to raise every issue, advance every argument, and ask every question, however distasteful, which he thinks will help his client 's case.
As an officer of the court concerned in the administration of justice, he has an overriding duty to the court, to the standards of his profession, and to the pub lic, which may and often does lead to a con flict with his client 's wishes or with what the client thinks are his personal interests.
Counsel must not mislead the court, he must not lend himself to casting aspersions on the other party or witnesses for which there is no sufficient basis in the information in his possession, he must not withhold authorities or documents which may tell against his cli ents but which 154 the law or the standards of his profession require him to produce.
By so acting he may well incur the displeasure or worse of his client so that if the case is lost, his client would or might seek legal redress if that were open to him.
" Again as Lord Denning, M.R. in Rondel vs W, would say 'he (the counsel) has time and again to choose between his duty to his client and his duty to the Court.
This is a conflict often difficult to resolve; and he should not be under pressure to decide it wrongly.
When a barrister or an advocate puts his first duty to the Court, he has nothing to fear '.
In the words of Lord Denning: "It is a mistake to suppose that he is the mouthpiece of his client to say what he wants: . .
He must disregard the most specific instructions of his client, if they conflict with his duty to the court.
The code which requires a barrister to do all this is not a code of law.
It is a code of honour.
If he breaks it, he is offending against the rules of the profession and is subject to its discipline.
" We are constrained to give expression to our views with a feeling of remorse to remind the counsel of that sense of detachment and non identification they are expected to maintain with the causes espoused by them and not with a view to belittle the profession or cast aspersions on coun sel.
After bestowing our dispassionate consideration of the matter we found ourselves left with no other alternative but to dismiss the application made by T.V. Choudhary which was clearly misconceived and we direct the applicant to pay Rs.5,000 as costs to the State Government in view of the disapprobation his case and conduct has warranted.
H.L.C. Petitions dismissed.
[/INST]An officer involved in a defalcation case who was sus pended, challenged the order of suspension under article 14 of the Constitution on the ground that another officer similar ly situate had merely been transferred.
The order was quashed by a Single Judge of the High Court, but, on appeal, his judgment was reversed by the Division Bench.
The matter came up before the Court by way of a Special Leave Petition.
The counter affidavit filed by the State Government indicated that it had initiated action to prosecute two other officers involved in the case.
When the Special Leave Petition came up for hearing, the Court made an interim order directing the counsel to convey to the State Govern ment the Court 's concern at the petitioner alone having been placed under suspension and, indicating that if the State Government did not pass any order placing the other offi cers, who, on a perusal of the investigation report, ap peared to be equally culpable, under suspension, it may become necessary lot the Court to revoke the suspension of the Special Leave Petitioner at the next hearing.
When the matter came up again, it had to be adjourned by the Court with another interim order directing the State Government to pass necessary orders for suspension of all the delinquent officers.
In anticipation of action by the State Government, two other officers involved in the case filed applications praying for recall of the two interim orders aforesaid.
However, the two officers in question were also placed under suspension before the matter finally came up for hearing.
The Court impressed upon counsel appearing for the applicants who had prayed for recall of the interim orders that the proper course for them was to move the State Gov ernment by way of appeal and/or representation against their suspension.
While counsel for one of the applicants accepted that suggestion and ,withdrew the application, counsel for the other applicant did not do so.
The latter applicant had, 147 in his application, made certain reckless allegations and cast aspersions on the Court.
The counsel appearing for him gave the impression that the application had been settled by him without noticing the offending averments but went on to advance arguments with undue vehemence and unwarranted passion.
The Court, while dismissing the Special Leave Petition as infructuous and expressing disapproval of the manner in which arguments had been advanced on behalf of one of the applicants.
HELD: By virtue of the pre eminence which 'Senior Coun sel ' enjoy in the profession, they not only carry greater responsibilities but they also act as a model to the junior members of the profession.
A senior counsel more or less occupies a position akin to a Queen 's counsel in England next after the Attorney General and the Solicitor General.
It is an honour and privilege conferred on Advocates of standing and experience by the Chief Justice and the Judges of this Court.
They thus become leading counsel and take precedence on all counsel not having that rank.
A senior counsel though he cannot draw up pleadings of the party, can nevertheless be engaged "to settle" i.e. to put the plead ings into "proper and satisfactory form" and hence a senior counsel settling pleadings has a more onerous responsibility as otherwise the blame for improper pleadings will be laid at his doors.
[153C E] In this case, not only were the arguments advanced with undue vehemence and unwarranted passion, reflecting identi fication of interests beyond established conventions but were of degrees not usual of enlightened senior counsel to adopt.
The majesty of law and the dignity of Courts cannot be maintained unless there is mutual respect between the Bench and the Bar and the counsel act in full realisation of their duty to the Court alongside their duty to their cli ents and have the grace to reconcile themselves when their pleas and arguments do not find acceptance with the Court.
Neither rhetoric nor tempestuous arguments can constitute the sine qua non for persuasive arguments.
[153A C] Rondel vs W, and Rondel vs Worsley, ; , referred to.
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<s>[INST] Summarize the judgementivil Appeal No: 446 of 1973 From the Judgment and Order dated 18.11.1970 of the Madras High Court in Writ Appeal No. 389 of 1967.
M.M. Abdul Khader and A.V. Rangam for the Appellant.
K. Ram Kumar and Mrs. J. Ramachandran for the Respondent.
The Judgment of the Court was delivered by CHINNAPPA REDDY, J.
This appeal is by a certificate granted by the Madras High Court under article 133(1)(c) of the Constitution.
The appellant is the State of Tamil Nadu.
The respondent is the Ahobila Matam, a well known religious institution.
The question relates to the applicability of the Tamil Nadu Inams (Assessment) Act, 1956 in regard to some lands situated in Narasimhapuram, Papanasam Taluk, Thanjavur District belonging to the institution.
The lands are covered by Inam Title Deed No.2214 dated July 29, 1881 granted by the Inam Commissioner to the Manager for the time being of Sri Ahobila Matam.
By the title deed, the Inam Commissioner, by order of the Governor in Council of Madras acting on behalf of the Secretary of State for India in Council, acknowledged the title of the Ahobila Matam to "a religious endowment or a Matam Inam consisting of the right to the Government Revenue on land claimed to be acres 28.11 cents of dry, 58.38 acres of wet and 6.83 acres of garden and situated in the whole village of Narasimhapuram besides Poramboke in the taluk of Kumbakonam District of Tanjore and held for the support of the Ahobila Matam" and confirmed the Inam to the Manager for the time being of the Ahobila Matam and his successor "tax free to be held without interference so long as the conditions are duly fulfilled.
" The extract of the Inam Fair Register mentioned in Column 8 that the grant was made by one of the Tanjore Princes, but that the purpose of the grant was not known.
It was presumed that the inam was conferred for the benefit of the Matam.
Column 13 mentioned the original grantee as the Ahobilam Servatantra Sri 235 Srinivasa Swami, apparently, the then Jeer of the Matam.
The recommendation of the Inam Commissioner in Column 22 was that the title deed should be issued in the name of the priest for the time being of the Ahobila Matam.
It was in pursuance of this recommendation that Inam Title Deed No. 22 14 was issued.
Consequent on the enactment of the Madras Inams(Assessment) Act, 1956, the Revenue Divisional Officer, Kumbakonam made an order on February.
28, 1963 levying full assessment on the lands.
The levy of the assessment was questioned by the Ahobila Matam by a Writ Petition in the Madras High Court.
First, a learned Single Judge and then, a Division Bench of Madras High Court quashed the assessment on the ground that the proviso to s.3 (1) of the Act pre vented the levy of full assessment of lands held on service tenure.
The proviso to section 3(1) of the Act is in the follow ing terms: "Provided that in the case of an Inam granted on service tenure which is proved to consist of an assignment of land revenue only, no assessment under this sub section shall be leviable, and the inamdar shall be liable to pay only the quit rent, Jodi, Kattubadi or other amount of a like nature, if any, which he has been paying before the commencement of this Act.
" The question for consideration, therefore, is whether the Inam was granted on 'service tenure '.
The High Court took the view that the expression 'service tenure ' was not to be restricted to a service inam and that it would include any grant for the support of a religious or charitable institution.
For that purpose reliance was placed on the classification of inams in the Standing Orders of the Board of Revenue.
The Standing Orders divided inams into unenfran chised service inams and unenfranchised personal inams.
Under the heading of unenfranchised service inams, religious and charitable inams were dealt with in Paragraph 54.
Para graph 54 enjoined a duty on the Collector to see that the inams confirmed by the Inam Commissioner for the benefit of or for service to be rendered to any religious or charitable institution or for the maintenance of irrigation works or other works of public utility; were not enjoyed without the terms of the grant being fulfilled.
Religious and charitable inams were further classified and in the first category we get inams granted for the support or maintenance of Hindu religious institutions, inams granted for the performance of a charity or service connected with Hindu religious institu tions and inams granted for any other Hindu charitable trust.
In the second category came the other inams.
We do not think that the classification of grants 236 for the benefit of a religious institution along with other service inams by Paragraph 54 of the Board 's Standing Orders throws light on the interpretation of the expression 'serv ice tenure ' in Madras Inams Assessment Act.
The expression 'service ' in connection with religious institutions has acquired a special and significant meaning and we do not think that we will be justified in ignoring the well under stood meaning given to the expressions 'service inams ' and 'service tenure ' over decades of years.
We must not also forget that the object of Madras Inams Assessment Act was to impose full assessment on Inam lands hitherto wholly or partly exempt from levy of land revenue.
As far back as 1934, the Madras High Court in Subramania vs Kailasanatha AIR 1934 Madras 258 (Venkata Subba Rao, J.), pointed out that there were three possible views that might be taken of grants made in connection with religious institutions: "First, that the land was granted to the institution, sec ondly, that it was intended to be attached to a particular office, and thirdly, that it was granted to a named individ ual, burdened with service, the person so named, happening to be the office holder, at the time of the grant.
This distinction between grants to institutions as such and grants made for the performance of service either by attach ing the service to a particular office or by naming the individual grantee and burdening the grant with service, the named individual being the holder of an office, for the time being.
In Hindu Religious Endowments Board, Madras vs Thadi konda Koteswara Rao, , a Division Bench of the Madras High Court considered a number of grants bearing these distinctions in mind.
Where the grant was "for the worship of the idol in the pagoda" or "for the nithya naivedya deeparathana" or "for the offering of daily nai vaidyam and deeparathana", the grants were construed as grants in favour of the institution and not as grants in favour of the office holder or individual burdened with service.
In other words, such grants were not treated as service inams but as grants in favour of institutions.
The decision in Hindu Religious Endowments Board vs Koteswara Rao, (supra), is the leading case on the subject and has been followed consistently all these years by the Madras High Court.
Lands granted to religious institutions (not either to the office holder or to an individual burdened with service) for the performance of worship in a temple or math have never been considered as lands subject to 'service tenure '.
The High Court referred to section 44(B) of Madras Act 2 of 1927.
We find ourselves unable to derive any assistance from that provision.
Section 44B provided for resumption and regrant of inams granted for the support or maintenance of a math or for the performance of charity or service connected with a math or temple.
We do not think that it would be proper for us to interpret the expression 'service tenure ' by refer 237 ring section 44B of the Madras Act 2 of 1927 where that expres sion is in fact not used at all.
We are, therefore, of the view that the proviso to section 3(1) is inapplicable to lands held by religious institutions and, therefore, the lands are liable to full assessment.
Shri Ram Kumar, learned counsel for the respondent argued that the imposition of full assessment on lands held by the religious institution in the present case would be hit by article 26 of the Constitution which gives to every religious.denomination the right to own and acquire movable and immovable property and to administer such property inaccordance with law.
We are unable to understand how the mere imposition of assessment on lands held by a religious denominational institution can possibly attract the right guaranteed by the article 26 of the Constitution.
The burden imposed is a burden to be shared in the same manner by all the owners of the lands in the State and not a special burden imposed on the denominational institution.
Burden of that nature are outside the right guaranteed by article 26 of the Constitution.
The appeal is, therefore, allowed and the orders of the learned single Judge and the Division Bench of the Madras High Court are set aside.
The writ petition filed in the High Court is dismissed.
P.S.S. Appeal allowed.
[/INST]The Appellant Company, in a writ petition, challenged the order passed by the respondent Electricity Board levy ing surcharge of 5.5 paise per unit on electricity drawn by the Company in excess of the permissible 70% authorised by the State Government.
The writ petition having been dis missed by a Single Judge of the High Court and the Division Bench having confirmed the decision, the appellant appealed to this Court.
In the appeal, it was contended; (i) that the Electrici ty Board had no authority to charge 5.5 paise per unit in excess of the agreed rate without giving one month 's notice as contemplated by the agreement; and (ii) that the levy of the surcharge resulted in retrospective levy and was there fore not in accordance with law.
Dismissing the appeal, HELD: 1.
The Electricity Board had the legal authority to levy and collect surcharge of 5.5 paise per unit from the appellant in regard to the supply of electricity in excess of the 70% authorised in the context of section 22 B of the .
[334 C] 2.
The agreement itself does not envision the supply of electricity in violation of the ban imposed by the State Government in exercise of the power under section 22B of the Act.
[333 G H] 3.1 Section 49(3) of the Electricity Supply Act autho rises a Board to supply electricity by charging different tariff having regard to the geographical position of the area, the nature of the supply, purpose for which the supply is required and any other relevant factors, and is wide enough to cover a situation where electricity in excess of the authorised quantum is drawn in disregard of the ban imposed in view of the shortage of the supply under section 22 B of the as also to cover a situation where at the express request of 332 the consumer electricity is purchased from some other au thority and is supplied.
[334 D, B] 3.2 The combined effect of s.49 and the terms and condi tions of supply is that having regard to the nature of supply and other relevant factors particularly when there is shortage of electricity the Board has the power to enhance the rates.
If there is shortage of electricity there is justification to impose restriction on supply.
The Board can also impose higher rates by way of sanction if the quota is exceeded.
[334 E] Adoni Cotton Mills etc.
vs The Andhra Pradesh State Electricity Board and Others, ; , relied upon.
In the instant case, having regard to the fact that the supply was made after obtaining it from the Damodar Valley Corporation at a higher rate and having further regard to the fact that the impost of the surcharge is construed as having been made under the statutory authority, the stipula tion in the agreement does not come into play.
[335 A B]
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<s>[INST] Summarize the judgementivil Appeal No. 289 of 1982.
1003 From the Judgment and Order dated 17.7.
1981 of the Delhi High Court in S.A.O. No. 249 of 1981.
Soli J. Sorabji, Anil Kumar Gupta and Brij Bhushan for the Appellant.
B.R. Agarwala for the Respondent.
The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.
This appeal by special leave arises from the order of the High Court of Delhi dated 17th of July, 1981 dismissing the second appeal in limine against the ' order dated 2nd July.
1981 in RCA No. 87 1 of 1980 of the Rent Control Tribunal, Delhi.
The order of eviction in this case on the ground of bona fide requirement of the landlord was passed by the Rent Controller on or about 15th of October, 1960.
There was an appeal from the said order of the Rent Controller and the appeal was dismissed on or about 9th October, 1961 by the 2Rent Tribunal.
In May 1962 the respondent filed an applica tion before the Competent Authority under section 19 of the Slum Areas (Improvement of Clearance) Act, 1956 (hereinafter called 'the Slum Act ') for permission to execute the order of eviction.
On or about 21st of March, 1963 the said application was dismissed by the Competent Authority under the Slum Act.
In the meantime in January, 1964.
the came into operation.
On the 19th of April.
1978, the respondent filed a second application before the Competent Authority for permission to execute the order of eviction.
In June, 1979 permission was granted by the appropriate authority under the Slum Act.
On 28th of August, 1979 the appeal from the said Rent Controller was dismissed by the High Court.
Thereafter on or about 25th of September, 1979 the respond ent herein filed an application before the Rent Controller for execution of the decree.
Objections under section 47, Order 21 Rule 22 and section 15 1, Code of Civil Procedure were filed on behalf of the appellant.
On 22nd of August, 1980 order was passed by the Rent Controller that the execu tion application was not barred by limitation.
Execution was stayed, however, to decide the question of fresh tenancy.
There was an appeal under section 38 of the Delhi Rent Control Act, 1958 filed by the appellant against the order of 22nd of August, 1004 1980.
Thereafter the Tribunal in July 1981 ordered that the execution was maintainable and was not barred by limitation and it was further held that supplementary objections were not maintainable.
On 17th of July, 1981 the High Court dismissed in limine the second appeal from the same as aforesaid.
The question that falls for consideration is whether the decree for eviction of the tenant under the Rent Act passed against the appellant was executable by the respondent or whether the same had become barred by limitation or by principles of res judicata.
As mentioned hereinbefore the decree holder had filed an application under section 19 of the Slum Act to obtain the permission from the competent authority in the year 1962.
The permission was not granted and the application was dismissed in the year 1963.
The decree holder filed a fresh application seeking permission from the competent authority in the year 1978.
The permis sion was granted by the order dated 18th of June, 1979.
Thereafter on 25th September, 1979 the decree holder filed application seeking execution of the order of eviction.
The main objection raised by the appellant on the point of limitation was firstly, that the decree in question was passed in 1960 and therefore the decee holder ought to have got it executed within 12 years by 1970.
Secondly, it was contended that the application under section 19 of the Slum Act was filed in the month of March, 1975 but the decree holder did not take any steps for 12 years which expired before 20th of March, 1975 to obtain permission from the Competent Authority and from that aspect also the execution application was time barred.
There are two aspects of the matter which have to be borne in mind, one was, when the decree became executable in the facts and circumstances of the case and what would be the period applicable for such execution.
On the other aspect of the matter, it is necessary to consider the ques tion whether once permission under the Slum Act was refused, does it create resjudicata for the second application? As mentioned hereinbefore the Rent Controller by the impugned order held that the execution application was not barred by time because in the opinion of the said Rent Controller till such time the permission of the Competent Authority (Slums) was obtained, no execution application could have been filed.
The Trial Court further held that the amendment to section 19 of the Slum Act did not affect 1005 the pending execution application, or in other words, limi tation would not have started running.
However, the trial court held that in regard to dispute about the creation of fresh tenancy the matter required investigation and after holding that execution application was within the time adjourned the case for evidence of the appellant and stayed the execution during the pendency of the said objections.
The said objections have been overruled and these are not subject matter of this appeal.
Aggrieved by,the said order the appellant filed appeal before the Rent Tribunal.
The Tribunal noted the relevant provisions of the Slum Act.
Section 19(1) as it stood before the amendment read as follows: "19(1) Notwithstanding anything contained in any other law for the time being in force, no person who has obtained any decree or order for the eviction of a tenant from any buildings in a slum area shall be entitled to execute such decree or order except with the previous permission in writing of the Competent Authority.
" Section 19(1) of the said Act now reads as follows: "19(1) Notwithstanding anything contained in any other law for the time being in force, no person shall except with the previous permission in writing of the Compe tent Authority, (a) institute, after the commencement of the Slum Areas (Improvement and Clearance) Amend ment Act, 1964, any suit or proceeding for obtaining any decree or order for the eviction of a tenant from any building or land in a slum area, or . . . " It is not disputed that 12 years had expired when the execution petition was filed from the date of the order of eviction but not from the date the permission of the Compe tent Authority (Slums) was obtained.
The question, there fore, is whether the Indian Limitation Act 1908 or Limita tion Act, 1963 was applicable to the execution proceedings and whether the limitation would start running from the date the permission of the Competent Authority (Slums) was ob tained.
So far as the first question about the applicability of the Limitation Act, it is necessary to refer to section 42 of the Delhi Rent Control (hereinafter called 'the Act ') which provided that an order of eviction has to be executed like a decree of the Civil Court.
The provisions of the Code of Civil Procedure executing the decree are made applicable by legal fiction recognised by virtue of section 42 of the Act.
In any case procedure of the Small Causes is adopted by the Controllers under the provisions of the Act wherein also in execution the provisions of Code of Civil Procedure are applicable and as such law of limitation would be attracted.
The question is when the limitation starts running.
Once the limitation started running then unless the statute comes to the rescue of a person the period would expire after the efflux of time.
Discussing certain authorities the Rent Tribunal held that the limitation started from the date of the grant of the permission and as such the execution application was well within time.
The Tribunal dismissed the appeal.
The High Court summarily rejected the second appeal.
The question before us is whether this execution was barred by limitation and secondly, whether there was a question of res judicata because a prior application for permission by the Slums Clearance Authority was rejected.
This particular point was considered by a learned single Judge of the Delhi High Court in Des Raj and another vs Noor Khan, (A.I .R. 1985 Delhi 470, where the High Court held that under Article 136 of the Limitation Act of 1963 a decree was executable within 12 years from the date when it became executable.
where the decree when passed, was not enforceable no execution could be levied and hence period of limitation would not commence.
A decree of eviction passed under the Delhi and Ajmer Rent Control Act, 1952 on 19 2 60 according to the said decision became executable only on 8 5 81 in the case when permission under the Slum Act to execute it was obtained and therefore the 12 years ' period prescribed by article 136 to execute the decree was held to have commenced only on 8 5 81 and not on 19 2 60.
The High Court followed a Full Bench decision of the Allahabad High Court and a division bench decision of the Patna High Court.
It was further held that there was no bar under section 19 of the Slum Act to a second or subsequent application seeking permission to execute the order of eviction of tenant obtained under section 13(1)(e) of the Delhi and Ajmer Rent Control Act, 1952, in view of the changed 1007 circumstances entitling grant of the permission being shown.
This decision negates the two principal contentions urged in this case on behalf of the appellant, namely there was no question of res judicata in granting subsequent permission under the Slum Act if changed circumstances so warranted and secondly limitation would start after the permission was granted.
But the Delhi High Court had no occasion to consider the effect of the decision of this Court in Ravi Dutt vs Rattan Lal, ; where it was held that the relevant provisions of the Delhi Rent Act for eviction on the ground of bona fide requirement being in Chapter III A of the said Act had overriding effect and the Slum Act was rendered inapplicable.
If that is the position then no permission under Slum Act was at all necessary in case of a decree for bona fide requirement.
The said princi ple was reiterated in two previous decisions.
If that was so then the decree for eviction having been passed on 15th October, 1960 and the application for execution being filed on or about 25th September, 1979 was clearly barred by limitation.
But the basic question in the instant case as we have noted from the facts of the case is that the decree for eviction under the Rent Act was passed in October, 1960 and the appeal against the same was dismissed in October, 1961 by the Tribunal.
Thereafter an application was made in May, 1962 for permission under section 19 of the Slum Act as it then stood was dismissed in March, 1963.
Thereafter no action was taken upto 1978.
When in 1978 action was initiat ed by filing the second application under the Slum Act 12 years from the dismissal of the application under the Slum Act had passed and the decree had become barred.
The decree had clearly become barred by limitation.
Article 136 of the provides that a decree can be executed within 12 years from the date on which it became executable.
Decree passed by the Rent Controller even if it was not executable and enforceable unless permission under the Slum Act had been taken, which as noticed before was not the position in law the steps for such permission had become barred.
Steps for filing the application under the Slum Act were not taken, on refusal of the first application within 12 years thereof.
It is apparent therefrom that the execu tion of the decree for eviction which was passed on 15th of October, 1960 became time barred on 14th of October, 1963 under Article 182 of the Indian Limitation Act, 1908 as it stood at that time.
Under Section 31(a) of the 1963 Limita tion Act, the provisions of the 1963 Limitation Act would not be availed of in respect of an application for which the period of limitation had expired before the commencement of the 1963 1008 Limitation Act, that is to say, 1.1.64.
But even if article 136 of the was attracted it had become barred after 12 years from the date of the decree, i.e. 15th October, 1960.
In the Bench decision the Calcutta High Court in Lala Baijnath Prosad and others vs Nursingdas Guzrati, A.I.R. 1958 Calcutta 1 at p. 8).
Chakravartti, C.J. speaking for the division bench observed: "The right to enforce the decree, it appears to me, is one thing; the possibility or practicability of exercising the right is another.
If by the terms of a decree, the decreeholder has become entitled to execute it immediately, an instant right to execute it has accrued to him contemporaneously with the passing of the decree.
Even if he is prevented by some external circumstance from enforcing the decree for some time, the right as a right, is nevertheless a present right.
And what is a present right is not merely the right declared by the decree but the right to enforce the decree, because if a decree de clares certain rights in favour of a person and there is nothing in the decree itself by which they are declared with effect from a future date or which postpones the right to execution to some date in the future, there is no reason to say that a present right to enforce the decree does not accrue to the decree holder as soon as the decree is passed.
It may,be that, though entitled under the terms of the decree to enforce it immediately, he cannot in fact do so for some time by reason, say, of having to comply first with some procedural requirement, as in the present case, but that only means that it is not practicable for him yet to enforce the decree and not that a present right to enforce it has not accrued. ' ' The aforesaid principles, in our opinion, would be applicable to the facts and circumstances of the present case.
It has been emphasised that there was no impediment or disability in the way of the respondent in applying for permission from the Competent Authority under the Slum Act.
It was, however, urged that unless the circumstances changed the permission under the Slum Act could not have been grant ed but for the off chance of circumstances changing and thereby giving a right to apply for permission under the Slum Act, a decree cannot be kept in suspended animation.
As we have noted before after the refusal of the application in March, 1963 until April, 1978 there 1009 were no steps taken.
This feature and this aspect, in our opinion, distinguishes this case from the other cases.
quite apart from the fact that in the light of the decision of this Court in Ravi Dutt vs Rattan Lal, (supra) there was no requirement of permission under the Slum Act and as such no impediment in putting the decree dated 15th October, 1960 into execution.
It has further to be borne in mind that respondent had filed a second application for permission after lapse of more than 15 years, there was, in any event.
no legal impediment or legal bar which prevented the re spondent from making the application for permission to the competent authority under the Slum Act before.
It was argued that the respondent did not apply because there was no change of circumstances which would entitle the respondent to obtain permission.
It was argued that the second applica tion was made in 1978 and at that time the law under the Slum Act had altered as we have noticed.
It appears to us that in this case in any event no permission was required to execute the decree.
Therefore the second application was unnecessary.
In that view of the matter in this case it is not necessary to examine whether a second application lay or not.
We are inclined to the view that an application might lie if it was within the period of limitation.
We need not decide in this case the question of res judicata.
It is clear that the order of eviction passed by the Rent Controller as confirmed by the Tribunal in 1961 had become obsolete in 1978 when the second attempt to execute the same was made.
In that view of the matter we are of the opinion that it was not just, equitable and in good conscience to allow such stale claims to be effectuated and that would be contrary to the principles of the as well as Indian Limitation Act, 1908.
In the premises the order dismissing the appeal from the Rent Tribunal must be set aside and the application made for execution must be dismissed.
It must be held that the claim to execute the order of eviction of the Rent Controller in this case dated 15th October, 1960 had become time barred.
The appeal is allowed and the judgment and order of the High Court are set aside.
In the facts and circumstances of the case, however, there will be no order as to costs.
N.P.V. Appeal allowed.
[/INST]The Rent Controller passed an order of eviction against the appellant tenant in October, 1960 on the ground of bona fide requirement of the landlord.
The appeal against this order was dismissed by the Rent Tribunal in October, 1961.
The application of the respondentlandlord for permission to execute the order of eviction under Section 19 of the Slum Areas (Improvement of Clearance) Act, 1956 filed in May, 1962 was dismissed by the Competent Authority in March, 1963.
In the meantime in January, 1964 the came into operation.
The respondent filed a second application in April, 1978 for permission to execute the eviction order.
Permission was granted in June 1979.
In September, 1979 the respondent filed an application before the Rent Controller for execution of eviction order.
Objections under Section 47, Order 21 Rule 22 and Section 151 of the Code of Civil Procedure were filed on behalf of the tenant.
The Rent Controller passed an order on August 22, 1980 holding that the execution application was not barred by limitation, but stayed the execution to decide the question of fresh tenancy.
An appeal against this order was filed by the appellant before the Tribunal which held that the execution was main tainable and was not barred by limitation and that supple mentary objections were not maintainable.
The High Court confirmed this order by dismissing the second appeal in limine.
In the appeal by the tenant before this Court, the question for 1002 consideration was whether the decree for eviction under the Rent Act passed against the respondent was executable by the appellant or whether the same had become barred by limita tion or by res judicata Allowing the appeal, this Court, HELD: 1.1 The claim to execute the order of eviction of the Rent Controller dated 15th October, 1960 had become time barred.
[1009G] 1.2 It was not just, equitable and in good conscience to allow such stale claims to be effectuated and that would be contrary to the principles of the as well as the Indian Limitation Act, 1908.
[1009E F] 1.3 The execution of the decree for eviction passed on 15th of October, 1960 became time barred on 14th of October, 1960 under Article 182 of the Indian Limitation Act, 1908 as it stood then.
Under section 31(a) of the 1963 Limitation Act, the provisions of the 1963 Limitation Act would not be availed of in respect of an application for which the period of limitation had expired before the commencement of the 1963 Limitation Act, that it to say, 1.1.1964.
But even if Article 136 of the was attracted it had become barred after 12 years from the date of the decree, i.e. 15th October, 1960.
[1007G H; 1008A] 1.4 There was no requirement of permission under the Slum Act and, as such, no impediment in putting the decree dated 15th October, 1960 into execution.
Second application for permission was filed after a lapse of more than 15 years; there was, in any event, no legal impediment or legal bar which prevented the respondent from making the applica tion for permission to the competent authority under the Slum Act before.
[1009B C] 1.5 The order of eviction passed by the Rent Controller as confirmed by the Tribunal in 1961 had become obsolete in 1978 when the second attempt to execute the same was made.
[1009E] Des Raj and another vs Noor Khan, A.I.R. 1985 Delhi 470; Ravi Dutt vs Rattan Lal, ; and Lala Baijnath Prosad and others vs Nursingdas Guzrati, A.I.R. 1958 Calcut ta 1 at p. 8, referred to.
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 32 of 1954.
227 On appeal from the judgment and order dated the 26th September 1951 of the Madras High Court in Case Referred No. 18 of 1949.
C. K. Daphtary, Solicitor General of India (C. N. Joshi and R. R. Dhebar, with him) for the appellant.
R. Ganapathy Iyer, for the respondent.
March 14.
DAS C.J.
In the year 1945 the respondent company (hereinafter called the "assessee") received a payment of a sum of Rs. 26,000 (rupees twenty six thousand) from Jupiter Pictures Ltd. of Madras (hereinafter referred to as Jupiter Pictures) pursuant to the terms of an agreement between the assessee and Jupiter Pictures dated the 31st October 1945.
In the course of the proceedings for the assessment of the assessee 's income tax for the year 1946 47 and the excess profits tax for the chargeable accounting period from 1st April 1945 to 31st March 1946, the following question arose: "Whether on the facts and in the circumstances of the case, the sum of Rs. 26,000 received by the assessee from Jupiter Pictures Ltd., is a revenue receipt assessable under the Indian Income Tax Act?" The Income Tax Officer took the view that the sum was in the nature of a revenue 'receipt and was liable to be brought to account for purposes of calculating the tax.
The Appellate Assistant Commissioner upheld this decision.
On further appeal by the assessee the Income Tax Appellate Tribunal held that the case was governed by the decision of the Judicial Committee in Commissioner of Income Tax vs Shaw Wallace and Company(1) and that the sum received by the assessee was a capital receipt.
Accordingly on 26th August 1948 the Tribunal reversed the decision of the Appellate Assistant Commissioner.
At the instance of the Commissioner of Income Tax and (1) [1932] L.R. 59 I.A. 206; A.I.R. 1932 P.C. 138; 6 I.T.C. 178.
228 Excess Profits Tax, Madras the Tribunal under section 66(1) of the Indian Income Tax Act, 1922 referred to the High Court of Madras the question of law quoted above.
The High Court agreed with the Income Tax Appellate Tribunal and answered the question in the negative.
The present appeal is directed against this decision of the High Court.
[After stating the facts of the case which gave rise to the present point in controversy and which have been stated above His Lordship proceeded as follows:] As already indicated the question for consideration is whether this payment constituted a capital receipt or a revenue receipt.
It may be mentioned here that the answer to this question will be relevant and helpful only in respect of assessments of other assessees for assessment years prior to the date when the new sub section (5 A) was, by the Finance Act of 1955, added to section 10 of the Indian Income Tax Act, 1922.
It is not always easy to decide whether a particular payment received by a person is his income or whether it is to be regarded as his capital receipt.
Income, said Lord Wright in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income Tax, Bihar and Orissa(1), is a word of the broadest connotation and difficult and perhaps impossible to define in any precise general formula.
Lord Macmillan said in Van Den Berghs, Ltd. vs Clark (Inspector of Taxes)(2) that though in general the distinction between an income and a capital receipt was well recognized and easily applied, cases did arise where the item lay on the border line and the problem had to be solved on the particular facts of each case.
No infallible criterion or test can be or has been laid down and the decided cases are only helpful in that they indicate the kind of consideration which may relevantly be borne in mind in approaching the problem.
The character of the payment received may vary according to the circumstances.
Thus the amount received as consideration for the sale of a (1) , 521; L.R. 70 I.A. 180, 192.
(2) ; ; 3 I.T.R. (Suppl.) 17.
229 plot of land may ordinarily be a capital receipt but if the business of the recipient is to buy and sell lands, it may well be his income.
The problem that confronts us has to be approached keeping in mind the different kinds of consideration taken into account in the different cases.
The assessee before us is a company carrying on a business and it received the sum in question in connection with that business.
We have, therefore, to ask ourselves as to what is the substance of the matter from the point of view of a businessman.
The assessee contends that in receiving this sum it was not carrying on its business,/which was to distribute films, but that it received this amount as and by way of compensation for not distributing those films, that is to say for not carrying on its business.
The sum was, according to the assessee, received by it in return for its ceasing to engage in the business of distributing those three films.
We do not think that is the intrinsic business of the matter.
Here was the assessee whose business was to distribute films, purchased or produced by itself or in respect of which it secured the distribution rights under agreements with the producers.
For the purpose of this distribution business the assessee obviously,had arrangements with the proprietors of different/cinema halls.
If any producer failed to deliver an film as agreed then the exigencies of the assessee 's business would certainly have required the assessee to treat that agreement as terminated by breach and to enter into another agreement for securing the distribution right in some other film so as to enable it to fulfil its engagement with the proprietors of the cinema halls by distributing the new film in the place of the one that had not been supplied.
Likewise if a particular film secured by the assessee failed to attract public enthusiasm, business exigencies might well have required the assessee to enter into an arrangement with the producers concerned to cancel the agreement for distribution of that film and to enter into another agreement with the same or other producers for acquiring the distribution right in another film likely to bring a better 230 box office collection.
The termination of the agreement in each of the circumstances hereinbefore mentioned could well be said to have been brought about in the ordinary course of business and money paid or received by the assessee as a result of or in connection with such termination of agreements would certainly be regarded as having been so paid or received in the ordinary course of its business and therefore a trading disbursement or trading receipt.
There was no covenant made by the assessee with Jupiter Pictures not to enter into agreements with other producers or not to distribute films secured from other producers.
In fact in the accounting year the assessee had distribution rights in respect of eleven films including these three.
These three agreements would have come to an end on the expiration of the period of five years from the respective dates of release of the films and had only a part of the period to run, a fact which may also be relevantly borne in mind.
The cancellation of these agreements must have left the assessee free, if it so chose to secure other films which could be distributed in the place of these films and/which might have brought in better box office collections, In the language of Lord Hanworth, M. R. in Short Bros., Ltd. vs The Com missioners of Inland Revenue(1) the sum paid to the assessee was not truly compensation for not carrying on its business but was a sum paid in ordinary course, of business to adjust the relation between the assesse and the producers of the films.
The agreements which were cancelled were by no means agreements on which the whole trade of the assessee bad for all practical purposes been built and the payment received by the assessee was not for the loss of such a fundamental asset as was the ship managership of the assessee in Barr, Crombie & Co., Ltd. vs Commissioners of Inland Revenue(2).
Nor can one say that the cancelled agreements constituted the framework or whole structure of the assessee 's profit making apparatus in the sense the agreement between the two margarine dealers concerned in Van Den Berghs (1) , 973.
(2) , 231 Ltd. vs Clark (Inspector of Taxes) (supra) was.
Here ' were three agreements entered into by the assessee in the ordinary course of his business along with several similar agreements.
These three agreements were by mutual consent put an end to.
The termination of these three agreements did not radically or at all affect or alter the structure of the assessee 's business.
Indeed the assessee 's business of distribution of films proceeded apace notwithstanding the cancellation of these three agreements.
Learned counsel for the assessee has, as did the High Court, strongly relied on the decision of the Privy Council in Shaw Wallace 's case (supra).
In that case there was no fixed period within which the distributing agency was to continue, whereas in the case before us the agreement was only for a fixed period of five years out of which a considerable part had already expired.
In Shaw Wallace 's case the entire distributing agency work was completely closed, whereas the termination of the agreements in question did not have that drastic effect on the assessee 's business at all.
His business of distribution of films continued notwithstanding the cancellation of these three agreements.
In Shaw Wallace 's case, therefore, it could possibly be said that the amount paid there represented a capital receipt.
It is pointed out that in Shaw Wallace 's case there were other agencies also which were continuing.
A reference to that case reported sub nom Shaw Wallace & Co. vs Commissioner of Income Tax, Bengal(1) will show that Shaw Wallace and Co. carried on business as merchants and managing agents of various companies and that they were also the distributing agents of the two oil companies as well.
The business of managing agency of a company is quite different from the business of distributing agency of the products of oil companies.
The different managing agencies in that case were entirely different from and independent of the distributing agency of the two oil companies and this aspect of the matter was emphasised (1) 31 232 by Sir George Lowndes towards the end of his judgment where he said: "It is contended for the appellant that the "business" of the respondents did in fact go on throughout the year, and this is no doubt true in a sense.
They had other independent commercial interests which they continued to pursue, and the profits of which have been taxed in the ordinary course without objection on their part.
But it is clear that the sum in question in this appeal had no connection with the continuance of the respondent 's other business.
The profits earned by them in 1928 were the fruit of a different tree, the crop of a different field".
If Shaw Wallace and Co. had other distributing agencies similar to those of the two oil companies then it would be difficult to reconcile the decision in that case with the later decisions in Kelsall all Parsons & Co. vs
Commissioners of Inland Revenue(1) and other cases.
It has been urged that the agreements did not create merely an agency for the distribution of the films but were composite agreements consisting partly of a financing agreement creating a security on the films for the monies to be advanced and conferring the right even to complete the films in case the producers failed to do so and partly of a distributing agency agreement giving the assessee the utmost latitude in the matter of the terms and conditions on which it could exploit and distribute the films.
It was argued that the rights acquired by the assessee under the agreements were in the nature of capital assets of the assessee 's business and the amounts received by the assessee were the prices or considerations for the sale or surrender of such capital assets or were received by way of compensation for the sterilization or destruction of those capital assets.
Kelsall Parsons & Co. 's case and Short Bros. ' case referred to above were sought to be distinguished on the ground that there the payments were made in respect of the cancellation of contracts directed to result in the making of the trading profits, whereas in the present case the cancelled agreements were directed to the acquisition (1) ; 233 of rights in the films which when worked were to yield profits.
The terms of the agreements summarised above clearly show that they constitute a financing agreement and a distributing agency agreement.
In so far as they were only financing agreements they gave the assessee a charge on the films to be produced with moneys advanced by it but gave it no right to distribute the films or otherwise work them for making income, profits or gains.
Therefore, it can hardly be said that by the financing agreements the assessee acquired capital assets for carrying on its distributing agency business.
In this respect the case differs from the case of Glenboig Union Fireclay Co. Ltd. vs Commissioners of Inland Revenue(1), for in that case the lease of the fire clay fields authorised the assessee who was a manufacturer of fire clay goods to extract fire clay and manufacture fire clay goods and consequently was a capital asset of the assessee 's business.
Further, in the present case there is no suggestion that any part of the moneys advanced by the assessee for the production of the films was outstanding.
Assuming that to start with the films constituted capital assets, the entire capital outlay had been recovered and the security had been extinguished and that part of the agreements which constituted financing agreements had been fully worked out and bad come to an end and the three films ceased to be capital assets and the assessee was holding the films only under that part of the agreements which consti tuted the distributing agency agreements which only were subsisting.
In the premises the amount received by the assessee was only so received "towards commission", that is to say, as compensation for the loss of the commission which it would have earned bad the agreements not been terminated.
In our opinion, in the events that had happened, the amount was not received by the assessee as the price of any capital assets sold or surrendered or destroyed or sterilized but in the language of Rowlatt J. in Short Bros. ' case (supra) the amount was simply received (1) 234 by the assessee in the course of its going distributing agency business from that going business.
In our judgment, on the facts and in the circumstances of the present case, it falls within the principles laid down in Short Bros. ' and Kelsall Parsons & Co. 's cases rather than within those laid down in Shaw Wallace 's case or Van Den Bergh 's case or Barr Crombie 's case.
Reference was made to section 10 (5 A) of the Indian Income Tax Act, 1922, and it was urged that the language of that sub section impliedly indicated that the sum of Rs. 26,000 (rupees twenty six thousand) was a capital receipt.
We are unable to accept this suggestion.
That sub section was obviously introduced to prevent the abuse of managing agency agreements being terminated on payment of huge compensation and to nullify the application of the decision in Shaw Wallace 's case to such cases.
But that sub section does not necessarily imply that if that sub section were not there the kind of payment referred to therein would have been treated as capital receipt in all cases.
For the reasons stated above the referred question should in our opinion have been answered in the affirmative and we answer it accordingly.
The appeal is, therefore, allowed with costs throughout.
WHAGWATI J.
I had the privilege of reading the judgment just delivered by my Lord the Chief Justice but I regret I cannot agree with the same.
The facts leading up to the present appeal have been fully set out in that judgment and it is not necessary to repeat the same.
The relevant portions of the agreement dated the 17th September 1941 which is the sample of the three agreements entered into between the Jupiter Pictures and the assessee may be, however, set out herein: "Whereas the producer has taken on hand the production of a Tamil talkie picture 'Kannagi ' hereinafter called the said picture. . and whereas for the purpose of the said production the producer has approached the distributors for financial assistance and 235 for the distribution and exploitation of the said picture by the distributors through their organization and the distributors have agreed to render such financial assistance by advancing to the producer altogether a sum of Rs. 57,000 on the terms and in the manner hereinafter appearing and.
to distribute and exploit the said picture through their organization as requested by the producer. . . . Cl. 1.
The distributors shall advance to the producer a sum of Rs. 57,000 only altogether in the manner hereinafter set out: (a) a sum of Rs. 7,000 only should be advanced on the execution of these presents; (b) a further sum of Rs. 5,000 should be advanced as soon as 5,000 feet of film shall have been completed and roughly edited, rushprint thereof shown; (c) a further sum of Rs. 10,000 should be advanced as soon as a further 10,000 feet of film shall have been completed; (d) a further sum of Rs. 10,000 should be advanced as soon as a further 15,000 feet of film shall have been completed; (e) a further sum of Rs. 12,000 should be advanced on the last shooting day of the picture; (f) a further sum of Rs. 10,000 should be advanced as soon as the picture is passed by the Board of Censors and 12 copies of the film delivered to the distributors; and the balance of Rs. 3,000 to be retained by the distributors to be utilised for the purpose of Press Publicity in regard to the said picture to be made by the distributors on behalf of the producer from time to time.
The distributors may utilise the said sum for publicity as they think fit and proper and at their sole discretion.
Cl. 3.
The distributors shall from the realisations of the said picture made by them: (a) pay themselves all amounts spent by them for publicity in respect of the said picture such an expenditure having been incurred only after obtaining the consent of the producer; (b) pay themselves their distribution commis 236 sion in respect of the said picture as hereinafter provided; and (c) pay themselves the available balance until the entire advance of Rs. 57,000 should be completely discharged and satisfied.
If the distributors should fail to realise the full amount due to them as aforesaid from the realisation of the said picture in the manner hereinbefore set out on or before the expiry of one and a half years from the date of the first release of the said picture, the producer shall be liable to pay to the distributors whatever balance may be then due by them with compound interest at 12 per cent.
per annum the said interest to be calculated on the said balance amount from the date of expiry of the said one and a half years and the said payment to be made before the expiry of one month therefrom.
Cl. 15.
And it is hereby expressly agreed by and between the distributors and the producer that until the entire amount of Rs. 57,000 to be advanced by the distributors should be repaid and discharged in full and all other claims of the distributors arising hereunder completely satisfied the negative and positive copies of the said picture shall constitute the security for whatever amount may be due to the distributors and shall, if in the possession of the producer or any one on his behalf, be held by them only as trustees for the distributors.
Cl. 19.
In the event of the producer failing to deliver the said copies of the said picture duly passed by the Board of Censors as hereinbefore provided before the said period, namely 1 5 1942, the producer shall become liable to pay to the distributors at the letters ' option such amount as has been advanced by the distributors to the producer including monies ,spent by the distributors in respect of publicity with interest thereon at 12 per cent.
per annum.
But if the said picture be not delivered within two months thereafter, viz., on or before 1 7 1942 the distributors may at their option complete the picture at their own cost and in such case the producer shall be liable to the distributors for all the expenses with compound 237 interest thereon at 12 per cent.
per annum and the distributors shall have all rights as to the distribution, sale, etc., as aforesaid.
Cl. 20.
On the expiry of the period of five years mentioned in this agreement, the distributors shall return to the producer all copies of films and balance stock of loan and saleable publicity materials of the said picture, subject to usual wear and tear and subject to the distributors receiving back from the producer such unrealised amount, if any, as mentioned in clause (6) above".
The said three agreements *were dated 17th September 1941, 16th July 1942 and 10th May 1945, each having a period of five years to run ending with 16th September 1946, 15th July 1947 and 9th May 1950 respectively.
The only question which falls to be determined by us herein is whether the payment of Rs. 26,000 received by the assessee from the Jupiter Pictures on the cancellation of the said three agreements on the 31st October 1945 is a capital receipt or income, profits or gains liable to tax in the assessment year 1946 47.
The assessee was no doubt carrying on the business of distributors which involved as a necessary corollary the acquisition of films for the purpose of distribution.
Those films could either be produced by it or could be acquired by it from the producers who hired them out to it for the purpose of distribution.
There was, however, an activity in this business of distributors which consisted of advancing monies to the producers to enable the producers to produce the films and the agreements which were entered into between the producers and the assessee as distributors were composite agreements incorporating therein the terms in regard to the financial assistance as also the distribution and exploitation of the films thus produce by the producers with the financial assistance rendered to them by the assessee.
They were not mere agreements for distribution and exploitation of the pictures which by themselves would not require any investment of capital but would 238 merely involve the work of distribution and exploitation of the pictures.
The terms above set out were designed for the purpose of protecting the interests of the assessee in so far as it advanced considerable sums to the producers for the purpose of producing the films.
Apart from the commission which the assessee derived from the distribution and exploitation of the pictures which would certainly be its revenue receipt in the course of the carrying on of its business as distributors, it was entitled under the terms of the agreements to repay itself the amounts of the advances which it made for the production of the pictures as also the interest thereon and the agreements also provided that the negative and positive".
, copies of the pictures should constitute the security for whatever amount might be due to the assessee not only in respect of the amounts advanced by it to the producers but also in respect of all other claims arising under the agreements.
The negative and positive copies of the pictures if in possession of the producers or any one on their/behalf would only be held by them as trustees of the assessee and the assessee was invested with a species of proprietary rights over the same.
If the pictures were not delivered within the specified period the assessee was at liberty to complete the same and in such a case the producers were liable to it for all the expenses with compound interest at 12 per cent.
per annum and all the rights as distributors were to fasten upon the same.
The copies of the films and all the other publicity materials were to be returned by the assessee to the producers after the expiry of the period of five years mentioned in the agreements subject to its receiving from the producers all unrealised amounts under the agreements.
What is it that the assessee was, acquiring from the producers under the terms of these agreements? Was it acquiring capital assets which it would work upon by way of distribution and exploitation in order to earn its income, profits or gains or was it acquiring stock in trade of its business as distributors? If it was capital assets which it thus acquired the monies 239 which it advanced to the producers for acquiring the same would necessarily be capital expenditure and would not be debited by it in its accounts as trading expenses which would be the position if what it, acquired under the terms of the agreements was mere stock in trade of its/business.
The realisations which it made by distribution and exploitation of the pictures would be undoubted trade receipts and, therefore, income, profits or gains and no part of the same would go to its capital account.
The monies which it had advanced for the production of the pictures would, however, as and when realised, be./ credited by it in its accounts as capital receipts and they would certainly not be liable to be treated as trading receipts.
There was thus a sharp distinction between the capital account and the trading account, the amounts advanced towards the production of the pictures being capital expenditure and the repayments of these advances as and when made being capital receipts, as distinct from the monies spent by it in the distribution and exploitation of the pictures being trading expenses and the commission realised by it from such distribution and exploitation being trading receipts.
As in the cases of mining leases and other species of proprietary rights obtained by an assessee being capital assets available to the assessee for working upon the same and earning income, profits or gains, so in the case of these pictures which it acquired by advancing monies to the producers to be available to it for distributing and exploiting the same, what it would be acquiring under the terms of the agreements would be capital assets and if an agreement was subsequently entered into by it either transferring these capital assets or surrendering them for value, whatever payment would be realised out of the same would be capital receipts and, not trading receipts.
The nomenclature of that receipt as commission for distribution and exploitation under the agreements would not make any difference to the position nor would the fact that, at the time when the said three agreements were.
cancelled.
, no part of the monies which had been advanced at the commence 32 240 ment remained outstanding and the only activity of the assessee qua these pictures was then confined to the distribution and exploitation of the same.
The agreements were composite agreements and what we have got to look to is what were the rights in these pictures which the assessee had acquired under the terms of the agreements.
It had a species of proprietary rights in these pictures all throughout the period of the agreements not only in respect of advances which it had made for producing the same but also in respect of all other claims under the terms of the agreements and the nature of those rights would not be changed by the accident of the full amount of the advances being repaid to it at a particular period of time during the currency of the agreements.
If it acquired capital assets those assets continued in its possession as such all throughout the period of the agreements and it would not be legitimate at any intermediate period of time to see what was the position obtaining at that time for the purpose of converting what were acquired as capital assets at the dates of the agreements into stock in trade of its business of distribution and exploitation of the pictures.
If this be the true position on the construction of the agreements it follows that what was done by the assessee on the 31st October 1945 was to surrender these capital assets to the producers for a consideration.
These capital assets qua the agreements of the 17th September 1941, 16th July 1942 and 10th May 1945 were to endure up to 16th September, 1946, 15th July 1947 and 9th May 1950 respectively.
A sum of Rs. 8,666 10 8 was fixed as the consideration for the surrender of each and the capital assets which had been acquired were all of them surrendered by the assessee to the producers with effect from the 31st October 1945.
The payment thus received by the assessee could only be a capital receipt being the price of the surrender of the capital assets and could not be considered a trading receipt at all.
It is well recognised that the problem of discriminating between an income receipt and a capital receipt 241 and between an income disbursement and a capital disbursement is not always easy to solve.
Even, though the distinction is well recognised and easily applied in general, cases do arise from time to time , where the item lies on the border line and the task of assigning it to income or capital becomes one of much refinement.
"While each case is found to turn upon its own facts, 'and no infallible criterion emerges, nevertheless the decisions are useful as illustrations and as affording indications of the kind of considerations which may relevantly be borne in mind in approaching the problem. . . . . .
The nature of a receipt may vary according to the nature of the trade in connection with which it arises.
The price of the sale of a factory is ordinarily a capital receipt, but it may be an income receipt in the case of a person whose business it is to buy and sell factories" (Per Lord Macmillan in Van Den Berghs, Ltd. vs Clark (H. M. Inspector of Taxes(1)).
It may also be borne in mind that the provisions of the Indian Income tax Act are not in pari materia with those of the English Income tax Statutes so that the decisions on the English Acts are in general of no assistance in construing the Indian Acts (Vide the observations of the Privy Council in Commissioner of Income tax vs Shaw Wallace & Co.(2) and in Raja Bahadur Kamakshya Narain Singh of Ramgarh vs Commissioner of Income tax, Bihar & Orissa(3)).
The authorities which were cited at the Bar may, however, be shortly referred to.
Counsel for the appellant particularly relied upon the decisions in Short Brothers, Ltd. vs The Commissioners of Inland Revenue(4) and Kelsall Parsons& Co. vs Commissioners of Inland Revenue(5) in support of the position that the cancellation of the agreements in the present case and the receipt of Rs. 26,000 by the assessee was in the ordinary course of business in order to adjust the relations between the producers and the assessee and was simply a receipt in the course of a (1) ; , 428, 431.
(2) [1932] L.R. 59 I.A. 206, 212.
(3) [1943] L.R. 70 I.A. 180, 188.
(4) (5) ; 242 going business from that going business and nothing else.
It was submitted that it was an essential part of the assessee 's business to enter into agreements of the nature in question and that it was an ordinary incident of its business that such agreements may be altered or terminated front , time to time.
It was therefore a normal incident of the business such as that of the assessee that the agreements might be modified and in parting with the benefits of the agreements the assessee could not be said to be parting, with something which could be described as an enduring asset of its business.
This position would have been tenable if the agreements in question were merely distributing agreements without anything more.
It would then have been an essential part of the assessee 's business to enter into such agreements and also it would have been a normal incident of its business to modify or terminate the same and to adjust the relations between the parties.
In neither of these cases was there any question of any capital asset having depreciated in value or become of less use for the purpose of the assessee 's business.
Rowlatt, J. observed in Short Brothers, Ltd. vs The Commissioners of Inland Revenue (supra) at page 968 that the money was not received in respect of the termination of any part of the assessee 's business nor was it received in respect of any capital asset as was the sum in the Glenboig 's case(1).
Lord Fleming also emphasized this aspect of the matter in Kelsall Parsons and Co. vs Commissioners of Inland Revenue (supra) at page 622 that there was no finding that in consequence of the termination, any capital asset was depreciated in value or became of less use for the purpose of the assessee 's business.
If the assessees in those cases bad by virtue of the agreements in question acquired capital assets which they could work in order to earn income, profits or gains, the payments received on termination of the said agreements would certainly not have been held to be trading receipts but capital receipts and as such not liable to tax.
(1) 243 Reliance was placed on behalf of the assessee on the decisions in Glenboig Union Fireclay Co. Ltd. vs Commissioners of Inland Revenue(1) and Van Den Berghs Ltd. vs Clark (H.M. Inspector of Taxes) (supra), for showing that, if the capital asset of the assessee was sterilized or destroyed, the payment would be a capital receipt.
Lord Buckmaster, in Glenboig Union Fireclay Co. Ltd. vs The Commissioners of Inland Revenue (supra) at page 463, expressed the opinion that "it made no difference whether it be regarded as the sale of the asset out and out, or whether it be treated as a means of preventing the acquisition of profit that would otherwise be gained.
In either case, the capital asset of the company was to that extent sterilized and destroyed and it was in respect of that action that the sum had been paid".
Lord Wrenbury also, at page 464 stated that "the mining leases were capital assets of the company, the company 's objects were to acquire profits by working the mines under and by virtue of the titles and rights which they hold under the leases and the payment was made to the assessee for abstaining from seeking to make a profit".
Put it in another way: "The right to work the area in which the working was to be abandoned was part of the capital asset consisting of the right to work the whole area demised.
Had the abandonment extended to the whole area all subsequent profit by working would.
, of course, have been impossible but it would be impossible to contend that the compensation would be other than capital.
It was the price paid for sterilising the asset from which otherwise profit might have been obtained.
What is true of the whole must be equally true of the part" ' (Page 465).
In Van Den Berghs Ltd. vs Clark (H. M. Inspector of Taxes) (supra) it was held that the payment in question was the payment for the cancellation of the assessee 's future rights under the agreements which constituted a capital asset of the assessee and that it was accordingly a capital receipt.
Justice Finlay, whose judgment was ultimately restored by the House of Lords, observed at page 413: (1) 244 The ground is not very easy to express, but the ground upon which I desire to put this part of the case is this, that the true view here is that the agreement which was cancelled was just a capital asset of, the Company and, if that is right, it seems to me to follow that, distinguishing such cases as Short Brothers(1), one ought to hold that the sum received was not an income receipt at all".
Lord Macmillan, after discussing the various authorities which according to him were useful as illustrations and as affording in dications of the kind of considerations which maybe relevantly borne in mind in approaching the problem, construed the agreements in question as not ordinary commercial contracts made in the course of the carrying on of the assessee 's trade.
The agreements in the facts and circumstances of the case before him related to the whole structure of the assessee 's profit making apparatus, they regulated the assessee 's activities, defined what they might and might not do and affected the conduct of their business and he had difficulty in seeing how money laid out to secure, or money received for the cancellation of, so fundamental an organization of a trader 's activities could be regarded as an income disbursement or an income receipt.
He expressed the opinion that the asset, the congeries of rights which the appellants enjoyed under the agreements and which for a price they surrendered, was a capital asset.
They provided a means of making profits but they themselves did not yield profits.
Applying the same ratio here, could it not be said that the pictures which were acquired by the assessee from the producers were capital assets of the assessee, the object of the assessee being to acquire profits by distributing and exploiting the pictures under and by virtue of the titles and rights which the assessee acquired under the agreements or that they provided the means of making profits though they themselves did not yield profits? That being the true position on the construction of the agreements, the only result would be that the pictures constituted capital assets (1) 245 of the company and the payment in question was one for the cancellation of the assessee 's rights under the agreements and was accordingly a capital receipt.
The distinction between capital assets on the one hand and the stock in trade on the other was sought to be supported by reference/to the decisions in Shad bolt (H. M. Inspector of Taxes) vs Salmon Estate (1) and Johnson (H. M. Inspector of Taxes) vs W. section Try Ltd. (2).
These were cases of assessees which carried on the business of building and selling houses or building and development business and in the course of their business acquired plots of land which they utilised for, the purpose of constructing buildings thereupon, which buildings together with the plots of land on which they stood were sold by them for a consideration.
The question which arose was whether the acquisition of the plots of land on which the buildings were thus constructed was the acquisition of a capital asset or a trading asset ,by the assessees.
Justice Macnaghten, whose judgment in the King 's Bench Division was the final judgment in Shadbolt (H. M. Inspector of Taxes) vs Salmon Estate (supra) remarked at page 57 that "it was not disputed that in the course of such a trade as this, the trade of building houses for sale, the land on which the houses were " built was part of the stock in trade of the business and was not a capital asset.
The land being thus a part of their stock in trade, the payment in question for the bit sold by the assessees would have been a trading receipt and the right to build on the plots was likewise a trading asset".
In Johnson (H. M. Inspector of Taxes) vs W. section TryLtd.
(supra), also, the judgment of the same learned Judge was the final judgment on the point in issue.
The following observations of the learned Judge at page 172 are very instructive: "Although in most cases land belonging to a trading company was part of its capital assets, in the case of a company engaged in ribbon development the land which is acquired for the purposes of such development is not part of its capital.
In such a case the land forms part of its stock in trade.
, just (1) (2) 246 as much as the materials which it buys for the purpose of erecting the buildings on it.
The cost of the land must come into its trading account as a trading expense.
If it sells the land the price must come into its trading account as a trading receipt.
And, likewise, compensation for injurious affection must also, in my opinion, be regarded as a trading receipt".
In the instant case also, the pictures, if produced by the assessee itself would have been capital assets of the assessee.
What the assessee did was that instead of producing the pictures itself it advanced monies to the producers for the purpose of producing the pictures which it acquired for the purpose of distribution and exploitation.
Nonetheless, the pictures thus acquired were capital assets of the assessee which it worked upon in carrying on its business of distribution and exploitation, the monies it spent on the acquisition of the pictures were thus capital expenditure and whatever monies were realised by it by working these capital assets were its capital receipts except of course the commission which it earned by distribution and exploitation of the pictures which certainly would be its trading receipts.
Having regard to the terms of these agreements it could certainly not be predicated of these pictures that they were its stock in trade so as to constitute the payment in question a trading receipt of the assessee.
Both the Income tax Appellate Tribunal and the High Court relied upon the decision of the Privy Council in commissioner of Income tax, Bengal vs Shaw Wallace & Co. (supra), and were of the opinion that the present case was covered by that decision.
On the facts of the case as set out in the above appeal it does not appear to be clear whether the two selling agencies there were the only selling agencies which had been acquired and worked by Shaw Wallace & Co., and it, is debatable under the circumstances whether the authority of that decision is not shaken by the decisions in Short Brothers ' case (supra) and Kelsall Parsons & Co. 's case (supra).
It is sufficient to observe that the agreements in the case of Shaw Wallace & Co. were not deemed to constitute capital 247 assets of the assessee and that aspect of the question was not at all considered by the Privy Council.
It is not, therefore, necessary to express any opinion on the correctness or otherwise of that decision in this case.
Having regard to all the circumstances adverted to above, it is, therefore, clear that the payment of Rs. 26,000 received by the assessee from the producers was in consideration of the surrender by the assessee of the capital assets which it had acquired from the producers under the three agreements in question and constituted a capital receipt not liable to tax for the assessment year 1946 47.
The answer given by the High Court to the referred question was, therefore, correct and I would dismiss the appeal with costs.
ORDER.
BY THE COURT: In accordance with the Judgment of the majority, the appeal is allowed with costs throughout.
[/INST]The appellant and four others were placed on their trial before the Assistant Sessions Judge of Sambalpur for offences under sections 120 B, 409, 477 A and 109, I.P.C. with having committed the offences of criminal conspiracy, criminal breach of trust in respect of Government property and falsification of accounts with a view to defraud the Government.
The appellant was the District Food Production Officer and the other four accused persons were agricultural sub overseers under the appellant and another agricultural sub overseer namely P. was examined at the trial as an approver.
The Assistant Sessions Judge convicted the appellant under all the three charges but acquitted the four sub overseers giving them the benefit of doubt.
The High Court in appeal allowed the appeal of the appellant in respect of charges under sections 409 and 477 A, I.P.C. but upheld his conviction and sentence in respect of the charge of conspiracy under section 120 B, I.P.C. observing that in respect of that charge the evidence given by the approver got corroboration from other independent evidence.
On appeal by special leave to the Supreme Court the main question for consideration was whether the ruling of the Supreme Court in the case of Topan Das vs The State of Bombay ([1955] 2 S.C.R. 881), governed the present case in view of the fact that the appellant was the only person out of the accused persons on trial who had been convicted of the offence of conspiracy under section 120 B, I.P.C. Held (i) that the case of Topan Das vs State of Bombay was, clearly distinguishable from the present case as in that case the only persons alleged to have been guilty of the offence of conspiracy 'Were the persons placed on trial.
There was no allegation nor any 207 evidence forthcoming that any other persons though not placed on trial, were concerned with the crime.
On the findings in that case, only one person, after the acquittal of the rest of the accused, was concerned with the crime and stood convicted of the charge of conspiracy.
As a person cannot be convicted of conspiring with himself to commit an offence, the Supreme Court gave effect to the.
contention that on the findings and on the evidence, as also on the charge in that case, the conviction could not be sustained.
But in the instant case on the findings of the courts below, apart from the persons placed on the trial, there was the approver who implicated himself equally with the other accused persons and a number of other prosecution witnesses as having been privy to the conspiracy.
And therefore the present case was not on all fours with the case of Topan Das vs State of Bombay.
(ii) The provisions of section 225, Cr.
P.C. were clearly applicable to the facts and circumstances of the present case.
It had not been shown how the omission to mention the name of the approver in the charge under section 120 B, I.P.C. had misled the appellant or had occasioned a failure of justice.
(iii) The provisions of section 537 of the Code of Criminal Procedure were equally applicable to the facts of the case.
As the appellant did not raise the point with reference to the alleged illegality or irregularity in the charge before the High Court it must be held, applying the Explanation to that section, that the omission in the charge bad not occasioned a failure of justice.
The contention that with the acquittal of the alleged conspirators no verdict of guilty against the appellant could be given, because the verdict would be regarded as repugnant in so far as it would amount to saying that there was a criminal agreement between the appellant and the others and none between them and him, the conviction of the appellant would amount to a similar repugnancy was without substance because the rule of English law as to the acquittal of an alleged conspirator when the conspiracy was said to be only between the two is based upon a rule of practice and procedure, namely that repugnancy or contradiction on the face of the record is a ground for annulling a conviction.
But such a repugnancy is not by itself a sufficient ground for quashing a conviction in India where the matter is governed by statutory law both as to the offence and the procedure for bringing the offender to justice.
In India there is no provision in the statutory law justifying an interference with a conviction on the ground of repugnancy in the record.
Topan Das vs State of Bombay ([1955] 2 S.C.R. 881), The Queen vs Manning ([1883] , The Queen vs Thompson ([1851] 16 Q.B. 832), The King vs Plummer ([1902] 2 K.B. 339), Kannangara Aratchige Dharmasena vs The King ([1951] A.C. 1), I. G. Singleton vs The King Emperor ([1924] , Dalip Singh vs State of Punjab ([1954] S.C.R. 145) and Kapildeo Singh v, The King ([1949 50] F.C.R. 834), referred to. 208
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<s>[INST] Summarize the judgementAppeal No. 81 of 1953.
Appeal under article 132(1) of the Constitution of India from the Judgment and Order, dated the 18th April, 1951, of the High Court of Judicature for the State of Orissa at Cuttack in Judicial Case No. 60 of 1951.
H. J. Umrigar, Sri Narain Andlay and Rajinder Narain for the appellant.
Porus A. Mehta and P. g. Gokhale for the respondent.
November 25.
The Judgment of the Court was delivered by BHAGWATI J.
The appellant who is a legal practitioner residing within the limits of the Kendrapara Municipality and practising as a mukhtar in the criminal and the revenue Courts there filed his nomination paper for election as a Councillor of the Municipality on the 15th March, 1951.
That nomination paper was rejected by the Election Officer on the 25th March, 1951, on the ground that he was employed as a legal practitioner against the Municipality in a case U/S 198 of the Bihar and Orissa Municipal Act which was pending in the Sub Divisional Magistrate Court.
The appellant then filed on the 4th April, 1951, a petition before the High Court of Orissa under article 226 of the Constitution praying that a writ or order of prohibition be issued to the State Government and the Election Officer restraining them from holding the election to the Kendrapara Municipality under the Orissa Municipal Act, 1950 or the Municipal Election Rules, 1950.
This petition was rejected by the High Court but the High Court granted the appellant a certificate under article 132(1) of the Constitution for leave to appeal to this Court.
The Orissa Municipal Act, 1950 (Orissa Act 23 of 1950) was passed by the local Legislature and received the assent of the Governor on the 7th November, 1950, and was published in the official gazette on the 11th November, 1950.
Section I of the Act runs as under 1006 (1) This Act may be called the Orissa Municipal Act, 1950.
(2) It shall extend to the whole of the State of Orissa.
(3) It shall come into force in such area or areas on such date or dates as the State Government may appoint from time to time (5) Any notification, order or rule and any appointment to an office, may be made or election held under this Act, after it shall have received the assent of the Governor and shall take effect on this Act coming into force.
Section 16 of the Act prescribes the disqualifications of candidates for election and provides (1) No person shall be qualified for election to a seat in a Municipality, if such person (ix ) is employed as a paid legal practitioner on behalf of the Municipality or as legal practitioner against the Municipality On the 11th November, 1950, the Secretary to the Government, Local Self Government Department addressed to all District Magistrates of the State letter No. 1336/L.S.G. intimating that the Government had decided that general elections should be held on the basis of adult suffrage as provided in the Act in 12 Municipalities including the Kendrapara Municipality.
Notification No. 2015 L.S.G. was issued on the 13th December, 1950, under section 13 read with section 1 (5) of the Act fixing the 1st day of March, 1950, as the relevant date for voters in the election as regards their residential qualification in the Municipality.
Notification No. 65 L.S.G. issued on the 4th January, 1951, published rules made in exercise of the powers conferred by clauses (1) and (2) of sub section (2) of section 387 of the Act called the "Municipal Election Rules, 1950.
" Redistribution of wards was effected by Notification No. 167 L.S.G. dated the 10th January, 1951, and two Notifications Nos. 519 and 521 L.S.G. were issued on the 24th January, 1951, fixing 1007 the numbers of Councillors and of the reserved seats for each Municipality.
The 15th March, 1951, was fixed as the date for filing the nominations and the 25th March, 1951, for scrutiny of nomination papers.
The 20th April, 1951, was the date fixed for the holding of the election.
All these steps were taken by the Government in anticipation acting under the powers reserved under section 1 (5) of the Act and it was only on the 15th April, 1951, that the Act was extended to the Kendrapara Municipality by a notification under section 1 (3) of the Act.
The appellant contended (1) that the Act had not come into operation in the Kendrapara Municipality till the 15th April, 1951, that the disqualification prescribed by section 16(1) (ix) could not consequently have been incurred by him on the 15th March, 1951, when he filed his nomination paper, that the rejection of his nomination paper therefore on that ground by the Election Officer on the 25th March, 1951, was illegal and no election could be held on the 20th April, 1951, as was sought to be done under the provisions of the Orissa Municipal Act, 1950, or the Municipal Election Rules, 1950, and (2) that in any event the disqualification prescribed under section 16(1) (ix) of the Act violated his fundamentals rights guaranteed under article 14 and article 19(1) (g) of the Constitution.
Both these contentions were in our opinion rightly negatived by the High Court.
Section 1 (5) of the Act in express terms provides that after the Act has received the assent of the Governor elections could be held under the Act but were only to take effect on the Act coming into force, which means the coming into force of the Act in such area or areas on such date or dates which the State Government might appoint from ' time to time under section 1 (3) of the Act.
There is thus contemplated under the very provisions of sec tion 1 (5) the holding of elections under the Act in spite of the fact that the Act had not come into force in a particular area.
Ordinarily the statute enacted by a State Legislature comes into force as soon as it receives 1008 the assent of the Governor.
Section 1 (3) of the Act however postpones the commencement of the Act which means that section 1 (3) came into operation immediately the Governor gave his assent to the Act.
Section 1 (5) is nothing but a proviso to section 1 (3) and must be regarded also to have come into operation simultaneously with section 1 (3).
Section 1 (5) having thus come into force at once on the Act having received the assent of the Governor on the 7th November, 1950, if elections were to be held under the Act before the rest of the Act came into force in any particular area. ' all incidental steps for the holding of such elections were certainly contemplated to be taken and those steps which would be thus taken in anticipation of the Act coming into force in a particular area were certainly authorised by the terms of section 1(5) by necessary implication, because no elections could be held unless all the preliminary steps for holding the same were taken.
It would be necessary for holding elections to prescribe the residential qualification, to distribute the wards, to fix the numbers of Councillors and of reserved seats, to frame election rules with reference to the filing of nominations, the scrutiny of the nomination papers and also the holding of elections.
All these preliminary steps would have to be taken if the elections were to be held and section 1(5) clearly contemplated the taking of these steps in authorising elections to be held under the Act.
No doubt the Act was not to be in force in a particular area until the relevant notification was issued by the State Government and until the Act came into force the disqualifications prescribed in section 16(1) of the Act would not normally attach to candidates for election.
The election rules also would be framed in exercise of the power reserved under the Act and if the Act had not come into force much less could the election rules come into operation and bind the candidates.
This argument could have availed the appellant if the State Legislature had not enacted section 1(5) of the Act and the defect could not have been cured by the provisions of section 23 of the Orissa General Clauses Act (Orissa Act I of 1937) which was relied upon by 1009 the respondent.
That section only enables the making of rules or bye laws or the issue of the preliminary orders in anticipation of the Act coming into force, which rules, bye laws or orders however would not come into effect till the commencement of the Act.
The clear provisions of section 1(5) of the Act however expressly empowered the State Government to hold elections and thereby validated all the preliminary steps taken for the purpose of holding such election, the only reservation made being that even though the election under the Act be held such election was not to take effect till the Act came into force in the particular area.
This contention of the appellant therefore fails.
The contention that the disqualification prescribed in section 16(1)(ix) violates the fundamental rights of the appellant under article 14 and article 19(1)(g) is equally untenable.
Article 14 forbids class legislation but does not forbid reasonable classification for the purposes of legislation.
That classification however cannot be arbitrary but must rest upon some real and substantial distinction bearing a reasonable and just relation to the things in respect of which the classification is made.
In other words the classification must have a reasonable relation to the object or the purpose sought to be achieved by the impugned legislation.
The classification here is of the legal practitioners who are employed on payment on behalf of the Municipality or act against the Municipality and those legal practitioners are disqualified from standing as candidates for election.
The object or purpose to be achieved is the purity of public life, which object would certainly be thwarted if there arose a situation where there was a conflict between interest and duty.
The possibility of such a conflict can be easily visualised, because if a Municipal Councillor is employed as a paid legal practi tioner on behalf of the Municipality there is a likelihood of his misusing his position for the purposes of obtaining Municipal briefs for himself and persuading the Municipality to sanction unreasonable fees.
Similarly, if he was acting as a legal practitioner against the Municipality he might in the interests of his client misuse any knowledge which he might have obtained 129 1010 as a Councillor through his access to the Municipal records or he might sacrifice the interests of the Municipality for those of his clients.
No doubt having regard to the best traditions of the profession very few legal practitioners would stoop to such tactics, but the Legislature in its wisdom thought it desirable to eliminate any possibility of a conflict between interest and duty and aimed at achieving this object or purpose by prescribing the requisite disqualification.
The classification thus would certainly have a reasonable relation to the object or purpose sought to be achieved.
It was however urged that besides this category there are also other categories where there would be a possibility of conflict between interest and duty and that in so far as they were not covered by the disqualifications prescribed by section 16(1) of the Act the provision disqualifying the category to which the appellant belonged was discriminatory.
It was particularly pointed out that a client who had a litigation against the Municipality was not prevented from standing as a candidate for election whereas the legal practitioner who held a brief against the Municipality was disqualified, though the ban against both these categories could be justified on ground of avoidance of conflict between interest and duty.
The simple answer to this contention is that legislation enacted for the achievement of a particular object or purpose need not be all embracing.
It is for the Legislature to determine what categories it would embrace within the scope of legislation and merely because certain categories which would stand on the same footing as those which are covered by the legislation are left out would not render legislation which has been enacted in any manner discriminatory and violative of the fundamental right guaranteed by article 14 of the Constitution.
The right of the appellant to practise the profession of law guaranteed by article 19(1) (g) cannot be said to have been violated, because in laying down the disqualification in section 16(1) (ix) of the Act the Legislature does not prevent him from practising his profession of law but it only lays down that if he wants 1011 to stand as a candidate for election he shall not either be employed as a paid legal practitioner on behalf of the municipality or act as a legal practitioner against the Municipality.
There is no fundamental right in any person to stand as a candidate for election to the Municipality.
The only fundamental right which is guaranteed is that of practising any profession or carrying on any occupation, trade or business.
There is no violation of the latter right in prescribing the disqualification of the type enacted in section 16(1) (ix) of the Act.
If he wants to stand as a candidate for election it is but proper that he should divest himself of his paid brief on behalf of the Municipality or the brief against the Municipality in which event there will be certainly no bar to his candidature.
Even if it be taken as a restriction on his right to practice his profession of law, such restriction would be a reasonable one and well within the ambit of article 19 clause 5.
Such restriction would be a reasonable one to impose in the interests of the general public for the preservation of purity in public life.
We therefore see no substance in this contention of the appellant also.
The appeal accordingly fails and stands dismissed with costs.
Appeal dismissed.
[/INST]Under section 110(1) of the if a proper officer has ,reason to believe ' that any goods are liable to confiscation under the Act, he may seize such goods.
Section 124 provides that no order confiscating any goods shall be made unless the owner of the goods is given notice in writing informing him of the grounds on which it is proposed to confiscate the goods.
Under section 110(2) where any goods are seized under sub section
(1) and no notice in respect thereof is given under section 124 within six months ,of the seizure, the goods shall be returned to the person from whose possession they were seized; provided, the period of six months may 'on sufficient cause being shown ' be extended by the Collector of Customs for a period not exceeding six months.
On March 19, 1963 goods were seized from the respondent and, on September 19, 1963 an extension for a period of four months was applied for by the customs authorises and was granted by the Collector on the , round that certain inquiries yet remained to be made by them.
On February 20, 1964, that is, one month after the extended period had expired, the Collector passed an order granting further extension for two months.
Both the extension orders were passed without giving any opportunity to the respondent.
The respondent challenged the second extension and the High Court held that the orders of extension were bad as the Colle ctor had to decide the application for extension judicially.
In appeal lo this Court, HELD : The power of extension under the proviso was quasi judicial, or at any rate, one requiring a judicial approach, and therefore, an opportunity of being beard ought to have been given to the respondent before ,ordering extension.
[811 B C] (a) The policy of the Legislature is, that in view of the extraordinary power of seizure the inquiry should ordinarily be completed within six months, but in exceptional cases, the legislature entrusted to a superior officer the power of extension on sufficient cause being shown.
The Collector is not expected to pass extension orders mechanically or as a matter of routine but only on being satisfied that there exist facts which indicate that investigation could not be completed for bona fide reasons within the time of 6 months laid down in section 110(2), [808 C E, F G] (b) Whereas section 110 (1) uses the expression reason to believe for enabling a customs officer to seize the goods, the proviso to sub section
(2) uses the expression sufficient cause being shown.
Sub Section (1) does not contemplate an inquiry at the stage of seizure, the only requirement being the satisfaction of the concerned officer that there are relevant reasons to believe that the goods are liable to confiscation by reason of illegal im 803 portation.
The words sufficient cause being shown mean that the Collector must determine on materials placed before him that they warrant extension of time.
Further, the civil right to have the seized goods restored which accrues on the expiry of the initial six months is defeated on exten Therefore, when the ' statute requires the determination being grantedtion of a sufficient cause on facts produced before the Collector it should be held to be a quasi judicial function or at least a function requiring judicial approach; and there is no, distinction between extension orders passed before and those passed after the expiry of the initial or the extended period.
[808 H; 809 A, C D; 811 C D] (c) When an order is made in bona fide exercise of power and within the provisions of the Act, which confer such power, the order is immune from interference by a court of law and therefore, the adequacy of the cause shown may not be a ground for interference, but the Collector has to hold an inquiry on facts, that is, on material placed before him, and consider the pros and cons of the question.
[809 D E; 811 E] (d) By holding such inquiry there is no danger of disclosure of facts which would be detrimental to the investigation.
The only disclosure would be about the fact that investigation at some place or places and about certain matters was still incomplete and pending.
As between the tight of the person from whom the goods were seized and the supposed danger to the investigation, the matter is not so weighted that it should he held that the Legislature could not possibly have contemplated a judicial approach by the Collector when he orders of extension of time.
[813 G H; 8 14 B D] Kraipak vs Union of India, [1970] .1
S.C.R. 457, followed.
Lakhanpal 's case; , and De Verteuil vs Knaggs, , referred to Sheikh Mohammed Sayeed vs Asstt.
Collector of Customs, A.I.R. 1970 Cal.
134, Ganeshmul Channilal Gandhi vs Collector of Central Excise, A.I.R. 1968 Mys. 89 and M/s. Prakash Cotton Mills Pvt. Ltd. vs Asstt.
Collector of Central Excise, Bombay, M.P. No. 127/1963 dt. 31 8 1970, overruled.
</s> |
<s>[INST] Summarize the judgementAppeal No. 5086 of 1985.
From the Judgment and Order dated 31.1.1985 of the Punjab and Haryana High Court in Civil Revision No. 1847 of 1984.
A.B. Rohtagi, R.C. Mishra and Dr. Meera Aggarwal for the Appellant.
M.S. Gujaral and R.S. Sodhi for the Respondents.
The Judgment of the Court was delivered by ' VERMA, J.
The appellant, Gulraj Singh Grewal, took the suit premises situate in Ludhiana on monthly rent of Rs. 800 from respondent No. 1, Dr. Harbans Singh, in March 1980.
Respondent No. 2, Dr. Ravinder Singh, is son of respondent No. 1, Dr. Harbans Singh.
Both the respondents are medical practitioners.
The respondents filed a petition for eviction of the appellant tenant on three grounds, namely, personal need of the respondents under Section 13(3) (a) (i) (a), change of user under section 13(2) (ii) (b) and impairment of value and utility of the rented building under section 13(2) (iii) of the East Punjab Urban Rent Restriction Act, 1948.
The appellant contested the petition denying the existence of any of these grounds for eviction.
The Rent Controller dismissed the petition holding that none of the three grounds had been proved.
On appeal by the respondents, the appellate authority held that the personal need of respondent No. 2, Dr. Ravinder Singh, one of the landlords, was proved and the ground of change of user of the rented building by the appellant had also been proved.
The third ground relating to impairment of value and utility of the rented building was rejected.
The appellate authority further held that the building though let out for residential purpose was used by the appellant, a consultant engineer, partly for his profession on account of which it had become 153 a 'scheduled building ' as defined in Section 2(h) of the Act and, therefore, the ground for eviction based on personal need was not available for evicting the tenant from a 'scheduled building.
However, an order of eviction was made on the ground of change of user of the rented building.
The appellant then preferred a revision to the High Court which has been dismissed the findings and order of eviction made by the appellate authority.
Hence, this appeal by special leave.
The submissions of Shri Avadh Behari, learned counsel for the appellant are several.
The first contention is that there was no change of user by the appellant tenant to justify the order of eviction on that ground.
The second submission is that the finding on the question of personal need of the landlord is erroneous.
The last submission is that no order of eviction can be made on the ground of personal need contained in section 13(3) (a) (i) (a) in respect of a 'scheduled building ' since that ground is available for eviction only from a 'residential building ' as defined in section 2(g) of the Act, a 'scheduled building ' defined in section 2(h) of the Act being a different kind of building.
In reply, Shri M.S. Gujral, learned counsel for the respondents submitted that the order of eviction is justified and there is no ground to interfere in this appeal.
His submission is that a 'scheduled building ' defined in section 2(h) continues to be a 'residential building ' as defined in section 2(g), so that the ground for eviction based on personal need contained in section 13(3) (a) (i) (a) is available in the present case.
He also submitted that the finding of fact relating to personal need of the landlord is not open to challenge.
His submission in the alternative is that in case a 'scheduled building ' is not 'residential building ', then the ground of change of user is available since the building was let out for residential purpose and its user has been changed unilaterally by the tenant without the consent of the landlord.
The first question for our decision is: whether learned counsel for the appellant is right in contending that a 'scheduled building ' is not a "residential building ' for the purpose of the ground of eviction contained in section 13(3) (a) (i) (a) ? In case it is held that this ground for eviction of the tenant is available in the present case and the finding of fact on the question of personal need of the landlord is not open to challenge, the order of eviction can be sustained on this ground alone and it is unnecessary to decide the question relating to the ground of change of user contained in section 13(2) (ii) (b) of the Act.
We would, therefore, consider 154 this question first.
Admittedly, the appellant is a consultant engineer and the suit premises, a 'building as defined in section ' '(a) of the Act, was let out to him solely for residential purpose.
He has been using it as his residence while a part thereof is used by him as his professional office without the consent of the landlord.
It is on the basis of use of a part of the building as appellant 's office that the appellant claims it to be a 'scheduled building ' as defined in section 2(h) of the Act.
Apart from the question of change of user which is a separate ground for eviction, the question is whether the suit premises being treated as a 'scheduled building, the ground for eviction contained in section 13(3) (a) (i) (a) is not available, that ground being available only in respect of a 'residential building ' as defined in section 2(g) of the Act.
The contention of learned counsel for the appellant is that the word 'scheduled ' which occurred along with 'residential ' in section 13(3) (a) (i) of the Act having been omitted by the amendment made in the principal Act in 1956, the obvious legislative intent is to exclude a 'scheduled building ' from the scope of that provision with the result that the grounds for eviction contained in section 13(3) (a) (i), of which personal need of the landlord is one, are not available for eviction of a tenant from ,scheduled building ' thereunder after that amendment.
To buttress this argument, learned counsel referred to section 4 of the principal Act and Section 13A, inserted therein by an amendment made in 1985, wherein the expression 'scheduled building ' is expressly used in addition to the expression 'residential building ' and the separate definition of 'scheduled building ' in section 2(h) while defining 'residential building ' in section 2(g) in the principal Act from the very inception.
The question is whether this contention can be accepted.
Before dealing with the above question, it would be appropriate to dispose of the challenge made to the finding of fact of landlord 's personal need, on which this question arises.
The finding on this question of fact recorded by the appellate authority has been affirmed by the High Court.
Can this finding be reopended now? Learned counsel for the appellant submitted that the personal need found proved is only of respondent No. 2, son of respondent No. 1, who did not enter the witness box and, as stated in an affidavit filed in this 155 Court, even he is carrying on his profession at a place about 25 kms, away from Ludhiana.
In our opinion, this finding of fact is unassailable.
The High Court has clearly observed that no meaningful argument could be advanced on behalf of the appellant to challenge this finding of the appellate authority.
Respondent No. 1 who is the father of respondent No. 2, has supported and proved the need of respondent No. 2, who also is a landlord.
The fact that for want of suitable accommodation in the city of Ludhiana, respondent No. 2 is at present carrying on his profession at some distance from Ludhiana is not sufficient to negative the landlord 's need.
In these circumstances, the non examination of respondent No. 2 also, when respondent No. 1 has examined himself and proved the need of the landlord, is immaterial and, at best, a matter relating only to appreciation of evidence, on which ground this finding of fact cannot be reopened.
This is more so when no serious challenge to this finding was made in the High Court.
We must, therefore, proceed on the basis that the personal need of the landlord is proved to make out the ground of eviction contained in section 13(3)(a)(i)(a) of the Act in case that ground of eviction is applicable to the suit premises treating it as a 'scheduled building.
In order to fully appreciate the arguments of learned counsel for the appellant, the legislative history would be useful.
The Punjab Urban Rent Restriction Act, 1941 was enacted to restrict the increase of rents on certain premises situated within the limits of urban areas in the Punjab.
That Act was primarily to control the increase of rents and did not relate to eviction of tenants.
Then came the Punjab Urban Rent Restriction Act, 1947 which was enacted to restrict the increase of rent of certain premises situated within the limits of urban areas and the eviction of tenants therefrom.
Provision was made in Section 4 of the Act for determination of fair rent, for which purpose 'non residential building ', 'residential building ' and 'scheduled building ' were treated as three different categories prescribing different formula for each of these three categories.
For this reason, separate definition of each of them was given in section 2 containing the definitions.
However, for the purpose of eviction, in section 13 (3), a 'residential building or a 'scheduled building ' were clubbed together and treated similarly by providing the same grounds for eviction while a 'non. residential building ' or 'rented land ' were clubbed together and provided for separately.
The scheme of the Act clearly shows that a 'residential building ' and a 'scheduled building ' were treated as different categories only for the determination of fair rent but were treated alike while prescrib 156 ing the grounds for eviction of a tenant therefrom.
The definition of 'scheduled building ' in section 2(h) of that Act also took care to provide that a 'scheduled building ' means a residential building which was being used partly for a specified purpose.
In this manner, the definition of a 'scheduled building ' given in the Act was in consonance with the scheme of the Act treating it differently from a 'residential building ' for the purpose of determination of fair rent and similarly for eviction of the tenant.
Then came the East Punjab Urban Rent Restriction Act, 1948 which repealed the 1947 Act and replaced it.
The same scheme was retained in the 1949 Act which is the principal Act for our purpose.
It is the relevant provisions of this Act, as amended from time to time, which are material for deciding the point raised by the appellant.
The East Punjab Urban Rent Restriction Act, 1948 (East Punjab Act No. 111 of 1948) was amended by the Amendment Acts of 1956, 1957, 1966 and 1985 whereby section 13 of the principal Act was amended and in 1985 the new section 13A was inserted.
It is the amendments made in section 13 at the principal Act providing for eviction of tenants which are material for our purpose.
The material provisions of the Act, including the amendments made in section 13 from time to time are mentioned hereafter.
In the principal Act as originally enacted, the material provisions are as under : '2.
Definitions.
In this Act, unless there is anything repugnant in the subject o r context, (a) 'building ' means any building or part of a building let for any purpose whether being actually used for that purpose or not, including any land, godowns out houses or furniture let therewith, but does not include a room in a hotel, hostel or boarding house; xxx xxx xxx (d) 'non residential building means a building being used solely for the purpose of business or trade; xxx xxx xxx (g) "residential building" means any building which is not a 157 non residential building; (h) "scheduled building means a residential building which is being used by a person engaged in one or more of the professions specified in the Schedule to this Act, partly for his business and partly for his residence; xxx xxx xxx "4.
Determination of fair rent. (1) The Controller shall on application by the tenant or landlord of a building or rented land fix the fair rent for such building or rented land after holding such inquiry as the Controller thinks fit.
(2) In fixing the fair rent under this section, the Controller may first fix a basic rent taking into consideration xxx xxx xxx (3) In fixing the fair rent of a residential building the Controller may allow.
If the basic rent xxx xxx xxx (4) In fixing the fair rent of a scheduled building the Controller may allow, if the basic rent xxx xxx xxx (5) In fixing the fair rent of a non residential building or rented land the Controller may allow, if the basic rent xxx xxx xxx '11.
Conversion of a residential building into a nonresidential building No person shall convert a residential building into a non residential building except with the permission in writing of the Controller." "13.
Eviction of tenants.
(1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement 158 of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the provisions of this section.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii)that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased.
or (iii)that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or the Controller may make an order directing the tenant to put the landlord in possession of the building or rented land and if the Controller is not so satisfied he shall make an order rejecting the application : Provided that the Controller may give the tenant a reasonable time for putting the landlord in possession of the building or rented land and may extend such time so as not to exceed three months in the aggregate.
(3) (a) A landlord may apply to the Controller for an order directing tenant to put the landlord in possession (i) in the case of a residential or a scheduled building if (a) he requires it for his own occupation; 159 (b) he is not occupying another residential or a scheduled building, as the case may be, in the urban area concerned; and (c) he has not vacated such a building without sufficient cause after the commencement of this Act in the said urban area: (ii) in the case of a non residential building or rented land, if (a) he requires it for his own use; (b) he is not occupying in the urban area concerned for the purpose of his business any other such building or rented land, as the case may be, and xxx xxx xxx "19.
Penalties.
(1) If any person contravenes any of the provisions of sub section (2) of section 9, sub section (1) of section 10, section 11 or section 18, he shall be punishable with fine which may extend to one thousand rupees. ' The East Punjab Urban Rent Restriction (Amendment) Act, 1956 (Punjab Act No. 29 of 1956) amended section 13 in the following manner: 2.
Amendment of section 13 of East Punjab Act III of 1949.
In clause (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, hereinafter referred to as the principal Act (i) (a) In sub clause (i), the words 'or a scheduled" shall be omitted.
(b) In sub paragraph (b), the words "or a scheduled" and the words "as the case may be" shall be omitted.
(ii) (a) In sub clause (ii) the words 'a non residential building or ' shall be omitted.
(b) In sub paragaph (b), the words "building or" and the words Was the case may be ' shall be omitted" 160 (c) In sub paragraph (c), the words 'a building or" shall be omitted.
(iii)For sub clause (iii), the following shall be substituted, namely: (iii)In the case of any building or rented land, if he requires it to carry out any building work at the instance of the Govern ment or local authority or any improvement Trust under some improvement of development scheme or if it has become unsafe or unfit for the human habitation. (iv) In sub clause (iv), for the words 'any building", where they first occur, the words 'any residential building shall be sub stituted.
(v) In the second proviso, for the words "a residential a scheduled or non residential building or rented land ', the words "a residential building or rented land" shall be substituted.
Section 13 was again amended by the Punjab Urban Rent Restriction ,Amendment) Act, 1957 (Punjab Act No. 21 of 1957) as under '2.
Amendment of section 13 of the East Punjab Act No. 111 of 1949.
After clause (c) of sub paragraph (i) of paragraph (a) of sub section (3) of section 13 of the East Punjab Urban Rent Restriction Act, 1949, the following shall be added, namely : "(d) it was let to the tenant for use as a residence by reason of his being in the service or employment of the landlord, and the tenant has ceased, whether before or after the commencement of this Act, to be in such service or employment: Provided that where the tenant is a workman who has been discharged or dismissed by the landlord from his service or employment in contravention of the provisions of the Industrial Disputes Ad, 1947, he shall not be liable to be evicted until the competent authority under that Act confirms the order of discharge or made against him by the landlord." 161 Thereafter, the East Punjab Urban Rent Restriction (Amendment) Act, 1966 (Punjab Act No. 6 of 1966) further amended section 13 of the principal Act as under "2.
Amendment of section 13 of punjab Act 3 of 1949.
In section 13 of the East Punjab Urban Rent Restriction Act, 1949, (i) in sub section (3), (a) after sub paragraph (i) of paragraph.(a), the following sub paragraph shall be inserted, namely : "(i a) In the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under special conditions within the meaning of section 3 of that Act.
Explanation.
For the purposes of this sub paragraph (1) the certificate of the prescribed authority shall be conclusive evidence that the landlord is serving under special conditions; and (2) "family ' means such relations of the landlord as ordinarily five with him and are dependent upon him;"; (c) in the first proviso in paragraph (a), for the words "shall not be entitled, the words 'shall not, except under sub paragraph (i a), be entitled ' shall be substituted; and (c) after paragraph (b), the following new paragraph shall be added, namely : '(c) where an application is made under sub paragraph (i a) of paragraph (a), it shall be disposed of, as far as may be, within a period of one month and if the claim of the landlord is accepted, the Controller shall make an order 162 directing the tenant to put the landlord in possession of the building on a date to be specified in the order and such date shall not be later than fifteen days from the date of the order."; and (2)In sub section (4), for the words 'does not himself occupy it or, if possession, the words 'does not himself occupy it or, if possession was obtained by him for his family in pursuance of an order under sub paragraph (i a) of paragraph (a) of sub section (3), his family does not occupy the residential building, or, if possession" shall be substituted." Then the East Punjab Urban Rent Restriction (Amendment) Act, 1985 (Punjab Act No. 2 of 1985) further amended section 13 and inserted new section 13A in the principal Act as under 'Amendment of section 13 of Punjab Act 3 of 1949.
In the principal Act, in section 13, after sub section (4), the following sub section shall be inserted, namely : '(4 A) Where a tenant is evicted from a residential or scheduled building in pursuance of an order made under section 13 A and the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law of such specified landlord : (a) does not occupy it for a continuous period of three months from the date of such eviction; or (b) within a period of three years from the date of such eviction of the tenant, lets out the whole or any part of such building, from which the tenant was evicted, to any person other than the tenant; such evicted tenant may apply to the Controller, for an order directing that the possession of the building shall be restored to him and the Controller shall make an order accordingly. ' Insertion of new section 13 A in Punjab Act 3 of 1949.
In the principal Act, after section 13, the following section shall 163 be inserted, namely: Right to recover immediate possession of residential or scheduled building to accrue to certain persons.
"13 A.
Where a specified landlord at any time, within one year prior to or within one yea after the date of his retirement or after his retirement but within one year of the date of commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985, whichever is later, applies to the Controller alongwith a certificate from the authority competent to remove him from service indicating the date of his retirement and his affidavit to the affect that he does not own and possess any other suitable accommodation in the local area in which he intends to reside to recover possession of his residential building or scheduled building, as the case may be, for his own occupation, there shall accrue, on and from the date of such application to such specified landlord, notwithstanding anything contained elsewhere in this Act or in any other law for the time being in force or in any contract (whether expressed or implied), custom or usage to the contrary, a right to recover immediately the on of such residential building or scheduled building or any part or parts of such building if it is let out in part or parts : Provided that in case of death of the specified landlord, the widow or widower of such specified landlord and in the case of death of such widow or widower, a child or a grandchild or a widowed daughter in law who was dependent upon such specified landlord at the time of his death shall be entitled to make an application under this section to the Controller, (a)in the case of death of such specified landlord, before the commencement of the East Punjab Urban Rent Restriction (Amendment) Act, 1985 within one year of such commencement: (b)In this case of death of such specified landlord, after such commencement, but before the date of his retirement, within one yew of the date of his death; 164 (c)in the case of death of such specified landlord, after such commencement and the date of his retirement, within one year of the date of such retirement; and on the date of such application the right to recover the possession of the residential building or scheduled building, as the case may be, which belonged to such specified landlord at the time of his death shall accrue to the applicant: Provided further that nothing in this section shall be so construed a. , conferring a right on any person to recover possession of more than one residential or scheduled building inclusive of any part or parts thereof if it is let out in part or parts: Provided further that the controller may give the tenant a reasonable period for putting the specified landlord or, as the case may be, the widow, widower, child, grandchild or widowed daughter in law in possession of the residential building or scheduled building, as the case may be, and may extend such time so as not to exceed three months in the aggregate.
Explanation.
For the purpose of this section the expression "retirement" means termination of service of a specified landlord otherwise than by resignation." Further by this Amendment Act of 1985, special procedure for disposal of applications under section 13A was prescribed and some other ancillary amendments were also made.
The definitions in clauses (a), (d), (g) and (h) of Section 2 and the material part of section 4 quoted above remain the same in the principal Act as originally enacted even after these amendments, section 13, in so far as it is material for the present case, as it stands amended in the above manner now reads as under: "13.
Eviction of tenants (1) A tenant in possession of a building or rented land shall not be evicted therefrom in execution of a decree passed before or after the commencement of this Act or otherwise and whether before or after the termination of the tenancy, except in accordance with the 165 provisions of this section, or in pursuance of an order made under section 13 of the Punjab Urban Rent Restriction Act, 1947, as subsequently amended.
(2) A landlord who seeks to evict his tenant shall apply to the Controller for a direction in that behalf.
If the Controller, after giving the tenant a reasonable opportunity of showing cause against the applicant, is satisfied (i). . . (ii) that the tenant has after the commencement of this Act without the written consent of the landlord (a). . . (b) used the building or rented land for a purpose other than that for which it was leased, or (iii) that the tenant has committed such acts as are likely to impair materially the value or utility of the building or rented land, or xxx XXK xxx (3) (a) A landlord may apply to the controller for an order directing the tenant to put the landlord in possession (i) in the case of a residential building if (a) he requires it for his own occupation; (b) he is not occupying an other residential building, in the urban area concerned; and xxx xxx xxx (i a) in the case of a residential building, if the landlord is a member of the armed forces of the Union of India and requires it for the occupation of his family and if he produces a certificate of the prescribed authority, referred to in section 7 of the , that he is serving under 166 special conditions within the meaning of section 3 of that Act.
XXK xxx xxx (ii) in the case of rented land, if (a) he requires it for his own use: (b) he is not occupying in the urban area concerned for the purpose of his business any other such rented land; and (c) he has not vacated such rented land without sufficient cause after the commencement of this Act, in the urban area concerned: xxx xxx xxx (iv) in the case of any residential building, if he requires it for use as an office, or consulting room by his son who intends to start practice as a lawyer or as a "registered practitioner" within the meaning of that expression as used in the Punjab Medical Registration Act, 1916, or for the residence of his son who is married, if (a) his son as aforesaid is not occupying in the urban area concerned any other building for use as office, consulting room or residence, as the case may be; and (b) his son as aforesaid has not vacated such a building without sufficient cause after the commencement of this Act, in the urban area concerned xxx xxx xxx The main argument of learned counsel for the appellant is that omission of the words "or a scheduled ' after the word 'residential ' in section 13(3) (a) (i) by the 1956 Amendment while using those words in addition to the word 'residential in section 13A, subsequently inserted in 1985, is a clear indication that the ground of eviction contained in section 13(3) (A) (i) (a) of _personal need of the landlord.is no longer available to landlords in general after the 1956 Amendment, awn though a more expeditious remedy on that ground has been provided by 13A from 167 1985 to the category of specified landlords alone.
The retention of the separate definition of 'scheduled building ' in section 2(h) and use of that expression elsewhere in the Act, including section 4 and section 13, is referred in support of this submission.
The question is whether this construction is proper.
In section 2 which contains the definitions, clause (a) defines 'building '.
Clause (d) then defines 'non residential building ' to mean a building being used solely for the purpose of business or trade.
Thus, to be a non residential building, it must be used solely for the purpose of business or trade.
Clause (g) defines 'residential building ' to mean any building which is not a non residential building.
These definitions make it clear that all buildings are divided into two categories : 'non residential ' and 'residential '.
Buildings used solely for the purpose of business or trade are 'non residential ' and the remaining buildings are all 'residential '.
Accordingly, no building to which the Act applies is outside the classification of 'non residential ' and 'residential '.
Then comes clause (h) which defines 'scheduled building ' to mean a residential building which is being used partly for a scheduled purpose.
The definition of 'scheduled building ' in clause (h) itself makes it clear that it is a residential building as defined in clause (g) with the qualification that such a residential building is one which is used partly for a specified purpose.
In other words, 'scheduled building ' as defined in clause (h) is merely a kind of 'residential building ' as defined in clause (g), its characteristic being its part user for a scheduled purpose.
The reason to defined 'scheduled building ' separately in clause (h) is also evident from some provisions of the Act itself.
The Act makes a distinction for the purpose of determination of fair rent between a residential building which is being used partly for a scheduled purpose and is, therefore, treated as a 'scheduled building ' and the remaining residential buildings which are not so used.
This is clear from the scheme of section 4 itself providing for determination of fair rent.
This is also clear from the fact that from the definition of 'building ' given in section 2(a), the only category excluded is a 'non residential building ' as defined in section 2(d) for the purpose of section 2(g) and not also 'scheduled building ' defined in section 2(h) and in section 2(h), a 'scheduled building" is defined to mean a residential building used partly for a scheduled purpose.
A separate definition of 'scheduled building ' in clause (h) while making it 168 clear therein that it means a residential building used partly for a specified purpose does not, therefore, indicate that a scheduled building ceases to be a residential building or is a category of building separate from a residential building for the purpose of eviction of tenants in the scheme of section 13 of the Act.
This is the only manner in which a harmonious construction can be made of these provisions.
The question now is of the effect of the 1956 Amendment which omitted the words 'or a scheduled ' in section 13(3) as indicated earlier.
The Statement of Objects and Reasons of the Amendment Act of 1956 clearly says that the provision allowing eviction on the ground of personal need has been misused by certain landlords and according to the Act applicable to Delhi the tenants of industrial and commercial premises cannot be ejected on the ground of personal need, while in the Punjab, such tenants can be evicted therefrom also on the ground of personal need.
To avoid hardship to such tenants, it was considered necessary that the tenants of non residential property in the Punjab should be placed at par with tenants of such property in Delhi.
Thus, the object of this enactment was to equate the Punjab tenants with Delhi tenants and exclude the ground of landlord 's personal need for eviction of tenants of non residential property.
To achieve this object deletion was made of the words other than 'residential ' from section 13(3) providing for eviction of tenants from buildings on the ground of landlord 's personal need.
Obviously, in view of the definition of 'scheduled building ' in section 2(h) being clear to indicate that 'scheduled building ' is a 'residential building, retention of the words ,or a scheduled ' after 'residential ' was considered superfluous while omitting the words 'non residential building ' in other parts of section 13(3) relating to the ground of personal need for eviction of the tenants from buildings.
Subsequently, in section 13A, when inserted by 1985 Amendment, the word 'scheduled ' was also used after 'residential ', may be, in view of the controversy like the present raised on the basis of the 1956 Amendment, to avoid any such controversy therein.
That does not, however, mean that section 13 which must be construed in the manner indicated by us should be read differently for that reason.
In fact, insertion of section 13A further reinforces the view we have taken.
There would be no occasion to provide an expeditious remedy for eviction of tenants of a category of 169 landlords and to also provide for a special summary procedure for them unless the remedy of eviction on the ground of personal need was already available generally to the landlords in section 13.
It is significant that section 13 was also amended by the 1985 Amendment by inserting sub section (4 A) therein as a result of insertion of the new section 13A in the principal Act.
Thus, the 1985 Amendment itself shows that section 13A is not a separate and distinct provision but has to be read along with section 13 of the principal Act forming a part of the general scheme contained in section 13 for eviction of tenants on the ground of personal need from buildings which are not non residential.
The construction we have made of section 13(3)(a)(i), as it stood after the 1956 Amendment, is the only construction which can be made to harmonise with the definitions in section 2 which continue to remain as originally enacted and the other provisions of the Act which have been referred.
The contention of learned counsel for the appellant on this point is, therefore, rejected.
The result of the above discussion is that the respondent landlord 's personal need being found proved, the ground of eviction contained in section 13(3) (a) (i) (a) is available and the order of eviction passed against the appellant can be sustained on this ground alone.
The construction made by the High Court of Section 13(3) (a) (i) that it does not apply to a scheduled building is, therefore, erroneous.
The only surviving question is the availability of the ground of change of user contained in section 13(2) (ii) (b) on which the order of eviction has been passed by the High Court.
In view of the above conclusion reached by us that the ground in section 13(3)(a)(i)(a) is made out, the consideration of this question in the present case appears unnecessary.
We have considered and decided that question in a connected matter Bishamber Das Kohli (Dead) by Lrs.
vs Smt.
Satya Bhalla.
However, a brief reference to the general principle may be apposite.
If the express terms of lease restrict the user solely for purpose of residence, then use of any part thereof for even a scheduled purpose without the written consent of the landlord may amount to use of the building for a purpose other than that for which it was leased.
That, however, is a question of fact in each case.
In that case while the ground of eviction in section 13(3)(a)(i)(a) would remain available to the landlord 170 for eviction of the tanant, in view of the express covenant against user of any part of the residential building even for a scheduled purpose.
It may make available also the ground of change of user under section 13(2) (ii) (b) of the Act.
In the present case, it is unnecessary to go into this further question since the order of eviction can be sustained on the ground contained in section 13(3)(a)(i)(a) alone as already indicated.
Consequently, the appeal is dismissed with costs.
Counsel 's fee Rs. 3,000.
U.R. Appeal dismissed.
[/INST]The first respondent, a defeated candidate, riled an election petition before the High Court for a declaration that the election of the appellant was void and that he himself had been duly elected.
Since the notice could not be served on the appellant, and some other respondents in the ordinary course, it was published in a vernacular daily newspaper, as directed by the High Court, fixing the date of appearance of the respondents therein.
The appellant appeared before the High Court on the date of publication of the notice and sought time for filing the written.
statement and after doing so submitted a recrimination notice under Section 97 of the Representation of People Act, 1951.
Along with the recrimination notice he flied an application under Section 5 of the requesting the High Court to condone the delay in filing the same, since the appellant had given notice beyond the period of 14 days from the date of commencement of trial, prescribed under the proviso to Section 97(1).
The High Court held that Section 5 of the was not applicable to a recrimination notice.
Aggrieved, the appellant riled the appeal, by special leave, before this Court.
It was contended that by virtue of Section 29(2) of the , all the provisions contained in sections 4 to 24 (both inclusive) of the Act applied to the proceedings under the Representation of the People Act, 1951, including the recrimination notice under Section 97.
314 Dismissing the appeal, this Court, HELD : 1.1.
There is no provision in the Representation of People act 1951 making all or any of the provisions of the placable to the proceedings under the Act.
[318A] 1.2.
The Act equates a recrimination notice to an election petition.
The language of Section 97 makes the said fact abundantly clear.
It provides that returned candidates or any other party may give evidence to prove that the election of such candidate would have been void If he had been the returned candidate and a petition had been presented calling in question his election.
The proviso to sub section (1) applies the provisions of Sections 117 and 118 to such a recrimination notice.
For non compliance with the requirement of Section 117 an election petition is liable to be dismissed by virtue of sub section (1) of Section 86.
Sub section (2) of Section 97 further provides that the notice referred to in sub section (1) should be accompanied by the statement and particulars as required by Section 83 in the case of an election petition and should be signed and verified in like manner.
[319C E] 1.3.
The proviso to sub section (1) of Section 97 which requires such a notice to be given to the High Court within 14 days of the date fixed for the respondents to appear before the High Court to answer the claim or claims (reading the definition of 'commencement of trial ' into it) has also a particular meaning and object behind it.
The idea is that the recrimination notice, if any, should be filed at the earliest possible time so that both the election petition and the recrimination notice are tried at the same time.
[319F] The recrimination notice is thus comparable to an election petition.
If Section 5 of the does not apply to the filing of an election petition, it does not equally apply to the filing of the recrimination notice.
[319G] H.N Yadav vs L.N. Misra, ; , relied on.
Shukla vs Khubchand Baghel and Ors., [1964] 6 S.C.R. 129, distinguished.
Bhogilal Pandya vs Maharawal Laxman Singh, AIR , Bhakti Bh.
Mondal vs Hhagendra K Bandhopandhya, 1968 Calcutta 315 69, overruled.
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<s>[INST] Summarize the judgementAppeal No. 661 of 1963.
Appeal by special leave from the judgment and order dated August 17, 1959 of the Calcutta High Court in Civil Rule No. 274 of 1958.
N. C. Chatterjee and Sukumar Ghose, for the appellant.
Sarjoo Prasad and section C. Mazumdar, for the respondent.
delivered by Sikri J.
This appeal by special leave is directed against the judgment of the High Court of Calcutta in an application under section 115 of the Code of Civil Procedure and under article 227 of the Constitution filed by the tenant, Shri Surendra Nath Bibra, now appellant before us.
Stephen Court Limited, respondent before us, hereinafter referred to as the plaintiff, filed a suit in the Court of Small Causes, Calcutta, for the recovery of rent from September 1956 to November,1956, at the rate of Rs. 350/ per mensem, and interest, against the appellant, hereinafter referred to as the defendant, alleging that the defendant was a monthly tenant by virtue of a lease dated 459 April 30, 1956, under the plaintiff, in respect of flat No. 17 at promises No. 18A, Park Street, known as Stephen Court in the town of Calcutta, and that the defendant had not paid the rent from September to November, 1956.
The defendant, inter alia, Pleaded that relying on the representation and assurance of the plaintiff that three bed rooms, two bath rooms etc. would be available to the defendant in flat No. 17 he executed a lease on April 30, 1956, for a period of 21 years, but the plaintiff put him in possession only of two bed rooms and not three, and according to him, in the circumstances he was entitled to suspend the rent altogether.
The Small Cause Court Judge, Mr. Mandal, found that the defendant had not been put into possession of one of the three bed rooms.
Purporting to follow Katyayani Debi vs Udoy Kumar Das (1) and Abhoya Charan Sen vs Hem Chandra Pal (2) he held that the defendant was entitled to suspend payment of rent to the plaintiff.
The plaintiff then preferred an application under section 38 of the Presidency Small Cause Courts Act against the dismissal of its suit.
The Full Bench of the Small Causes Court, following Ram Lal Dutt Sarkar vs Dhirendra Nath.
Roy,(3) held that the plaintiff 's claim for arrears of rent must succeed in spite of the fact that the landlord had failed to give possession of one out of the three bed rooms of the demised premises.
The Bench, however, made it clear that the "non applicability of the principle of suspension of rent in the present suit for recovery of arrears of rent for a parti cular period will not necessarily debar the tenant from claiming other appropriate reliefs against the failure of the landlord to put him In possession of the entire demised premises by way of apportionment of rent or damages. ' Accordingly, it decreed the suit.
The defendant then filed an application under section 115, Civil Procedure Code, and article 227 of the Constitution.
In the application the defendant prayed that the suit be dismissed.
In the alternative, the defendant alleged that the plaintiff was at best entitled only to a proportionate rent.
The High Court dismissed the application and the defendant having obtained special leave, the matter is now before us.
Mr. N. C. Chatterjee, the learned counsel for the defendant,.
contends that the decision in Ram Lal Dutt 's (4) case which the High Court and the Full Bench of the Small Causes Court had followed was distinguishable because in that case the tenancy was.
an agricultural tenancy and the tenant in that case had raised the point after the lapse of a number of years.
He says that the doctrine of suspension of rent should be applied to the facts of this case because the plaintiff had deliberately not given possession (1) 30 C.W.N. (P.C.) 1 (2) (3) 70 I.A. 18.
460 of one bed room.
In the alternative he contends that the Fun Bench of the Small Causes Court and the High Court should have made an order for apportionment of rent.
We are unable to agree with Mr. Chatterjee that the decision of the Privy Council in Ram Lal Dutt 's (1) case can be distinguished on the ground urged by him.
It is no doubt true that the Privy Council was concerned with an agricultural tenancy but the Privy Council decided the appeal on a matter of principle, the principle being that the doctrine enunciated, in Neak vs Mackenzie (2 ) should not be regarded as a rule of justice, equity and good conscience in India in all circumstances.
It is interesting to note that the subject matter of the lease in Neak vs Mackenzie (2) was a dwelling house and land attached to it, and it was eight acres of the land which was attached to the house that the tenant had been kept out ,of possession.
Be that as it may, in our opinion, the doctrine laid down in Neale vs Mackengie (2) is too inflexible and cannot be applied to all cases.
As observed by Sir George Rankin, the ,doctrine cannot be justified as a dependable rule to be adhered to notwithstanding hard cases.
On the one hand it does not seem ,equitable that when a tenant enjoys a substantial portion of the property of the landlord, leased to him, without much inconvenience, he should not pay any compensation for the use of the property , in other words, to borrow the language of Sir George Ranking that he should enjoy a windfall.
On the other hand it is unfair that if a tenant is not given possession of a substantial portion of the property, he should be asked to pay any compensation for the use of the property while he is taking appropriate measures for specific performance of the contract.
It seems to us that it will depend on the circumstances of each case, whether a tenant would be entitled to suspend payment of the rent or whether he should be held liable to pay proportionate part of the rent.
On the facts of this case we are of the opinion that the tenant is not entitled to suspend the payment of rent but he must pay a proportionate part of the rent.
We may make it clear that like the Privy Council in Ram Lal Dutt 's (1) case we are not deciding that the doctrine of suspension ,of rent should or should not "be applied at all to cases of eviction ,of the lessee by the lessor from a part of the land, and if so, whether it is limited to rents reserved as a lump sum, and whether it is a rigid or discretionary rule these questions will call for careful review when they are presented by the facts of a particular case.
" In view of this we need not consider cases like Hakim Sardar Bahadur vs Parkash Singh (3); Jatindra Kumar Seal vs Raimohan Bai (4); and Nilkantha Pati vs Kshitish Chandra Satati.(5) (1) 70 I.A. 18.
(2) ; (3) A.I.R. (1962) Pun.
(4) A.I.R. [1961] An. 52.
(5) 1. 461 The High Court rejected the plea of apportionment of rent on the ground that the defendant had not taken a specific plea to this effect in the written statement.
The second ground given by the High Court was that it would be unreasonable to thrust a relief on the defendant unless he himself chooses one or more of the alternative reliefs available to him.
Further, no prayer was 3 made before the High Court to amend the written statement to include this relief.
In our opinion, the Full Bench of the Small Causes Court should have remanded the case for calculation of the proportionate rent for the portion of the premises taken possession of by the defendant.
In our view, the High Court has taken too technical a view.
It would be inequitable to allow the plaintiff to recover the full rent when he has not delivered possession of the whole of the premises in question.
Mr. Sarjoo Prasad, the learned counsel for the plaintiff, urges that the defendant had paid rent voluntarily for four months this fact also is relied on by the High Court and therefore we should not remand the case.
But we find that three months ' rent was paid in advance as security deposit, and hence there is no force in the contention.
Mr. Sarjoo Prasad finally contends that as this appeal arises from an application under section 115 of Civil Procedure Code and article 227 of the Constitution, we should not interfere with the decision of the Full Bench of the Small Causes Court even though it be erroneous.
A similar point was raised before the High Court and although the High Court found some substance in the point it chose to go into the merits of the case and not dismiss the application on this ground.
It must be remembered that the application was also under article 227 of the Constitution, and although ordinarily article 227 should be used sparingly, on the facts of this case we are satisfied that the High Court was right in not throwing out the application on this ground.
In the result the appeal succeeds.
We set aside the orders of the High Court and of the Full Bench of the Small Causes Court and of the Judge Small Causes Court, and remand the case to the Court of Small Causes, Calcutta, with ' the direction that it will dispose of the suit in the light of this judgment.
The parties would be at liberty to lead evidence before the Court of Small Causes on the question of apportionment of rent.
In the circumstances of the case there would be no order as to costs.
Appeal allowed.
[/INST]A dispute regarding amendment of rules relating to privilege leave etc.
arose between the Ahmedabad Millowners ' Association and the union of workmen employed in the textile industry.
After conceliation proceedings were declared by the Conciliator to have failed, the union referred the dispute to the Industrial Court under section 73A of the Bombay Industrial Relations Act, 1946.
The Industrial Court decided against the Millowners who filed a writ petition in the ' High Court and thereafter appealed to this Court.
It was urged on behalf of the appellants that (i) section 73A was violative of article 14 of the Constitution since it gave a right to the workers union to make a reference but not to the employer (ii) the Act had not been made applicable to the cotton industry at Ahmedabad under section 2(4) and it was not applicable under section 2(3) because the Bombay Industrial Disputes Act, 1938 was repugnant to Central) and must be deemed to have been repealed.
HELD:(i) Section 73A was not violative of article 14.
Whenever any industrial dispute arises the employer can always ensure arbitration of that dispute by making an offer to the union under section 66 of the Act whereupon a registered and approved union is compelled to agree to submission of the dispute to arbitration.
Clearly therefore there was no need to make any Provision empowering the employer to make a reference of the dispute for arbitration to the Industrial Court.
On the other hand if a Union wants a dispute to be settled and even offers that the dispute be submitted to arbitration under section 66 of the Act, the employer can refuse, whereupon the union would be left without any remedy.
It is obvious that section 73A was enacted to fill this gap and place the union on with the employer so as to enable the union to have any dispute = by arbitration even when the employer does not agree to arbitration.
This section, in these circumstances did not at all require that the right granted to the union should also be granted to the employer.
[441 G H] There was no difference in the procedure to be followed by the Industrial Court in a reference under section 73A and that to be followed when the reference is under section 66.
In both the procedure under section 92 had to be followed.
[443 E F] (ii)Chapter V of the Bombay Industrial Disputes Act 1938 was not repugnant to the Central Act of 1947 and therefore continued to be in force, and consequently under section 2(3) of the Bombay Industrial Relations Act 1947 the latter Act became applicable to the industry of the appellants and did not require a notification under section 2(4) to make it applicable [446 G H; 447 A B] 438 Ex Parte McLean, ; Victoria and Others vs The Commonwealth of Australia and Others, ; , Zaverbhai Amaidas vs The State of Bombay, [1955] 1 S.C.R. 799, Ch.
Tika Ramji & Ors.
vs The State of Uttar Pradesh & Ors., and Deep Chand vs The State of Uttar Pradesh and Others, [1959] Supp. 2 S.C.R. 8.
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<s>[INST] Summarize the judgementSpecial Leave Petition Nos. 937 939 of 1980.
From the Judgment and Order dated 1 8 1979 of the Madras High Court in A.A.O. Nos. 815 817 of 1977.
T. A. Ramachandran and K. Ramkumar for the Petitioner.
The Order of the Court was delivered by KRISHNA IYER, J. Sri Ramachandran, ably assisted by Sri K. Ram Kumar, presented the case of the petitioner for special leave, as persuasively as the facts permit but while we were impressed with the 102 industry and advocacy of counsel, we heartily dismiss this petition.
Why heartily? Because the High Court, if at all, has erred in favour of the petitioner, not against him.
The Facts: A stage carriage belonging to the petitioner was on a trip when, after nightfall, the bus hit an over hanging high tension wire resulting in 26 casualties of which 8 proved instantaneously fatal.
A criminal case ensued but the accused driver was acquitted on the score that the tragedy that happened was an act of God! The Accidents Claims Tribunal, which tried the claims for compensation under the Motor Vehicles Act, came to the conclusion, affirmed by the High Court, that, despite the screams of the passengers about the dangerous over hanging wire ahead, the rash driver sped towards the lethal spot.
Some lost their lives instantly; several lost their limbs likewise.
The High Court, after examining the materials, concluded: "We therefore sustain the finding of the Tribunal that the accident had taken place due to the rashness and negligence of R.W. 1 (driver) and consequently the appellant is vicariously liable to pay compensation to the claimant.
" The plea that the criminal case had ended in acquittal and that, therefore, the civil suit must follow suit, was rejected and rightly.
The requirement of culpable rashness under section 304A I.P.C. is more drastic than negligence sufficient under the law of tort to create liability.
The quantum of compensation was moderately fixed and although there was, perhaps a case for enhancement, the High Court dismissed the cross claims also.
Being questions of fact, we are obviously unwilling to re open the holdings on culpability and compensation.
Road accidents are one of the top killers in our country, specially when truck and bus drivers operate nocturnally.
This proverbial recklessness often persuades the courts, as has been observed by us earlier in other cases, to draw an initial presumption in several cases based on the doctrine of res ipsa loquitur.
Accidents Tribunals must take special care to see that innocent victims do not suffer and drivers and owners do not escape liability merely because of some doubt here or some obscurity there.
Save in plain cases, culpability must be inferred from the circumstances where it is fairly reasonable.
The court should not succumb to niceties, technicalities and mystic maybes.
We are emphasising this aspect because we are often distressed by transport operators getting away with it thanks to judicial laxity, despite the fact that they do not exercise sufficient disciplinary control over the drivers in the matter of careful driving.
The heavy economic 103 impact of culpable driving of public transport must bring owner and driver to their responsibility to their 'neighbour '.
Indeed, the State must seriously consider no fault liability by legislation.
A second aspect which pains us is the inadequacy of the compensation or undue parsimony practised by tribunals.
We must remember that judicial tribunals are State organs and Article 41 of the Constitution lays the jurisprudential foundation for state relief against accidental disablement of citizens.
There is no justification for niggardliness in compensation.
A third factor which is harrowing is the enormous delay in disposal of accident cases resulting in compensation, even if awarded, being postponed by several years.
The States must appoint sufficient number of tribunals and the High Courts should insist upon quick disposals so that the trauma and tragedy already sustained may not be magnified by the injustice of delayed justice.
Many States are unjustly indifferent in this regard.
We have been taken through a few intricate legal submissions by counsel but we decline to interfere under Article 136 of the Constitution especially where human misery is pitted against operational negligence.
P.B.R. Petition dismissed.
[/INST]The appellant was the Managing Director of a bank and held a power of attorney to act on behalf of its Directors and authorising him to borrow money on behalf of the bank.
Certain Government Promissory Notes were pledged with the bank by another bank to cover an overdraft account up to a specified amount.
There was, however, no overdraft by the pledgor.
The pledgee bank was in a precarious financial condition.
The appellant pledged the securities with a third party to get a loan for the bank 's use and on its failure 484 to repay the same on demand, the creditors sold the securities for realising their dues.
The pledgee bank was thus no longer in a position to return the securities on demand made by the pledgor.
Information.
was lodged with the police at the instance of the Official Liquidator appointed to wind up the bank and the appellant was put up for trial under section 409 of the Indian Penal Code.
Held, that the appellant was guilty of the offence charged and the appeal must be dismissed.
Held further, that in the absence of any overdraft by the pledgor, the pledgee bank acquired no interest in the securities which it could deal with and section 179 of the Contract Act had no application.
That the delivery of the securities by the pledgor made the pledgee a trustee for him and he remained the owner subject to any especial interest created in favour of the pledgee by the agreement and in a case, such as the present, where there was no question of redeeming the securities by the pledgor, there having been no overdraft, or sale by the pledgee in enforcement of any especial interest, as none had accrued to it, the pledgee bank had no right to deal with the securities.
That the question whether the remedy of the pledgor was by way of a suit for damages for breach of contract or by way of a criminal prosecution would depend on whether or not there was mens rea and.
other elements constituting the offence.
That although the offence of criminal breach of trust presupposes an entrustment, such entrustment need not conform to all the technicalities of the law of trust, and, consequently, in a case such as the present where the accused had the necessary power and exercised dominion over the securities and caused wrongful loss to the pledgor and wrongful gain to the pledgee by dealing with the securities, he was guilty of the offence.
That the provisions of section 79 of the Indian Penal Code were of no avail to him as it was never pleaded in his written statement nor found by the courts below that he Was unaware of the fact that there had been no overdraft at all.
That no sanction under section 179 of the Companies Act was re quired for the prosecution.
The provisions of that section were of a permissive character enabling the court Liquidator to do certain things with the permission of the court and did not in any way control the general law so as to restrict the power of the court to take cognisance of an offence or of the Police to initiate a prosecution or even of a private citizen to move the machinery of the criminal courts to bring an offender to justice.
Basdeo Agarwalla vs King Emperor, ([1946] F.C.R. 93), distinguished and held inapplicable.
That the charge framed against the accused fulfilled the requirements of sections 221 and 222(1) of the Code of Criminal Procedure and 485 as the particulars mentioned in the charge were sufficient to give him notice of the matter he was being charged with it was not necessary to set out also the manner of the commission of the offence as required by section 223 of the Code.
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<s>[INST] Summarize the judgementAppeal No. 2097 of 1968.
Appeal from the judgment and order dated August 11, 1965 of the Delhi High Court in C.W. No. 197 D of 1965.
Jagdiish Swarup, Solicitor General of India, section N. Prasad, B. D. Sharma and section P. Nayar, for the appellant.
S.C. Manchanda, section Balakrishnan and P. N. Lekhi, for the respondent.
The Judgment of the Court was delivered by Grover, J.
This is an appeal by certificate from a judgement of the Punjab High Court by which the petition under article 226 of the Constitution filed by the respondent was allowed and the ban imposed on the sale of a news weekly called "The Indian Observer" by the licensees of the Railway Book Stalls throughout the country under directions issued by the appellant was set aside.
According to the writ petition, the petitioner was the owner and publisher of a weekly newspaper known as "The Indian Observer" which had a wide sale in India, its weekly circulation being approximately 1,35,000 copies.
Till March 1965 the .aforesaid news weekly was being sold at all the railway stations 867 which were managed and were under the administrative control of the Railway Board.
It was alleged that the policy of the news weekly was to publish a constructive criticism and fair comment in public interest on the working of different departments of the Government and to suggest remedial measures.
, In,some of the copies of the news Weekly, certain matters regarding the maladministration of the Railway had been published.
Reference was made in particular to the issue of 11th September, 1964 in which allegations were made about the black marketing in deluxe train tickets.
It was stated to have attained the magnitude of a big racket operating in the country resulting in lot of gain by corrupt means to the Railway staff.
It is unnecessary to give the details but according to the allegations made in the news weekly, the Railway staff was corrupt and the reasons for the corruption were also given.
Other comments were made which reflected adversely on the working of the Indian Railways.
According to the petitioner all these statements and resolutions annoyed the Railway Authorities and on 22nd September, 1964, the Circulation Manager of the Petitioner company received a letter from M/s Gulab Singh (P) Ltd., one of the licensees, of the Railway Board for sale of printed matters intimating that the Northern Railways administration had banned the sale, of "The Indian Observer" on the Railway Book Stalls.
Subsequently, when the petitioner took up the matter with the authorities concerned, the General Manager, Northern Railways, wrote to him informing him that temporary permission had been given to the railway contractors of printed matters to sell the news weekly subject to proper review of that paper and final orders which would be given later.
The General Manager asked the petitioner to supply copies of 12 old issues which was done.
Finally, the petitioner was informed by means of a letter dated the 16th March: 1965 that the sale of the weekly "The Indian Observer" could not be permitted on the railway stations.
In the return which was filed by the Joint Director, Traffic (General), Railway Board, it was not denied that the news weekly "The Indian Observer" was being sold at the, railway stations by the licensed contractors.
It was asserted that the petitioner had been publishing "sexy and obscene literature" Lind the licensees had been raising objections on this score.
The articles published in the Pews weekly were considered to be of low taste, and it was decided that it would not be in public interest to allow its sale at the railway Platforms by the, licencees.
The allegations made in the petition about the statements relating to corruption and maladministration in the Railways which had been published in some of the issues of the news weekly was not denied.
It was, however.
maintained that the Railway Board had taken the action 868 not because of the publication of those articles but because of the sexy and obscene literature of low taste which was being published in the news weekly.
Before, the High Court, section 28 of the Indian Railways Act 1890, hereinafter called the "Act", and the relevant sub clauses of clause 742 of the Indian Railway Code were pressed into service for challenging the ban which had been imposed on the sale of the news weekly.
The High Court was of the view that the petitioner before it had cited and produced instances of publications which were freely on sale on the bookstalls on the railway platforms to show that the material which was sought to be excluded or) grounds on obscenity, was hardly distinguishable from the other popular magazines of foreign and Indian origin.
Reliance was placed on the provisions of clause 742 of the Indian Railway Code which established that a publication to attract the ban imposed by the Railway Board must have been previously prohibited by the Government.
As the Railway Board was not authorised to exclude any publication from sale on its own determination that it was obscene, it was held that the order which was made by that Board was without authority.
The ban had hit the writ petitioner who had been made the object of discriminatory treatment.
Consequently, the restriction imposed on the sale of "The Indian Observer" was quashed.
Section 120A of the Act which was inserted for the first time by Act No. 13 of 1959 provides that if a person canvasses for any custom or hawks or exposes for sale any article whatsoever, in any railway carriage or upon any part of a railway except under and in accordance with the terms and conditions of a licence by the railway administration shall be punishable with fine which may extend to two hundred and fifty rupees.
He can also be removed from the carriage or any part of the railway by any railway servant so authorised.
It appears that prior to the insertion of this section, rules hadbeen framed under section 47 (1) of the Act.
Rule 17 ofPart 11 of the Rules laid down that no person could canvass for any custom or hawk or expose for sale any article whatsoever, on any train, station, platform or premises without a licence granted by the railway administration.
Clause.
I of Rule 17 has been incorporated in section 120A(1) of the Act in 1959, that Clause having been deleted from the rule.
The book stalls on the railway platforms where books, manazines and newsp apers are sold, belong to the licencees who have entered into an agreement with the President of India.
It is not disputed that according to the usual clauses in these agreements of licence, the ale of newspapers shall not be stopped by the licencees at any time save when it is due to causes beyond the, control of the: 869 licensee.
The learned Solicitor General produced a sample agree ment in court which was not objected to by the counsel for the respondent.
According to clause 3(b) thereof the licensor can reserve to himself the right to require the licencee to sell specified books or types of books and periodicals and the licencee was bound to comply with such requirements.
Under clause 5 the licensor had the right of prohibiting the sale, or exhibition of any publication of an obscene or scurrilous nature and of any publication to which good, sufficient, and reasonable objections could be shown and the decision of the licensor was to be final and binding oil the licensee.
The Railway Board which is the appellant before us has issued certain instructions and laid down essential principles and policy directions which have been Published in the form of a Code called the "Indian Railway Code" for the Traffic Department (Commercial).
It may be Mentioned that the Solicitor General himself maintained that all those were of a mandatory nature and it is stated in the preface to the Code.
Chapter VII, Part A of this Code deals with catering and vending services.
Part B relates to book stalls, sale of newspapers and periodicals on railway platforms.
Clause 742 to the extent it is material is reproduced below (v) The sale of obscene books and pictures and publications prohibited by the Government should be strictly banned.
(viii)The contractors should provide equal opportunity to all the popular newspapers for in their stalls on the same terms.
A list of popular newspapers and magazines should be drawn up by the Railway Administration in consultation with the Zonal Railway Bookstall Advisory Committee".
The main argument of the learned Solicitor General on behalf of the appellant is that sale of books on railway platforms or in railway carriages is a matter which is regulated by the terms of the agreement of licence between the bookstall contractors and the railway authorities and it is open to the appropriate authority to stop the sale of any newspaper or publication which was considered obscene or scurrilous or to which sufficient and reasonable objections could be shown.
In the letter of the Railway Board dated March 26, 1965 it was stated that it had come to the Board 's, 870 notice that the "Indian Observer" generally contained "articles written in very low taste bordering oh obscenity".
It was further .stated that after a perusal of few Copies of the said weekly the Board had come to the conclusion that it was not fit for sale at railway stations.
It was desired that the book stall contractors should be, instructed to stop with immediate effect the sale of the "Indian Observer" from their bookstalls as well as on the platforms as also along train side and in station premises.
According to the Solicitor General the action taken by the Railway Board was perfectly competent and was taken in accordance with the terms of the licence granted to the book stall contractors.
It is urged that ,the respondent had no right or locus standi to insist on or ask for the sale of the Indian observer oil the platforms etc., which are the private property of the railway and where the sale .of any publication could only be subject to such terms and conditions as obtained between the licensor or licencee.
Before the High Court and before us the main complaint of the present respondent is based On an infraction of Article 14 of the Constitution and it has been asserted that the news weekly "Indian Observer" was singled out for discriminatory treatment inasmuch as publications containing similar material were not prohibited from sale by the Railway Board on the book stalls at the platforms and in the trains etc.
The High Court had found as a fact that publications which were freely on sale on the book stalls to whom licences had been given were such that they were hardly distinguishable from the "Indian Observer" on the ground news weekly inquestion had been sold on railway platforms since 1963 nor wasit suggested that the Railway Board had ever accorded individual sanction for the sale of every single book and publication at the book stalls of the Railway Administration.
Now in the Indian Railway Code the policy or the principle laid down in categorical terms in sub clause (viii) of Clause 742 is that the contractor should provide equal opportunity to all the popular newspapers for sale in their stalls on the same terms.
This was subject to certain conditions, one of which was that the sale of obscene books and pictures and publications prohibited by the Government should be strictly banned.
(vide sub clause v).
The letter written by the railway itself to which a reference has been made, does not impose the ban on the ground that the "Indian Observer" is an obscene publication which has been prohibited by the Government.
In that letter there was first a recital of what had come to the Board 's notice i.e. that the articles written in the said news weekly were in very low taste bordering on obscenity.
There was no finding or decision that it was a publication which was obscene.
The conclusion of the Board 871 simply was that the "Indian Observer" was not fit for sale at the Railway stations.
The other condition laid down in sub clause (v) that its sale had been prohibited by the government was neither mentioned nor has it been shown that any such order had been made by the government prohibiting the sale of the "Indian Observer" on the ground that it is obscene.
The learned Solicitor General contends that the word 'Government ' in sub clause (v) means the Railway Board because according to section 2 of the , Central Government may by notification in the official gazette invest the Railway Board either absolutely or subject to conditions with all or any of the powers or functions of the Central Government under the Act.
Our attention has not been drawn to any provision in the Act or the rules framed thereunder by which the Central Government can prohibit the sale of any obscene book, picture or publication on.
It appears that the aforesaid clause.
has reference to a prohibition 'unposed by the Central Government under some enactments other than the Act.
It is not claimed that the Railway Board could impose a ban under any other enactment.
Nor has it been suggested that the Central Government had passed any order prohibiting the sale of the Indian Observer under any statutory provision.
Even on the assumption that the Board could make such an order as is contemplated by sub clause (v) of clause 742 it cannot take any advantage of that provision because in the letter dated March 26, 1965 it was nowhere stated that the publication of the news weekly was being banned on the ground of obscenity.
It is thus apparent that the High Court was fully justified in taking the view that the "Indian Observer" had been sin led out for being banned and this clearly amounted to a discriminatory,treatment.
The question that has next to be resolved is whether article 14 could be invoked by the respondent in the present case.
It has not been and indeed cannot be disputed that the Railway Board will fall within the definition of "State" as given in article 12 of the Constitution.
The learned Solicitor General has relied on Railway, Board vs Niranjan Singh(1).
It was laid down that there was no fundamental right under article 19(1) for anyone to hold meetings in government premises.
The Northern Railway was the owner of the Premises and was entitled to enjoy its property in the same manner as any private individual, subject to any such restrictions as the law or the usage placed on them.
We are unable to appreciate how the ratio of that decision could be applied to the present case.
The meetings of workers which had taken place there had been held inside workshops, stores and depots and within office compounds, Railway platforms may be the property (1).[1969] 3 S.C.R. 548. 872 of the railways, but it cannot be disputed that every bona fide traveller or every other member of the public who, buys a platform ticket can have access to the railway platforms.
It is true that under Rule 15 of the General Statutory Rules and Orders, a railway administration may exclude and, if necessary, remove from the station platform or any part of the railway premises any person who is not a bona fide passenger and who does not have any business connected with the railway or any person who having arrived at a station by train and having no business connected with the railway refuses to leave the railway premises when required to do so.
But that is a right which is reserved for being exercised only in the circumstances mentioned in the rule.
There is no analogy between a station platform and a government office.
Even otherwise the crux of the matter is that the respondent is not seeking to us the station platform or any part of the railway premises by sending any of its own representatives to hawk or sell the news weekly there.
All that the respondent says is that the railway administration has itself directed that the bookstall contractors who were its licensees should provide equal opportunity to all the popular newspapers for sale in their stalls.
These very contractors are now being directed to discriminate between the respondent and owners or publishers of other popular newspapers on grounds which have no legal basis or justification.
The administrative act or order of the Railway Board can, therefore, be challenged under article 14.
The respondent is not asking for the enforcement of any such fundamental right as would come within the rule laid down in the previous decision of this Court.
In other words what the present respondent is challenging is the order of the Railway Board which led to the stoppage of the sale of the news was weekly on the Railway platforms etc.
If that order is discriminatory and, cannot be justified on anyof the well known grounds.
the respondent can challenge it in a Petition under Art.226 of the Constitution as violative of Art.14.
There is no parallel between the facts of this case and the decision relied upon by the learned Solicitor General.
We concur with the view of the High Court that the impugned order of the Railway Board was discriminatory.
No proper or valid grounds have been shown for sustaining the discrimination made.
A certain amount of discussion took place before us with regard to the applicability of section 28 of the Act which contains pro hibition against under preference being shown by the Railway Administration in any respect whatsoever.
Tn the view that we have taken about the applicability of article 14 we do not consider it necessary to decide whether the respondent could take advan tage of the provisions of that section.
873 Lastly, we may refer to a preliminary objection which was raised on behalf of the respondent to the certificate which was granted by the High Court.
It has been urged that the certificate is defective because in the order dated July 7, 1968 granting it the Bench has virtually given a decision as if an appeal was being entertained against the judgment dated August 11, 1965 by which the writ petition was allowed.
It does appear that Deshpande J., who delivered the order of the Division Bench granting the certi ficate has made certain observations which seem to suggest that the previous decision was incorrect.
Although such an order will not per se vitiate the certificate, both judicial propriety and decorum demand that a Bench while considering the question of granting certificate for appeal to this Court ought not to be critical of or express any dissent from the judgment appealed against because it has no such jurisdiction and all that it has to decide is whether the requirement of the Articles of the Constitution on which a certificate can be granted, have been satisfied.
The appeal fails and it is dismissed with costs.
G.C Appeal dismissed.
[/INST]The first respondent was carrying on business of selling country liquor.
In exercise of the powers conferred by section 29(2) of the Bihar and Orissa Excise Act, 1915, the appellant issued an Order and in pursuance of that Order a date was notified for selling by public auction the exclusive privilege.
of selling by retail, country liquor in 8 shops.
The respondent was the highest bidder but his bid was rejected because the Government was of the view that inadequate prices had been offered as a result of collusion between the bidders.
Thereafter, tenders were called for and the appellant accepted the tender in respect of one shop and rejected the others as it was again of the opinion that the price offered was inadequate.
Thereafter, the remaining 7 shops were ' sold by private negotiation for substantially higher prices.
A writ petition filed by the respondent in the High Court was allowed mainly on the ground that the power centered on the Government by cl.
(vi) of the Order, that no sale shall be deemed to be final unless confirmed by the State who shall be at liberty to accept or reject without assigning any reason, was an unguided power violative of articles 14 and 19(1) (g).
Allowing the appeal to this Court, HELD : (1) Section 22 of the Act confers power on the Government to grant to any person on such conditions and for such period as it may think fit the exclusive privilege of selling in retail country liquor; and section 29 empowers the Government to accept payment in consideration of the grant either by calling tenders or by auction or otherwise as it may by general order direct.
The powers conferred on the State Government by sections 22 and 29 are absolute.
The Government cannot be said to have conferred on itself arbitrary power under cl.
(vi) of its Order, passed under section 29(2), because, the power that the Government reserved for itself under that clause is nothing more than what was conferred on it by the Legislature under the sections.
Since the validity of the sections was not challenged the validity of the Order could not also be challenged.
[792 B F] (2) Even otherwise, one of the important purposes of selling the exclusive right to sell liquor in wholesale or retail is to raise revenue; and excise 'revenue forms an important part of every State 's revenue.
The Government is a guardian of the finances of the State and is expected to protect its financial interests.
The fact that the prices fetched by the sale of the privilege to sell country liquor is an excise revenue does not change the nature of the right in the Government.
Therefore, the 785 Legislature has empowered the Government to see that there is no leakage in the revenue.
It was for the Government to decide whether the price offered in an auction is adequate and the conclusion reached by the Government does not affect anyone 's rights.
[793 D F; 794 F G] (3) Public auctions are held to get the best possible price and there is no completed contract till the bid is accepted.
There is, therefore, no basis for, contending that the owner of the privileges who had offered to sell them cannot decline to accept the highest bid if he thinks that the price offered is inadequate, and, it makes no difference that the Government was the seller.
[793 G H; 794 A] (4) If the Government is exclusive owner of the privileges, the respondent could not rely on article 14 and 19(1)(g), because, citizens cannot have any fundamental right to trade or carry on business in the properties or rights belonging to Government, nor can there be any infringement of article 14 if Government tries to get the best available price for its valuable, rights.
Further there is no inherent right in a citizen to sell intoxicating liquor by retail.
[793 A; 794 A B] Coverjee B. Bharucha vs The Excise Commissioner and the Chief Commissioner, Ajmer and Ors., ' ; and Union of India and Ors.
vs M/s. Bhimsen Walait Ram, ; , followed.
(5) Assuming that the question of arbitrary or unguided power can be raised it should be remembered that the power to accept or reject the highest bid is given to the highest authority in the State, namely, the Government, which is expected to safeguard the finances of the State and it is not a case of delegated power but of power conferred by the Legislature.
While accepting or rejecting a bid Government is performing an executive function and the correctness of its conclusion is not open to Judicial review where the power is not used for any collateral purpose.
[793 F , 794 C E] (6) The real conclusion.
of the Government was that the price fixed was inadequate and hence High Court erred in thinking that the Government was bound to satisfy the Court that there was collusion between the bidders.
[794 E F] Barrium Chemicals Ltd. and Anr.
vs Company Law Board and Ors.
[1966] Supp.
S.C.R. 311 and Rohtas Industries Ltd. vs section T. Agarwal; , referred to.
(7) The Government was not precluded, having had recourse to the auction method once, from either calling for tender or selling by negotiations.
Once the Government declines to accept the highest bid or the tender price offered, the government was free to have recourse to other methods.
The pow(* given to the Government to sell in such other manner as it thinks fit is a very wide and unrestricted power and includes within it the power to; sell the privilege by private negotiation.
[795 A B] (8) The Government is not required by section 29 (2) (a) to make an order that the privilege will be sold by private negotiation, since, it makes no sense to require Government to first make an order that it is going to negotiate.
The section only says that the State Government 'may by general or special order direct ' and the direction contemplated is one to subordinate officials and not to itself.
[795 D F]
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 443 of 1985.
503 From the Judgment and order dated 6.5.1985 of the Allahabad High Court in C.M.W.P. No. 2822 of 1983.
Dr. Y.S. Chitale, Mrs. Rekha Pandey, S.P. Pandey, Atul Tiwari, Pinaki Misra, Mrs. Mamta Kachawala and Miss Bina Gupta for the Appellant.
M.K. Banerjee, Solicitor General, A.K. Ganguli, Gopala Subramaniam, K.J. John, M.M. John, Harish N. Salve and Miss Nisha Srivastava for the Respondents.
The Judgment of the Court was delivered by RANGANATH MISRA, J.
This is an appeal by special leave.
The appellant was employed on the production side of the Uttar Pradesh State Handloom Corporation, a public sector undertaking (hereinafter referred to as 'Corporation ' for short) on temporary basis.
Having been appointed on 30th of October, 1976 as Bunker Sewa he obtained two promotions while still working in temporary status and by 1983 was working as Deputy Production Manager.
The appellant 's letter of appointment, as far as material, stated: "With effect from the date of taking over charge Shri Rabindra Kumar Mishra . is hereby appointed as Bunker Sewa . on the following terms and conditions: (1) That his appointment is temporary and his services are liable for termination with one month 's notice or one month 's pay in lieu of notice from either side On November 22, 1982 the appellant was placed under suspension and that order read as follows: "As a result of preliminary enquiries made by the Central Manager on 13.11.1982 of the Production Center, Kunda and other Centres under the same, it has come to notice that Sri R.K. Misra, former Dy.
Production Manager, Kunda, is responsible for misconduct, dereliction of duty, mismanagement and showing fictitious production of terrycot cloth.
He is, therefore, placed under suspension with immediate effect . . . " (Underlinings are ours) 504 On the 1st of February, 1983 the order of suspension was A revoked and on 10th of February, 1983 the impugned order terminating his services being to the following effect was passed: "The undersigned hereby gives notice to Shri R.K. Misra, Deputy Production Manager, Production Center, Kunda, Prataapgarh, Salon Rai Bareilly that his services are no more required and his service will be deemed to be terminated from receipt of this notice by him.
It is directed that he will be entitled to receive one month 's salary in lieu of notice period on the same rate on which he was receiving salary before termination of his service.
" The appellant challenged the order of termination of his service before the Allahabad High Court but the High Court declined to interfere by holding that the termination was not punitive and the question of breach of principles of natural justice did not arise.
It is not disputed that the employer Corporation is 'State ' within the meaning of Article 12; yet it has not been contended and rightly that the protection of Article 311(2) of the Constitution is avilable to the employees of the Corporation.
The appellant has however, claimed that he is entitled to the protection of Article 14 and 16 of the Constitution; though his order of termination is innocuous the setting in which it has been made clearly makes it an order of dismissal and the High Court has gone wrong in holding that the order of termination was not punitive; as service was determined by the order of termination attaching stigma the appellant was entitled to a hearing commensurate with rules of natural justice and in the absence of that opportunity of being heard the order is liable to be quashed.
It cannot be disputed that temporary service can be terminated by notice.
The order of appointment in the appellant 's case made it abundantly clear that with a month 's notice or payment of salary m lieu of notice such termination could be effected by either side Rule 63 of the Corporation Rules made in exercise of Article 127 of the Articles of Association of the Uttar Pradesh State Handloom Corporation Limited recognised such a power.
That Rule provides: " 1.
The appointing authority may, at any time, during the pendency of the temporary tenure terminate the services of a temporary employee by giving him one month 's notice or emoluments for such lesser period by H 505 which the notice falls short of one month.
The temporary employee, on his part, shall have the option of quitting service by giving one month 's notice to the appointing authority or paying to the Corporation an amount equal to his one month 's pay . " The order of termination of service in this case is indeed innocuous.
The appellant is not entitled to the protection of Article 311(2) of the Constitution not being a member of a civil service of the Union or a State nor holder of a civil post under the State but his own Service Rules provide under Rule 68 that if the punishment of discharge or dismissal is imposed, an enquiry commensurate with requirements of natural justice is a condition precedent.
Admittedly no such enquiry has been held.
The question that crops up here for determination, therefore, is whether the impugned order was an order of termination simpliciter or really amounted to an order of dismissal.
In Purshotam Lal Dhingra vs Union of India, [ ; a Constitution Bench of this Court stated: "This use of expression 'terminate ' or 'discharge ' is not conclusive.
In spite of the use of such innocuous expressions, the Court has to apply the two tests mentioned above, namely.
(1) whether the servant had a right to the post or the rank or (2) whether he has been visited with evil consequences of the kind herinbefore referred to? If the case satisfied either of the two tests then it must be held that the servant has been punished and the termination of his service must be taken as a dismissal or removal from service or the reversion to his substantive rank must be regarded as a reduction in rank and if the requirements of the rules and Article 311, which give protection to Government servant have not been complied with, the termination of the service or the reduction in rank must be held to be wrongful and in violation of the constitutional right of the servant.
This view has been approved by another Constitution Bench of this Court in Champaklal Chimanlal Shah vs The Union of India, [ 19641 5 SCR 190.
After indicating approval, Wanchoo, J. as he then was, spoke for the Constitution Bench thus: "It is well known that Government does not terminate 506 nate the services of a public servant, be he even a temporary servant without reason; nor is it usual for Government to reduce a public servant in rank without reason even though he may be holding the higher rank only tempoarily.
One reason for terminating the services of a temporary servant may be that the post that he is holding comes to an end.
In that case, there is nothing further to be said and his services terminate when the post comes to an end.
Similarly a Government servant temporarily officiating in a higher rank may have to be reverted to his substantive post where the incumbent of the higher post comes back to duty or where the higher post created for a temporary period comes to an end.
But besides the above, the Government may find it necessary to terminate the services of a temporary servant if it is not satisfied with his conduct or his suitability for the job and/or his work.
The same may apply to the reversion of a public servant from a higher post to a lower post where the post is held as a temporary measure.
This dissatisfaction with the work and/or conduct of a temporary servant may arise on complaint against him.
In such cases two courses are open to Government.
It may decide to dispense with the services of the servant or revert him to his substantive post without any action being taken to punish him for his bad work and/or conduct.
Or the Government may decide to punish such a servant for his bad work or misconduct, in which case even though the servant may be temporary, he will have the protection of Article 311(2).
But even where it is intended to take action by way of punishment what usually happens is that something in the nature of what may be called a preliminary enquiry is first held in connection with the alleged misconduct or unsatisfactory work.
ln this preliminary enquiry the explanation of the government servant may be taken and documentary and even oral evidence may be considered.
It is usual when such a preliminary enquiry makes out a prima facie case against the servant concerned that charges are then framed against him and he is asked to show cause why disciplinary action be not taken against him.
An enquiry officer (who may be himself in the case where the appointing authority is other than the Government) is appointed who holds enquiry into the charges communicated to the servant concerned after taking his explanation and his enquiry is held in accordance with the principles of natural 507 justice.
This is what is known as a formal departmental enquiry into the conduct of a public servant . . "Generally therefore a preliminary enquiry is usually held to determine whether a prima facie case for a formal departmental enquiry is made out, and it is very necessary that the Two should not be confused.
Even where Government does not intend to take action by way of punishment against a temporary servant on a report of bad work or misconduct a preliminary enquiry is usually is held to satisfy Government that there is reason to dispense with the services of a temporary employee or to revert him to his substantive post, for as we have said already, Government does not usually take action of this kind without any reason.
Therefore when a preliminary enquiry of this nature is held in the case of a temporary employee or a Government servant holding a higher rank temporarily it must not be confused with the regular departmental enquiry (which generally follows such a preliminary enquiry) when the Government decides to frame charges and get a departmental enquiry made in order that one of the three major punishments already indicated may be inflicted on the government servant.
Therefore, so far as the preliminary enquiry is concerned, there is no question of its being governed by Article 311(2) for that enquiry is really for the satisfaction of government to decide whether punitive action should be taken or action should be taken under the contract or the rules in the case of a temporary government servant or a servant holding higher rank temporary to which he has no right.
In short a preliminary enquiry is for the purpose of collection of facts in regard to the conduct and work of a government servant in which he may or may not be associated so that the authority concerned may decide whether or not to subject the servant concerned to the enquiry necessary under Article 311 for inflicting one of the three major punishments mentioned therein.
Such a preliminary enquiry may even be held ex parte, for it is merely for the satisfaction of Government, though usually for the sake of fairness, explanation is taken from the servant concerned even at such an enquiry.
" Both Pershotam Lal Dhingra 's case (supra) and Champaklal 's case 508 (supra) were referred to and relied upon in Shamsher Singh & Anr.
vs State of Punjab, ; This is a case which was heard by a 7 Judge Bench.
Ray, CJ., who spoke for the majority of five considered all the cases rendered by this Court till then touching on the point and at page 841 of the Reports stated as follows: "The form of the order is not decisive as to whether the order is by way of punishment.
Even an innocuously worded order terminating the service may in the facts and circumstances of the case establish that an enquiry into allegations of serious and grave character of misconduct involving stigma has been made in infraction of the provision of Article 311.
In such a case the simplicity of the form of the order will not give any sanctity.
" In Sharnsher Singh 's case (supra) the ratio of the two earlier Constitution Bench judgment was approved.
On facts it was found that the order of termination though innocuous in form was really an order by way of punishment removing the appellant from service on the basis of charges of gross misconduct found to have been established by an exparte enquiry conducted by the S.P. Vigilance Department with the only object of ascertaining truth of the alleged misconduct and for the purpose of dismissing or removing the appellant, if charges were found established.
It was ultimately on the basis of specific findings recorded by the S.P. Vigilance that the appellant 's services were terminated.
The Court found that the enquiry by the S.P. Vigilance was essentially and in character and object different from the informal enquiry into the and in object different from the informal enquiry into the suitability of the appellant.
Ray, CJ.
in Shamsber Singh 's case (supra) further pointed out: "The fact of holding an enquiry is not always conclusive.
What is decisive is whether the order is really by way of punishment . .
A probationer whose terms of services provided that it could be terminated without any notice and without any cause being assigned could not claim the protection of Article 311(2).
An order terminating the services of a temporary servant or probationer under the Rules of employment and without anything more will not attract Article 311.
Where a departmental enquiry is contemplated and if an enquiry is not in fact proceeded with Article 311 will not be attracted 509 unless it can be shown that the order though unexceptionable in form is made following a report based on misconduct. " In Regional Manager & Anr.
vs Pawan Kumar Dubey, ; it was observed by this Court thus: 1 "We think that the principles involved in applying Article 311(2) having been substantially explained in Shamsher Singh 's case (supra) it should not no longer be possible to urge that Sughar Singh 's case could give rise to some misapprehension of the law.
Indeed we do not think that the principles of law declared and applied so often have really changed.
But the application of the same law to the differing circumstances and facts of various cases which have come up to this court could create the impression some times that there is some conflict between decisions of this Court.
Even where there appears to be some conflict, it would, we think, vanish when the ratio decidendi of each case is correctly understood.
It is the rule deducible from the application of law to the facts and circumstances of a case which constitutes its ratio decidendi and not some conclusion based upon facts which may appear to be similar.
One additional or different fact can make a word of difference between conclusions in two cases even when the same principles are applied in each case to similar facts . ".
As we have already observed, though the provisions of Article 311(2) of the Constitution do not apply, the Service Rules which are almost at par make the decisions of this Court relevant in disposing of the present appeal.
In several authoritative pronouncements of this Court, the concept of 'motive ' and 'foundation ' has been brought in for finding out the effect of the order of termination.
If the delinquency of the officer in temporary service is taken as the operative motive in terminating the service, the order is not considered as punitive while if the order of termination is founded upon it, the termination is considered to be a punitive action.
This is so on account of the fact that it is necessary for every employer to assess the service of the temporary incumbent in order to find out as to whether he should be confirmed in his appointment or his services should be terminated.
It may also be necessary to find out whether the officer should be tried for some more time on temporary basis.
Since both in regard to a temporary employee or an officiating employee in a higher post such H 510 an assessment would be necessary merely because the appropriate authority proceeds to make an assessment and leaves a record of its views the same would not be available to be utilised to make the order of termination following such assessment punitive in character.
In a large democracy as ours, administration is bound to be impersonal and in regard to public officers whether in Government or public Corporations, assessments have got to be in writing for purposes of record.
We do not think there is any justification in the contention of the appellant that once such an assessment is recorded, the order of termination made soon thereafter must take the punitive character.
There may be cases where an enquiry is undertaken and prima facie material for serious charges are found; by disclosing the result of such preliminary enquiry, the officer concerned is put under suspension in contemplation of disciplinary action.
After such steps have been taken, the employer/appropriate authority decides not to continue the departmental proceedings but makes an order terminating the service, as has been done in this case.
Counsel for the respondents pointed that that in the matter of ordering termination of service of a temporary employee, the order follows a review of his working.
Unless the termination is ordered because there is no need for the post, in the absence of reasons for termination, the action is open to challenge as arbitrary, particulary when other similarly situated employees are continued in service.
When reasons are given, they are bound to disclose adverse features of the employee and disclosure of such features become the ground of challenge of the order on the plea that termination is not innocuous.
To meet this position, the distinction between 'motive ' and 'foundation ' has been adopted by the courts.
As long as the adverse feature of the employee remains the motive and does not become transformed as the foundation of the order of termination it is unexceptionable.
No straight jacket test can be laid down to distinguish the two and whether 'motive ' has become the foundation has to be decided by the court with reference to the facts of a given case.
The two are certainly two points of one line ordinarily apart but when they come together 'motive ' does get transformed and merges into foundation.
As has been held by a three Judge Bench in State of U.P. vs Ram C 'handra Trivedi, ; the position in regard to cases of the present nature is clear and the examination of the decisions of this court shows that there is no real conflict in their ratio decidendi.
On facts as established in different cases, courts have applied the known 511 tests and in order that complete justice may be done on the facts found, there have been punishable deviations.
We may point out that this Court in a Consitution Bench judgment in the case of State of Orissa & Anr.
vs Ram Narayan Dass, [ ; , indicated: "The fact of the holding of an enquiry is not decisive of the question.
What is decisive is whether the order in the light of the decisions laid down in Parshotam Lal Dhingra 's case.
Keeping in view the principles indicated above, it is difficult to accept the claim of the appellant.
He was a temporary servant and had no right to the post.
It has also not been denied that both under the contract of service as also the Service Rules governing him the employer had the right to terminate his services by giving him one month 's notice.
The order to which exception is taken is expressly an order of termination in innocuous terms and does not cast any stigma on the appellant nor does it visit him with any evil consequences.
It is also not founded on misconduct.
In the circumstances, the order is not open to challenge .
We may point out that the learned Solicitor General appearing for the Corporation had at the commencement of the arguments suggested that the appellant could be given some compensation for termination.
Ordinarily, under the law he would not be entitled to compensation in a case of this type, but since he has been put out of employment at an advanced age and it may be difficult for him to get an alternate employment, while dismissing his appeal we think it reasonable to call upon the Corporation to pay a consolidated amount of Rs.25000 (Rupees Twenty five Thousand only).
Accordingly the appeal is dismissed.
The amount of Rs.25,000 as indicated above may be paid to the appellant within one month from today.
There would be no order for costs.
P.S.S. Appeal dismissed.
[/INST]The appellant, a company, set up a fertilizer factory at Kota in Rajasthan.
The factory manufactures urea for which the main raw material is Naptha, which has to be transported from the Koyali Refinery of the Indian oil Corporation.
Before the actual setting up of the factory, the appellant requested the Railway Board by letter for a concessional frieght rate for the carriage of Naptha to the factory.
The Railway Board by its letter EX 5 dated November 5, 1966, quoted station to station rate equal to 85 B (special) as against the rate equivalent to classification 62.5 B requested for by the appellant, and also stated that as the special rate was being quoted ahead of the actual setting up of the factory, the frieght rate would be reviewed when the traffic actually began to move.
When the factory was almost ready for operation, the appellant again requested the Railway Board by letter for charging the rate under classification 62 5 B instead of 85 B (special) quoted by it.
The Railway Board refused to oblige.
The appellant wrote another letter to the Board, requesting it to permit charging the rate equivalent to 85 B (special) pending its final decision, as the movement of naptha was to commence from June/July, 1968.
The Railway Board refused to grant that request also, saying that it could reconsider the question if on the basis of the facts and figures of the cost of production vis a vis the sale price of the fertilizers, it could be established that the production of the fertilisers at Kota was uneconomical unless freight concession on the movement of naptha was granted.
The appellant filed a complaint under section 41(1)(a) and (b) of the Railways Act, 1890, before the Railway Rates Tribunal.
The Tri 384 bunal decided against the appellant.
Aggrieved, the appellant appealed to this Court by special leave for relief against the order and judgment of the Tribunal.
Dismissing the appeal, the Court ^ HELD: Three questions arise for consideration of the Court: (1) whether the Railway Board was bound to allow the concessional rate offered to the appellant, that is, 85 B (special) quoted in its letter exhibit C 5 dt.
November 5, 1966, to the appellant, (2) whether the rate charged for the carriage of the naptha between the stations concerned was unreasonable, and (3) whether the Railways were showing undue preference or advantage in respect of other traffic in contravention of the provisions of section 28 of the Railways Act.
[389E F ] Dealing with the third question first, which relates to the contravention of section 28 of the Railways Act, the scope of the section was considered by this Court in Rajgarh Jute Mills Ltd vs Eastern Railway and another; , at 241, and the Railway Rates Tribunal, considering the material on record in the light of the decision of the Court in case, held that there was no evidence produced by the appellant to justify any grievance under section 28.
This conclusions is perfectly justified.
[390E; 391C] The second question above said relates to the rate charged by the Railway Administration being per se unreasonable.
Even assuming, as argued by appellant 's counsel, that the Railways are earning some surplus income, that by itself is no ground to hold that the frieght charged is per se unreasonable.
In the case of commodities of national needs such as foodgrains, crude oil etc., it may be necessary for the Railways to charge below the operation cost, and to offset the loss, the Railways may charge higher freight for some other classified commodities.
The cost of operation cannot by itself be the basis for judging the reasonableness of the rate charged.
Counsel for the appellant also argued that crude oil and naptha were comparable commodities for the purpose of carriage but there was disparity in the rates charged in respect of the two, naptha being charged at a much higher rate.
The Tribunal rejected the demand of the appellant for parity in frieghts, and the Court cannot interfere with the finding to the Tribunal in this appeal under Article 136 of the Constitution.
On merits also, there is no justification to demand that neptha should take the same freight rate as that of the crude oil.
[391D, F H; 392B. D E] 385 Lastly, the first question: It relates to the correctness of the view taken by the Tribunal on doctrine of promissory estoppel consequent upon the letter exhibit 5 of the Railway Board.
The Tribunal rejected this claim of the appellant.
Considering the conclusion of the Tribunal on this question, it appears the Tribunal has not correctly understood the doctrine of promissory estoppel: The party asserting the estoppel must have relied and acted upon the assurance given to him.
It means the party has changed or altered the position by relying on the assurance or representation.
The alteration of position by the party is the only indispensable requirement of the doctrine.
It is not necessary to prove further any damage, detriment or prejudice to the party asserting the estoppel. "A promise intended to be binding, intended to be acted upon, and in fact acted upon, is binding", said Lord Denning, sitting as a trial judge in Central London Properties Ltd vs High trees House Ltd., If the promisee has acted upon the promise, the promisor is precluded from receding from his promise.
The concept of detriment as it is understood now is whether it appears unjust, unreasonable or inequitable that the promisor should be allowed to resile from his assurance or representation, having regard to what the promisee has done or refrained from doing in reliance on the assurance or representation.
It is, however quite fundamental that the doctrine of promissory estoppel cannot be used to compel the public bodies or The Government to carry out the representation or promise which is contrary to law or which is outside their authority or power.
Secondly, the estoppel stems from equitable doctrine.
it requires that he who seeks equity must do equity.
The doctrine, therefore, cannot also be invoked if it is found to be inequitable or unjust in its enforcement.
or the purpose of invoking the doctrine, it is not necessary for the appellant to show that the insurance contained in exhibit (I S was mainly responsible for the establishing of the factory at Kota.
There may be several representation to one party from different authorities in regard to different matters.
Or there may be several representations from the same party in regard to different matters; In the instant case, there was one representation by the Rajasthan government to supply power to the appellant 's factory at concessional rate.
There is another representation from the same government to exempt the appellant from payment of tax for a certain period.
If those representations have been relied upon by the appellant, the Court would compel the authorities to adhere to their representations.
What is required is the fact that the appellant was induced to act on the representations.
The assurance given by the Railway Board in the letter exhibit S was not clear and unqualified.
it was subject to review to be undertaken 386 when the appellant started moving the raw material.
Accordingly, A appellant was put to notice that it has to approach the Railway administration again when it would review the whole matter.
From the tenor of exhibit 5, the railways are entitled to say that they have reviewed the matter and found no justification for a concessional frieght rate for naptha; that does not amount to resiling from the earlier assurance.
No question of estoppel arises in favour of the appellant in the case out of the representation made in Ex 5.
The Court agreed with the conclusion of the Tribunal but not for all the reasons stated.
Rajgarh Jute Mills Ltd vs Eastern Railway & Anr, at 241; Central London Properties Ltd vs High Trees House Ltd, ; Central Newbury Car Auctions Ltd vs Unity Finance Ltd, at 909; Article "Recent Development in the Doctrine of Consideration" Modern Law Review, Vol. , Grundt vs The Great Boulder Ptv Gold, Mines Ltd, ; ; Mohlal Padampet Sugar Mills Co Ltd vs State of UP and ors; , at 695= ; ; Union of India and ors vs Godfrey Philips Ltd, ; [1985] Supp. 3 SCR 123 and Halsbury 's Laws of England 4th Edn., Vol. , para 1595, referred to.
</s> |
<s>[INST] Summarize the judgementCivil Appeal No. 1597 of 1972.
Appeal from the Judgment and Order dated 25th January, 1972of the Allahabad High Court in Civil Misc.
Writ No. 3788/70.
S.T. Desai, Shri Narain, J. B. Dadachanji, Ravinder Narain, S Swarup and Talat Ansari for the Appellant.
G. N. Dikshit, M. V. Goswami and O. P. Rana for RR 1 3 and 5.
Girish Chandra for Respondent No. 4.
651 A. B. Dewan, Ravinder Narain, section Swarup and A. N. Haksar for the Intervener (M/s. Modi Rubber Ltd.).
The Judgment of the Court was delivered by BHAGWATI, J.
, This appeal by certificate raises a question of considerable importance in the field of public law.
How far and to what extent is the State bound by the doctrine of promissory estoppel ? It is a doctrine of comparatively recent origin but it is potentially so fruitful and pregnant with such vast possibilities for growth that traditional lawyers are alarmed lest it might upset existing doctrines which are looked upon almost reverentially and which have held the field for a long number of years.
The law in regard to promissory estoppel is not yet well settled though it has been the subject of considerable debate in England as well as the United States of America and it has also received consideration in some recent decisions in India and we, therefore, propose to discuss it in some detail with a view to defining its contours and demarcating its parameters.
We will first state briefly the facts giving rise to this appeal.
This is necessary because it is only where certain fact situations exist that promissory estoppel can be invoked and applied.
The appellant is a limited company which is primarily engaged in the business of manufacture and sale of sugar and it has also a cold storage plant and a steel foundry.
On 10th October, 1968 a news item appeared in the National Herald in which it was stated that the State of Uttar Pradesh had decided to give exemption from sales tax for a period of three years under section 4A of the U.P. Sales Tax Act to all new industrial units in the State with a view to enabling them "to come on firm footing in developing stage".
This news item was based upon a statement made by Shri M. P. Chatterjee the then Secretary in the Industries Department of the Government.
The appellant, on the basis of this announcement, addressed a letter dated 11th October, 1968 to the Director of Industries stating that in view of the sales tax holiday announced by the Government, the appellant intended to set up a Hydro genation Plant for manufacture of Vanaspati and sought for confirmation that this industrial unit, which it proposed to set up would be entitled to sales tax holiday for a period of three years from the date it commenced production.
The Director of Industries replied by his letter dated 14th October, 1968 confirming that "there will be no sales tax for three years on the finished product of your proposed Vanaspati factory from the date it gets power connection for commencing production." The appellant thereupon started taking steps to contact various financiers for financing the project and also initiated negotiations with manufacturers for purchase of machinery for setting 652 up the Vanaspati factory.
On 12th December, 1968 the appellant 's representative met the 4th respondent who was at that time the Chief Secretary to the Government as also Advisor to the Governor and intimated to him that the appellant was setting up the Vanaspati factory solely on the basis of the assurance given on behalf of the Government that the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of commercial production at the factory and the 4th respondent reiterated the assurance that the appellant would be entitled to sales tax holiday in case the Vanaspati factory was put up by it.
The appellant by its letter dated 13th December, 1968 placed on record what had transpired at the meeting on the previous day and requested the 4th respondent "to please confirm that we shall be allowed sales tax holiday for a period of three years on the sale of Vanaspati from the date we start production." On the same day the appellant entered into an agreement with M/s. De Smith (India) Pvt. Ltd., Bombay for supply of plant and machinery for the Vanaspati factory, providing clearly that the appellant would have the option to terminate the agreement, if within 10 weeks exemption from sales tax was not granted by the State Government.
The 4th respondent replied on 22nd December, 1968 confirming that "the State Government will be willing to consider your request for grant of exemption from U.P. Sales Tax for a period of three years from the date of production" and asked the appellant to obtain the requisite application form and submit a formal application to the Secretary to the Government in the Industries Department and in the meanwhile to "go ahead with the arrangements for setting up the factory".
The appellant had in the meantime submitted an application dated 21st December, 1968 for a formal order granting exemption from sales tax under section 4A of the Act.
It appears that the letter of the 4th respondent dated 22nd December, 1968 was not regarded as sufficient by the financial institutions which were approached by the appellant for financing the project since it merely stated that the State Government would be willing to consider the request for grant of exemption and did not convey any decision of the State Government that the exemption would be granted.
The appellant, therefore, addressed a letter dated 22nd January, 1969 to the 4th respondent pointing out that the financial institutions were of the view that the letter of the 4th respondent dated 22nd December, 1968 "did not purport to commit the Government for the concession mentioned" and it was, therefore, necessary to obtain a formal order of exemption in terms of the application submitted by it.
The 4th respondent, however, stated categorically in his letter in reply dated 23rd January, 1969 that the proposed Vanaspati Factory of the appellant "will be 653 entitled to exemption from U.P. Sales Tax for a period of three years from the date of going into production and that this will apply to all Vanaspati sold during that period in Uttar Pradesh itself" and expressed his surprise that "a letter from the Chief Secretary to the State Government stating this fact in clear and unambiguous words should not carry conviction with the financial institutions.
" In view of this unequivocal assurance given by the 4th respondent, who not only occupied the post of Chief Secretary to the Government but was also Advisor to the Governor functioning under the President 's rule, the appellant went ahead with the setting up of the Vanaspati Factory.
The appellant by its letter dated 25th April, 1969 advised the 4th respondent that the U.P. Finance Corporation, being convinced by the clear and categorical assurance given by the 4th respondent that the Vanaspati Factory of the appellant would be entitled to exemption from sales tax for a period of three years from the date of commencement of production, had sanctioned financial assistance to the appellant and the appellant was going ahead with the project in full speed to enable it to start production at the earliest.
The appellant made considerable progress in the setting up of the Vanaspati Factory but it seems that by the middle of May 1969 the State Government started having second thoughts on the question of exemption and a letter dated 16 May, 1969 was addressed by the 5th respondent who was Deputy Secretary to the Government in the Industries Department, intimating that a meeting has been called by the Chief Minister on 23rd May, 1969 "to discuss the question of giving concession in Sales Tax on Vanaspati products" and requesting the appellant to attend the meeting.
The appellant immediately by its letter dated 19th May, 1969 pointed out to the 5th respondent that so far as the appellant was concerned, the State Government had already granted exemption from Sales Tax by the letter of the Chief Secretary dated 23rd January, 1969 but still, the appellant would be glad to send its representative to attend the meeting as desired by the 5th respondent.
The proposed meeting was, however, postponed and the appellant was intimated by the 5th respondent by its letter dated 23rd May, 1969 that the meeting would now be held on 3rd June, 1969.
The appellant 's representative attended the meeting on that day and reiterated that so far as the appellant was concerned, it had already been granted exemption from Sales Tax and the State Government stood committed to it.
The appellant thereafter proceeded with the work of setting up the Vanaspati plant on the basis that in accordance with the assurance given by the 4th respondent on behalf of the State Government, the appellant would be exempt from payment of Sales Tax for a period of three years from the date of commencement of production.
654 The State Government however went back upon this assurance and a letter dated 20th January, 1970 was addressed by the 5th respondent intimating that the Government had taken a policy decision that new Vanaspati Units in the State which go into commercial production by 30th September, 1970 would be given partial concession in Sales Tax at the following rates for a period of three years: First year of production 31/2% Second year of production 3% Third year of production 21/2% The appellant by its letter dated 25th June, 1970 pointed out to the Secretary to the Government that the appellant proposed to start commercial production of Vanaspati with effect from 1st July, 1970, and stated that, as notified in the letter dated 20th January, 1970, the appellant would be availing of the exemption granted by the State Government and would be charging sales tax at the rate of 31/2% instead of 7% on the sales of Vanaspati manufactured by it for a period of one year commencing from 1st July, 1970.
The factory of the appellant thereafter went into production from 2nd July, 1970 and the appellant informed the Secretary to the Government about the same by its letter dated 3rd July, 1970.
The State Government however once again changed its decision and on 12th August, 1970 a news item appeared in the Northern India Patricia stating that the Government had decided to rescind the earlier decision i.e. the decision set out in the letter dated 20th January, 1970, to allow concession in the rates of Sales Tax to new Vanaspati Units.
The appellant thereupon filed a writ petition in the High Court of Allahabad asking for a writ directing the State Government to exempt the sales of Vanaspati manufactured by the appellant from sales tax for a period of three years commencing from 2nd July, 1970 by issuing a notification under section 4A and not to collect or charge sales tax from the appellant for the said period of three years.
It appears that in the writ petition as originally filed, there was no plea of promissory estoppel taken against the State Government and the writ petition was, therefore, amended by obtaining leave of the High Court with a view to introducing the plea of promissory estoppel.
The appellant urged in the amended writ petition that the 4th respondent acting on behalf of the State Government had given an unequivocal assurance to the appellant that the appellant would be entitled to exemption from payment of sales tax for a period of three years from the date of commencement of the production and this assurance was given by the 4th respondent intending or knowing that it would be acted on by the appellant and in fact 655 the appellant, acting in reliance on it, established the Vanaspati factory by investing a large amount and the State Government was, therefore, bound to honour the assurance and exempt the Vanaspati manufactured and sold by the appellant from payment of sales tax for a period of three years from 2nd July, 1970.
This plea based on the doctrine of promissory estoppel was, however rejected by the Division Bench of the High Court principally on the ground that the appellant had waived the exemption, if any, by accepting the concessional rates set out in the letter of the Deputy Secretary dated 20th January, 1970.
The appellant thereupon preferred the present appeal after obtaining a certificate of fitness from the High Court.
The principal argument advanced on behalf of the appellant in support of the appeal was that the 4th respondent had given a categorical assurance on behalf of the State Government that the appellant would be exempt from payment of sales tax for a period of three years from the date of commencement of production and such assurance was given intending or knowing that it would be acted on by the appellant and in fact the appellant, acting in reliance on it, altered its position and the State Government was, therefore, bound, on the principle of promissory estoppel, to honour the assurance and exempt the appellant from sales tax for a period of three years from 2nd July, 1970, being the date on which the factory of the appellant commenced production.
The appellant assailed the view taken by the High Court that this claim of the appellant for exemption based on the doctrine of promissory estoppel was barred by waiver, because the appellant had by its letter dated 25th June, 1970 accepted that it would avail of the exemption granted under the letter of the 5th respondent dated 20th January, 1970 and charged sales tax at the concessional rate of 31/2% instead of 7% during the first year of its production.
The appellant urged that waiver was a question of fact which was required to be pleaded and since no plea of waiver was raised in the affidavit filed on behalf of the State Government in opposition to the writ petition, it was not competent to the State Government to rely on the plea of waiver for the first time at the hearing of the writ petition.
Even if the plea of waiver were allowed to be raised, notwithstanding that it did not find place in the pleadings, no waiver was made out, said the appellant, since there was nothing to show that were the circumstances in which the appellant had addressed the letter dated 25th June, 1970 stating that it would avail of the exemption granted under the letter dated 20th January, 1970 and it was not possible to say that the appellant, with full knowledge of its right to claim total exemption from payment of sales tax, waived that right and agreed to accept the concessional rates set out in the letter dated 20th January, 1970.
The 656 State Government on the other hand strongly pressed the plea of waiver and submitted that the appellant had clearly waived its right to complete exemption from payment of Sales Tax by addressing the letter dated 25th June, 1970.
The State Government also contended that, in any event, even if there was no waiver, the appellant was not entitled to enforce the assurance given by the 4th respondent, since such assurance was not binding on the State Government and more over, in the absence of notification under section 4A, the State Government could not be prevented from enforcing the liability to sales tax imposed on the appellant under the provisions of the Act.
It was urged on behalf of the State Government that there could be no promissory estoppel against the State Government so as to inhibit it from formulating and implementing its policies in public interest.
These were broadly the rival contentions urged on behalf of the parties and we shall now proceed to consider them.
We shall first deal with the question of waiver since that can be disposed of in a few words.
The High Court held that even if there was an assurance given by the 4th respondent on behalf of the State Government and such assurance was binding on the State Government on the principle of promissory estoppel, the appellant had waived its right under it by accepting the concessional rates of sales tax set out in the letter of the 5th respondent dated 20th January, 1970.
We do not think this view taken by the High Court can be sustained.
In the first place, it is elementary that waiver is a question of fact and it must be properly pleaded and proved.
No plea of waiver can be allowed to be raised unless it is pleaded and the factual foundation for it is laid in the pleadings.
Here it was common ground that the plea of waiver was not taken by the State Government in the affidavit filed on its behalf in reply to the writ petition, nor was it indicated even vaguely in such affidavit.
It was raised for the first time at the hearing of the writ petition.
That was clearly impermissible without an amendment of the affidavit in reply or a supplementary affidavit raising such plea.
If waiver were properly pleaded in the affidavit in reply, the appellant would have had an opportunity of placing on record facts showing why and in what circumstances the appellant came to address the letter dated 25th June, 1970 and establishing that on these facts there was no waiver by the appellant of its right to exemption under the assurance given by the 4th respondent.
But in the absence of such pleading in the affidavit in reply, this opportunity was denied to the appellant.
It was, therefore, not right for the High Court to have allowed the plea of waiver to be raised against the appellant and that plea should have been rejected in limine.
657 Secondly, it is difficult to see how, on the facts, the plea of waiver could be said to have been made out by the State Government.
Waiver means abandonment of a right and it may be either express or implied from conduct, but its basic requirement is that it must be "an intentional act with knowledge".
Per Lord Chelmsford, L.C. in Earl of Darnley vs London, Chatham and Dover Rly.
Co. There can be no waiver unless the person who is said to have waived is fully informed as to his right and with full knowledge of such right, he intentionally abandons it.
It is pointed out in Halsbury 's Laws of England (4 d) Volume 16 in paragraph 1472 at page 994 that for a "waiver to be effectual it is essential that the person granting it should be fully informed as to his rights" and Isaacs, J, delivering the judgment of the High Court of Australia in Craine vs Colonial Mutual Fire Insurance Co. Ltd. has also emphasised that waiver "must be with knowledge, an essential supported by many authorities".
Now in the present case there is nothing to show that at the date when the appellant addressed the letter dated 25th June, 1970, it had full knowledge of its right to exemption under the assurance given by the 4th respondent and that it intentionally abandoned such right.
It is difficult to speculate what was the reason why the appellant addressed the letter dated 25th June, 1970 stating that it would avail of the concessional rates of sales tax granted under the letter dated 20th January, 1970.
It is possible that the appellant might have thought that since no notification exempting the appellant from sales tax had been issued by the State Government under section 4A, the appellant was legally not entitled to exemption and that is why the appellant might have chosen to accept whatever concession was being granted by the State Government.
The claim of the appellant to exemption could be sustained only on the doctrine of promissory estoppel and this doctrine could not be said to be so well defined in its scope and ambit and so free from uncertainty in its application that we should be compelled to hold that the appellant must have had knowledge of its right to exemption on the basis of promissory estoppel at the time when it addressed the letter dated 25th June, 1970.
In fact, in the petition as originally filed, the right to claim total exemption from sales tax was not based on the plea of promissory estoppel which was introduced only by way of amendment.
Moreover, it must be remembered that there is no presumption that every person knows the law.
It is often said that every one is presumed to know the law, but that is not a correct statement: there is no such maxim known to the law.
Over a hundred and thirty years ago, Maule, J., pointed out in Martindala vs Faulkner(3): "There is no presumption in this country 658 that every person knows the law: it would be contrary to common sense and reason if it were so".
Scrutton, also once said: "It is impossible to know all the statutory law, and not very possible to know all the common law." But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans vs Bartlem(1)"_____the fact is that there is not and never has been a presumption that every one knows the law.
There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application.
" It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25th June, 1970.
We accordingly reject the plea of waiver raised on behalf of the State Government.
That takes us to the question whether the assurance given by the 4th respondent on behalf of the State Government that the appellant would be exempt from sales tax for a period of three years from the date of commencement of production could be enforced against the State Government by invoking the doctrine of promissory estoppel.
Though the origin of the doctrine of promissory estoppel may be found in Hughes vs Metropolitan Railway Co.(2) and Birmingham & District Land Co. vs London & North Western Rail Co.(3) authorities of old standing decided about a century ago by the House of Lords, it was only recently in 1947 that it was rediscovered by Mr. Justice Denning, as he then was, in his celebrated judgment in Central London Property Trust Ltd. vs High Trees House Ltd.(4) This doctrine has been variously called 'promissory estoppel ', 'equitable estoppel ', 'quasi estoppel ' and 'new estoppel '.
It is a principle evolved by equity to avoid injustice and though commonly named 'promissory estoppel, it is, as we shall presently point out, neither in the realm of contract nor in the realm of estoppel.
It is interesting to trace the evolution of this doctrine in England and to refer to some of the English decisions in order to appreciate the true scope and ambit of the doctrine particularly because it has been the subject of considerable recent development and is steadily expanding.
The basis of this doctrine is the inter position of equity.
Equity has always, true to form, stepped into mitigate the rigours of strict law.
The early cases did not speak of this doctrine as estoppel.
They spoke of it as 'raising an equity '.
Lord Cairns stated 659 the doctrine in its earliest form it has undergone considerable development since then in the following words in Hughes vs Metropolitan Railway Company (supra): "It is the first principle upon which all Courts of Equity proceed, that if parties who have entered into definite and distinct terms involving certain legal results. afterwards by their own act or with their own consent enter upon a course of negotiation which has the effect of leading one of the parties to suppose that the strict rights arising under the contract will not be enforced, or will be kept in suspense, or held in abeyance, the person who otherwise might have enforced those rights will not be allowed to enforce them where it would be inequitable having regard to the dealings which have thus taken place between the parties.
" This principle of equity laid down by Lord Cairns made sporadic appearances in stray cases now and then but it was only in 1947 that it was disinterred and restated as a recognised doctrine by Mr. Justice Denning, as he then was, in the High Trees ' case (supra).
The facts in that case were as follows: The plaintiffs leased to the defendents, a subsidiary of the plaintiffs, in 1937 a block of flats for 99 years at a rent of & 2500/ a year.
Early in 1940 and because of the war, the defendants were unable to find sub tenants for the flats and unable in consequence to pay the rent.
The plaintiffs agreed at the request of the defendants to reduce the rent to &.
1250/ from the beginning of the term.
By the beginning of 1945 the conditions had improved and tenants had been found for all the flats and the plaintiffs, therefore, claimed the full rent of the premises from the middle of that year.
The claim was allowed because the court took the view that the period for which the full rent was claimed fell out side the representation, but Mr. Justice Denning, as he then was, considered Obiter whether the plaintiffs could have recovered the covenanted rent for the whole period of the lease and observed that in equity the plaintiffs could not have been allowed to act inconsistently with their promise on which the defendants had acted.
It was pressed upon the Court that according to the well settled law as laid down in Jorden y. Money(1), no estoppel could be raised against plaintiffs since the doctrine of estoppel by representation is applicable only to representations as to some state of facts alleged to be at the time actually in existence and not to promises de futuro which, if binding at all, must be binding only as contracts and here there was no representa 660 tion of an existing state of facts by the plaintiffs but it was merely a promise or representation of intention to act in a particular manner in the future.
Mr. Justice Denning, however, pointed out: "The law has not been standing still since Jorden vs Money.
There has been a series of decisions over the last fifty years which, although they are said to be cases of estoppel are not really such.
They are cases in which a promise was made which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made, and which was in fact so acted on.
In such cases the courts have said that the promise must be honoured.
" The principle formulated by Mr. Justice Denning was, to quote his own words, "that a promise intended to be binding, intended to be acted on and in fact acted on, is binding so far as its terms properly apply".
Now Hughes vs Metropolitan Railway Co. (supra) and Birmingham and District Land Co. vs London & North Western Rail Co. (supra), the two decisions from which Mr. Justice Denning drew inspiration for evolving this new equitable principle, were clearly cases where the principle was applied as between parties who were already bound contractually one to the other.
In Hughes vs Metropolitan Railway Co. (supra) the plaintiff and the defendant were already bound in contract and the general principle stated by Lord Cairns, L.C. was: "If parties who have entered into definite and distinct terms involving certain legal results afterwards enter upon a course of negotiations".
Ten years later Bowen, L. J. also used the same terminology in Birmingham and District Land Co. vs London and North Western Rail Co. (supra) that: "If persons who have contractual rights against others induce by their conduct those against whom they have such rights to believe ".
These two decisions might, therefore, seem to suggest that the doctrine of promissory estoppel is limited in its operation to cases where the parties are already contractually bound and one of the parties induces the other to believe that the strict rights under the contract would not be enforced.
But we do not think any such limitation can justifiably be introduced to curtail the width and amplitude of this doctrine.
We fail 661 to see why it should be necessary to the applicability of this doctrine that there should be some contractual relationship between the parties.
In fact Donaldson, J. pointed out in Durham Fancy Goods Ltd. vs Michael Jackson (Fancy Goods) Ltd. (1) : "Lord Cairns in his enunciation of the principle assumed a pre existing contractual relationship between the parties, but this does not seem to me to be essential, provided that there is a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties." But even this limitation suggested by Donaldson, J. that there should be a pre existing legal relationship which could in certain circumstances give rise to liabilities and penalties is not warranted and it is significant that the statement of the doctrine by Mr. Justice Denning in the High Trees ' case does not contain any such limitation.
The learned Judge has consistently refused to introduce any such limitation in the doctrine and while sitting in the Court of Appeal, he said in so many terms, in Evenden vs Guildford City Association Football Club Ltd.(2) "Counsel for the appellant referred us, however, to the second edition of Spencer Bower 's book on Estoppel by Representation[(1966) pp.
340 342] by Sir Alexander Turner, a judge of the New Zealand Court of Appeal.
He suggests the promissory estoppel is limited to cases where parties are already bound contractually one to the other.
I do not think it is so limited : see Durham Fancy Goods Ltd. vs Michael Jackson (Fancy Goods) Ltd. It applies whenever a representation is made, whether of fact or law, present or future, which is intended to be binding, intended to induce a person to act on it and he does act on it.
" This observation of Lord Denning clearly suggest that the parties need not be in any kind of legal relationship before the transaction from which the promissory estoppel takes its origin.
The doctrine would seem to apply even where there is no pre existing legal relationship between the parties, but the promise is intended to create legal relations or affect a legal relationship which will arise in future.
Vide Halsbury 's Laws of England, 4th ed.
16 p. 1018, Note 2 para 1514.
Of course it must be pointed out in fairness to Lord Denning that he made it clear 662 in the High Trees ' case that the doctrine of promissory estoppel cannot found a cause of action in itself, since it can never do away with the necessity of consideration in the formation of a contract, but he totally repudiated in Evenden 's case the necessity of a pre existing relationship between the parties and pointed out in Crabb vs Arun District Council(1) that equity will in a given case where justice and fairness demand, prevent a person from insisting on strict legal rights even where they arise, not under any contract, but on his own title deeds or under statue.
The true principle of promissory estoppel, therefore seems to be that where one party has by his words or conduct made to the other a clear and unequivocal promise which is intended to create legal relations or affect a legal relationship to arise in the future, knowing or intending that it would be acted upon by the other party to whom the promise is made and it is in fact so acted upon by the other party, the promise would be binding on the party making it and he would not be entitled to go back upon it, if it would be inequitable to allow him to do so having regard to the dealings which have taken place between the parties, and this would be so irrespective whether there is any preexisting relationship between the parties or not.
It may be pointed out that in England the law has been well settled for a long time, though there is some indication of a contrary trend to be found in recent juristic thinking in that country, that promissory estoppel cannot itself be the basis of an action.
It cannot found a cause of action : it can only be a shield and not a sword.
This narrow approach to a doctrine which is otherwise full of great potentialities is largely the result of an assumption, encouraged by it rather misleading nomenclature, that the doctrine is a branch of the law of estoppel.
Since estoppel has always been traditionally a principle invoked by way of defence, the doctrine of promissory estoppel has also come to be identified as a measure of defence.
The ghost of traditional estoppel continues to haunt this new doctrine and that is why we find that while boldly formulating and applying this new equity in the High Trees ' case, Lord Denning added a qualification that though in the circumstances set out, the promise would undoubtedly be held by the courts to be binding on the party making it, notwithstanding that under the old common law it might be difficult to find any consideration for it. "the courts have not gone so far as to give a cause of action in damages for the breach of such a promise, but they have refused to allow the party making it to act inconsistently with it".
Lord Denning also pointed out in Combe vs 663 Combe(2) that "Much as I am inclined to favour the principles stated in the High Trees ' case, it is important that it should not be stretched too far, lest it should be endangered.
That principle does not create new causes of action where none existed before.
It only prevents a party from insisting upon his strict legal rights, when it would be unjust to allow him to enforce them, having regard to the dealings which have taken place between the parties. " So also said Buckley, J., in the more recent case of Beesly vs Hallwood Estates Ltd.(1) "The doctrine may afford a defence against the enforcement or otherwise of enforceable rights : it cannot create a cause of action.
" It is, however, necessary to make it clear that though this doctrine has been called in various judgments and text books as promissory estoppel and it has been variously described as `equitable estoppel ', `quasi estoppel ' and `new estoppel ', it is not really based on the principle of estoppel, but it is a doctrine evolved by equity in order to prevent injustice where a promise is made by a person knowing that it would be acted on by the person to whom it is made and in fact it is so acted on and it is inequitable to allow the party making the promise to go back upon it.
Lord Denning himself observed in the High Trees ' case, expressly making a distinction between ordinary estoppel and promissory estoppel that cases like the one before him were" not cases of estoppel in the strict sense.
They are really promises, promises intended to be binding, intended to be acted upon and in fact acted upon".
Jenkins, C.J. also pointed out in Municipal Corporation of Bombay vs Secretary of State (2) that the "doctrine is often treated as one of estoppel but I doubt whether this is correct, though it may be a convenient name to apply".
The doctrine of promissory estoppel need not, therefore, be inhibited by the same limitation as estoppel in the strict sense of the term.
It is an equitable principle evolved by the courts for doing justice and there is no reason why it should be given only a limited application by way of defence.
It may be noted that even Lord Denning recognised in Crabb vs Arun Distric Council (supra) that "there are estoppels and estoppels.
Some do give rise to a cause of action.
Some don 't" and added that "in the species of estoppel called `proprietary estoppel ', it does give rise to a cause of action" The learned Law Lord, after quoting what he had said in Moorgate Mercantile Co. Ltd. vs Twitchings,(3) namely that the effect of estoppel on the true owner may be that : 664 "his own title to the property, be it land or goods, has been held to be limited or extinguished, and new rights and interests have been created therein.
And this operates by reason of his conduct what he has led the other to believe even though he never intended it.
" Proceeded to observe that "the new rights and interests, so created by estoppel, in or over land, will be protected by the courts and in this way give rise to a cause of action".
The Court of Appeal in this case allowed Crabb a declaration of "a right of access at point over the verge on to Mill Park Road and a right of way along that road to Hook Lane" on the basis of an equity arising out of the conduct of the Arun District Council.
Of course, Spencer Bower and Turner, in their Treatise on `The Law Relating to Estoppel by Representation ' have explained this decision on the basis that it is an instance of the application of the doctrine of estoppel by encouragement or acquiescence or what has now come to be known as proprietary estoppel which, according to the learned authors, forms an exception to the rule that estoppel cannot found a cause of action.
But if we look at the judgments of Lord Denning and Scarman, L.J., it is apparent that they did not base their decision on any distinctive feature of proprietary estoppel but proceeded on the assumption that there was no distinction between promissory and proprietary estoppel so far as the problem before them was concerned.
Both the learned Law Lord and the learned Lord Justice applied the principle of promissory estoppel in giving relief to Crabb.
Lord Denning, referring to what Lord Cairns had said in Hughes vs Metropolitan Railway Co.,(1) a decision from which inspiration was drawn by him for evolving the doctrine of promissory estoppel in the High Tree 's case, observed that " it is the first principle on which all courts of equity proceed. that it will prevent person from insisting on his strict legal rights whether arising under a contract, or on his title deeds, or by statute when it would be inequitable for him to do so having regard to the dealings which have taken place between the parties".
The decision in the High Trees ' case was also referred to the learned Law Lord and so also other cases supporting the doctrine of promissory estoppel.
Scarman, L.J. also observed that in pursuing the inquiry as to whether there was an equity in favour of Crabb, he did not find helpful "the distinction between promissory and proprietary estoppel".
He added that this "distinction may indeed be valuable to those who have to teach or expound the law, but I do not think that, in solving the particular problem raised by a particular case, putting the law into categories is of the slightest assistance".
It does appear to us that this was a case deci 665 ded on the principle of promissory estoppel.
The representative of the Arun District Council clearly gave assurance to Crabb that they would give him access to the new road at point B to serve the southern portion of his land and the Arun District Council in fact constructed a gate at point B, and in the belief induced by this representation that he would have right of access to the new road at point B, Crabb agreed to sell the northern portion of his land without reserving for himself as owner of the southern portion any right of way over the northern portion for the purpose of access to the new road.
This was the reason why the Court raised an equity in favour of Crabb and held that the equity would be satisfied by giving Crabb "the right of access at point B free of charge without paying anything for it".
Arun District Council was held bound by its promise to provide Crabb access to the new road at point B and this promise was enforced against Arun District Council at the instance of Crabb.
The case was one which fell within the category of promissory estoppel and it may be regarded as supporting the view that promissory estoppel can be the basis of a cause of action.
It is possible that the case also came within the rule of proprietary estoppel enunciated by Lord Kingsdown in Ramsden vs Dyson(1) : "The rule of law applicable to the case appears to me to be this : If a man, under a verbal agreement with a landlord for a certain interest in land, or what amounts to the same thing, under an expectation, created or encouraged by the landlord that he shall have a certain interest, takes possession of such land, with the consent of the landlord, and upon the faith of such promise or expectation, with the knowledge of the land lord, and without objection by him, lays out money upon the land, a Court of equity will compel the landlord to give effect to such promise or expectation." and Spencer Bower and Turner may be right in observing that that was perhaps the reason why it was held that the promise made by Arun District Council gave rise to a cause of action in favour of Crabb.
But, on what principle, one may ask, is the distinction to be sustained between promissory estoppel and proprietary estoppel in the matter of enforcement by action.
If proprietary estoppel can furnish a cause of action, why should promissory estoppel not ? There is no qualitative difference between the two.
Both are the off springs of equity and if equity is flexible enough to permit proprietary estoppel to be used as a cause of action, there is no reason in logic or principle why promissory estoppel should also not be available as a cause of action, if necessary to satisfy the equity.
666 But perhaps the main reason why the English Courts have been reluctant to allow promissory estoppel to found a cause of action seems to be the apprehension that the doctrine of consideration would other wise be completely displaced.
There can be no doubt that the decision of Lord Denning in the High Trees ' case represented a bold attempt to escape from the limitation imposed by the House of Lords in Jorden vs Money (supra) and it rediscovered an equity which was long embedded beneath the crust of the old decisions in Hughes vs Metropolitan Railway Co. (supra) and Birmingham and District Land Co. vs London and North Western Rail Co. (supra), and brought about a remarkable development in the law with a view to ensuring its approximation with justice, an ideal for which the law has been constantly striving.
But it is interesting to note the Lord Denning was not prepared to go further, as he thought that having regard to the doctrine of consideration which was so deeply entrenched in the jurisprudence of the country, it might be unwise to extend promissory estoppel so as to found a cause of action and that is why he uttered a word of caution in Combe vs Combe (supra) that the principle of promissory estoppel "should not be stretched too far, lest it should be endangered".
The learned Law Lord proceeded to add "seeing that the principle never stands alone as giving a cause of action in itself, it can never do away with the necessity of consideration when that is an essential part of the cause of action.
The doctrine of consideration is too firmly fixed to be overthrown by a side wind.
" Spencer Bower and Turner also point out at page 384 of their Treatise (3rd ed) that it is difficult to see how in a case of promissory estoppel a promise can be used to found a cause of action without according to it operative contractual force and it is for this reason that "a contention that a promissory estoppel may be used to found a cause of action must be regarded as an attack on the doctrine of consideration." The learned authors have also observed at page 387 that "to give a plaintiff a cause of action on a promissory estoppel must be little less than to allow an action in contract where consideration is not shown" and that cannot be done because consideration "still remains a cardinal necessity of the formation of a contract.
" It can hardly be disputed that over the last three or four centuries the doctrine of consideration has come to occupy such a predominant position in the law of contract that under the English law it is impossible to think of a contract without consideration and, therefore, it is understandable that the English courts should have hesitated to push the doctrine of promissory estoppel to its logical conclusion and stopped short at allowing it to be used merely as a weapon of defence, though, as we shall point out, there are, quite a few cases where this doctrine has been used 667 not as founding a cause of action in itself but as a part of a cause of a action.
The modern attitude towards the doctrine of consideration is, however, changing fast and there is considerable body of juristic thought which believes that this doctrine is "something of an anchronism".
Prof. Holdsworth pointed out long ago in his History of English Law that "the requirements of consideration in its present shape prevent the enforcement of many contracts, which ought to be enforced, if the law really wishes to give effect to the lawful intentions of the parties to them; and it would prevent the enforcement of many others, if the judges had not used their ingenuity to invest considerations.
But the invention of considerations, by reasoning which is both devious and technical, adds to the difficulties of the doctrine".
Lord Wright remarked in an article published in that the doctrine of consideration in its present form serves no practical purpose and ought to be abolished.
Sir Federick Pollock also said in his well known work of `Ganius of Common Law ', p. 91 that the application of the doctrine of consideration" to various unusual but not unknown cases has been made subtle and obscured by excessive dialectic refinement".
Equally strong is the condemnation of this doctrine in judicial pronouncements.
Lord Duned observed in the well known case of Dunlop Pneumatic Tyre Co. vs Selfridge and Co. Ltd.(1) "I confess that this case is to my mind apt to nip any budding affection which one might have had for the doctrine of consideration.
For the effect of that doctrine in the present case is to make it possible for a person to snap his fingers at a bargain deliberately made, a bargain not in itself unfair, and which the person seeking to enforce it has a legitimate interest to enforce.
" The doctrine of consideration has also received severe criticism at the hands of Dean Roscoe Pound in the United States.
The reason is that promise as a social and economic institution becomes of the first importance in a commercial and industrial society and it is an expression of the moral sentiment of a civilised society that a man 's word should be `as good as his bond ' and his fellow men should be able to rely on the one equally with the other.
That is why the Law Revision Committee in England in its Sixth Report made as far back as 1937 accepted Prof. Holdsworth 's view and advocated that a contract should exist if it was intended to create or affect legal relations and either consideration was present or the contract was reduced to writing.
This recommendation, however, did not fructify into law with the result that the present position remains what it was.
But having regard to the general opprobrium to which the doctrine of consideration has been subjected 668 by eminent jurists, we need not be unduly anxious to project this doctrine against assault or erosion nor allow it to dwarf or stultify the full development of the equity of promissory estoppel or inhibit or curtail its operational efficacy as a justice device for preventing injustice.
It may be pointed out that the Law Commission of India in its 13th Report adopted the same approach and recommended that, by way of exception to section 25 of the Indian Contract Act, 1925, a promise, express or implied, which the promisor knows or reasonably should know, will be relied upon by the promisee, should be enforceable, if the promisee has altered his position to his detriment in reliance on the promise.
We do not see any valid reason why promissory estoppel should not be allowed to found a cause of action where, in order to satisfy the equity, it is necessary to do so.
We may point out that even in England where the judges apprehending that if a cause of action is allowed to be founded on promissory estoppel it would considerably erode, if not completely overthrow, the doctrine of consideration, have been fearful to allow promissory estoppel to be used as a weapon of offence, it is interesting to find that promissory estoppel has not been confined to a purely defensive role.
Lord Denning himself said in Combe vs Combe (supra) that promissory estoppel "may be a part of a cause of action", though "not a cause of action itself".
In fact there have been several cases where promissory estoppel has been successfully invoked by a party to support his cause of action, without actually founding his cause of action exclusively upon it.
Two such cases are : Robertson vs Minister of Pensions(1) and Evenden vs Guildford City Association Football Club Ltd.(2) The English courts have thus gone a step forward from the original position when promissory estoppel was regarded merely as a passive equity and allowed it to be used as a weapon of offence to a limited extent as a part of the cause of action, but still the doctrine of consideration continues to inhibit the judicial mind and that has thwarted the full development of this new equitable principle and the realisation of its vast potential as a juristic technique for doing justice.
It is true that to allow promissory estoppel to found a cause of action would seriously dilute the principle which requires consideration to support a contractual obligation, but that is no reason why this new principle, which is a child of equity brought into the world with a view to promoting honesty and good faith and bringing law closer to justice should be held in fetters and not allowed to operate in all the activist magnitude, so that it may fulfil the purpose for which it was conceived and born.
It must be remembered that law is not a mausoleum.
It is not an antique to be taken 669 down, dusted, admired and put back on the shelf.
It is rather like an old vigorous tree, having its roots in history, yet continuously taking new grafts and putting out new sprouts and occasionally dropping dead wood.
It is essentially a social process, the end product of which is justice and hence it must keep on growing and developing with changing social concepts and values.
Otherwise, there will be estrangement between law and justice and law will cease to have legitimacy.
It is true as pointed out by Mr. Justice Holmes, that continuity with the past is a historical necessity but it must also be remembered at the same time, as pointed out by Mr. Justice Cardozo that "conformity is not to be turned into a "fetish".
We would do well to recall the famous words uttered by Mr. Justice Cardozo while closing his first lecture on "Paradoxes of Legal Science"; "The disparity between precedent and ethos may so lengthen with the years that only covin and chicenery would be disappointed if the separation were to end.
There are many intermediate stages, mores, if inadequate to obliterate the past, may fix direction for the future.
The evil precedent may live, but so sterilized and truncated as to have small capacity for harm.
It will be prudently ignored when invoked as an apposite analogy in novel situations, though the novel element be small.
There will be brought forward other analogies, less precise, it may be, but more apposite to the needs of morals.
The weights are constantly shifted to restore the equilibrium between precedent and justice.
" Was it not Lord Denning who exhorted judges not to be timorous sours but to be bold spirits, ready to allow a new cause of action if justice so required.
(Candler vs Crane Christmas & Co.(1) We may profitably consider at this stage what the American law on the subject is because in the United States the law has always shown a greater capacity for adjustment and growth than elsewhere.
The doctrine of promissory estoppel has displayed remarkable vigour and vitality in the hands of American Judges and it is still rapidly developing and expanding in the United States.
It may be pointed out that this development does not derive its origin in any way from the decision of Lord Denning in the High Trees ' case but ante dates this decision by a number of years; perhaps it is possible that it may have helped to inspire that decision.
It was long before the decision in the High Trees 'case that the American Law Institute 's Restatement of the Law of Contract 's came out with the following proposition in Article 90 : 670 "A promise which the promisor should reasonably expect to induce action or forbearance of a definite and substantial character on the part of the promisee, and which does induce such action or forbearance, is binding if injustice can be avoided only by enforcement of the promise.
" This proposition was explained and elucidated by several illustrations given in the article and one of such illustrations was as follows : "A promises B to pay him an annuity during B 's life.
B thereupon resigns a profitable employment, as A expected that he might.
B receives the annuity for some years, in the meantime becoming disqualified from again obtaining good employment.
A 's promise is binding.
" It is true that the Restatement has not the same weight, as a source of law, as actual decisions of courts of high standing, yet the principle set out in Article 90 has in fact formed the basis of a number of decisions in various states and it is now becoming increasingly clear that a promise may in the United States derive contractual enforceability if it has been made by the promisor intending that it would be acted on and the promisee has altered his position in reliance on it, notwithstanding that there is no consideration in the sense in which that word is used in English and Commonwealth jurisprudence.
Of course the basic requirement for invoking this principle must be present namely, that the fact situation should be such that "injustice can be avoided only by enforcement of the promise".
There are numerous examples of the application of this principle to be found in recent American decisions.
There is, for instance, the long line of cases in which a promise to give a charitable subscription has been consistently held to be enforceable at the suit of the charity.
Though attempts have been made to justify these decisions by reasoning that the charity by commencing or continuing its charitable work after receiving promise has given good consideration for it, we do not think that, on closer scrutiny, the enforceability of the promise in these cases can be supported by spelling out the presence of some form of consideration and the true principle on which they are really based is the principle of promissory estoppel.
This is also the view expressed in the following statement at page 657 of vol.
19 of American Jurisprudence : "A number of courts have upheld the validity of charitable subscriptions on the theory of promissory estoppel holding that while a mere promise to contribute is unenforceable for want of consideration, if money has been expended or liabilities have been incurred in reliance on the promise so 671 that non fulfillment will cause injury to the payee, the donor is estopped to assert the lack of consideration, and the promise will be enforced." Chief Justice Cardozo, presiding over the Court of Appeals of the State of New York, explained the ratio of these decisions in the same terms in Alleghany College vs National Chauteuque County Bank(1): "The half truths of one generation tend at times to perpetuate themselves in the law as the whole truths of another, when constant repetition brings it about that qualifications, taken once for granted, are disregarded or forgotten.
The doctrine of consideration has not escaped the common lot.
As far back as 1881, Judge Holmes in his lectures on the Common Law (p. 292) separated the detriment which is merely a consequence of the promise from the detriment, which is in truth the motive or inducement, and yet added that the courts 'have gone far in obliterating this distinction '.
The tendency toward effacement has not lessened with the years.
On the contrary there has grown up of recent days a doctrine that a substitute for consideration or an exception to its ordinary requirements can be found in what is styled a 'promissory estoppel '.
Williston, Contract, Ss. 139, 116.
Whether the exception has made its way in this State to such an extent as to permit us to say that the general law of consideration has been modified accordingly, we do not now attempt to say.
Cases such as and be signposts on the road.
Certain at least it is that we have adopted the doctrine of promissory estoppel as the equivalent of consideration in connection with our law of charitable subscriptions.
So long as those decisions stand, the question is not merely whether the enforcement of a charitable subscription can be squared with the doctrine of consideration in all its ancient rigor.
The question may also be whether it can be squared with the doctrine of consideration as qualified by the doctrine of promissory estoppel".
We have said that the cases in this State have recognized this exception, if exception it is thought to be.
Thus, in the subscription was made without request, express or implied that the church do anything on the faith of it.
Later, the church did incur expense to the knowledge of the promisor, and in the reasonable belief that the promise would be kept.
We held the promise binding, though 672 consideration there was none except upon the theory of a promissory estoppel.
In a situation substantially the same became the basis for a like ruling.
So in 103 N.Y. 600 and the moulds of consideration as fixed by the old doctrine were subject to a like expansion.
Very likely, conceptions of public policy have shaped, more or less subconsciously, the rulings thus made.
Judges have been affected by the thought that 'defences of that character ' are 'breaches of faith towards the public, and especially towards those engaged in the same enterprise, and an unwarrantable disappointment of the reasonable expectations of those interested '.
W. F. Allen J. in 12 N.Y. 18 and of and cases there cited.
The result speaks for itself irrespective of the motive.
Decisions which have stood so long, and which are supported by so many considerations of public policy and reason, will not be over ruled to save the symmetry of a concept which itself came into our law, not so much from any reasoned conviction of its justice, as from historical accidents of practice and procedure.
(8 Holdsworth, History of English Law, 7 et.
The concept survives as one of the distinctive features of our legal system.
We have no thought to suggest that it is obsolete or on the way to be abandoned.
As in the case of other concepts, however, the pressure of exceptions has led to irregularities of form.
" It is also interesting to note that the doctrine of promissory estoppel has been widely used in the United States in diverse other situations as founding a cause of action.
The most notable instances are to be found in what may be called the "sub contractor bid cases" in which a contractor about to tender for a contract, invites a sub contractor to submit a bid for a sub contract and after receiving his bid the contractor submits a tender.
In such cases, the sub contractor has been held unable to retract his bid and be liable in damages if he does so.
It is not possible to say that any detriment which the contractor may be able to show in these cases would amount to consideration in its strict sense and these decisions have plainly been reached on an application of the doctrine of promissory estoppel.
One of such cases was Drennan vs Star Paving Company(1) where Traynor, J. explicitly adopted as good law the text of Article 90 of the Restatement of the law of Contracts quoted above and stated in so many words that "the absence of consideration is not fatal to the enforcement of such a promise".
There are also numerous cases where the doctrine of promissory estoppel has been applied against the Government where 673 the interest of justice, morality and common fairness clearly dictated such a course.
We shall refer to these cases when we discuss the applicability of the doctrine of equitable estoppel against the Government.
Suffice it to state for the present that the doctrine of promissory estoppel has been taken much further in the United States than in English and Commonwealth jurisdictions and in some States at least, it has been used to reduce, if not to destroy, the prestige of consideration as an essential of valid contract.
Vide Spencer Bower and Turner 's Estoppel by Representation (2d) page 358.
We now go on to consider whether and if so to what extent is the doctrine of promissory estoppel applicable against the Government.
So far as the law in English is concerned, the position cannot be said to be very clear.
Rowlett J., in an early decision in Rederiaktiebolaget Amphitrite vs The King(1) held that an undertaking given by the British Government to certain neutral ship owners during the First World War that if the shipowners sent a particular ship to the United Kingdom with a specified cargo, she shall not be detained, was not enforceable against the British Government in a court of law and observed that his main reason for taking this view was that: " it is not competent for the Government to fetter its future executive action, which must necessarily be determined by the needs of the community when the question arises.
It cannot by contract hamper its freedom of action in matters which concern the welfare of the State.
" This observation has however not been regarded by jurists as laying down the correct law on the subject since it is "very wide and it is difficult to determine its proper scope".
Anson 's English Law of Contract, 22d.
The doctrine of executive necessity propounded by Rowlatt, J., was in fact disapproved by Denning, J., as he then was, in Roberston vs Minister of Pensions (supra) where the learned Judge said: The Crown cannot escape by saying that estoppels do not bind the Crown for that doctrine has long been exploded.
Nor can the Crown escape by praying in aid the doctrine of executive necessity, that is, the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
That doctrine was propounded by Rowlatt, J., in Rederiak tiebolaget Amphitrite vs The King but it was unnecessary for the decision because the statement there was not a promise which was intended to be binding but only an expression of intention.
Rowlatt, J., seems to have been influenced by 674 the cases on the right of the Crown to dismiss its servants at pleasure, but those cases must now all be read in the light of the judgment of Lord Atkin in Reily vs The King (1954) A.C. 176, 176).
In my opinion the defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract.
" It is true that the decision of Denning J., in this case was overruled by the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (1) but that was on the ground that the doctrine of promissory estoppel cannot be invoked to "bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it".
The decision of the House of Lords did not express any disapproval of the applicability of the doctrine of promissory estoppel against the Crown nor did it overrule the view taken by Denning J., that the Crown cannot escape its obligation under the doctrine of promissory estoppel by "praying in aid the doctrine of executive necessity.
" The statement of the law by Denning, J., may, therefore, still be regarded as holding the field and it may be taken to be a judicially favoured view that the Crown is not immune from liability under the doctrine of promissory estoppel.
The courts in America for a long time took the view that the doctrine of promissory estoppel does not apply to the Government but more recently the courts have started retreating from that position to a sounder one, namely, that the doctrine of promissory estoppel may apply to the Government when justice so requires.
The second edition of American Jurisprudence brought out in 1966 in paragraph 123 points out that "equitable estoppel will be invoked against the State when justified by the facts", though it does warn that this doctrine "should not be lightly invoked against the State.
" Later in the same paragraph it is stated that "as a general rule, the doctrine of estoppel will not be applied against the State in its governmental, public or sovereign capacity", but a qualification is introduced that promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity if "its application is necessary to prevent fraud or manifest injustice".
Since 1966 there is an increasing trend towards applying the doctrine of promissory estoppel against the State and the old law that promissory estoppel does not apply against the government is definitely declining.
There have been numerous cases in the State courts where it has been held that promissory estoppel may be applied even against the Govern 675 ment in its governmental capacity where the accommodation of the needs of justice to the needs of effective government so requires.
The protagonists of the view that promissory estoppel cannot apply against the Government or a public authority seek to draw inspiration from the majority decision of the United States Supreme Court in Federal Crop Insurance Corporation vs Merrill.(1) But we do not think that decision can be read as laying down the proposition that the doctrine of promissory estoppel can never be invoked against the Government.
There the County Committee acting as the agent of the Federal Crop Insurance Corporation which was a wholly Government owned corporation constituted under the Federal Crop Insurance Act, advised the respondents that their entire 460 acres of spring wheat crop which included spring wheat reseeded.
On winter wheat acreage was insurable and acting upon it, the respondents made an application for insurance which was forwarded by the County Committee to the Denver office of the Corporation with a recommendation for acceptance.
The application did not mention that any part of the insured crop was reseeded and it was accepted by the Denver office of the Corporation.
There were at this time wheat crop insurance regulations framed by the Corporation and published in the Federal Register which prohibited insurance of spring wheat reseeded on winter wheat acreage but neither the respondents nor the County Committees which was acting as the agent of the Corporation was aware of them.
A few months later, most of the respondent 's crop was destroyed by drought and on a claim being made by the respondents under the policy of insurance, the Corporation refused to pay the loss on the ground that the wheat crop insurance regulations expressly prohibited insurance of reseeded wheat.
The refusal was upheld by the Supreme Court by a majority of five to four.
The majority observed: "It is too late in the day to urge that the Government is just another private litigant, for purposes of charging it with liability, whenever it takes over a business theretofore conducted by private enterprises or engages in competitions with private ventures.
Whatever the form in which the Government functions, anyone entering into an arrangement with the Government takes the risk of having accurately ascertained that be who purports to act for the Government stays within the bounds of his authority And this is so even though as here, the agent himself may have been unaware of the limitations upon his autho 676 rity. "Man must turn square corners when they deal with the Government", does not reflect a callous outlook.
It merely expresses the duty of all courts to observe the conditions defined by Congress for charging the public treasury.
" It will be seen that the Corporation was held entitled to repudiate its liability because the wheat crop insurance regulations prohibited insurance of reseeded wheat and the assurance given by the County Committee as the agent of the Corporation that the reseeded wheat was insurable being contrary to the wheat crop insurance regulations, could not be held binding on the Corporation.
It was not within the authority of the County Committee to give such assurance contrary to the wheat crop insurance regulations and hence no promissory estoppel against the Corporation could be founded upon it.
This decision did not say that even if an assurance given by an agent is within the scope of his authority and is not prohibited by law, it could still not create promissory estoppel against the Government.
But, it may be pointed out, even this limited holding has come in for considerable criticism at the hands of jurists in the United States.
See Davis on Administrative Law (3rd d.) pages 344 345.
Referring to the observation of the majority that "Men must turn square corners when they deal with the Government", Maguire and Zimet have poetically responded by saying: "It is hard to see why the Government should not be held to a like standard of rectangular rectitude when dealing with its citizens." (Maguire and Zimet, Hobson 's Choice and Similar Practices in Federal Taxation, 48 Harv.
L. Rev. 1287 at 1299).
There has so far not been any decision of the Supreme Court of the United States taking the view that the doctrine of promissory estoppel cannot be invoked against the Government.
The trend in the State courts, of late, has been strongly in favour of the application of the doctrine of promissory estoppel against the Government and public bodies "where interests of justice, morality and common fairness clearly dictate that course.
" It is being increasingly felt that "that the Government ought to set a high standard in its dealings and relationships with citizens and the word of a duly authorised Government agent, acting within the scope of his authority ought to be as good as a Government bond".
Of course, as pointed out by the United States Court of Appeals, Third Circuit in Valsonavich vs United States, (1) the Government would not be estopped "by the acts of its officers and agents who without authority enter into 677 agreements to do what the law does not sanction or permit" and "those dealing with an agent of the Government must be held to have notice of limitations of his authority" as held in Merrill 's case.
This is precisely what the House of Lords also held in England in Howell vs Falmouth Boat Construction Co. Ltd. (supra) where Lord Simonds stated the law to be: "The illegality of an act is the same whether or not the actor has been misled by an assumption of authority on the part of a Government officer however high or low in the hierachy.
The question is whether the character of an act done in face of a statutory prohibition is affected by the fact that it has been induced by a misleading assumption of authority.
In my opinion the answer is clearly No." But if the acts or omissions of the officers of the Government are within the scope of their authority and are not otherwise impermissible under the law, they "will work estoppel against the Government.
" When we turn to the Indian law on the subject it is heartening to find that in India not only has the doctrine of promissory estoppel been adopted in its fullness but it has been recognized as affording a cause of action to the person to whom the promise is made.
The requirement of consideration has not been allowed to stand in the way of enforcement of such promise.
The doctrine of promissory estoppel has also been applied against the Government and the defence based on executive necessity has been categorically negatived.
It is remarkable that as far back as 1880, long before the doctrine of promissory estoppel was formulated by Denning, J., in England, A Division Bench of two English Judges in the Calcutta High Court applied the doctrine of promissory estoppel and recognised a cause of action founded upon it in the Ganges Manufacturing Co. vs Surajmuli and other(1).
The doctrine of promissory estoppel was also applied against the Government in a case subsequently decided by the Bombay High Court in Municipal Corporation of Bombay vs The Secretary of State.(2) The facts of this last mentioned case in Municipal Corporation of Bombay vs The Secretary of State (supra) are a little interesting and it would be profitable to refer to them.
The Government of Bombay, with a view to constructing an arterial road, requested the Municipal Commissioner to remove certain fish and vegetable 678 markets which obstructed the construction of the proposed road.
The Municipal Commissioner replied that the markets were vested in the Corporation of Justices but that he was willing to vacate certain municipal stables which occupied a portion of the proposed site if the Government would rent other land mentioned in his letter, to the Municipality at a nominal rent, the Municipality undertaking to bear the expenses of levelling the same and permit the Municipality to erect on such land "stables of wood and iron with nobble foundation to be removed at six months ' notice on other suitable ground being provided by Government".
The Government accepted the suggestion of the Municipal Commissioner and sanctioned the application of the Municipal Commissioner for a site for stabling on the terms set out above and the Municipal Commissioner thereafter entered into possession of the land and constructed stables, workshops and chawls on the same at considerable expense.
Twenty four years later the Government served a notice on the Municipal Commissioner determining the tenancy and requesting the Municipal Commissioner to deliver possession of the land within six months and in the mean time to pay rent at the rate of Rs.12,000/ per month.
The Municipal Corporation declined to hand over possession of the land or to pay the higher rent and the Secretary of State for India thereupon filed a suit against the Municipal Corporation for a declaration that the tenancy of the Municipality stood determined and for an order directing the municipality to pay rent at the rate of Rs. 12,000/ per month.
The suit was resisted by the Municipal Corporation on the ground then the events which had transpired had created an equity in favour of the Municipality which afforded an answer to the claim of the Government to eject the Municipality.
This defence was upheld by a Division Bench of the High Court and Jenkins C.J., speaking on behalf of the Division Bench, pointed out that, in view of the following facts, namely: " the Municipality gave up the old stables, levelled the ground, and erected the moveable staibles in 1866 in the belief that they had against the Government an absolute right not to be turned out until not only the expiration of six months notice, but also other suitable ground was furnished: that this belief is referable to an expectation created by the Government that their enjoyment of the land would be in accordance with this belief: and that the Government knew that the Municipality were acting in this belief so created:" 679 an equity was created in favour of the Municipality which entitled it "to appeal to the Court for its aid in assisting them to resist the Secretary of State 's claim that they shall be ejected from the ground".
The learned Chief Justice pointed out that the doctrine which he was applying took its origin "from the jurisdiction assumed by Courts of Equity to intervene in the case of or to prevent fraud" and after referring to Ramsden vs Dyson(1) observed that the Crown also came within the range of this equity.
This decision of the Bombay High Court is a clear authority for the proposition that it is open to a party who has acted on a representation made by the Government to claim that the Government shall be bound to carry out the promise made by it, even though the promise is not recorded in the form of a formal contract as required by the Constitution.
That is how this decision has in fact been interpreted by this court in Union of India vs Indo Afghan Agencies:(2) We don 't find any decision of importance thereafter on the subject of promissory estoppel until we come to the decision of this Court in Collector of Bombay vs Municipal Corporation of the City of Bombay & Ors.(3).
The facts giving rise to this case were that in 1865 the Government of Bombay called upon the predecessor in title of the Municipal Corporation of Bombay to remove old markets from a certain site and vacate it and on the application of the Municipal Commissioner, the Government passed a resolution approving and authorizing the grant of another site to the Municipality.
The resolution stated further that "the Government do not consider that any rent should be charged to the Municipality as the markets will be like other public buildings, for the benefit of the whole community".
The Municipal Corporation gave up the site on which the old markets were situated and spent a sum of Rs. 17 lakhs in erecting and maintaining markets on the new site.
In 1940 the Collector of Bombay assessed the new site to land revenue and the Municipal Corporation there upon filed a suit for a declaration that the order of assessment was ultra vires and it was entitled to hold the land for ever without payment of any assessment.
The High Court of Bombay held that the Government had lost its right to assess the land in question by reason of the equity arising on the facts of the case in favour of the Municipal Corporation and there was thus a limitation on the right of the Government to assess under section 8 of the Bom 680 bay City Land Revenue Act.
On appeal by the Collector to this Court, the majority Judges held that the Government was not, under the circumstances of the case, entitled to assess land revenue on the land in question because the Municipal Corporation had taken possession of the land in terms of the Government resolution and had continued in such possession openly, uninterruptedly and of right for over seventy years and thereby acquired the limited title it had been prescribing for during the period, that is to say, the right to hold the land in perpetuity free of rent.
Chandrasekhra Aiyar, J., agreed with the conclusion reached by the majority but rested his decision on the doctrine of promissory estoppel.
He pointed out that the Government could not be allowed to go back on the representation made by it and stressed the point in the form of an interrogation by asking: "if we do so, would it not amount to our countenancing the perpetration of what can be compendiously described as legal fraud which a court of equity must prevent being committed?" He observed that even if the resolution of the Government amounted merely to "the holding out of a promise that no rent will be charged in the future, the Government must be deemed in the circumstances of this case to have bound themselves to fulfil it.
Whether it is the equity recognised in Ramsden 's case (supra) or it is some other form of equity, is not of much importance.
Courts must do justice by the promotion of honesty and good faith, as far as it lies in their power.
" This was of course the solitary view of Chandrasekhara Aiyer, J., but it was approved by this Court in no uncertain terms in Indo Afghan Agencies case (supra).
Then we come to the celebrated decision of this Court in the Indo Afghan Agencies case (supra).
It was in this case that the doctrine of promissory estoppel found its most eloquent exposition.
We may briefly state the facts in order to appreciate the ratio of the decision.
Indo Afghan Agencies Ltd. who were the respondents before the Court, acting in reliance on the Export Promotion Scheme issued by the Central Government, exported woollen goods to Afghanistan and on the basis of their exports claimed to be entitled to obtain from the Textile Commissioner import entitlement certificate for the full F.O.B. value of the goods exported as provided in the scheme.
The Scheme was not a statutory Scheme having the force of law but it provided that an export of woollen goods would be entitled to import raw material of the total amount equal to 100% of the F.O.B. value of his exports.
The respondents contended that, relying on the promise contained in the Scheme, they had exported woollen goods to Afghanistan and were,.
therefore, entitled to enforce the promise against the Government and to obtain import entitlement 681 certificate for the full F.O.B. value of the goods exported on the principle of promissory estoppel.
This contention was sought to be answered on behalf of the Government by pleading the doctrine of executive necessity and the argument of the Government based on this doctrine was that it is not competent for the Government to fetter its future executive action which must necessarily be determined by the needs of the community when the question arises and no promise or undertaking can be held to be binding on the Government so as to hamper its freedom of executive action.
Certain observations of Rowlatt, J., in Rederiektiabolaget Amphitrite vs The King (supra) were sought to be pressed into service on behalf of the Government in support of this argument.
We have already referred to these observations earlier and we need not reproduce them over again.
These observation undoubtedly supported the contention of the Government but it was pointed out by this Court that these observations were disapproved by Denning J., in Robertson vs Minister of Pensions (supra) where the learned Judge said that "the Crown cannot escape by praying in aid the doctrine of executive necessity, that is the doctrine that the Crown cannot bind itself so as to fetter its future executive action.
The defence of executive necessity is of limited scope.
It only avails the Crown where there is an implied term to that effect or that is the true meaning of the contract" and this statement of Denning, J., was to be preferred as laying down the correct law of the subject.
Shah, J., speaking on behalf of the Court, observed at p. 376: "We are unable to accede to the contention that the executive necessity releases the Government from honouring its solemn promises relying on which citizens have acted to their detriment.
Under our constitutional set up no person may be deprived of his right or liberty except in due course of and by authority of law; of a member of the Executive seeks to deprive a citizen of his right or liberty otherwise than in exercise of power derived from the law common or statute the Courts will be competent to and indeed would be bound to, protect the rights of the aggrieved citizen.
" The defence of executive necessity was thus clearly negatived by this Court and it was pointed out that it did not release the Government from its obligation to honour the promise made by it, if the citizen, acting in reliance on the promise, had altered his position.
The doctrine of promissory estoppel was in such a case applicable against the Government and it could not be deteated by invoking the defence of executive necessity.
682 It was also contended on behalf of the Government that if the Government were held bound by every representation made by it regarding its intention, when the exporters have acted in the manner they were invited to act, the result would be that the Government would be bound by a contractual obligation even though no formal contract in the manner required by Article 299 was executed.
But this contention was negatived and it was pointed out by this Court that the respondents "are not seeking to enforce any contractual right: they are seeking to enforce compliance with the obligation which is laid upon the Textile Commissioner by the terms of the Scheme, and we are of the view that even if the Scheme is executive in character, the respondents who were aggrieved because of the failure to carry out the terms of the Scheme were entitled to seek resort to the Court and claim that the obligation imposed upon the Textile Commissioner by the Scheme be ordered to be carried out".
It was thus laid down that a party who has, acting in reliance on a promise made by the Government, altered his position, is entitled to enforce the promise against the Government, even though the promise is not in the form of a formal contract as required by Article 299 and that Article does not militate against the applicability of the doctrine of promissory estoppel against the Government.
This Court finally, after referring to the decision in the Ganges Manufacturing Co. vs Surujmull (supra).
The Municipal Corporation of the City of Bombay vs The Secretary of State for India (supra) and Collector of Bombay vs Municipal Corporation of the City of Bombay & Ors.
(supra), summed up the position as follows: "Under our jurisprudence the Government is not exempt from liability to carry out the representation made by it as to its future conduct and it cannot on some undefined and undisclosed ground of necessity or expediency fail to carry out the promise solemnly made by it, nor claim to be the Judge of its own obligation to the citizen on an ex parte appraisement of the circumstances in which the obligation has arisen." The law may, therefore, now be taken to be settled as a result of this decision that where the Government makes a promise knowing or intending that it would be acted on by the promises and, in fact, the promisee, acting in reliance on it, alters his position, the Government would be held bound by the promise and the promise would be enforceable against the Government at the instance of the promises, notwithstanding that there is no consideration for the promise and the promise is not recorded in the form of a formal contract 683 as required by Article 299 of the Constitution.
It is elementary that in a Republic governed by the rule of law, no one, howsoever high or low, is above the law.
Every one is subject to the law as fully and completely as any other and the Government is no exception.
It is indeed the pride of constitutional democracy and rule of law that the Government stands on the same footing as a private individual so far as the obligation of the law is concerned: the former is equally bound as the latter.
It is indeed difficult to see on what principle can a Government, committed to the rule of law, claim immunity from the doctrine of promissory estoppel.
Can the Government say that it is under no obligation to act in a manner that is fair and just or that it is not bound by considerations of "honesty and good faith"? Why should the Government not be held to a high "standard of rectangular rectitude while dealing with its citizens"? There was a time when the doctrine of executive necessity was regarded as sufficient justification for the Government to repudiate even its contractual obligations, but let it be said to the eternal glory of this Court, this doctrine was emphatically negatived in the Indo Afghan Agencies case and the supremacy of the rule of law was established.
It was laid down by this Court that the Government cannot claim to be immune from the applicability of the rule of promissory estoppel and repudiate a promise made by it on the ground that such promise may fetter its future executive action.
If the Government does not want its freedom of executive action to be hampered or restricted, the Government need not make a promise knowing or intending that it would be acted on by the promisee and the promisee would alter his position relying upon it.
But if the Government makes such a promise and the promises acts in reliance upon it and alters his position, there is no reason why the Government should not be compelled to make good such promise like any other private individual.
The law cannot acquire legitimacy and gain social acceptance unless it accords with the moral values of the society and the constant endeavor of the Courts and the legislatures must, therefore, be to close the gap between law and morality and bring about as near an approximation between the two as possible.
The doctrine of promissory estoppel is a significant judicial contribution in that direction.
But it is necessary to point out that since the doctrine of promissory estoppel is an equitable doctrine, it must yield when the equity so requires.
If it can be shown by the Government that having regard to the facts as they have transpired, it would be inequitable to hold the Government to the promise made by it, the Court would not raise an equity in favour of the promisee and enforce the promise against the 684 Government.
The doctrine of promissory estoppel would be displaced in such a case because, on the facts, equity would not require that the Government should be held bound by the promise made by it.
When the Government is able to show that in view of the facts as have transpired, public interest would be prejudiced if the Government were required to carry out the promise, the Court would have to balance the public interest in the Government carrying out a promise made to a citizen which has induced the citizen to act upon it and after this position and the public interest likely to suffer if the promise were required to be carried out by the Government and determine which way the equity lies.
It would not be enough for the Government just to say that public interest requires that the Government should not be compelled to carry out the promise or that the public interest would suffer if the Government were required to honour it.
The Government cannot, as Shah, J., pointed out in the Indo Afghan Agencies case, claim to be exempt from the liability to carry out the promise "on some indefinite and undisclosed ground of necessity or expediency", nor can the Government claim to be the sole judge of its liability and repudiate it "on an ex parte appraisement of the circumstances".
If the Government wants to resist the liability, it will have to disclose to the Court what are the facts and circumstances on account of which the Government claims to be exempt from the liability and it would be for the Court to decide whether these facts and circumstances are such as to render it inequitable to enforce the liability against the Government.
Mere claim of change of policy would not be sufficient to exonerate the Government from the liability: the Government would have to show what precisely is the changed policy and also its reason and justification so that the Court can judge for itself which way the public interest lies and what the equity of the case demands.
It is only if the Court is satisfied, on proper and adequate material placed by the Government, the over riding public interest requires that the Government should not be held bound by the promise but should be free to act unfettered by it, that the Court would refuse to enforce the promise against the Government.
The Court would not act on the mere ipse dixit of the Government, for it is the Court which has to decide and not the Government whether the Government should be held exempt from liability.
This is the essence of the rule of law.
The burden would be upon the Government to show that the public interest in the Government acting otherwise than in accordance with the promise is so overwhelming that it would be inequitable to hold the Government bound by the promise and the Court would insist on a highly rigorous standard of proof in the discharge of this burden.
But even where there is no such over riding public interest, it may still be competent to 685 the Government to resile from the promise "on giving reasonable notice which need not be a formal notice, giving the promisee a reasonable opportunity of resuming his position" provided of course it is possible for the promisee to restore status quo ante.
If however, the promisee cannot resume his position, the promise would become final and irrevocable.
Vide Emmanuel Ayodeji Ajayi vs Briscoe.(1) The doctrine of promissory estoppel was also held applicable against a public authority like a Municipal Council in Century Spinning & Manufacturing Co. Ltd. & Anr.
vs The Ulhasuagar Municipal Council & Anr.(2) The question which arose in this case was whether the Ulhas Nagar Municipal Council could be compelled to carry out a promise made by its predecessor municipality that the factories in the industrial area within its jurisdiction would be exempt from payment of octroi for seven years from the date of the levy.
The appellant company, in the belief induced by the assurance and undertaking given by the predecessor municipality that its factory would be exempt from octroi for a period of seven years, expanded its activities, but when the municipal council came into being and took over the administration of the former municipality, it sight to levy octroi duty on appellant company.
The appellant company thereupon filed a writ petition under Article 226 of the Constitution in the High Court of Bombay to restrain the municipal council from enforcing the levy of octroi duty in breach of the promise made by the predecessor municipality.
The High Court dismissed the petition in limine but, on appeal, this Court took the view that this was a case which required consideration and should have been admitted by the High Court.
Shah, J., speaking on behalf of the Court, pointed out "Public bodies are as much bound as private individuals to carry out representations of facts and promises made by them, relying on which other persons have altered their position to their prejudice.
The obligation arising against an individual out of his representation amounting to a promise may be enforced ex contracted by a person who acts upon the promise: when the law requires that a contract enforceable at law against a public body shall be in certain from or be executed in the manner prescribed by statute, the obligation may be if the contract be not in that form be enforced against it in appropriate cases in equity." The learned Judge then referred to the decision in the Indo Afghan Agencies case and observed that in that case it was laid down by this 686 Court that "the Government is not exempt from the equity arising out of the acts done by citizens to their prejudice relying upon the representations as to its future conduct made by the Government".
It was also pointed out by the learned Judge that in the Indo Afghan Agencies case this Court approved of the observations made by Denning, J. in Robertson vs Minister of Pensions (supra) rejecting the doctrine of executive necessity and held them to be applicable in India.
The learned Judge concluded by saying in words pregnant in the hope and meaning for democracy: "If our nascent democracy is to thrive different standards of conduct for the people and the public bodies cannot ordinarily be permitted.
A public body is, in our judgment, not exempt from liability to carry out its obligation arising out of representations made by it relying upon which a citizen has altered his position to his prejudice." This Court refused to make a distinction between a private individual and a public body so far as the doctrine of promissory estoppel is concerned.
We then come to another important decision of this Court in Turner Morrison & Co. Ltd. vs Hungerford Investment Trust Ltd. (1) where the doctrine of promissory estoppel was once again affirmed by this Court.
Hegde, J, speaking on behalf of the Court, pointed out: "Estoppel" is a rule of equity.
"That rule has gained new dimensions in recent years.
A new class of estoppel i.e. promissory estoppel has come to be recognised by the courts in this Country as well as in England.
The full implication of 'promissory estoppel ' is yet to be spelled out." The learned Judge, after referring to the decisions in High Trees case, Robertson vs Minister of Pensions (supra) and the Indo Afghan Agencies case, pointed out that "the rule laid down in these decisions undoubtedly advanced the cause of justice and hence we have no hesitation in accepting it.
We must also refer to the decision of this Court in M. Ramanatha Pillai vs The State of Kerala & Anr.(1) because that was a decision strongly relied upon on behalf of the State for negativing the applicability of the doctrine of estoppel against the Government.
This was a case where the appellant was appointed to a temporary post and on the post being abolished, the service of the appellant was terminated.
The appellant challenged the validity of termination of service, inter alia, on 687 the ground that the Government was precluded from abolishing the post and terminating the service on the principle of promissory estoppel.
This ground based on the doctrine of promissory estoppel was negatived and it was pointed out by the Court that the appellant knew that the post was temporary, suggesting clearly that the appellant could not possibly be led into the belief that the post would not be abolished.
If the post was temporary to the knowledge of the appellant, it is obvious that the appellant knew that the post would be liable to be abolished at any time and if that be so, there could be no factual basis for invoking the doctrine of promissory estoppel for the purpose of precluding the Government from abolishing the post.
This view taken by the Court was sufficient to dispose of the contention based on promissory estoppel and it was not necessary to say anything more about it, but the Court proceeded to cite a passage from American Jurisprudence, Vol. 28 (2d) at 783, paragraph 123 and observed that the High Court rightly held "that the courts exclude the operation of the doctrine of estoppel, when it is found that the authority against whom estoppel is pleaded has owed a duty to the public against whom the estoppel cannot fairly operate.
" It was this observation which was heavily relied upon on behalf of the State but we fail to see how it can assist the contention of the State.
In the first place, this observation was clearly obiter, since, as pointed out by us, there was on the facts of the present case no scope for the applicability of the doctrine of promissory estoppel.
Secondly, this observation was based upon a quotation from the passage in paragraph 123 at page 783 of Volume 28 of American Jurisprudence (2 d), but unfortunately this quotation was incomplete and it overlooked, perhaps inadvertently, the following two important sentences at the commencement of the paragraph which clearly show that even in the United States the doctrine of promissory estoppel is applied against the State "when justified by the facts": "There is considerable dispute as to the application of estoppel with respect to the State.
While it is said that equitable estoppel will be invoked against the State when justified by the facts, clearly the doctrine of estoppel should not be lightly invoked against the State" (emphasis supplied).
Even the truncated passage quoted by the Court recognised in the last sentence that though, as a general rule, the doctrine of promissory estoppel would not be applied against the State in its governmental, public or sovereign capacity, the Court would unhesitatingly allow the doctrine to be invoked in cases where it is necessary in order "to prevent fraud or manifest injustice".
This passage leaves no doubt that the 688 doctrine of promissory estoppel may be applied against the State even in its governmental, public or sovereign capacity where it is necessary to prevent fraud or manifest injustice.
It is difficult to imagine that the Court citing this passage with approval could have possibly intended to lay down that in no case can the doctrine of promissory estoppel be invoked against the Government.
Lastly, a proper reading of the observation of the Court clearly shows that what the Court intended to say was that where the Government owes a duty to the public to act differently, promissory estoppel cannot be invoked to prevent the Government from doing so.
This proposition is unexceptionable, because where the Government owes a duty to the public to act in a particular manner, and here obviously duty means a course of conduct enjoined by law, the doctrine of promissory estoppel cannot be invoked for preventing the Government from acting in discharge of its duty under the law.
The doctrine of promissory estoppel cannot be applied in teeth of an obligation or liability imposed by law.
We may then refer to the decision of this Court in Assistant Custodian vs Brij Kishore Agarwala & Ors.(1) It is not necessary to reproduce the facts of this case, because the only purpose for which this decision was relied upon on behalf of the State was to show that the view taken by the House of Lords in Howell vs Falmouth Boat Construction Co. Ltd. (Supra) was preferred by this Court to that taken by Lord Denning in Robertson vs Minister of Pension (supra).
It is true that in this case the Court expressed the opinion "that the view taken by the House of Lords is the correct one and not the one taken by Lord Denning" but we fail to see how that can possibly help the argument of the State.
The House of Lords did not in Howell 's case negative the applicability of the doctrine of promissory estoppel against the Government.
What it laid down was merely this, namely, that no representation or promise made by an officer can preclude the Government from enforcing a statutory prohibition.
The doctrine of promissory estoppel cannot be availed to permit or condone a breach of the law.
The ratio of the decision was succinctly put by Lord Normand when he said" neither a minister nor any subordinate officer of the Crown can by any conduct or representation bar the Crown from enforcing a statutory prohibition or entitle the subject to maintain that there has been no breach of it".
It may also be noted that promissory estoppel cannot be invoked to compel the Government or even a private party to do an act prohibited by law.
There can also be no promissory estoppel against the exercise of legislative power.
The Legislature can never be precluded 689 from exercising its legislative function by resort to the doctrine of promissory estoppel.
Vide State of Kerala vs Gwalior Rayon Silk Manufacturing Co. Ltd.(1) The next decision to which we must refer is that in Excise Commissioner, U.P. Allahabad vs Ram Kumar.(2) This was also a decision on which strong reliance was placed on behalf of the State.
It is true that, in this case, the Court observed that "it is now well settled by a catena of decisions that there can be no question of estoppel against the Government in the exercise of its legislative, sovereign or executive powers," but for reasons which we shall presently state, we do not think this observation can persuade us to take a different view of the law than that enunciated in the Indo Afghan Agencies ' case.
In the first place, it is clear that in this case there was factually no foundation for invoking the doctrine of promissory estoppel.
When the State auctioned the licence for retail sale of country liquor and the respondents being the highest bidders were granted such licence, there was in force a Notification dated 6th April, 1959, issued under section 4 of the U.P. Sales Tax Act, 1948, exempting sale of country liquor from payment of sales tax.
No announcement was made at the time of the auction whether the exemption from sales tax under this Notification dated 6th April, 1959 was or was not likely to be withdrawn.
However, on the day following the commencement of the licence granted to the respondents, the Government of U.P. issued a Notification dated 2nd April, 1969 superseding the earlier Notification dated 6th April, 1959 and imposing sales tax on the turnover in respect of country spirit with immediate effect.
This notification dated 2nd April, 1969 was challenged by the respondents by filing a writ petition and amongst the several grounds of challenge taken in the writ petition, one was that "since the State Government did not announce at the time of the aforesaid auction that the Notification dated 6th April, 1959 was likely to be withdrawn and the sales of country liquor were likely to be subjected to the levy of sales tax during the excise year and in reply to the query made by them at the time of the auction they were told by the authorities that there was no sales tax on the sale of country liquor, the appellants herein were estopped from making the demand in respect of sales tax and recovering the same from them".
It was in the context of this ground of challenge that the Court came to make the observation relied upon on behalf of the State.
Now, it is clear that, even taking the case of the respondents at its highest, there was no representation or promise made by the Government that they would continue the exemp 690 tion from sales tax granted under the Notification dated 6th April, 1959 and would not withdraw it, and the Notification dated 2nd April, 1969 could not, therefore, be assailed as being in breach of any such representation or promise.
There was accordingly, no factual basis for making good the plea of promissory estoppel and the observation made by the court in regard to the applicability of the doctrine of promissory estoppel against the Government was clear obiter.
That perhaps was the reason why the Court did not consider it necessary to refer to the earlier decisions in Century Spinning & manufacturing Co. 's case and Turner Morrison 's case and particularly the decision in the Indo Afghan Agencies case where the court in so many terms applied the doctrine of promissory estoppel against the Government in the exercise of its executive power.
It is not possible to believe that the Court was oblivious of these earlier decisions, particularly when one of these decisions in the Indo Afghan Agencies case was an epoch making decision which marked a definite advance in the field of administrative law.
Moreover, it may be noted that though, standing by itself, the observation made by the Court that "there can be no question of estoppel against the Government in exercise of its legislative, sovereign or executive powers" may appear to be wide and unqualified, it is not so, if read in its proper context.
This observation was made on the basis of certain decisions which the Court proceeded to discuss in the succeeding paragraphs of the judgment.
The Court first relied on the statement of the law contained in paragraph 123 at page 783, Volume 28 of the American Jurisprudence (2d), but it omitted to mention the two important sentences at the commencement of the paragraph and the words "unless its application is necessary to prevent fraud or manifest injustice" at the end, which clearly show that even according to the American Jurisprudence, the doctrine of promissory estoppel is not wholly inapplicable against the Government in its governmental, public or sovereign capacity, but it can be invoked against the Government "when justified by the facts" as for example where it is necessary to prevent fraud or injustice.
In fact, as already pointed out above, there are numerous cases in the United States where the doctrine of promissory estoppel has been applied against the Government in the exercise of its governmental, public or executive powers.
The Court then relied upon the decision in the Gwalior Rayon Silk Manufacturing Co. 's case, but that decision was confined to a case where legislation was sought to be precluded by relying on the doctrine of promissory estoppel and it was held, and in our opinion rightly, that there can be no promissory estoppel against the legislature in the exercise of its legislative function.
That decision does not negative the applicability of the 691 doctrine of promissory estoppel against the Government in the exercise of its governmental, public or executive powers.
The decision in Howell 's case was, thereafter, relied upon by the Court, but that decision merely says that the Government cannot be debarred by promissory estoppel from enforcing a statutory prohibition.
It does not countenance an absolute proposition that promissory estoppel can never be invoked against the government.
The Court also cited a passage from the judgment of the High Court of Jammu & Kashmir in Malhotra & Sons & Ors.
vs Union of India & Ors.
,(1) but this passage itself makes it clear that the courts will bind the Government by its promise where it is necessary to do so in order to prevent manifest injustice or fraud.
The last decision on which the Court relied was Federal Crop Insurance Corporation vs Morrill (supra) but this decision also does not support the view contended for on behalf of the State.
We have already referred to this decision earlier and pointed out that the Federal Crop Insurance Corporation in this case was held not liable on the policy of insurance, because the regulations made by the Corporation prohibited insurance of reseeded wheat.
The principle of this decision was that promissory estoppel cannot be invoked to compel the Government or a public authority to carry out a representation or promise which is contrary to law.
It will thus be seen from the decisions relied upon in the judgment that the Court could not possibly have intended to lay down an absolute proposition that there can be no promissory estoppel against the Government in the exercise of its governmental, public or executive powers.
That would have been in complete contradiction of the decisions of this Court in the Indo Afghan Agencies Case, Century Spinning and Manufacturing Co. 's case and Turner Morrison 's case and we find it difficult to believe that the Court could have ever intended to lay down any such proposition without expressly referring to these earlier decisions and over ruling them.
We are, therefore, of the opinion that the observation made by the Court in Ram Kumar 's case does not militate against the view we are taking on the basis of the decisions in the Indo Afghan Agencies ' case, Century Spinning & Manufacturing Co. 's case and Turner Morrison 's case in regard to the applicability of the doctrine of promissory estoppel against the Government.
We may then refer to the decision of this Court in Bihar Eastern Gangetic Fishermen Co operative Society Ltd. vs Sipahi Singh & Ors.(2) It was held in this case in paragraph 12 of the judgment that the respondent could not invoke the doctrine of promissory estoppel because he was unable to show that, relying on the representation of the Govern 692 ment, he had altered his position by investing moneys and the allegations made by him in that behalf were "much too vague and general" and there was accordingly no factual foundation for establishing the plea of promissory estoppel.
On this view, it was unnecessary to consider whether the doctrine of promissory estoppel was applicable against the Government, but the Court proceeded to reiterate, without any further discussion, the observation in Ram Kumar 's case that "there cannot be any estoppel against the Government in the exercise of its sovereign, legislative and executive functions".
This was clearly in the nature of obiter and it cannot prevail as against the statement of law laid down in the Indo Afghan Agencies case.
Moreover, it is clear from paragraph 14 of the judgment that this Court did not intend to lay down any proposition of law different from that enunciated in the Indo Afghan Agencies case because it approved of the decision in the Indo Afghan Agencies case and distinguished it on the ground that in that case there was not enforcement of contractual right but the claim was founded upon equity arising from the Scheme, while in the case before the Court, a contractual right was sought to be enforced.
There is, therefore, nothing in this decision which should compel us to take a view different from the one we are otherwise inclined to accept.
We may point out that in the latest decision on the subject in Radha Krishna Agarwal vs State of Bihar & Ors.(1) this Court approved of the decisions in the Indo Afghan Agencies case and Century Spinning and Manufacturing Co 's case and pointed out that these were cases where it could be held that public bodies or the State are as much bound as private individuals are to carry out obligations incurred by them because parties seeking to bind the authorities have altered their position to their disadvantage or have acted to their detriment on the strength of the representations made by these authorities".
It would, therefore, be seen that there is no authoritative decision of the Supreme Court which has departed from the law laid down in the celebrated decisions in the Indo Afghan Agencies case and the Century Spinning & Manufacturing Co 's case.
The law laid down in these decisions as elaborated and expounded by us continues to hold the field.
We may now turn to examine the facts in the light of the law discussed by us.
It is clear from the letter of the 4th respondent dated 23rd January, 1969 that a categorical representation was made by the 4th respondent on behalf of the Government that the proposed vanaspati factory of the appellant would be entitled to exemption from sales tax 693 in respect of sales of vanaspati effected in Uttar Pradesh for a period of three years from the date of commencement of production.
This representation was made by way of clarification in view of the suggestion in the appellant 's letter dated 22nd January, 1969 that the financial institutions were not prepared to regard the earlier letter of the 4th respondent dated 22nd December, 1968 as a definite commitment on the part of the Government to grant exemption from sales tax.
Now the letter dated 23rd January, 1969 clearly shows that the 4th respondent made this representation in his capacity as the Chief Secretary of the Government, and it was, therefore, a representation on behalf of the government.
It was faintly contended before us on behalf of the State that this representation was not binding on the Government, but we cannot countenance this argument, because, in the first place, the averment in the writ petition that the 4th respondent made this representation on behalf of the government was not denied by the State in the affidavit in reply filed on its behalf, and secondly, it is difficult to accept the contention that the 4th respondent, who was at the material time the Chief Secretary to the government and also advisor to the Governor who was discharging the functions of the Government.
We must, therefore, proceed on the basis that this representation made by the 4th respondent was a representation within the scope of his authority and was binding on the Government.
Now, there can be no doubt that this representation was made by the Government knowing or intending that it would be acted on by the appellant, because the appellant had made it clear that it was only on account of the exemption from sales tax promised by the Government that the appellant had decided to set up the factory for manufacture of vanaspati at Kanpur.
The appellant, in fact, relying on this representation of the Government, borrowed moneys from various financial institutions, purchased plant and machinery from M/s. De Smith (India) Pvt. Ltd., Bombay and set up a vanaspati factory at Kanpur.
The facts necessary for invoking the doctrine of promissory estoppel were, therefore, clearly present and the Government was bound to carry out the representation and exempt the appellant from sales tax in respect out the representation and exempt the appellant from sales tax in respect of sales of vanaspati effected by it in Uttar Pradesh for a period of three years from the date of commencement of the production.
The State, however, contended that the doctrine of promissory estoppel had no application in the present case because the appellant did not suffer any detriment by acting on the representation made by the Government : the vanaspati factory set up by the appellant was quite a profitable concern and there was no prejudice caused to the 694 appellant.
This contention of the State is clearly unsustainable and must be rejected.
We do not think it is necessary, in order to attract the applicability of the doctrine of promissory estoppel, that the promisee acting in reliance of the promise, should suffer any detriment.
What is necessary is only that the promisees should have altered his position in reliance on the promise.
This position was implied accepted by Denning, J., in the High Trees ' case when the learned Judge pointed out that the promise must be one "which was intended to create legal relations and which, to the knowledge of the person making the promise, was going to be acted on by the person to whom it was made and which was in fact acted an" (emphasis supplied).
If a promise is "acted on", "such action, in law as in physics, must necessarily result in an alteration of position.
" This was again reiterated by Lord Denning in W.J. Alan & Co. Ltd. x. El.
Nasr Export and Import Co.(1) where the learned Law Lord made it clear that alteration of position "only means that he (the promise) must have been led to act differently from what he would otherwise have done.
And if you study the cases in which the doctrine has been applied, you will see that all that is required is that the one should have acted on the belief induced by the other party." Viscount Simonds also observed in Tool Metal Manufacturing Co. Ltd vs Tungsten Electric Co. Ltd. (2) that "the gist of the equity lies in the fact that one party has by his conduct led the other to alter his position".
The judgment of Lord Tucker in the same case would be found to depend likewise on a fundamental finding of alteration of position, and the same may be said of that of Lord Coheb.
Then again in Emmanuel Avodeji vs Briscoe (supra) Lord Hodson said: "This equity,is however, subject to the qualification (1) that the other party has altered his position".
The same requirement was also emphasised by Lord Diplock in Kaminins Ballrooms Ltd. vs Zenith Investments (Torquay) Ltd. (3) What is necessary, therefore, is no more than that there should be alteration of position on the part of the promisee.
The alteration of position need not involve any detriment to the promises.
If detriment were a necessary element, there would be no need for the doctrine of promissory estoppel because in that event, in quite a few cases, the detriment would form the consideration and the promise could be binding as a contract.
There is in fact not a single case in England where detriment is insisted upon as a necessary ingredient 695 of promissory estoppel.
In fact, in W. J. Alan & Co. Ltd. vs El Nasar Export and Import Co. (supra), Lord Denning expressly rejected detriment as an essential ingredient of promissory estoppel, saying: "A seller may accept a less sum for his goods than the contracted price, thus inducing (his buyer) to believe that he will not enforce payment of the balance; see Central London Property Trust Ltd. vs High Trees House Ltd. and D. & C. Builders Ltd. vs Rees In none of these cases does the party who acts on the belief suffer any detriment.
It is not a detriment, but a benefit to him to have an extension of time or to pay less, or as the case may be.
Nevertheless, he has conducted his affairs on the basis that he has had that benefit and it would not be equitable now to deprive him of it.
" We do not think that in order to invoke the doctrine of promissory estoppel it is necessary for the promise to show that he suffered detriment as a result of acting in reliance on the promise.
But we may make it clear that if by detriment we mean injustice to the promisee which could result if the promisor were to recede from his promise then detriment would certainly come in as a necessary ingredient.
The detriment in such a case is not some prejudice suffered by the promisee by acting on the promise, but the prejudice which would be caused to the promisee, if the promisor were allowed to go back on the promise.
The classic exposition of detriment in this sense is to be found in the following passage from the judgment of Dixon, J in the Australian case of Grundt vs The Great Boulder Pty.
Gold Mines Ltd. (1): " It is often said simply that the party asserting the estoppel must have been induced to act to his detriment.
Although substantially such a statement is correct and leads to no misunderstanding, it does not bring out clearly the basal purpose of the doctrine.
That purpose is to avoid or prevent a detriment to the party asserting the estoppel by compelling the opposite party to adhere to the assumption upon which the former acted or abstained from acting.
This means that the real detriment or harm from which the law seeks to give protection is that which would flow from the change of position if the assumption were deserted that led to it.
So long as the assumption is adhered to, the party who altered his situation upon the 696 faith of it cannot complain.
His complaint is that when afterwards the other party makes a different state of affairs the basis of an assertion of right against him then, if it is allowed, his own original change of position will operate as a detriment.
His action or inaction must be such that, if the assumption upon which he proceeded were shown to be wrong, and an inconsistent state of affairs were accepted as the foundation of the rights and duties of himself and the opposite party, the consequence would be to make his original act or failure to act or source of prejudice.
" If this is the kind of detriment contemplated, it would necessarily be present in every case of promissory estoppel because it is on account of such detriment which the promisee would suffer if the promisor were to act differently from his promise, that the Court would consider it inequitable to allow the promisor to go back upon his promise.
It would, therefore, be correct to say that in order to invoke the doctrine of promissory estoppel it is enough to show that the promisee has acting in reliance of the promise, altered his position and it is not necessary for him to further show that he has acted to his detriment.
Here, the appellant clearly altered its position by borrowing moneys from various financial institutions, purchasing plant and machinery from M/s. De Smet (India) Pvt. Ltd., Bombay and setting up a vanaspati plant, in the belief induced by the representation of the Government that sales tax exemption would be granted for a period of three years from the date of commencement of the production.
The Government was, therefore bound on the principle of promissory estoppel to make good the representation made by it.
Of course, it may be pointed out that if the U.P. Sales Tax Act, 1948 did not contain a provision enabling the Government to grant exemption, it would not be possible to enforce the representation against the Government because the Government cannot be compelled to act contrary to the statute, but since section 4 of the U.P.Sales Tax Act, 1948 confers power on the Government to grant exemption from sales tax, the Government can legitimately be held bound by its promise to exempt the appellant from payment of sales tax.
It is true that taxation is a sovereign or governmental function, but, for reasons which we have already discussed, no distinction can be made between the exercise of a sovereign or governmental function and a trading or business activity of the Government so far as the doctrine of promissory estoppel is concerned.
Whatever be the nature of the function which the Government is discharging, the Government is subject to the rule of promissory estoppel and if the 697 essential ingredients of this rule are satisfied, the Government can be compelled to carry out the promise made by it.
We are, therefore, of the view that in the present case the Government was bound to exempt the appellant from payment of sales tax in respect of sales of vanaspati effected by it in the State of Uttar Pradesh for a period of three years from the date of commencement of the production and was not entitled to recover such sales tax from the appellant.
Now, for the assessment year 1970 71, that is, 2nd July, 1970 to 31st March, 1971, the appellant collected from its customers sales tax amounting to Rs. 6,81,178.95 calculated at the rate of 3 1/2% on the sale price.
But when the assessment was made by the Sales Tax Authorities, sales tax was levied on the appellant at the rate of 7% and the appellant was required to pay up a further sum of Rs. 6,80,969.42.
The appellant had prayed for an interim order in the present appeal staying further proceedings, but this Court, by an order dated 3rd April, 1974, granted interim stay only on the appellant paying up the amount of sales tax due for the assessment year 1970 71 before 31st July, 1974 and so far as the assessment years 1971 72, 1972 73 and 1973 74 were concerned, the Court directed that the assessments for those years may proceed, but only the final order shall not be passed.
The result was that the appellant had to pay up the further sum of Rs. 6,80,949.42 for the assessment year 1970 71.
The appellant collected from the customers for the assessment year 1971 72 an aggregate sum of Rs. 9,91,206.17 by way of sales tax at the rate of 3 1/2% for the period 1st April, 1971 to 1st July, 1971, 4% for the period 2nd July, 1971 to 24th January, 1972 and 7% for the period 25th January, 1972 to 31st March, 1972 and deposited this amount in the Treasury.
Similarly, for the assessment year 1972 73, the appellant collected from its customers an aggregate sum of Rs. 19,36,597.23 as and by way of sales tax at the rate of 7% of the sale price and this amount was deposited by the appellant in the Treasury, and so also for the first quarter of the assessment year 1973 74 upto the end of which the exemption from sales tax was to continue, the appellant collected and paid an aggregate sum of Rs. 4,84,884.05 at the rate of 7% of the sale price.
It appears that surcharge amounting to Rs. 2,83,008.09 for the period of the exemption was also paid by the appellant into the Treasury.
The assessments for the assessment years 1971 72, 1972 73 and 1973 74 were, however, not completed in view of the stay order granted by this Court.
Now, obviously since the Government is bound to exempt the appellant from payment of sales tax for a period of three years from 2nd July, 1970, being the date of commencement of the production, the appellant would not be liable to 698 pay any sales tax to the State in respect of sales of vanaspati effected during that period and hence the State would have to refund to the appellant the amount of sales tax paid for the period 2nd July, 1970 to 31st March, 1971, subject to any claim which the State may have to retain any part of such amount under any provision of law.
If the State has any such claim, it must be intimated to the appellant within one month from today and it must be adjudicated upon within a further period of one month after giving proper opportunity to be heard to the appellant.
If no such claim is made, or, if made, not adjudicated upon within the time specified, the State will refund the amount of sales tax to the appellant with interest thereon at the rate of 6% per annum from the date when such refund becomes due and if such claim is made and adjudicated upon within the specified time and it is found that a part of this amount is liable to be retained by the State under some provision of law, the State will refund the balance to the appellant with interest at the like rate.
So far as the assessment years 1971 72, 1972 73 and 1973 74 are concerned, the Sales Tax Authorities will proceed to complete the Assessments for those assessment years in the light of the law laid down in this judgment and the amounts of sales tax deposited by the appellant will be refunded to the appellant to the extent to which they are not found due and payable as a result of the assessments, subject to any claim which the State may have to retain those amounts under any provision of law.
We accordingly allow the appeal, set aside the judgment of the High Court and issue a writ, order or direction to the above effect against the respondents.
The State will pay the costs of the appellant throughout.
S.R. Appeal allowed.
[/INST]To provide for the better administration and supervision of Wakfs, the Wakfs Act 1954, sought to bring the management of wakfs under the supervision of the State.
The Act envisages the appointment of a Commissioner of Wakfs for the purpose of survey of wakf properties existing at the time of the commencement of the Act.
The Commissioner is enjoined to submit his report to the State Government after making such enquiries as he may consider necessary.
While making enquiries the Commissioner is invested with powers as are vested in a Civil Court under the Code of Civil Procedure.
Section 6 of the Act provides that if any question arises as to whether a particular property specified in the list of wakfs published under section 5(2) was wakf property or not and such other related matters, the Board of Muslim Wakfs or the Mutawalli of the wakf or any person interested therein may institute a suit in a Civil Court for decision of the question.
Respondents 1 and 2 were mortgagee purchasers of the property in dispute, which was claimed to be wakf property.
Respondent.
No. 3 in his application to the Commissioner of Wakfs alleged that the property in dispute being wakf property its transfer by the mutawalli to the respondents was invalid and prayed that the property be taken over by the wakf committee.
While denying that the property in dispute was wakf property respondents 1 and 2 contended before the Commissioner that he had no jurisdiction to make an enquiry whether a particular property was wakf property or not.
The Commissioner rejected these contentions and submitted a report to the State Government.
On receipt of the Commissioner 's report the Board of Muslim Wakfs included the property in the list of wakfs in the Stat.
In the respondents ' Writ Petition, the High Court held (i) that the jurisdiction of the Board of Wakfs was confined to matters of administration of the wakfs and not to adjudication of questions of title and that the Act did not invest either the Board or the Commissioner with power to decide the question whether a property belonged to a wakf or not and therefore the Commissioner had no jurisdiction under section 4(3) of the Act to enquire whether or not the property was wakf property and (ii) that the failure of a stranger to the wakf to institute a suit in a court of competent jurisdiction within a period of one year on the question whether a particular property was wakf property or not could not make the inclusion of such property in the list of wakfs final and conclusive.
149 In appeal to this Court it was contended on behalf of the appellants that (i) the words "for the purpose of making a survey of wakf properties" are wide enough to confer power on the Commissioner to investigate and adjudicate upon the question whether a particular property was or was not wakf property and (ii) failure of the respondents to file a suit within the time allowed by s, 6(1) made the inclusion of the property in the list of wakfs final and conclusive.
The word "therein" occurring in "any person interested therein" in section 6 ( 1 ) qualifies the words "wakf property" and not "person interested in the wakfs" as wrongly assumed by the High Court.
Dismissing the appeal to this Court ^ HELD: While the High Court was right in determining the scope of section 6(1), it was clearly in error in curtailing the ambit and scope of enquiry by the Commissioner under section 4(3 ) .
[160 E] 1.
(a) The Commissioner of wakfs acted within his jurisdiction in holding the disputed property to be wakf property.
[168 C] (b) The whole purpose of the survey of the wakfs by the Commissioner under section 4(1) is to inform the Board of Wakfs as to existence of the wakfs in the State in order that all such wakfs should be brought under the supervision and control of the Board.
[160 D] (c) The words "for the purpose of making a survey" are the key to the construction of the section.
If the Commissioner has the power to make a survey it is but implicit that in the exercise of such power he should enquire whether or not a wakf exists.
The making of such an enquiry is a necessary concomitant of the power to survey.
The High Court was, therefore, wrong in holding to the contrary.
[162 A Bl (d) It would be illogical to hold that while making a survey of wakf properties existing in the State the Commissioner of wakfs should have no power to enquire whether a particular property was wakf property or not.
After making the survey the Commissioner is required to submit a report to the State Government in regard to the several matters referred to in clauses (a) to (f) thereof.
There may be a dispute as between the Board, the mutawalli or a person interested in the wakf, as regards the existence of wakf i.e. whether a particular property is wakf property, whether it is a Shia wakf or a Sunni wakf, the extent of the property attached to the wakf, the nature and object of the wakf and so on.
While making such an enquiry, the Commissioner is invested with the powers vested in a Civil Court under the Code of Civil Procedure, 1908.
In view of the comprehensive provisions contained in the Act the enquiry which the Commissioner makes is not purely of an administrative nature but partakes of a quasi judicial character in respect of persons falling within the scope of section 6(1).
[161 F; C E] (e) The power of the Commissioner to survey wakf properties or to enquire and investigate into the several matters set out in sub section (3) cannot be curtailed by taking recourse to section 4(S).
Sub section (S) only lays down that, if during an enquiry any dispute arises as to whether a particular wakf is a Shia wakf or Sunni wakf and if there are clear indications in the deed of wakf as to its nature, the dispute shall be decided on the basis of 150 such deed.
It, therefore, makes the wakf deed conclusive as to the nature of the wakf Sub section (5) cannot be projected into sub section (1) determining the question whether a certain property is a wakf property or not.
Nor does it enter into an enquiry as to several of the matters adverted to in some of the clauses of sub section (3).
[162 D E] (f) Moreover section 6 and section 6(1) clearly envisage that the enquiry by the Commissioner was not confined to the question as to whether a particular wakf was a Shia Wakf or Sunni Wakf.
It might also embrace a dispute is to whether a wakf existed or not.
[162 H] 2.
(a) Where a stranger is a non Muslim and is in possession of certain property, his right.
title and interest therein cannot be put in jeopardy merely because the property is included in the list of wakfs.
Such a person is not required to file a suit for a declaration of his title within a period of one year.
The special rule of limitation laid down in proviso to section 6(1) is not applicable to him.
In other words, the list published by the Board of Wakfs under section 5(2) can be challenged by him by filing a suit for declaration of title even after the expiry of the period of one year, if the necessity of filing such suit arises.
h 167 A B] (b) The word "therein" occurring in section 6(1) after the words "any person interested therein" must necessarily refer to the "Wakf" which immediately precedes it.
It cannot refer to the wakf property.
Section 6 ( 1 ) enumerates the persons who can file suits and also the questions in respect of which such suits can be filed.
In enumerating the persons who are empowered to file suits under this provision only the Board, the mutawalli of the Wakf; and "any person interested therein", thereby necessarily meaning any person interested in the wakfs, are listed.
Its provisions empower only those who are interested in the wakfs to institute suits.
[164 E Fl Sirajul Hag Khan & Ors.
vs The Sunni Central Board of Wakf, U.P. Ors., , referred to.
(c) The word "therein" in section 6(1) must mean "any person interested in a wakf" as defined in section 3(h).
The object of the section is to narrow down the dispute between the Board of Wakfs, the Mutawalli and the person interested in the wakf as defined in section 3(h).
[165 H] (d) The right of the respondents 1 and 2 in respect of the disputed property, if at all they have any, will remain unaffected by the impugned Notification.
They are at liberty to bring a Suit for the establishment of their right and title, if any, to the property.
[168 E]
</s> |
<s>[INST] Summarize the judgementition (Criminal) No. 981 of 1984.
(Under article 32 of the Constitution) Navin Malhotra and Harjinder Singh for the Petitioners.
K. Parasaram, Attorney General and A. V. Rangam for the Respondent.
The Judgment of the Court was delivered by G VENKATARAMIAH, J.
We have heard Shri Navin Malhotra, amicus curiae and the learned Attorney General for the State of Tamil Nadu.
In State of Andhra Pradesh vs Vallabhapuram Ravi 1058 (Criminal Appeal No. 254 of 1984) in which judgment was delivered on September 14, 1984 this Court has held that adolescent offenders kept in a Borstal School by virtue of orders made by the State Government under section 10 A of the Andhra Borstal Schools Act, 1925 cannot be detained in the Borstal School or in any other place after they have attained 23 years of age and that they should be released.
The provisions of the Tamil Nadu Borstal Schools Act, 1925 are identical with the provisions of the Andhra Borstal Schools Act, 1925.
In the judgment referred to above the decision of the Madras High Court in In re.
Ganapati which had taken the view that after section 433A of the Code of Criminal Procedure, 1973 came into force a person who was convicted of an offence punish able under section 302 of Indian Penal Code but sentenced to imprisonment for life and who was by virtue of an order passed under section 10 A of the Tamil Nadu Borstal Schools Act, 1925 detained in a Borstal School could not be released before he completed 14 years of detention has also been overruled.
In the circumstances it has to be held that the State Government of Tamil Nadu cannot keep any adolescent offender who is convicted of a capital offence but sentenced to imprisonment of life in respect of whom an order is made under section 10 A of the Tamil Nadu Borstal Schools Act in a Borstal School or in any other kind of detention after he has attained 23 years of age.
We, therefore, direct the Government of the State of Tamil Nadu to release all such inmates of the Borstal Schools in Tamil Nadu who have attained 23 years of age forthwith.
If the petitioner C. Elumalai satisfies the above condition he is also entitled to be released and if he is not in detention he shall not be taken back into custody.
The writ petition is accordingly allowed.
N.V.K. Petition allowed.
[/INST]The respondent landlord sought eviction of the appellants tenants under section 12 (1) of the Madhya Pradesh Accommodation Control Act, 1961 on the main ground that the landlord bonafide required the premises for locating his gold and silver ornaments factory after demolishing and reconstructing the building.
The courts below found that the requirement of the landlord was bonafide and ordered eviction of the tenants under section 12 (l) (f) and (h) of the Act.
In these appeals the tenants contended that since the eviction ordered was under section 12 (l) (h), section 18 of the Act was attracted and it was obligatory on the part of the landlord to provide accommodation of equal extent to the tenants in the new building to be constructed by him.
Dismissing the appeals, ^ HELD: In Ramnilal P. Mehta vs Indradaman Amritlal this Court observed that once the landlord establishes that he bonafide requires the premises for his occupation, he is entitled to recover possession of it from the tenant under the provisions of sub clause (g) of section 13 (1) of the Bombay Rents, Hotel and Lodging House.
Rates Control Act, 1947 irrespective of the fact whether he would occupy the premises without making any alterations or after making tho necessary alterations.
[948B C] Ramnilal P. Mehta vs Indradaman Amritlal Sheth, ; , referred to.
Section 13 (1) (g) of the Bombay Rents, Hotel and Lodging House, Rates Control Act, 1947 corresponds to section 12 (1) (f) of tho Madhya Pradesh Accommodation Control Act.
[948A] Applying the above principle to the facts of the instant case, though the Courts below have passed the order of eviction under section 12 (1) (f) and (h) the Court is of the opinion that the order of eviction is based really and substan 946 tially only under section 12 (1) (f) of the Act.
The fact that section 12 (1) (h) is also mentioned in the order of the Court below does not make the order of eviction purely one under that section, for the main ground of requirement of the landlord is bonafide personal requirement for locating his proposed factory for the manufacture of gold or silver ornaments.
Therefore there is no case for the application of section 18 to the facts of the present case.
[947F G]
</s> |
<s>[INST] Summarize the judgementminal Appeal No. 67 of 1964.
Appeal by special leave from the judgment and order dated March 2, 1964 of the Orissa High Court in Government Appeal No. 49 of 1963.
R. K. Garg, section C. Agarwala, M. K. Ramamurthy and D. P. Singh, for the appellants.
H. R. Khanna and R. N. Sachthey, for the respondent.
, 637 The Judgment of the Court was delivered by Ramaswami, J.
This appeal is brought, by special leave, from the judgment of the Orissa High Court dated March 2, 1964 in Government Appeal No. 49 of 1963 by which the High Court set aside the order of acquittal passed by the Assistant Sessions Judge of Puri and convicted the appellants under section 353 of the Indian Penal Code and sentenced them to 4 months ' rigorous imprisonment.
The decree holders Panu Sahu and Naha Sahu levied execution of the decree (exhibit Case No. 125/62) in the Court of the Munsif, Puri against the appellants and a writ of attachment of the moveables of the judgment debtor was issued for execution through P.W. 2, Sadhu Charan Mohanty, a peon of the Civil Court, Puri, returnable by August 10, 1962.
P.W. 2 reached the village of the judgment debtors on August 10, 1962 at 10 a.m. with the warrant of attachment and asked the judgment debtors to pay the decretal dues of Rs. 952 10 nP, and when he was going to seize some of the moveables, the appellants came there with lathis and resisted him.
P.W. 2 sent a report exhibit
4 to the Court through Nabaghan requesting the Court to give necessary police help.
Accor dingly on the same day the Munsif wrote a letter, exhibit 2, requesting the Superintendent of Police, Puri to direct the Officer in charge, Sadar Police Station, to give immediate police help to the process server.
In pursuance of this letter, P.W. 1, the Assistant Sub.
Inspector, Sadar Police Station, Puri was deputed along with two constables including P.W. 3, Constable No. 613.
They went to the village Sanua where the writ of attachment was to be executed ' P.W. 6 the Naib Sarpanch and P.W. 8 the Chowkidar of the village Chhaitna also accompanied them.
On reaching the spot, they found P.W. 2 sitting in front of the house of Durga Charan Naik One of the judgment debtors.
The A.S.I. then called out Fakir Charan Naik, father of Durga Charan Naik one of the judgment debtors, who opened the door and paid Rs. 952 10 nP to the process server, Sadhu Charan Mohanty and obtained a receipt from him.
After the money was paid, all of them left the village and at about 7 p.m. while they were crossing a river nearby in a boat, P.W. I saw the appellant Durga Charan with 10 or 12 persons coming from the opposite direction.
On seeing them, P.W. I apprehended some trouble and directed P.W. 2 to hand over the money to the chowkidar, P.W. 8.
When all of them got down from the boat, appellant Durga Charan forcibly dragged the A.S.I. A number of other persons including the other appellants assembled at the spot.
Durga Charan threatened to assault the A.S.1 if he did not return the money.
Durga Charan also searched hi pockets and Netrananda threatened the A.S.I. by saying that he would not leave the place until the money was returned.
When P.W. I wanted to write a report to his police station, Netrananda MllSup.
Cl/66 9 638 obstructed him by holding his right hand.
Bipra and Jugal caught hold of the hands of P.W. 2 and took him to the river bank and demanded return of the money.
Then at the intervention of some outsiders the appellants left the spot.
P.W. I lodged the first information report at the police station next morning and after investigation the appellants were charge sheeted and committed to the court of Sessions.
The appellants were charged under sections 143/402, Indian Penal Code on the allegation that they formed an unlawful assembly with the common object of committing dacoity.
Durga Charan, Jugal, Bipra along with three others were further charged under section 186, Indian Penal Code for having voluntarily obstructed P.Ws I and 2 in the discharge of their public duty.
Durga Charan and Netrananda were also charged under section 353, Indian Penal Code for having used criminal force against P.W. I and Bipra Charan and Jugal were similarly charged under section 353, Indian Penal Code for having used criminal force against P.W. 2 while both of them were dis charging their duty as public servants.
The Additional Sessions Judge acquitted the appellants of all the charges.
The State Government took the matter in appeal to the Orissa High Court which set aside the order of acquittal with regard to the 4 appellants and convicted them under section 353, Indian Penal Code.
The High Court, however, held that there was no satisfactory evidence to convict the appellants under sections 143/402, Indian Penal Code.
As regards the charge under section 186, Indian Penal Code, the High Court expressed the view that the prosecution was barred under the provisions of section 195, Criminal Procedure Code.
In support of this appeal Mr. Garg submitted, in the first place, that the High Court had no justification for interfering with the order of acquittal passed by the Additional Sessions Judge and that 'it has not applied the correct principle in a matter of this description.
Learned Counsel took us through the judgments of the High Court and of the trial court and stressed the argument that there was no evidence upon which the High Court reached the finding that the appellants used criminal force against P.Ws I and 2.
We are unable to accept the argument of Mr. Garg as correct.
The High Court has mainly relied upon the evidence of P.Ws 1, 2 and 3 and P.Ws 9 to 13 for holding that the appellants used criminal force against P.Ws I and 2.
The High Court has also observed that P.W. 2 was entrusted with the execution of the writ of attachment.
He was also entrusted with the official cheque book (exhibit 5) to give the receipt in token of payment of the decretal dues.
In the course of his official business P.W. 2 was carrying the money realised from the judgment debtors for necessary deposit in Court.
So far as P.W. I was concerned, he was deputed to render assistance to P.W. 2 in executing the writ of attachment.
It is manifest that both P.Ws.
I and 2 were assaulted by the appellants when they 639 were discharging their duties as public servants.
The High Court has also accepted the evidence of P.W. I that Durga Charan caught hold of his hands and demanded money on the threat of assault.
P.W. 2, the process server stated that Bipra Charan and Jugal caught hold of his hands and Durga Charan told him that he would not let anybody go unless the money was returned.
P.W. 2 added that Bipra and Jugal also snatched away his bag.
The High Court analysed the evidence of P.Ws 9 to 13 and reached the conclusion that the appellants used criminal force against P.Ws I and 2 in the course of the performance of their duties.
The High Court has also dealt with the reasoning of the trial court and has pointed out that the order of acquittal of the appellants with regard to section 353, Indian Penal Code was not justified.
In Sanwat Singh & Others vs State of Rajasthan(1) it was pointed out by this Court that an appellate court has full power to review the evidence upon which the order of acquittal is founded and that the principles laid down by the Judicial Committee in Sheo Swarup 's case (2) afford a correct guide for the appellate court 's approach to a case disposing of such an appeal.
It was further observed that different phraseology used in the judgments of this Court, such as "substantial and compelling reasons", "good and sufficiently cogent reasons" and "strong reasons" are not intended to curtail the undoubted power of an appellate Court in an appeal against acquittal to review the entire evidence and to come to its own conclusion, but in doing so should not only consider every matter on record having a bearing on the questions of fact and the reasons given by the Court below in support of its order of acquittal in arriving at a conclusion on those facts, but should express the reasons in its judgment, which led it to hold that the acquittal was not justified.
The same opinion has been expressed by this Court in a later decision in M. G. Agarwal and M. K. Kulkarni vs State of Maharashtra (3).
It was pointed out in that case that there is no doubt that the power conferred by cl.
(a) of section 423(1) which deals with an appeal against an order of acquittal is as wide as the power conferred by el.
(b) which deals with an appeal against an order of conviction, and so, it is obvious that the High Court 's powers in dealing with criminal appeals are equally wide whether the appeal in question is one against acquittal or against conviction.
It was observed that the test suggested by the expression "substantial and compelling reasons" for reversing a judgment of acquittal, should not be construed as a formula which has to be rigidly applied in every case, and so, it is not necessary that before reversing a judgment of acquittal, the High Court must necessarily characterise the findings recorded therein as perverse.
Tested in the light of these principles laid down by those authorities, we are satisfied that the High Court was justified, in the present case, in interfering with the order of acquittal passed by (1) ; (2) 61 I.A. 398.
(3) ; 640 the Additional Sessions Judge with regard to the charge under section 353, Indian Penal Code and the judgment of the High Court is not vitiated by any error of law.
We accordingly hold that Mr. Garg is unable to make good his argument on this aspect of the case.
We pass on to consider the next contention of the appellants that the conviction of the appellants under section 353, Indian Penal Code is illegal because there is a contravention of s.195(1) of the Criminal Procedure Code which requires a complaint in writing by the process server or the A.S.I.
It was submitted that the charge under section 353, Indian Penal Code is based upon the same facts as the charge under section 186, Indian Penal Code and no cognizance could be taken of the offence under section 186, Indian Penal Code unless there was a complaint in writing as required by section 195(1) of the Criminal Procedure Code.
It was argued that the conviction under section 353, Indian Penal Code is tantamount, in the circumstances of this case, to a circumvention of the requirement of section 195(1) of the Criminal Procedure Code and the conviction of the appellants under section 353, Indian Penal Code by the High Court was, therefore, vitiated in law.
We are unable to accept this argument as correct.
It is true that most of the allegations in this case upon which the charge under section 353, Indian Penal Code is based are the same as those constituting the charge under section 186, Indian Penal Code but it cannot be ignored that sections 186 and 353, Indian Penal Code relate to two distinct offences and while the offence under the latter section is a cognizable offence, the one under the former section is not so.
The ingredients of the two offences are also distinct.
Section 186, Indian Penal Code is applicable to a case where the accused voluntarily obstructs a public servant in the discharge of his public functions but under section 353, Indian Penal Code the ingredient of assault or use of criminal force while the public servant is doing his duty as such is necessary.
The quality of the two offences is also different.
Section 186 occurs in Ch.
X of the Indian Penal Code dealing with Contempts of the lawful authority of public servants, while section 353 occurs in Ch.
XVI regarding the offences affecting the human body.
It is well established that section 195 of the Criminal Procedure Code does not bar the trial of an accused person for a distinct offence disclosed by the same set of facts but which is not within the ambit of that section.
In Satis Chandra Chakravarti vs Ram Dayal De(1) it was held by Full Bench of the Calcutta High Court that where the maker of a single statement is guilty of two distinct offences, one under section 21 1, Indian Penal Code, which is an offence against public justice, and the other an offence under section 499, wherein the personal element largely predominates, the offence under the latter section can be taken cognizance of without the sanction of the court concerned, as the Criminal Procedure Code has not provided for sanction of court (1) 641 for taking cognizance of that offence.
It was said that the two offences being fundamentally distinct in nature, could be separately taken cognizance of.
That they are distinct in character is patent from the fact that the former is made non compoundable, while the latter remains compoundable; in one for the initiation of the proceedings the legislature requires the sanction of the court under section 195, Criminal Procedure Code, while in the other, cognizance can be taken of the offence on the complaint of the person defamed.
It is pointed out in the Full Bench case that where upon the facts the commission of several offences is disclosed some of which require sanction and others do not, it is open to the complainant to proceed in respect of those only which do not require sanction; because to hold otherwise would amount to legislating and adding very materially to the provisions of sections 195 to 199 of the Code of Criminal Procedure.
The decision of the Calcutta case has been quoted with approval by this Court in Basir ul Huq and Others vs The State of West Bengal (1) in which it was held that if the allegations made in a false report disclose two distinct offences, one against a public servant and the other against a private individual, the latter is not debarred by the provisions of section 195, Criminal Procedure Code, from seeking redress for the offence committed against him.
In the present case, therefore, we are of the opinion that section 195, Criminal Procedure Code does not bar the trial of the appellants for the distinct offence under section 353 of the Indian Penal Code, though it is practically based on the same facts as for the prosecution under section 186, Indian Penal Code.
Reference may be made, in this connection, to the decision of the Federal Court in Hori Ram Singh vs The Crown (2).
The appellant in that case was charged with offences under sections 409 and 477 A, Indian Penal Code.
The offence under section 477 A could not be taken cognizance of without the previous consent of the Governor under section 270(1) of the Constitution Act, while the consent of the Governor was not required for the institution of the proceedings under section 409, Indian Penal Code.
The charge was that the accused dishonestly misappropriated or converted to his own use certain medicines entrusted to him in his official capacity as a sub assistant surgeon in the Punjab Provincial Subordinate Medical Service.
He was further charged that being a public servant, he wilfully and with intent to defraud omitted to record certain entries in a stock book of medicines belonging to the hospital where he was employed and in his possession.
The proceedings under section 477 A were quashed by the Federal Court for want of jurisdiction, the consent of the Governor not having been obtained, but the case was sent back to the sessions judge for hearing on the merits as regards the charge under section 409, Indian Penal (1) (2) 642 Code, and the order of acquittal passed by the sessions judge under that charge was set aside.
Two distinct offences having been committed in the same transaction, one an offence of misappropriation under section 409 and the other an offence under section 477 A which required the sanction of the Governor, the circumstance that cognizance could not be taken of the latter offence without such consent was not considered by the Federal Court as a bar to the trial of the appellant with respect to the offence under section 409.
We have expressed the view that section 195, Criminal Procedure Code does not bar the trial of an accused person for a distinct offence disclosed by the same or slightly different set of facts and which is not included within the ambit of the section, but we must point out that the provisions of section 195 cannot be evaded by resorting to devices or camouflage.
For instance, the provisions of the section cannot be evaded by the device of charging a person with an offence to which that section does not apply and then convicting him of an offence to which it does, on the ground that the latter offence is a minor one of the same character, or by describing the offence as one punishable under some other section of the Indian Penal Code, though in truth and substance the offence falls in the category of sections mentioned in section 195, Criminal Procedure Code.
Merely by changing the garb or label of an offence which is essentially an offence covered by the provisions of section 195 prosecution for such an offence cannot be taken cognizance of by misdescribing it or by putting a wrong label on it.
On behalf of the appellants Mr. Garg suggested that the prosecution of the appellants under section 353, Indian Penal Code was by way of evasion of the requirements of section 195, Criminal Procedure Code.
But we are satisfied that there is no substance in this argument and there is no camouflage or evasion in the present case.
For these reasons we hold that the judgment of the High Court dated March 2, 1964 must be affirmed and this appeal must be dismissed.
Appeal dismissed.
[/INST]The respondents (workmen of the appellant) raised on indus trial dispute and pleaded before the Labour Court that the appellant 's action in retrenching some of its employees was mala fide, as the appellant did not follow the "first come.
last go" rule.
The appellant justified its action on the ground that the appellant had recorded valid reasons for departing from the rule.
The reasons were that, one of the employees retained was the only person capable of looking after the appellant 's share work and court work, another was the only typist with the appellant, a third was the record keeper who alone knew where the different types of records were kept, and the other two were peons who were retained as chowkidars because, there was no other person who could do that work.
The Labour Court accepted the respondents ' contention, ordered the reinstatement of those employees who were affected by the departure from the rule, and directed that those employees who were properly retrenched should be paid in addition to the retrenchment compensation under section 25F of the , which had been paid by the appellant 50 % of their wages as compensation till the date when the award, became enforceable.
In appeal to this Court.
HELD:(i) The Labour Court was in error in inferring mala )ides merely because the management departed from the rule of "first come, last go.
" Where other things are equal, the ordinary industrial rule has to be followed by the employer, but the rule is not immutable.
It is for the management to ascertain who, on retrenchment, should be retained in the interests of the business, and the industrial tribunal will not interfere with the decision of the management, unless preferential treatment is actuated by mala fides.
Preference given to the retained employees on the ground of mere experience may justify an inference of mala fides; but in the present case, the employees retained had, beside experience, special skill, or aptitude in the Particular branch of the business of the appellant they were attending to, and the management had retained them because of that skill, or aptitude.
[76 E F 79B E].
Swadesamitran Ltd. V. Their Workmen, ; and J.K. Iron and Steel Company Ltd. vs its Workmen. , referred to.
(ii) Where retrenchment has been properly made and that order has not been set aside, there is no justification for directing payment of compensation to employees Properly retrenched in addition to the retrenchment compensation statutorily payable.
[8O E].
</s> |
<s>[INST] Summarize the judgementetition (Crl.) No. 1323 of 1979.
(Under Article 32 of the Constitution.) Ram Jethamalani and Harjinder Singh and M. M. Lodha for the Petitioner.
U.R. Lalit, A. V. Rangam and M. N. Shroff for the Respondent.
The Judgment of the Court was delivered by KAILASAM, J.
The Petitioner Ramchandra A. Kamat has preferred this petition under article 32 of the Constitution of India praying for the issue of writ of Habeas Corpus directing his release by quashing the order of his detention dated 31 8 1979 passed by second respondent, Additional Secretary to the Government of India, Ministry of Finance.
The petitioner was directed to be detained by an order dated 31st August, 1979 under section 3(1) of the .
In pursuance of the order, the petitioner was arrested on 5 9 1979.
He was served with the grounds of detention on the same day.
The Petitioner through his advocate by a letter dated 7 9 1979 wrote to the second 1074 respondent stating that it was found that the detaining authority relied upon a number of statements of various persons including the detenu as well as documents referred to in the grounds, but the detenu was not furnished with the copies of the same.
The Advocate stated that detenu desires to make a representation against the order of detention but found that without the copies of documents referred to in the grounds of detention order it is not possible to make an effective representation.
A reply to his letter was sent to the Advocate by Mr. Thawani, Deputy Secretary to the Government of India, wherein he acknowledged the receipt of the letter of the Advocate dated 7 9 1979.
By this letter the Deputy Secretary requested the Advocate to contact the Deputy Director, Directorate of Enforcement, Bombay, who it was stated, had been suitably advised regarding supply of copies of statements and documents, relied upon in the detention order dated 31 8 1979.
It may be noted that the detaining authority, the second respondent did not acknowledge the letter from the detenu 's advocate or take any action by himself but directed the Deputy Secretary to address the communication dated 10 9 1979 referred to above.
Though the letter states that the Deputy Director, Bombay has been suitably advised regarding the request for supply of copies of statements and documents relied on in the detention order nothing further was done by the Deputy Director of Enforcement, Bombay.
On the 14th September, 1979, the advocate not having received any communication, addressed a letter to the Deputy Director enclosing a copy of the letter which he received from the Deputy Secretary and requested the Deputy Director to supply him on behalf of his client copies of the relevant statements and documents referred to and relied upon in the order of detention at an early date.
In reply to the letter of 14 9 79 by the Advocate, the Deputy Director in his communication dated 22 9 1979 requested the advocate to see the Deputy Director on 24 9 1979 at 1430 hours to take inspection of the documents.
On inspecting the documents the advocate was not satisfied and insisted on supply of copies of documents and ultimately copies were supplied on 3 days, namely, on 26 9 79, 28 9 79 and 29 9 79.
The representation was made by the detenu on 5 10 79.
It is settled law that the appropriate authority is bound to give an opportunity to the detenu to make representation and to consider the representation of the detenu as early as possible.
There should not be any delay in the matter of consideration.
The Constitutional Bench of this Court in Jayanarayan Sukul vs State of West Bengal(1) has held that the fundamental right of the detenu to have representation considered by the appropriate Govern 1075 ment will render meaningless if the Government will not deal with the matter expeditiously.
The Court observed: "It is established beyond any measure of doubt that the appropriate authority is bound to consider the representation of the detenu as early as possible.
The appropriate Government itself is bound to consider the representation as expeditiously as possible.
The reason for immediate consideration of the representation is too obvious to be stressed.
The personal liberty of a person is at stake.
Any delay would not only be an irresponsible act on the part of the appropriate authority but also unconstitutional because the Constitution enshrines the fundamental right of a detenu to have his representation considered and it is imperative that when the liberty of a person is in peril immediate action should be taken by the relevant authorities.
The same view has been expressed by this Court in a number of cases vide Seervai 's Constitutional Law of India, Vol.
I, page 542, paragraph 12.82.
The right to make a representation is a fundamental right.
The representation thus made should be considered expeditiously by the Government.
In order to make an effective representation, the detenu is entitled to obtain information relating to the grounds of detention.
When the grounds of detention are served on the detenu, he is entitled to ask for copies of the statements and documents referred to in the grounds of detention to enable him to make an effective representation.
When the detenu makes a request for such documents, they should be supplied to him expeditiously.
The detaining authority in preparing the grounds would have referred to the statements and documents relied on in the grounds of detention and would be ordinarily available with him when copies of such documents are asked for by the detenu the detaining authority should be in a position to supply them with reasonable expedition.
What is reasonable expedition will depend on the facts of each case.
It is alleged by the detenu that there had been unreasonable delay in furnishing of the statements and documents referred to in the grounds of detention.
It is the duty of the detaining authority to satisfactorily explain the delay, if any, in furnishing of these documents.
We are in this context not referring to the statements and documents not referred to in the grounds of detention for it may be that they are not in the possession of the detaining authority and that reasonable time may be required for furnishing copies of the relevant documents, which may not be in his possession.
1076 If there is undue delay in furnishing the statements and documents referred to in the grounds of detention the right to make effective representation is denied.
The detention cannot be said to be according to the procedure prescribed by law.
When the Act contemplates the furnishing of grounds of detention ordinarily within five days of the order to detention, the intention is clear that the statements and documents which are referred to in the grounds of detention and which are required by the detenu and are expected to be in possession of the detaining authority should be furnished with reasonable expedition.
It will have to be considered on the facts of the case whether there was any unexplained delay in furnishing the statements and documents relied on in the grounds of detention.
The detenu was arrested on 5 9 1979 and his advocate by a letter dated 7 9 1979 Annexure 'C ' to the writ petition wrote to the detaining authority stating that for making an effective representation, he must have copies of statements and documents referred to in the detention order.
He prayed that the copies of the statements and documents may be furnished to him.
This letter was received by the detaining authority on the 10th of September, 1979 and a communication was addressed not by the detaining authority but by Mr. Thawani, Deputy Secretary on the same date.
It is not clear whether the detaining authority applied his mind and realised the necessity for furnishing of the documents to the detenu expeditiously.
The communication was addressed by the Deputy Secretary to the Advocate of the detenu informing him that the Deputy Director of Enforcement at Bombay had been suitably advised regarding the request for supply of copies of statements and documents relied on in the detention order.
One would have expected that the detaining authority or the Deputy Secretary acting on his behalf, to have directed the Deputy Director of Enforcement, Bombay to furnish the necessary documents expeditiously to the Advocate as requested or to the detenu himself.
The direction in the communication from the Deputy Secretary was not immediately complied with.
The Advocate for the detenu wrote again on the 14th September, 1979 reminding the Deputy Director of the communications, he had received from the Deputy Secretary.
The Advocate requested that the copies of the relevant statements and documents referred to and relied upon in the detention order may be supplied to him.
This letter was replied by the Deputy Director on the 22nd September, 1979 in which the Advocate was asked to have inspection of the documents in his premises, between 1430 hours on 24 9 1979.
The copies of the statements and documents requested by the Advocate for the detenu and directed by the Deputy Secretary to be furnished to the Advocate were not furnished to him instead the Deputy Director asked the Advocate to 1077 have inspection at the Deputy Director 's office.
After inspecting the documents on 22/24/25 9 1979, he insisted of having copies which were supplied on the 26th, 27th and 28th of September, 1979.
The explanation given by the detaining authority regarding the delay in furnishing copies as seen in his counter affidavit is that the constitutional right of the petitioner to make effective representation had not been infringed.
According to the detaining authority "it was not incumbent upon the detaining authority to supply copies of all the documents relied upon in the grounds of detention to the petitioner alongwith the grounds within 5 days of detention as petitioner has contended.
In this context it would be relevant to state that the grounds were sufficiently detailed so as to enable the petitioner to make an effective representation against the detention." He further stated that all steps were taken to comply as expeditiously as possible.
It may not be necessary for the detaining authority to supply copies of all the documents relied upon in the grounds of detention at the time when the grounds are furnished to the detenu but once the detenu states that for effective representation it is necessary that he should have copies of the statements and documents referred to in the grounds of detention, it is the duty of the detaining authority to furnish them with reasonable expedition.
The detaining authority cannot decline to furnish copies of the documents on the ground that the grounds were sufficiently detailed to enable the petitioner to make an effective representation.
In this case, the detaining authority should have taken reasonable steps to provide the detenu or his advocate with the statements and documents as early as possible.
The reply to the detenu was not sent by the detaining authority and it is not clear whether he appreciated the necessity to act expeditiously.
As noted already, a communication was sent by the Deputy Secretary to the Deputy Director, who did not comply with the direction and furnish copies of the statements and documents.
After a lapse of 12 days i.e. on 22 9 1979, the Deputy Director offered inspection.
Taking into account the facts and circumstances of the case and explanation furnished by the detaining authority, we are of the view that the detaining authority failed to act with reasonable expedition in furnishing the statements and documents referred to in the grounds of detention.
On the facts of the case, therefore, we are satisfied that the detention is not in accordance with the procedure contemplated under law.
The continued detention is not warranted.
The order of his release has already been issued by this Court.
N.V.K. Petition allowed.
[/INST]The petitioner was directed to be detained by an order dated August 31, 1979 under section 3(1) of the and in pursuance thereof was arrested on September 5, 1979.
He was served with the grounds of detention on the same day.
The petitioner 's advocate wrote a letter dated September 7, 1979 to the detaining authority second respondent stating that it was not possible to make an effective representation without the copies of statements and documents referred to in detention order.
The detaining authority did not take any action on the letter but forwarded it to the Deputy Secretary to the Government of India who by a communication dated September 10, 1979 acknowledged its receipt and requested the advocate to contact the Deputy Director, Directorate of Enforcement, Bombay regarding the supply of copies of statements and documents.
As no further communication was received, the advocate addressed a letter dated September 14, 1979 to the Deputy Director to supply him copies of the statements and documents.
The Deputy Director in his communication dated September 22, 1979 requested the advocate to see him on September 24, 1979 to take inspection of the documents.
On inspecting the documents the advocate was not satisfied and insisted on supply of copies of documents, which were supplied on three days, September 26, 1979, September 28, 1979 and September 29, 1979.
On October 5, 1979 the petitioner made his representation against the detention.
In the writ petition, it was contended on behalf of the petitioner that as there was unreasonable delay in furnishing of the statements and documents referred to in the grounds of detention and the right to make an effective representation was denied, the detention could not be said to be according to the procedure prescribed by law.
On behalf of the detaining authority it was contended that the constitutional right of the petitioner to make an effective representation had not been infringed and that it was not incumbent upon the detaining authority to supply copies of all documents relied upon in the grounds of detention and that the grounds of detention were sufficiently detailed so as to enable the petitioner to make an effective representation against the detention.
Allowing the petition, ^ HELD: 1.
The detaining authority failed to act with reasonable expedition in furnishing the statements and documents referred to in the grounds of detention.
The detention is therefore not in accordance with the procedure contemplated under law, and the continued detention is not warranted.
[1077G] 2.
It is settled law that the appropriate authority is bound to give an opportunity to the detenu to make representation and to consider the representation 1073 of the detenu as early as possible.
There should not be any delay in the matter of consideration.
[1074G] Jayanarayan Sukul vs State of West Bengal, ; , referred to.
(i) The right to make a representation is a fundamental right.
The representation thus made should be considered expeditiously by the Government.
In order to make an effective representation, the detenu is entitled to obtain information relating to the grounds of detention.
When the grounds of detention are served on the detenue he is entitled to ask for copies of the statements and documents referred to in the grounds of detention to enable him to make an effective representation.
When the detenu makes a request for such documents, they should be supplied to him expeditiously.
[1075E] (ii) When the Act contemplates the furnishing of grounds of detention within five days of the order of detention, the intention is clear that the statements and documents which are referred to in the grounds of detention and which are required by the detenu should be furnished with reasonable expedition.
[1076B] 4.
If there is undue delay in furnishing the statements and documents referred to in the grounds of detention the right to make an effective representation is denied.
It is the duty of the detaining authority to satisfactorily explain the delay, if any, in furnishing of the documents.
[1076A, 1075G] 5.
It may not be necessary for the detaining authority to supply copies of the documents relied upon in the grounds of detention at the time when the ground are furnished to the detenu but once the detenu states that for effective representation it is necessary that he should have copies of the statements and documents referred to in the grounds of detention it is the duty of the detaining authority to furnish them with reasonable expedition.
The detaining authority cannot decline to furnish copies of the documents on the ground that the grounds were sufficiently detailed to enable the petitioner to make an effective representation.
[1077D E]
</s> |
<s>[INST] Summarize the judgement: Special Leave Peti tion (CRL.) No. 1370 of 1986.
From the Judgment and Order dated 23.5.
1986 of the Bombay High Court in Crl.
W.P. No. 385 of 1986.
AND WRIT PETITION NO.
363 OF 1986.
(Under Article 32 of the Constitution of India).
G.L. Sanghi, D. Canteenwala, V.B. Agarwala, B.R. Agarwa la and Miss Vijay Lakshmi Mannen for the Petitioner.
K. Parasaran, Attorney General, C.V. Subba Rao and A. Subba Rao for the Respondent.
The following Judgment of the Court was delivered: This petition for special leave directed against the judgment and order of the Bombay High Court dated May 3, 1986, and the connected petition under article 32 of the Con stitution raise common questions and therefore they are disposed of by this common order.
The petitioner by a peti tion under article 226 filed before the High Court prayed for the issuance of a writ of habeas corpus which is also the prayer before us, for the release of her husband Mohanlal Jatia, who has been detained by an order of the Additional Secretary to the Government of India, Ministry of Finance, Department of Revenue dated December 13, 1985 under sub section
(1) of section 3 of the Conservation of Foreign Exchange & Pre vention of Smuggling Activities Act, 1974 on being satisfied that it was necessary to detain him with a view to prevent ing him from acting in any manner prejudicial to the augmen tation of foreign exchange.
Intelligence gathered by the Directorate of Revenue Intelligence, Bombay was that one Subhash Gadia, the broth er in law of the detenu Mohanlal Jatia, a very rich and prosperous businessman of Bombay, was under invoicing the imports of yarn from Japan.
On the 55 basis of the said information the officers of the Director ate of Revenue Intelligence and officers the Customs, Bombay searched his residential premises at A 121, Sea Lord Cuffe Parade, Colaba, Bombay under the on June 27, 1985 which resulted in seizure of certain documents.
As the seized documents not only revealed violation of the provisions of the but also indicated certain payments and transactions in violation of the Foreign Ex change Regulation Act, 1973, the matter was referred to the office of the Enforcement Directorate for purposes of inves tigation from the angle of the Foreign Exchange Regulation Act on October 24, 1985.
The aforesaid Subhash Gadia was summoned under section 40 of the Foreign Exchange Regulation Act and his statement was recorded by R.C. Singh, an officer of the Enforcement Directorate, Bombay on November 5, 1985.
In his statement of even date, Subhash Gadia stated that he went to Japan in 1970 seeking employment with a proprietory concern known as Messrs Greenland Corporation, Tolo Build ing, Osaka, Japan owned by a Nepali national and was engaged in exporting yarn, fibre, fabrics, chemicals etc.
to India and Middle East countries.
Messrs J.M. Trading Corporation, 701, Tulsiani Chambers, 212 Nariman Point, Bombay (of which Mohanlal Jatia is a partner).
are the sole selling agents of Messrs Greenland Corporation for yarn and fibre.
He further revealed that Satyanarayan Jatia, the eider brother of Mohanlal Jatia who is the partner of Messrs J.M. Trading Corporation, Bombay had been staying in Japan for some 35 years and was the sole representative of Messrs Greenland Corporation in Japan.
While explaining the entries in the seized documents from his residence on June 27, 1985, Sub hash Gadia admitted that the bunch marked S.G. 6 containing pages 1 to 94 are written by him in his own writing and that these contained accounts relating to his trade or business including imports and cash transactions and payments.
He further confirmed that all the transactions reflected in these documents were his real business transaction dealings and some of which were not reflected in his regular account books.
While explaining page 94 of the seized bunch S.G. 4.
he stated that this page contained coded account in Indian rupees of his firm Messrs Piyush Corporation and that on the left side of this page credit entries were shown in Indian rupees with two zeros (00) missing and that while writing his account he had deleted two zeros in the credit side as well as debit side (right side) of the page.
While decoding the codes he stated that the figure 8582/38 written on the right hand side was actually Rs.8,58,238 and this amount had been debited against A/S investment.
Further, that A/S ' investment was his private investment abroad in US dollars which had been utilised by him for under invoicing of sever al imports etc.
56 Paragraph 44 of the grounds of detention revealed trans actions relating to the detenu Mohanlal Jatia and it is extracted: "44.
When confronted with the documents seized from Subhash Gadia 's residence even though you have denied any connection in respect of various unauthorised transactions between you, Greenland Corporation.
Japan and others abroad, but the following documents clearly revealed that you have been indulging in various unauthorised transactions in violations of provisions of Foreign Exchange Regulation Act.
A. Page338 Trial Balance of Greenland S.G. 6 Corporation entries of ML, GN, RN, R.G.T. and Gadia admits before that they are Jatia 's account.
B. " M.L. Jatia 's i.e. your account maintained in Japan, how ever.
you admit receipt of Gifts by your children such as T.V., Video and M.V.Parts.
C. Page215 Keeping U.S. $ 2 lakhs in S.G. 6 fixed deposit on 2.6.83 in Kamal Account, also inclu ding 20 lakhs $ (dollars).
D. Page335 American dollar account as S.G. 6 on 31.1.
E. Page318 Account in Japanese Yen Final posi S.G. 6 total of 141147.27.
tion of Bombay.
F.D.R. amount of Japanese Yen 1093 1471.16 to be equally divided between Yen.
GN, SN and Laxmiji account/ Capital account.
57 F. Page 214 15 U.S. $ 78000/ converted S.G. 6 into Rs.9, 16,500/ commiss ion of." The Additional Secretary to the Government of India, Ministry of Finance, in exercise of his powers conferred by sub section
(1) of section 3 of the ( 'COFEP OSA ') ordered the detention of the aforesaid Mohanlal Jatia by an order dated December 13, 1985 on being ' satisfied that it was necessary to detain him "with a view to preventing him from acting in any manner prejudicial to the augmenta tion of foreign exchange".
The petitioner thrice approached the High Court with petitions under article 226 of the Consti tution seeking to challenge the impugned order of detention.
Immediately after the passing of the impugned order i.e. on December 16, 1985, she moved the first of these petitions being W.P. No. 2530/85 for an appropriate writ or direction to quash the impugned order of detention and applied for stay.
The Writ Petition was admitted but stay was refused.
On appeal, a Division Bench in Writ Appeal No. 1162/85 granted interim stay till the disposal of the appeal.
On February 28, 1986 the Division Bench dismissed the appeal as well as the Writ Petition.
By its subsequent order dated March 4, 1986 the Division Bench granted stay of execution upto April 4, 1986 on certain terms and conditions.
The petitioner filed a petition under article 136 in this Court for grant of special leave being SLP No. 3742/86.
The Court by its order dated April 3, 1986 dismissed the petition and ordered the detenu to appear before the Commissioner of Police, Bombay on the next day i.e. on April 4, 1986 when the impugned order of detention was to be served upon him and directed that the impugned order was to become effec tive.
The further direction made by this Court was that the detenu should immediately be released on parole for a period of 10 days subject to certain terms and conditions.
On April 4, 1986 the detenu appeared before the Commissioner of Police, Bombay when he was served with the impugned order of detention together with the grounds of detention and the relevant documents.
In compliance with the direction of this Court.
the detenu was released on parole.
On April 7, 1986 the petitioner filed second petition under article 226 of the Constitution being WP No. 385/86 for quashing the impugned order of detention along with an application for extending the period of parole.
On April,14,1986 the parole period having expired, the detenu was taken into custody and lodged in the Central Prison, Bombay.
The Writ Petition came up for hearing before the High Court on April 18, 1986 and admitted but the application for extending the period of parole was 58 rejected.
Aggrieved by the refusal of interim relief, the petitioner again moved this Court under article 136 of the Constitution which was dismissed as withdrawn.
It appears that the impugned order of detention was mainly challenged on two grounds, namely: (1) There was no material on which the satisfaction of the detaining authori ty could be reached that the detention of the detenu was necessary under section 3(1) of the COFEPOSA with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange.
And (2) There was total non application of mind on the part of the detaining author ity to the material on record, and in particular to the factual misstatements contained in paragraph 44 of the grounds of detention as detailed in entries 'A to F '.
The Division Bench of the High Court did not feel impressed with any of these submissions and by its judgment and order dated May 2/3, 1986 dismissed the Writ Petition.
Thereafter, on May 6, 1986 the petitioner filed the present petition under article 136 of the Constitution.
On July 11, 1986 she also filed a petition under article 32 challenging the continued detention of her husband.
On July 18, 1986 the Court issued notice both on the Special Leave Petition as well as the Writ Petition and in the meanwhile directed that the peti tioner 's husband be released on parole for a week.
The Court by its subsequent order dated July 25, 1986 extended the period of parole till August 20, 1986.
The Writ Petition filed in this Court on July 11, 1986 is principally based on the ground that there was failure on the part of the detaining authority to consider the alleged representation dated April 11, 1986 made by the detenu against the impugned order of detention addressed to the President of India which was presented through one Ashok Jain at the President 's Secretariat on April 15, 1986 and there had thus been an infraction of the constitutional safeguards enshrined in article 22(5) and section 11 of the COFEPOSA which rendered the continued detention of the detenu without the due process of law and thus illegal, unconstitutional and void.
The other substantial question raised is that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40 of the Act and therefore the statements recorded by him could not be regarded as valid statements under section 40 and thus did not form the basis upon which the satisfaction of the detaining authority could be reached.
The respondents have filed a counter affidavit sworn by S.K. Chaudhary, Under Secretary to the Government of India, Ministry of 59 Finance, Department of Revenue controverting the allegation that the detenu addressed any such representation to the President of India or that the alleged representation was received at the President 's Secretariat.
It has been averred that the President 's Secretariat has informed the Ministry of Finance, Department of Revenue that no such representa tion was received from the detenu.
Along with the counter affidavit, the respondents have filed copies of the letter of the Under Secretary to the Government of India, Ministry of Finance, Department of Revenue dated August 4, 1986 addressed to the Under Secretary, President 's Secretariat and of the reply of even date sent by the Under Secretary, President 's Secretariat to him which shows that no such representation had been received in the President 's Secre tariat, as alleged.
They have also filed a note explaining the manner in which the dak is acknowledged at the Presi dent 's Secretariat.
There is a further affidavit filed by K.C. Singh, Deputy Secretary to the President of India explaining the manner of handling the dak at the Rashtrapati Bhawan.
The petitioner has filed an affidavit of Ashok Jain claiming to be a friend of the Jatia family supporting the assertion that he handed over the representation in person at the Rashtrapati Bhawan on April 15, 1986.
During the pendency of the proceedings, the Union Gov ernment has made an application under section 340 of the Code of Criminal Procedure, 1973 for prosecution of the persons responsible for forging the document purporting to be the alleged representation made by the detenu under section 8(b) of the COFEPOSA on April 15, 1986 as, in fact, no such repre sentation was ever made, and for making certain interpola tions in the dak register kept at the President 's Secretari at.
They have produced in a sealed envelope the original dak register maintained at the Rashtrapati Bhawan in which the alleged interpolations have been made.
We are informed that the matter has been handed over to the Central Bureau of Investigation for investigation.
We shall deal with the application under section 340 of the Code later.
In support of these petitions, learned counsel has mainly advanced the following contentions, namely: (1) As is evident from the grounds of detention, the detaining author ity relied upon the statements recorded by R.C. Singh on the assumption that they were valid statements under section 40 of the Act although they were in reality not so, inasmuch as R.C. Singh was not a 'gazetted officer of Enforcement ' within the meaning of section 40 and therefore there was no material on which the satisfaction of the detaining authori ty could be reached.
(2) In a habeas corpus petition, the burden was entirely upon the respon 60 dents to produce the relevant records and to substantiate that the detention was strictly according to law.
The fail ure on the part of the respondents to produce the relevant notification showing that R.C. Singh was a gazetted officer of Enforcement within section 40 of the FERA when he recorded the statements in question must necessarily lead to the infer ence that he was not a gazetted officer of Enforcement.
(3) The impugned order of detention was void ab initio and it could not be sustained by recourse to the de facto doctrine or any assumption that R.C. Singh was acting under the colour o[ his office as a gazetted officer of Enforcement or in treating the statements to be valid being relatable to section 39(b) of the FERA.
(4) It is not possible to predicate to what extent, and in what manner, the mind of the detaining authority was influenced by his wrongful assumption that the statements recorded by R.C. Singh who was not a gazetted officer of Enforcement, were statements made under section 40 of the FERA, and even assuming that the statements recorded by R.C. Singh could be treated to be statements relatable to section 39(b) of the FERA, it is not possible to say whether the detaining authority would have based his satisfaction upon such material.
(5) There was non application of mind on the part of the detaining authority as the grounds of detention are based on several factual misstatements.
According to the learned counsel, the factual errors were self evident as the entries relied upon in paragraph 4 of the grounds of deten tion, do not find place in the account books of Messrs Greenland Corporation.
The failure of the Central Government to place before the detaining authority, the original ac count books of Messrs Greenland Corporation, deprived the detaining authority to apply his mind to the correctness or otherwise of the facts stated therein.
(6) There was infrac tion of the constitutional safeguards enshrined in article 22(5) inasmuch as there was failure on the part of the detaining authority to consider the representation filed by the detenu under section 8(b) of the COFEPOSA through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and therefore the impugned order of detention was vitiated and the continued detention of the detenu was rendered illegal and void.
Other subsidiary questions were also raised.
Having given the matter our anxious considera tion, we are of the considered opinion that none of the contentions can prevail.
In order to deal with the rival contentions advanced, it is necessary to set out the relevant provisions of the Foreign Exchange Regulation Act, 1973.
The Foreign Exchange Regulation Act, 1973 is an Act, as reflected in the long title.
to consolidate and amend economic development of the country.
The legislation has been brought in to 61 implement the Government policy for conservation of foreign exchange and for removing the difficulties in implementing the same.
The provisions of sections 3, 4 and 5 deal with (i) classes of officers of Enforcement; (ii) appointment and powers of officers of Enforcement and (iii) entrustment of functions of Director or other officer of Enforcement.
These provisions provide as follows: "3.
Classes of officers of Enforcement There shall be the following classes of officers of Enforcement, namely: (a) Directors of Enforcement; (b) Additional Directors of Enforcement; (c) Deputy Directors of Enforcement; (d) Assistant Directors of Enforcement; and (e) Such other class of officers of Enforcement as may be appointed for the pur poses of this Act." "4.
Appointment and powers of officers of Enforcement.: (1)The Central Government may appoint such persons as it thinks fit to be officers of Enforcement.
(2) Without prejudice to the provisions of sub section (1), the Central Government may authorise a Director of Enforcement or an Additional Director of Enforcement or a Deputy Director of Enforcement or an Assistant Direc tor of Enforcement to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
(3) Subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exercise the powers and discharge the duties conferred or imposed on him under this Act." "5.
Entrustment of functions of Director of other officer of Enforcement: The Central Government may, by order and subject to such conditions and limitations as it thinks fit to impose, authorise any officer of customs or any Central Excise Officer or any police officer or any other officer of the Central Government or a State Government to exercise such of the powers and discharge such of the duties of the Director of Enforcement or any other officer of Enforce 62 ment under this Act as may be specified in the order.
section 39 deals with the power of the Director of any other officer of Enforcement to examine persons and provides: "39.
Power to examine persons The Director of Enforcement or any other officer of Enforce ment authorised in this behalf by the Central Government, by general or special order, may, during the course of any investigation or pro ceeding under this Act , (a) require any person to produce or deliver any document relevant to the investigation or proceeding; (b) examine any person acquainted with the facts and circumstances of the case.
" Sub section
(1) ors '.
40 reads as follows: "40.
Power to summon persons to give evidence and produce documents (1) Any gazetted offi cer of Enforcement shall have power to summon any person whose attendance he considers necessary either to give evidence or to pro duce a document during the course of any investigation or proceeding under this Act.
" The main thrust of the argument of Shri G.L. Sanghi, learned counsel appearing for the petitioner revolves around mainly three aspects: (1) R.C. Singh was not a Gazetted Officer of Enforcement and therefore statements recorded by him had no evidentiary value and thus they could not form the basis upon which the satisfaction of the detaining authority could be reached.
(2) There was total nonapplica tion of mind by the detaining authority to several factual misstatements as detailed in entries 'A to F ' in the grounds of detention which vitiated the impugned order of detention.
And (3) The failure of the Sponsoring authority to forward the account books seized during the course of search at the residential premises of Subhash Gadia shows that the detain ing authority proceeded to make the impugned order of deten tion without due application of mind.
According to the learned counsel, if there is one principle more firmly settled than any other in this field of jurisprudence relat ing to preventive detention, it is that even if one of the grounds or reasons which led to the subjective satisfaction of the detaining authority is non existent or misconceived 63 or irrelevant, the order of detention would be invalid since it is not possible to predicate as to whether the detaining authority would have made all order for detention even in the absence of non existent or irrelevant ground.
His con tention is that the principle enunciated by this Court some 30 years ago in Shibban Lal Saksena vs The State of Uttar Pradesh & Ors., ; and in Dr. Ram Manonar Lohia vs State of Bihar & Ors., ; which it reiter ated later m Pushkar Mukherjee & Ors.
vs The State of West Bengal, ; still holds good despite the change in the law brought about by the introduction of section 5A of the Act that though one or more of the grounds of detention were found to be vague, non existent, not relevant, not connect ed, irrational or invalid for any other reason whatsoever, the detention could be sustained on the remaining grounds.
He seeks to draw sustenance from the decision of the Consti tution Bench of this Court in Mohd. Shakeel Wahid Ahmed vs State of Maharashtra & Ors., ; We are afraid, the contention cannot prevail.
The decision in Mohd. Shakeel 's case is clearly distinguishable.
In Mohd. Shakeel 's case, three of the four grounds of deten tion on which the appellant was detained were held by the High Court to be bad for one reason or another but it held that the remaining ground did not suffer from any defect and was enough to sustain the order of detention.
On appeal, Shri Jethmalani, learned counsel for the detenu, sought to challenge the constitutional validity of section 5A of the Act and the case was therefore referred to a Constitution Bench.
At the hearing, Shri Jethmalani confined his submission to an altogether different point which ultimately prevailed, namely, that the remaining ground of detention was also bad for the reason that there was failure on the part of the State Government to place before the detaining authority the opinion which the Advisory Board had recorded in favour of another detenu Shamsi who was also detained for his involve ment in the same transaction on an identical ground based on similar 'and identical facts.
It was held that although the opinion of the Advisory Board that there was no sufficient cause for Shamsi 's detention may not have been binding on the detaining authority which ordered the detention of the detenu, but the opinion of the Advisory Board in Shamsi case was an important consideration which should and ought to have been taken into account by the detaining authority before passing the order of detention in that case.
It was observed that the Court could not exclude a reasonable probability that since the Advisory Board had not sustained Shamsi 's detention on a ground which was common to him and the detenu, the detaining authority would have.
if at all, passed the order of detention against the detenu 64 on the three remaining grounds which had been held to be bad.
The decision is Shamsi 's case turned on its own facts and certainly is not an authority for the proposition con tended for.
So also in Ashadevi vs
K. Shiveraj, Addl.
Chief Secretary to the Government of Gujarat & Anr., 15 on which reliance was placed there was failure on the part of the State Government to apprise the detaining au thority of the fact that the detenu 's request to have the presence of and consultation with his counsel had been refused, and that the confessional statement upon which the detaining authority had relied, had been retracted while he was in judicial custody, rendered the impugned order of detention invalid and illegal because there was complete non application of mind by the detaining authority to the most material and vital facts.
The other decision in Kurjib hai,Dhanjibhai Patel vs State of Gujarat & Ors., is also distinguishable.
In that case, there was failure on the part of the sponsoring authority in not furnishing the relevant material to the detaining authority, namely, the reply of the detenu to the show cause notice issued in the adjudication proceedings undertaken by the Customs authorities which was held to be the most relevant material which ought to have been placed before it.
It was held that the question was not whether the material which was withheld from the detaining authority formed part of any separate or independent proceedings like the adjudication proceedings as held by the High Court, but the real question was whether the material was relevant and would have influ enced the mind of the detaining authority.
In the counter affidavit filed by the Under Secretary to the Government of India, Ministry of Finance it had been averred that the representation of the detenu along with his reply to the show cause had been considered by the Advisory Board and after considering all the facts it was of the opinion that there was sufficient cause for detention.
It was held that such ex post facto consideration of the detenu 's reply to the show cause could not fill up the lacuna of non consider ation thereof by the detaining authority before passing the order of detention.
Both these decisions proceed on the well settled principle that if material and vital facts which would influence the mind of the detaining authority one way or the other on the question whether or not to make the detention order are not placed, it would vitiate its subjective satisfaction rendering the detention order ille gal.
We fail to see the relevance of these decisions to the present case.
Before touching upon the merits, we wish to make a few observations.
It is not suggested at the bar that the grounds for detention do not set out the facts with suffi cient degree of particularity or that they do not furnish sufficient nexus for forming the subjective satisfaction 65 of the detaining authority. ]he impugned order of detention was therefore not challenged on the ground that the grounds furnished were not adequate or sufficient for the satisfac tion of the detaining authority or for the making of an effective representation.
Sufficiency of grounds is not for the Court but for the detaining authority for the formation of his subjective satisfaction that the detention of a person under section 3(1) of the Act is necessary with a view to preventing him from acting in any manner prejudicial to the augmentation of foreign exchange.
In Mangalbhai Motiram Patel vs State of Maharashtra & Ors., ; , it was observed at p. 477 of the Report: "The Conservation of Foreign Exchange and prevention of Smuggling Activities Act, 1974 is enacted to serve a laudable object.
It is a measure to prevent smuggling of goods into or out of India and to check diversion of foreign exchange by immobilising the persons engaged in smuggling, foreign exchange racketeering and related activities by preventive detention of such persons.
Violations of foreign ex change regulations and smuggling activities are having an increasingly deleterious effect on the national economy and thereby a serious adverse effect on the security of the State.
Such economic offences disrupt the economic life of the community as a whole.
It is neces sary to protect the basic economic order of the nation.
Nevertheless, the Act is a law relating to preventive detention.
That being so, the power of detention exercisable under sub section
(1) of section 3 of the Act is subject to the limitations imposed by the Constitution.
As observed by this Court in Narendra Pursho tam Umrao vs B.B. Gujral, 15, when the liberty of the subject is involved, whether it is under the Preventive Detention Act or the Maintenance of Internal Security Act or the Conservation of Foreign Exchange and prevention of Smuggling Activities Act or any other law providing for preventive deten tion," "it is the bounden duty of the court to satis fy itself that all the safeguards provided by the law have been scrupulously observed and that the subject is deprived of his personal liberty otherwise than in accordance with law." Nevertheless, as observed by the Court in Mangalbhai Motiram Patel 's case: 66 "The community has a vital interest in the proper enforcement of its laws, particularly in an area such as conservation of foreign exchange and prevention of smuggling activi ties in dealing effectively with persons engaged in such smuggling and foreign exchange rackteering by ordering their preventive detention and at the same time, assuring that the law is not used arbitrarily to suppress the citizen of his right to life and liberty.
" The Government must therefore ensure that the constitutional safeguards of article 22(5) read with sub section
(1) of section 3 of the Act are fully complied with.
In the instant case, however, there was no infraction of the constitutional safeguards contained in article 22(5).
We are satisfied that there was no failure on the part of the Government to discharge its obligation under article 22(5).
The relevant records of the Enforcement Directorate have been placed before us.
They clearly show that there was sufficient material for the formation of the subjective satisfaction of the detaining authority under sub section
(1) of section 3 of the Act.
They also show that the detenu was afforded a reasonable opportunity for making an effective representation against his deten tion.
It has long been established that the subjective satis faction of the detaining authority as regards the factual existence of the condition on which the order of detention can be made i.e. the grounds of detention constitutes the foundation for the exercise of the power of detention and the Court cannot be invited to consider the propriety or sufficiency of the grounds on which the satisfaction of the detaining authority is based.
Nor can the Court, on a review of the grounds substitute its own opinion for that of the authority.
But this does not imply that the subjective satisfaction of the detaining authority is wholly immune from the power of judicial review.
It inferentially follows that the subjective satisfaction being a condition precedent for the exercise of the power conferred on the executive, the Court can always examine whether the requisite satisfac tion was arrived at by the authority; if it is not, the condition precedent to the exercise of the power would not be fulfilled and the exercise of the power would be bad.
The simplest case is where the authority has not applied its mind at all; in such a case, the authority could not possi bly be satisfied as regards the fact in respect of which it is required to be satisfied.
See: Khudi Ram Das vs State of West Bengal & Ors., ; , following the case of Emperor vs Shibnath Banerjee & Ors., AIR (1943) FC 75.
67 The substantive contention of learned counsel for the petitioner has therefore been that there was non application of mind on the part of the detaining authority to the grounds of detention and that there was violation of the constitutional safeguards contained in article 22(5).
In es sence, three questions arise, namely: (1) Whether the im pugned order of detention was based on no material inasmuch as R.C. Singh was not a gazetted officer of Enforcement and therefore the statements recorded by him had no evidentiary value and thus could not form the basis upon which his subjective satisfaction could be reached; and if not, wheth er the statements recorded by him could be treated to be statements relatable to section 39(b) of the FERA and could still form the basis for such satisfaction.
(2) Whether there was non application of mind on the part of the detaining author ity and therefore the impugned order of detention was bad as there were factual mis statements detailed in items A to F of the grounds of the grounds of detention.
And (3) Whether there was infraction of the constitutional safeguards con tained in article 22(5) due to the failure on the part of the Central Government to consider the representation filed by the detenu under section 8(b) read with section 11 of the Act, alleged to have been presented through one Ashok Jain and received at the President 's Secretariat on April 15, 1986 and there fore the continued detention of the petitioner was rendered invalid and unconstitutional.
We wish to deal with these contentions in seriatim in the order in which they have been advanced.
On the first of these questions, we have no hesitation in repelling the contention that there was no material on which the detaining authority could have based the subjec tive satisfaction under sub section
(1) of section 3 of the Act.
The argument of the learned counsel stems from the hypothesis that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40 of the FERA when he issued summons and recorded the statements and that even assuming that the statements recorded by R.C. Singh could be treated to be statements failing under section 39(b) of the Act, it is not possible to say whether the detaining authority would have based his satisfaction upon such material.
The learned counsel places emphasis on the word 'gazetted ' in section 40(1) and contends that R.C. Singh for the first time became a gazetted officer of Enforcement on January 13, 1986 when his appointment as such was notified.
According to him, the detaining authority has relied upon the statements purport ing to be under section 40(1) though in reality they were not so.
According to the learned counsel, there is a sanctity at tached to statements recorded under section 40(1) of the FERA.
That is so, because every person summoned by a gazetted officer of Enforcement to make a statement under sub section
(1) of section 40 is under a compulsion to state the 68 truth on the pain of facing prosecution under sub section
(3) thereof.
Further, sub section
(4) provides that every such inves tigation or proceeding as aforesaid, shall be deemed to be judicial proceeding within the meaning of sections 193 and 224 of the Indian Penal Code, 1860.
Such being the legal position, the learned counsel contends that while a statement recorded by a gazetted Enforcement Officer under section 40( 1 ) can furnish sufficient and adequate material on the basis of which the detaining authority can form his opinion, it may not be so with regard to statements recorded by an officer of Enforcement authorised in that behalf under section 39(b) of the FERA.
On the other hand, learned counsel for the respondents contends that there is no basis for the assertion that there was no material on which the detaining authority could have formed the subjective satisfaction under sub section
(1) of section 3 of the Act or that there was any factual mis statement in the grounds which showed that there was non application of mind on his part.
We may briefly summarise his submission.
Factually, the statements were there and the detaining authority was entitled to act upon the statements.
The question whether the statements could be acted upon or not is not for the Court.
A person summoned to make a statement under section 40(1) has the right to object to the power and authority of the officer issuing the summons.
It must there fore logically follow that when the persons summoned like Subhash Gadia and Mohanlal Jatia were examined by R.C. Singh it was not open to others to raise objection that R.C. Singh was competent to record the statements under section 40(1).
The statements made by them were not hit by section 25 of the Evi dence Act, 1872 and could be used against the detenu.
There is no substance in the contention that R.C. Singh was not a gazetted officer of Enforcement.
The word 'gazetted ' does not imply that the appointment of such officer should be published in the official Gazette.
All that is required by section 40(1) of the FERA that such officer recording the state ment must be holding a gazetted post of an officer of En forcement, in contradistinction to that of an Assistant Officer of Enforcement which is a nongazetted post.
It cannot be disputed that R.C. Singh had been appointed as Enforcement Officer on an ad hoc basis on November 24, 1982 and he continued to function as such at the time when he recorded the statement under section 40(1).
The subsequent noti fication issued by the Enforcement Directorate on January 13, 1986 was for his appointment on a regular basis.
What is of significance, it is said.
is that at the time when R.C. Singh recorded the statements he was holding the gazetted post of an Enforcement Officer and discharging 69 the functions attached to the post.
There is, in our opin ion, consideration force in these submissions.
In any event, the learned counsel further contends that R.C. Singh was clothed with the insignia of office and he was purporting to exercise the functions and duties of a gazetted officer of Enforcement under section 40(1) of the FERA and therefore the de facto doctrine was attracted.
He relies upon the decision of this Court in Gokaraju Rangaraju vs State of Andhra Pradesh; , enunciating the de facto doctrine, born of necessity and public policy to prevent needless confusion and endless mischief.
In other words, he contends that where an officer acts under the law, it matters not how the appointment of the incumbent is made so far as the validity of his acts are concerned.
We are inclined to the view that in this jurisdiction there is a presumption of regularity in the acts of offi cials and that the evidential burden is upon him who asserts to the contrary.
The contention that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40(1) of the FERA appears to be wholly misconceived besides being an afterthought.
The validity of appointment of R.C. Singh to be an officer of Enforcement under this Act cannot be questioned.
The Directorate of Enforcement have along with the counter affidavit placed on record Establishment Order No. 87/82 dated November 24, 1982 which shows that R.C. Singh along with 25 others was appointed by the Direc tor to be an officer of Enforcement on an ad hoc basis against 30 per cent deputation quota.
The subsequent Estab lishment Order No. 84/86 dated January 13, 1986 relied upon by the petitioner shows that R.C. Singh along with 29 others was appointed as an officer of Enforcement on an officiating basis.
It is not suggested that these officers were not authorised by the Central Government to discharge the func tions and duties of an officer of Enforcement.
Under the scheme of the Foreign Exchange Regulation Act, the Director ate of Enforcement is primarily charged with the duty of administering the Act.
section 3 defines different classes of officers of Enforcement.
The expression 'officers of En forcement ' as defined in section 3 embraces within itself not only (a) a Director (b) Additional Director (c) Deputy Director and (d) Assistant Director of Enforcement but also (e) such other class of officers of Enforcement as may be appointed for the purpose of the Act.
Obviously, R.C. Singh who was Assistant Enforcement Officer having been appointed as an officer of Enforcement on an ad hoc basis in 1982 fell within the category 'such other class of officers ' covered by section 3(e).
Sub S.(1) of section 4 provides that the 70 Central Government may appoint such persons, as it thinks fit, to be officers of Enforcement.
Sub section
(2) thereof provides for delegation of such power of appointment by the Central Government to a Director of Enforcement or an Addi tional Director of Enforcement etc.
to appoint officers of Enforcement below the rank of an Assistant Director of Enforcement.
Sub section
(3) of section 4 of the FERA provides that subject to such conditions and limitations as the Central Government may impose, an officer of Enforcement may exer cise the powers and discharge the duties conferred or im posed on him under the Act.
Undoubtedly R.C. Singh was discharging his duties and functions as a gazetted officer of Enforcement under section 40(1) of the FERA when he recorded the statements in question.
In our opinion, the expression 'gazetted officer of Enforcement ' appearing in section 40(1) must take its colour from the context in which it appears and it means any person appointed to be an officer of Enforcement under section 4 holding a gazetted post.
There is no denying the fact that R.C. Singh answered that description.
The conten tion that there was no material on the basis of which the detaining authority could have based his subjective satis faction on the ground that R.C. Singh was not a gazetted officer of Enforcement within the meaning of section 40(1) of the FERA cannot prevail.
Even if the contention that R.C. Singh was not a gazet ted officer of Enforcement within the meaning of section 40(1) of the FERA were to prevail, it would be of little consequence.
In this case during the investigation statements were re corded by B .T. Gurnsawhney, Assistant Director of Enforce ment and R.C. Singh.
There is no dispute regarding the competence of B.T. Gurusawhney to record statements under section 40(1) of the FERA and the only question is as to whether the statements recorded by R.C. Singh under section 40(1) could be acted upon.
If evidence is relevant the Court is not concerned with the method by which it was obtained.
In Barindra Kumar Ghose & Ors.
vs Emperor, ILR (1910) 37 Cal.
467 Sir Lawrence Jenkins repelling the contention that the Court must exclude relevant evidence on the ground that it was obtained by illegal search or seizure, said at p. 500 of the Report: "Mr. Das has attacked the searches and has urged that, even if there was jurisdiction to direct the issue of search warrants, as I hold there was, still the provisions of the Criminal Procedure Code have been completely disre garded.
On the assumption he has contended that the evidence discovered by the searches is not admissible, but to this view I cannot accede.
For without in any way countenancing disregard of the provisions prescribed by the Code, I hold that what would otherwise be relevant does not become irrel evant because it was discovered 71 in the course of a search in which those provisions were disregarded".
The question arose before the Judicial Commit tee of the Privy Council in the well known case of Kuruma vs Reginam, In dealing with the question Lord Goddard, CJ.
delivering the judgment of the Privy Council said: "The test to be applied.
both in civil and in criminal cases, in considering whether evi dence is admissible, is whether it is relevant to the matters in issue.
If it is, it is admissible and the Court is not concerned with how it was obtained.
" The learned CJ.
further observed: "In their Lordships ' opinion, when it is a question of the admission of evidence strictly it is not whether the method by which it was obtained is tortuous but excusable, but whether what has been obtained is relevant to the issue being tried.
" Again, the House of Lords in R.V. Sang; , reiterated the same principle that if evidence was admissi ble it matters not, how it was obtained.
Lord Diplock after considering various decisions on the point observed that however much the judge may dislike the way in which a par ticular piece of evidence was obtained before proceedings were commenced, if it is admissible evidence probative of the accused 's guilt 'it is no part of his judicial function to exclude it for this reason ' and added: "He has no discretion to refuse to admit relevant admissible evidence on the ground that it was obtained by improper or unfair means.
The court is not concerned with how it was obtained.
There is a long line of authority to support the opinion that the Court is not concerned with how evidence is ob tained.
The rule is however subject to an exception.
The Judge has a discretion to exclude evidence procured.
after the commencement of the alleged offence, which although technically admissible appears to the Judge to be unfair.
The classical example of such a case is where the prejudi cial effect of such evidence would be out of proportion to its evidential value.
Coming nearer home.
this Court in Magraj Patodia vs
R.K. Birla & Ors., ; held that the fact that a document which was procured by improper or even illegal means could not bar its admissibility 72 provided its relevance and genuineness were proved.
In R.M. Malkani vs State of Maharashtra, ; the Court applying this principle allowed the tape recorded conversa tion to be used as evidence in proof of a criminal charge.
In Pooran Mal etc.
vs Director of Inspection (Investigation) of Income Tax Mayur Bhavan, New Delhi & Ors.
, ; the Court held that the income tax authorities can use as evidence any information gathered from the search and seizure of documents and accounts and articles seized.
This being the substantive law, it follows that the detaining authority was entitled to rely upon the statements recorded by R.C. Singh under section 40(1) of the FERA.
Even if R.C. Singh was not competent to record such statements under section 40(1) of the FERA, the statements were clearly relatable to section 39(b) of the Act.
It cannot therefore be said that there was no material on which the detaining authority could have based his subjective satisfaction under sub section
(1) of section 3 of the Act.
We are unable to accept the submission of the learned counsel for another reason.
Where an office exists under the law, it matters not how the appointment of the incumbent is made, so far as validity of its acts are concerned.
It is enough that he is clothed with the insignia of the office, and exercises its powers and functions.
The official acts of such persons are recognised as valid under the de facto doctrine, born of necessity and public policy to prevent needless confusion and endless mischief.
In Gokaraju Ranga raju 's case, supra, Chinnappa Reddy, J. explained that this doctrine was engrafted as a matter of policy and necessity to protect the interest of the public.
He quoted the follow ing passage from the judgment of Sir Ashutosh Mukerjee J. in Pulin Behari vs King Emperor, 17 at p. 574: "The substance of the matter is that the de facto doctrine was introduced into the law as a matter of policy and necessity, to protect the interest of the public and the individual where these interests were involved in the official acts of persons exercising the duties of an office without being lawful officers.
The doctrine in fact is necessary to maintain the supremacy of the law and to preserve peace and order in the community at large." The learned Judge also relied upon the following passage from the judgment of P. Govindan Nair, J. in P.S. Menon vs State of Kerala & Ors., AIR (1970) Kerala 165 at p. 170; "This doctrine was engrafted as a matter of policy and 73 necessity to protect the interest of the public and individual involved in the official acts of persons exercising the duty of an officer without actually being one in strict point of law.
But although these officers are not officers de jure they are by virtue of the particular circumstances, officers, infact, whose acts, public policy requires should be considered valid.
" The next substantive contention of learned counsel for the petitioner is that the so called factual mis statements which occur in paragraph 44 of the grounds of detention show that there was nonapplication of mind on the part of the detaining authority and he relies on the observations made in Khudiram Das ' case that the subjective satisfaction of the detaining authority is not wholly immune from the judi cial review and the Court can always examine whether the requisite satisfaction was arrived at by the authority; if it is not, the condition precedent to the exercise of the power would be bad.
According to the rule laid down in Khudiram Das ' case which proceeds on well settled princi ples, the simplest case is whether the authority has not applied its mind and that is sufficient to vitiate the order of detention.
It is submitted that this was a case of mis taken identity and there was no material before the detain ing authority to show that the initials 'ML ' in the various entries in the accounts of Messrs Greenland Corporation, Japan and the relative telex messages related to the detenu Mohanlal Jatia and not to the other ML meaning ML Kedia, the brother in law of Subhash Gadia.
We are afraid, we cannot accept this line of argument.
There is no warrant for the submission that the initials 'ML ' refer to ML Kedia and not the detenu Mohanlal Jatia or that a wrong person has been placed under detention.
There is no dispute whatever that the initials 'ML ' refer to the detenu Mohanlal Jatia.
When confronted during the interrogation with the initials 'ML ' in the books of Messrs Greenland Corporation and the telex messages, the detenu admitted that the initials 'ML ' or 'MLJi ' in the various entries as well as the telex messages stand for himself i.e. Mohanlal Jatia.
As to the co called factual mis statements, the argument proceeds on the wrongful assumption that the facts stated in paragraph 44 of the grounds of detention are the 'grounds ' when they are in reality nothing but 'facts '.
The High Court has rightly observed that the facts stated in paragraph 44 of the grounds cannot be read in isolation and the grounds of detention have to be read as a whole with the accompanying documents and material.
As is quite apparent, the ground of deten 74 tion was only one viz. that the detenu was engaged in activ ities prejudicial to the augmentation of foreign exchange and therefore it became necessary in the public interest to place him under detention.
Sufficiency of grounds is not for the Court but for the detaining authority for the perform ance of his subjective satisfaction that the detention of the detenu Mohanlal Jatia under section 3(1) of the Act was necessary.
It was a matter of legal inference to be drawn from several facts which appear in the grounds and the facts are not merely in paragraph 44 but also in other paragraphs.
It will be seen that paragraph 44 merely recites that when the detenu was confronted with the documents recovered from a search of Subhash Gadia 's residential premises and else where, he denied the various transactions entered into between him and Messrs Greenland Corporation, Japan and others abroad.
It then goes on to state that the documents clearly revealed that he had been engaged in various unau thorised transactions in violation of the provisions of the Foreign Exchange Regulation Act.
According to the learned counsel, the mistakes which crept in the proposal made by the initiating authority for the detention of the detenu recur in paragraph 44 of the grounds and it shows the casualness with which the grounds of detention were drawn which indicate nonapplication of mind.
Although the argument at first blush appears to be attractive, but on deeper consideration does not stand to scrutiny.
We wish to enumerate the so called factual mis statements listed as Items A to F in paragraph 44 of the grounds and deal with them in seriatim.
Item A at p. 338 of the seized bunch SG 6 is the trial balance sheet of Messrs Greenland Corporation, Japan.
On that page, there are var ious entries of ML, GN, RN and RG Jatia.
It is mentioned by the detaining authority in paragraph 44 underneath Item A that Gadia 'admits ' that they are Jatia 's account.
During interrogation Subhash Gadia stated that bunch of documents SG 6 relates to Messrs Greenland Corporation, Japan and that these entries 'may be related to the Jatia family '.
The detaining authority was not wrong in treating the words 'may be ' in the context in which they appear as being an admis sion of fact made by the detenu.
The detaining authority was entitled to make use of the decoding formula revealed by Subhash Gadia to connect the detenu Mohanlal Jatia with the initials 'ML ' appearing in various transactions, more so because the relative telex messages sent by Messrs Greenland Corporation were seized from the office premises of Messrs J.M. Trading Corporation, J.M. Textile Pvt. Ltd., Ramgopal Textile Pvt. Ltd., Ram Gopal & Sons, Ram Gopal Synthetics Pvt. Ltd., Kamal Trading Corporation.
Kalpana Trading Corpo ratoin, Sudhir Trading Corporation, all situate at 701, Tulsiani cham 75 bers, 212, Nariman Point, Bombay and the detenu admittedly is closely connected with these concerns being Director or shareholder or a partner.
The said documents disclose that the detenu Mohanlal Jatia with the initials 'ML ' and his brothers GN, SN and RN, namely.
Ganesh Narayan Jatia, Satya Narayan Jatia and Ram Niranjan Jatia are maintaining secret accounts with Messrs Greenland Corporation, Japan.
They also clearly indicate that the detenu and his brothers were found to be engaged in transferring funds from or to India in an unauthorised manner on a very large scale.
Subhash Gadia in his statement revealed that pp. 316, 317 and 318 of the seized document SG 6 are written in his handwriting and the account is in Yen.
He further revealed that the said ac counts relate to Satya Narayan Jatia, Ganesh Narayan Jatia and Mohanlal Jatia.
The detenu was furnished a copy of the statement made by Subhash Gadia.
As hereinbefore adumbrated, the detenu when confronted denied to have entered into the transaction.
However.
when confronted with the various entries appearing in the seized document SG 6 the detenu admitted that the initials 'MI. ' or 'MLJi ' relate to him both in the accounts as well as in the telex messages.
The various entries show transactions involving foreign exchange to the tune of several crores of rupees.
For instance, at p. 318 of SG 6appear the details of FDR account standing in the name of Satya Narayan, Ganesh Narayna and Mohanlal Jatia to be divided equally and the sum total of the amount shown is 1,09,37,471.16 Yen.
The said figure also finds place at p. 278 of the file SG 6 which gives details how the figure 1,09,37,471.16 has been arrived at.
In the telex message appearing at pp.
35 and 36 in the bunch of seized document SG 6 arc given the details of the FDR account with instruc tions to work out the average rate of interest between the three brothers Satya Narayan, Ganesh Naryana and Mohanlal payable on the FDR for 1,09,37,471.16 Yen.
Similarly, Laxmi Ji account with Messrs Greenland Corporation, Japan is a capital account of Satya Narayan, Ganesh Narayan and Mohan lal showing a capital investment of 48,62,96,325 Yen.
We need not go into further details.
The entries show the magnitude of the operation in foreign exchange carried on by the detenu.
We do not see any mistake of fact in Item B which re lates to purchase of a TV 27" and a VCR.
There is an entry at p. 338 of SG 6 showing that the detenu 's account was debited with these items although the detenu in his state ment asserted that they were gifted by his brother.
That takes us to the effect of the mistake occurring in Item C at p.215 of the seized documents that there is an entry showing that the detenu had a fixed deposit of US $ 2 lakhs.
The entry reads: "ML 2 76 lakhs A/S 11.75 dated 2.6.83".
Even assuming that it was a mistake to have introduced the words "also including 20 lakhs $ (dollars)" in paragraph 44 of the grounds that would not by itself without more, vitiate the impugned order of detention or necessarily show nonapplication of mind.
Even so, the detaining authority was entitled to act upon the entry.
relating to US $ 2 lakhs for the formation of his subjective satisfaction.
Significance of these entries shows that the detenu was maintaining the secret account and had large sums of money in fixed deposits abroad.
The detaining authority has charged the detenu with keeping US $ 2 lakhs in fixed deposit in Kamal Account which is the capital account of the detenu and his brothers Messrs Greenland Corporation, Japan.
The words "also including 20 lakhs $ (dollars)" are no doubt not there in the books of accounts but they crept in the proposal and have been reproduced in paragraph 44 of the grounds.
It is somewhat strange that these words should be introduced when they were not there in the books of accounts but the fact remains that there is a typographical error.
The High Court rightly observes that a single typographical mistake about making a reference to US $ 20 lakhs would not necessarily show the non application of mind when the entry of US $ 2 lakhs (dollars) is reflected in various places in the account such as ML Ji Khata P. 175 and Kamal Account P. 226, copies of which were furnished to the detenu.
Even assuming that the words "also including 20 lakhs $ (dollars)" were introduced in paragraph 44 of the grounds that would not be a factor vitiating the impugned order of detention.
The detaining authority was still enti tled to act upon the entry relating to fixed deposit of US $ 2 lakhs (dollars) for the formation of his subjective satis faction.
As regards Items D and E, the contention of the peti tioner is that reference to American Dollar account as on January 31, 1984 as per p. 335 of SG 6 and Japanese Yen account: Final position at Bombay of 141147.27 set out at p. 318 thereof was totally unintelligible and was unconnected with the detenu nor had any relevance The respondents have controverted this in the counter affidavit filed by M.I,.
Wadhawan, Additional Secretary to the Government of India, Ministry of Finance.
It is asserted that the aforesaid abstracts clearly indicate that the detenu Mohanlal Jatia and his brothers were found to be engaged in transferring funds from or to India in an unauthorised manner on a very large scale.
According to the statement of Subhash Gadia the American Dollar account is as per p. 335 of SG 6, the de tails whereof are given at p. 3 18 and the said amount is credited in the name of SN.
GN and ML to be divided equally.
The sum total of the amount shown to be divided was 10937,471.16 Yen.
This figure also appears at p. 278 77 of file SG 6 giving details as to how this figure 10937,471.16 Yen has been worked out.
At p. 318 of SG 6 under the heading Laxmi Ji account.
the sum total in Japa nese Yen shown is 48,62,96,325 to be equally divided amongst SN, GN and ML.
According to the statement of Subhash Gadia, the Laxmi Ji account was a capital account of SN, GN and ML with Messrs Greenland Corporation, Japan.
The amount of 141147.27 apparently shown in Item E represents the detenu 's share.
However, the detenu expressed his inability to ex plain the said two accounts American Dollar account and Laxmi Ji account and the telex messages.
It appears that imports of yarn in India from Messrs Greenland Corporation, Japan were effected through Messrs J.M. Trading Company of which the detenu is a partner and there was either over pricing of the goods in the invoices or some portion of commission was secretly kept with Messrs Greenland Corpora tion and was being utilised for differential treatment.
It can hardly be asserted in view of the facts revealed in the counter affidavit of the Additional Secretary, Ministry of Finance that the detenu was transferring funds either from or to India in a clandastine manner on a very large scale.
The remaining Item F at p. 315 of the bunch of documents marked SG 6 is a coded account maintained by the detenu under the name Kamal Account representing the capital in vestment of SN, GN and ML with Messrs Greenland Corporation.
It relates to the entry "US $ 78,000 converted into Rs.9,16,500 commission of".
At every place in the bunch of seized document SG 6 such as on the reverse of p. 215 there is an entry to the effect that US $ 78,000 were converted into Indian rupees @ Rs. 11.75 equivalent to 9, 16,500 and that the said amount was capitalised on 19.7.
1983 in the name of GN.
Paragraph 33 of the grounds involves the com plicity of the detenu by making reference to a secret ac count maintained by SN, GN and ML to the effect: was found that all of you are engaged in transferring funds from or to India on a very large scale.
" In this coded account, the modus operandi adopted at every place is to delete two zeros from the converted Indian currency.
Learned counsel for the petitioner tried to spell out an argument that the use of the word 'or ' shows that the ground was vague or indefinite.
According to the learned counsel, it is quite apparent that the detaining authority was not definite as to the nature of payment i.e. whether the con version of foreign exchange into rupees represented payments made or amounts received.
Nothing really turns on this.
The fact remains that the detneu had been admittedly keeping a secret account of foreign currency abroad without the per mission of the Reserve Bank of India.
78 It is quite apparent that the so called factual mis statements are not mis statements at all.
The High Court rightly held that the alleged mistakes or infirmities point ed out were not so material or serious in nature as to vitiate the impugned order of detention.
As already indicat ed, sufficiency of the grounds is for the detaining authori ty and not for the Court.
It cannot be said on a perusal of the grounds that there was no material on which the detain ing authority could have acted.
There still remains the further question whether the period of parole should be treated as part of the detention period itself.
This question has been elaborately considered by this Court in Smt.
Poonam Lata vs M.L. Wadhawan & Ors., (J.T. to which one of us (Sen, J.) was a party and it was held therein "that the period of parole has to be excluded in reckoning the period of detention under sub section (1) of Section 3 of the Act" (Conservation of Foreign Exchange and Prevention of Smuggling Activities Act, 1974).
addition to the reasons given therein we may add the following by way of supplementary material.
Though the element of detention is a common factor in cases of preven tive detention as well as punitive detention, there is a vast difference in their objective.
Punitive detention follows a sentence awarded to an offender for proven charges in a trial by way of punishment and has in it the elements of retribution, deferrence, correctional factor and institu tional treatment in varying degrees.
On the contrary preven tive detention is an extraordinary measure resorted to by the State on account of compulsive factors pertaining to maintenance of public order, safety of public life and the welfare of the economy of the country.
The need for this extraordinary measure i.e. detention without trial was realised by the rounding fathers of the Constitution as an inevitable necessity for safeguarding the interests of the public and the country and hence a specific provision has been made in clause (3) of Article 22 providing for preven tive detention being imposed in appropriate cases notwith standing the fundamental right of freedom and liberty gua ranteed to the citizens by the Constitution.
The entire scheme of preventive detention is based on the bounden duty of the State to safeguard the interests of the country and the welfare of the people from the canker of anti national activities by anti social elements affecting the maintenance of public order or the economic welfare of the country.
Placing the interests of the nation above the individual liberty of the anti social and dangerous elements who con stitute a grave menace to society by their unlawful acts, the preventive detention laws have been made for effectively keeping out of circulation the detenus during a prescribed 79 period by means of preventive detention.
The objective underlying preventive detention cannot be achieved or ful filled if the detenu is granted parole and brought out of detention.
Even if any conditions are imposed with a view to restrict the movements of the detenu while on parole, the observance of those conditions can never lead to an equation of the period of parole with the period of detention.
One need not look far off to see the reason because the observ ance of the conditions of parole, wherever imposed, such as reporting daily or periodically before a designated authori ty, residing in a particular town or city, traveling within prescribed limits alone and not going beyond etc.
will not prevent the detenu from moving and acting as a free agent during the rest of the time or within the circumscribed limits of travel and having full scope and opportunity to meet people of his choice and have dealings with them, to correspond with one and all and to have easy and effective communication with whomsoever he likes through telephone, telex etc.
Due to the spectacular achievements in modern communication system, a detenu, while on parole, can sit in a room in a house or hotel and have contacts with all his relations, friends and confederates in any part of the country or even any part of the world and thereby pursue his unlawful activities if so inclined.
It will, therefore, be futile to contend that the period of parole of a detenu has all the trappings of actual detention in prison and as such both the periods should find a natural merger and they stand denuded of their distinctive characteristics.
Any view to the contrary would not only be opposed to realities but would defeat the very purpose of preventive detention and would also lead to making a mockery of the preventive deten tion laws enacted by the Centre or the States.
It will not be out of place to point out here that in spite of the Criminal Procedure Code providing for release of the con victed offenders on probation of good conduct, it expressly provides, when it comes to a question of giving set off to a convicted person in the period of sentence, that only the actual pre trial detention period should count for set off and not the period of bail even if bail had been granted subject to stringent conditions.
In contrast, in so far as preventive detentions under the , are concerned, the Act, specifically lays down that a person against whom an order of detention has been passed shall not be released on bail or bail bond or otherwise (vide Section 12 (6) of the Act) and that any revocation or modification of the order of detention can be made only by the Government in exercise of its powers under Section 11.
Incidentally.
it may be pointed out that by reason of sub section
(6) of section 12 of the Act placing an embargo on the grant of bail to a detenu there was no 80 necessity for the Legislature to make a provision similar to sub section (4) of Section 389 of the Code of Criminal Procedure, 1973 (corresponding to sub section (3) of Section 426 of the old Code) for excluding the period of bail from the term of detention period.
For these reasons the plea for treating the period of parole as part of the detention period has to necessarily fail.
One last point remains.
Besides refuting the contention of the petitioner that the detenu had made a written repre sentation addressed to the President of India on April 15, 1986 and that there has been an infraction of the Constitu tional safeguard embodied in Article 22(5" of the Constitu tion and Section 11 of the Act due to the failure of the Central Government to consider the said Representation, the respondents have preferred an application under Section 340 of the Code of Criminal Procedure, 1973 for prosecution of the persons responsible for forging the document purporting to be the alleged Representation made by the detenu under Section 8(4" of the Act and for making certain interpola tions in the Dak Register kept at the Rashtrapati Bhavan.
The respondents have placed sufficient material before the Court to show that the alleged Representation addressed to the President of India was neither filed by the detenu nor was it received at the President 's Secretariat on April, 15, 1986.
The respondent have placed on record the correspond ence that passed between the Ministry of Finance, Department of Revenue and the President 's Secretariat.
They have also produced for our perusal the original Dak Register kept at the Rashtrapati Bhawan.
On a careful scrutiny of the corre spondence and the entries in the Dak Register we are more than satisfied that no such Representation was ever made by the detenu and that the attempt to assail the order of detention on the ground of violation of the constitutional safeguard enshrined in Article 22(5) and the violation of Section 11 of the Act by the Central Government is a well planned and ingenuous move on the part of the detenu.
We are not only deeply shocked by the daring attempt of the detenu to fabricate a document styled as a representation addressed to the President of India but feel much more perturbed and even alarmed that there should have been willing hands at the President 's Secretariat to lend their services to the alleged agent of the detenu to give a colour of truth and reality to the nefarious scheme.
We may now set out the highlights of the disquieting features noticed by us in the case set up by the detenu about a representation being delivered at the President 's Secretariat on 15.4.
Before enumerating the suspicious features it has to be borne in mind that the 81 detenu is not a rustic or an uneducated person or a man of no means.
On the other hand he is a man of great affluence, having dealings in this country as well as in countries overseas and, therefore, having the means to secure the services of astute and enlightened counsel in the country.
He cannot, therefore, take umbrage for his actions on grounds such as lack of knowledge or want of funds or igno rance of law.
Now coming to the details.
The representation said to have been made was not addressed to the Government of India which is the authority to consider the representa tion but to the President.
Be that as it may, the represen tation signed in Bombay could have been sent by registered post/acknowledgement due to the President 's Secretariat but instead it is said to have been brought by a messenger from Bombay to New Delhi.
The said messenger does not present the representation at the President 's Secretariat but he is said to have handed it over to one Ashok Jain and the said Ashok Jain is said to have delivered the representation at the President 's Secretariat.
As per the affidavit filed by Shri K.C. Singh, Deputy Secretary to the President, President 's Secretariat, a visitor coming with a petition to the Rash trapati Bhavan has first to approach the Reception and then he is given a printed pass and sent with an escort to the Central Registry and after he delivers the letter he will be escorted back to the Reception to return his pass and then leave the building.
Ashok Jain in his affidavit has categor ically stated that he went to the Rashtrapati Bhavan at "roughly about 6.00 P.M." and a person at the Reception directed a peon to show him the Central Registry, that no one enquired him about his name or issued him any pass and that he went to the Central Registry as pointed out by the peon and delivered a sealed envelope and obtained an en dorsement of acknowledgement on the Xerox copy of the repre sentation.
In view of the conflicting affidavit, there is room for inference that either Ashok Jain did not personally go and deliver the sealed envelope at the President 's Secre tariat or that he was able to wield influence to such an extent as to be taken to the Central Registry without the procedural requirement of every visitor being issued a pass being observed in his case.
It also surpasses our comprehen sion how an endorsement of acknowledgement could have been made on a Xerox copy of the alleged representation when the original of the representation is said to have been given in a sealed envelope.
There are several other intrinsic fea tures in the endorsement itself evoking grave suspicion.
The rubber stamp seal affixed on the Xerox copy does not corre spond to the facsimiles of the two rubber stamps used in the President 's Secretariat as described by Shri K.C. Singh, Deputy Secretary in his affidavit. 'I he endorsement of acknowledgement does not contain the signature or 82 initials of the Receiving Officer.
but strangely it contains a Dak Number, "Dy.
No. 20 date 15.4.1986".
Shri K.C. Singh has set out in his affidavit the procedure to be followed when letters and open petitions are received at the Presi dent 's Secretariat but the procedure set out therein has not been followed in this case.
Over and above all these things, a scrutiny of the relevant page in the Dak Register kept in the President 's Secretariat, which was produced before us in a sealed cover, contains tell tale features of a startling nature revealing a planned attempt, but very clumsily exe cuted, to somehow interpolate an entry in the Dak Register to make it appear that an envelope containing the alleged representation had been presented at the President 's Secre tariat.
For our present purposes, it is not necessary to give a graphic account of the manipulations made in the Register and it will suffice if we refer only to the broad features.
The bottom portion of the page has been torn off, obviously with a view to obliterate some entry made therein.
The entry relating to the alleged representation of the detenu has been interpolated between one entry dated 15.4 and another entry dated 16.4.
but in order to fit in the serial number, the entry relating to the representation has first been noted as 20(A), then the letter A has been smudged and the entry dated 16.4 has been made 20(A) instead of 20.
The entry pertaining to the representation is in different handwriting and ink.
Shri K.C.Singh in his affida vit has stated that "this office is enquiring into the circumstances under which the entry came to be inserted in the Dak Register meant only for unopened letters addressed to the President by name.
" All these things not only warrant an inference that the detenu and his associates have gone to deplorable lengths to create evidence favourable to the detenu but arouse convul sive thoughts in our minds about the efficiency and integri ty of the concerned sections of the President 's Secretariat.
We are constrained to give expression to our feelings of anguish by means of these observations because at the level of the President 's Secretariat every section of the Secre tariat is expected to observe the highest standards of morality, integrity and efficiency.
The ease with which and the facile manner in which the detenu 's agent Ashok Jain claims to have entered the President 's Secretariat and delivered the Dak and obtained an endorsement of acknowl edgement in a copy of the representation and the length to which the concerned Secretariat staff have gone to give credence to the version of Ashok Jain not only reveals the deep fall in standards but also the lack of security and vigilance.
We feel fully persuaded to hold that this is a fit case in which the 83 detenu, his wife (petitioner herein), Ashok Jain and all other persons responsible for the fabrication of false evidence should be prosecuted for the offences committed by them.
Nevertheless we wish to defer the passing of final orders on the.application made under Section 340 of the Code of Criminal Procedure, 1973 by the Union of India at this stage because of the fact the Central Bureau of Investiga tion is said to be engaged in making a thorough investiga tion of the matter so that suitable action could be taken against all the perpetrators of the fraudulent acts and the offences.
As such the launching of any.
prosecution against the detenu and his set of people at this stage forthwith may lead to a premature closure of the investigation resulting in the Central Bureau of Investigation being unable to unearth the full extent of the conspiracy.
Such a situation should not come to pass because the manipulations of the detenu and his agents on the one hand and the connivance of staff in the President 's Secretariat on the other cannot be treated as innocuous features ' or mere coincidence and cannot therefore, be taken lightly or viewed leniently.
On the contrary they are matters which have to be taken serious note of and dealt with a high degree of vigilance, cate and concern: Consequently, while making known our opinion of the matter for action being taken under Section 340 of the Code of the Criminal Procedure we defer the passing of final orders on the application under Section 340 till the inves tigation by the Central Bureau Of Investigation is complet ed.
The respondents are permitted to move the Court for final orders in accordance with our directions.
Accordingly, the special leave petition and the writ petition are dismissed with costs.
H.L.C. Petitions dis missed.
[/INST]Sub section (1) of section 5 of the Orissa Forest Produce (Control of Trade) Act, 1981 provides that on the issue of a notification under sub section
(3) of section 1 in respect of an area (a) all contracts for the purchase, sale, gathering or collection of specified forest produce shall stand rescind ed, and (b) no person other than the State Government or its officers or agents shall purchase or transport any specified forest produce in the said area.
Explanation II thereto provides that purchase of specified forest produce from the State Government or its officers or agents is not to be deemed to be a purchase in contravention of the provisions of the Act.
The appellant company was granted a licence for collec tion, sale and purchase of sal seeds from Government forests on the stipulation that it would establish solvent extrac tion units in backward areas.
The appellant company was to supply sal seeds to these extraction plants.
The agreement was renewed for a further period of ten years from October 1, 1979.
The State Government by a notification dated Decem ber 9, 1982 issued under sub section
(3) of section 1 brought the Act into force immediately in the whole of the State in relation to sal seeds.
Thereafter it refused to accept royalty from the appellant on the ground that the notification had the effect of rescinding the contract between the company and the Government.
318 A writ petition filed by the company for a declaration that the abovesaid notification did not have the effect of rescinding their contract with the State Government, was dismissed by the High Court.
In the appeals to this Court it was contended for the appellants that the Act had no application to the produce grown in Government forests, that the Act was aimed at creating a monopoly in forest produce in the Government by vesting in it the exclusive right to purchase forest produce grown in private holdings, and that even otherwise Explana tion II to section 5(1) saved such contracts for the purchase of specified forest produce from Government lands also.
On behalf of the respondents it was contended that the very wide language of section 5(1)(a) made it applicable to all forest produce whether grown in private holdings or Government forests, and that the contract being for collection and not for purchase of forest produce it was not saved by the Explanation II to section 5(1).
Allowing the appeals, the Court, HELD: 1.
The Orissa Forest Produce (Control of Trade) Act, 1981 and the notification issued under it do not apply to the forest produce grown in Government forests.
It was not, therefore, open to the Government to treat the con tracts with the appellants as rescinded.
[333C] 2.
The scheme of the Act is fully in tune with the object set out in the Statement of Objects and Reasons and in the Preamble, namely, that of creating a monopoly in forest produce by making the Government the exclusive pur chaser of forest produce grown in private holdings.
Sections 4, 5(1)(b), 5(3), 7, 8 and 9 deal with purchase of forest produce by the State Government.
This can only be of forest produce grown in private holdings and not in Government forests since there can be no question of or providing for the purchase by the Government of forest produce grown on Government lands.
The only provision in the Act which ex pressly deals with sale of forest produce by the State Government is section 12, and that again is confined to the sale of specified forest produce purchased by the State Govern ment.
The Act, therefore, cannot to said to have any appli cation to produce grown in Government forests.
[331H 332A, 331FG, EF, CD, F, 323E] 3.1 The safest guide to the interpretation of a statute is the reason for it, which can he discovered through exter nal and internal aids.
The external aids are Statement of Objects and Reasons when the Bill is 319 presented to Parliament, the reports of Committees which preceded the Bill and the reports of Parliamentary Commit tees.
Occasional excursions into the debates of Parliament are permitted.
Internal aids are the Preamble, the scheme and the provisions of the Act.
[328EF[ 3.2.
No provision in the statute and no word of the statute may be construed in isolation.
Every provision and every word must be looked at generally before any provision or word is attempted to be construed.
The setting and pat tern are important.
Parliament does not waste its breath unnecessarily.
It is neither expected to use unnecessary expressions, 'nor to express itself unnecessarily.
While the words of an enactment are important, the context is no less important.
The fact that general words are used in a statute is not in itself a conclusive reason why every case failing literally within them should be governed by that statute.
The context of an Act may well indicate that wide or general words should be given a restrictive meaning.
[328F 329B] Attorney General vs H.R.H. Prince Augustus, ; Chertsey, U.D.C.v.
Mixnam 's Properties, , Empress Mills vs Municipal Committee, Wardha, ; and Maunsell vs Olins, , referred to.
4.1 It is not permissible to the Court to construe the wide and general words of section 5(1)(a) in their literal sense as that would not be in consonance with the scheme of the Act.
The proper way to construe that provision is to give a restricted meaning to the wide language there used so as to fit into the general scheme of the Act.
[332B D] 4.2 Section 5(1)(a) and 5(1)(b) are connected by the conjunction 'and ', and having regard to the circumstances leading to the enactment and the policy and design of the Act, cls.(a) and (b) must be construed in such a way as to reflect each other.
Viewing section 5(1)(a) and 5(1)(b) together and in the light of the Preamble and the Statement of Ob jects and Reasons and against the decor of the remaining provisions of the Act, it is apparent that section 5(1), like the rest of the provisions, applied to forest produce grown in private holdings and not to forest produce grown in Govern ment lands.
[332D, F G] 5.
The contracts relating to specified forest produce which, therefore, stood rescinded were contracts in relation to forest produce grown in private holdings only.
Since the very object to the Act was to create a monopoly in forest produce in the Government so as to enable the Government, among other things, to enter into contracts and since 320 section 5(1) does not bar any future contracts by the Government in respect of the forest produce, there was no justification in rescinding contracts solemnly entered into by the Govern ment for the avowed purpose of encouraging the setting up of certain industries in the State.
[332E, 334A] 6.
The object of the Act was to prevent smuggling of those varieties of forest produce as were grown both in Government forests and private lands.
It was expressly mentioned in the Statement of Objects and Reasons that such varieties of forest produce were unlike sal seeds which were grown only in Government forests.
Even so the only notifica tion ever issued under the Act was in respect of sal seeds and no other forest produce.
The mere inclusion of 'sal seeds ' in the definition of 'forest produce ' cannot in the teeth of the several provisions of the Act lead to the inference that forest produce grown in Government lands was also meant to be dealt with by the Act.
Several species of forest produce were included in the definition of forest produce and among them 'sal seeds ' were also included so as to eliminate even the remote possibility of the existence of some stray private holdings in which sal seeds may have been grown.
[324G 325A, 333AB] 7.
The circumstance that 'grower of forest produce ' is defined so as to include the Government is of no consequence in determining whether the Act is applicable to forest produce grown on Government lands.
The expression 'grower of forest produce ' is not found in any other provision except section 5(2)(a) and section 10.
Section 5(2)(a) provides for the transport of forest produce by the grower from a place within one unit to another place within the unit.
Section 10 requires every grower of specified forest produce to get himself registered in the prescribed manner.
Neither section 5(2)(a) nor section 10 has, therefore, any application to the Government lands.
[331B, A] 8.
It is not necessary to consider the submission that Explanation II to section 5(1) saves the present contract or that Explanation I1 is an explanation only to section 5(1)(a) and not to section 5(1)(b).
[333B] [It is not permissible for the Court to extend the period of lease of the appellants by way of relief for the business lost.
The parties to work out their rights in the light of the various interim orders and the declaration granted by the Court. ] [333E]
</s> |
<s>[INST] Summarize the judgementAppeal Nos.
86 to 89 of 1965.
Appeals by special leave from the judgment and order, dated October 17, 1963 of the Allahabad High Court in section T. Ref.
No. 109 of 1956.
A. V. Viswanatha Sastri and B. N. Kripal, for the appellant.
N. D. Karkhanis and O. P. Rana, for the respondent, K. K. Jain, for intervener.
The Judgment of the Court was delivered by Sikri, J.
These four appeals by special leave are directed against the judgment of the Allahabad High Court in a Sales Tax Reference made by the Judge (Revisions), Sales Tax, Uttar Pradesh, Lucknow, on being directed to do so by the High Court under section 11 of the Uttar Pradesh Sales Tax Act, 1948, hereinafter referred to as the Act.
The question referred was as follows : "Whether in law the revising authority was right in holding that the sales in dispute were not for delivery outside Uttar Pradesh and that the applicant Was not entitled to a rebate under sec.
5 of the Act.
" The question was referred in the following circumstances.
The appellant, hereinafter referred to as the assessee mills, carries on the business of manufacturing and selling sugar and is registered as a dealer under the provisions of the Act.
During the previous year relevant to the Assessment Year 1948 49, the assessee company had sold sugar to parties who carried on business outside Uttar Pradesh and also delivered the same outside Uttar Pradesh.
It also sold sugar to parties who carried on business inside Uttar Pradesh but the sugar was despatched to stations outside Uttar Pradesh in compliance with the instructions issued by the buyers.
The assessee mills submitted an application.under section 5 of the Act in form VII, prescribed by, the Uttar Pradesh Sales Tax (Temporary) Rules, 1948, claiming 50% rebate on the sales of sugar delivered outside Uttar Pradesh.
The Sales Tax Officer allowed rebate in respect of the sales of sugar to parties who carried on business outside Uttar Pradesh but rejected the claim for the sales which were made to parties carrying on business inside Uttar Pradesh.
In respect of the assessment year 1948 49 there were four assessment orders covering each quarter of the year,, the, 47 first quarter being April 1948 to July 1948.
Section 5 of the Act reads as follows "Sales of certain goods for delivery outside the State In respect of such manufactured goods as may be notified by the State Government and subject to such restrictions and conditions as may be prescribed, a rebate of one half of the tax levied on sales of such goods for delivery outside the Uttar Pradesh shall be allowed if such goods are actually so delivered.
" In exercise of the powers conferred by section 5 of the Act, the Governor was pleased to order that rebate of one half of the tax levied on sales of certain goods including sugar manufactured in Uttar Pradesh for delivery outside Uttar Pradesh shall be allowed if such goods were actually so delivered.
It appears that this notification was modified on March 30, 1949, but we are not concerned with this modification.
The Sales Tax Officer dealt with the question at issue in his order in respect of the quarter ending March 31, 1949, in detail and he was of the view that if property passed from the seller to the purchaser in Uttar Pradesh, section 5 and the notification issued under it could not apply.
The assessee mills then filed four revision applications before the Judge (Revisions) Sales Tax.
The Judge (Revisions) disposed of the four applications by two orders, first dated February 1, 1950, and the second dated December 5, 1950.
He held that "the words 'sales of such goods for delivery outside U.P. clearly show that the intention of the framers of the act was to allow a rebate only in cases in which the goods are sold subject to the condition that they would be delivered outside U.P.
It is also clear that section 5 contemplates only one buyer who purchase the goods and also take their delivery outside U.P.
In other words the party who buys the goods and the party who takes the delivery must be one and the same.
It is not disputed that the sales of sugar in respect of which the claim has been disallowed were in favour of one party and delivery was taken by another party outside U.P.
The party after buying the sugar under a contract of sale had the goods despatched outside U.P. by the Mills to another party outside U.P." He added later that "on a true construction of section 5 rebate will be permissible only if delivery is taken outside U.P. by the same party which purchased the sugar from the mills." Then 48 on the facts he held that the selling agents, Tandon Bros., who entered into a contract with the assessee mills for sale of the goods were really the buyers and although the goods were despatched outside Uttar Pradesh in accordance with the despatch instructions of some contract arrived at between Tandon Bros., and the party to which the goods were ultimately delivered, the assessee mill had not entered into the contract with the parties to which the goods were despatched outside Uttar Pradesh.
He further repelled the argument that despatch instructions formed part of the contract.
The assesses mills then filed four applications under section 1 of the Act, but the Judge (Revisions) Sales Tax rejected the applications on the ground that no question of law arose.
The High Court, however, directed the Judge (Revisions) to state a case under section 11 of the Act.
A consolidated statement of the case was referred.
The Judge (Revisions) drawing up the statement of the case was not the Judge (Revisions) who had disposed of the revision applications.
In the statement of the case certain further facts were given and those are as under "The applicants (assessee mills) were members of the Indian Sugar Syndicate Ltd., and they were entitled to send sugar under the orders of the Syndicate through some selling agents of their own.
M/s. Tandon Bros., were the selling agents of the Mills.
It was through them that the sales had been made to buyers outside U.P.
The goods were despatched outside U.P. under the instructions received from the buyers through the selling agents.
The delivery of the goods was made outside U.P.
It is on the basis of these facts that the applicants (assessee mills) claimed that the sales had been made for delivery outside U.P." The standard contract form prescribed by the Indian Sugar Syndicate has been annexed to the case and the following terms are relevant : "AN AGREEMENT made this Sixteenth day of October 1948 between the AMRITSAR SUGAR MILLS CO. LTD.
ROHANA KALAN (hereinafter called "the Seller") and Tandon Brothers New Mandi Muzaffarpur (hereinafter called "the Buyee") for the sale of the following goods by the Seller to the Buyer upon the following terms and conditions 49 A B C D E F Factory Description Price per Md. ofQuantity Period(s) Re (short) of quality 40 Srs.
82 2/7 lb. of marks Name F.O.R. Factory delivery Station Ex Factory.
Rohana Average colour Rs. Thirty Six Bags 4,000 Ready Mills.
not lower than annas two & I.S.S. No. 127 pies three only.
Average grain not Each of pack finer than I.S.S. ing 2/30.
No. D. or I. 36/2/3 2.
Delivery is to be made F.O.R. Rohana Kalan station, all terms and conditions of the Railway (torn) to be binding on the Buyer.
The goods shall be deemed to have been delivered (a) when tendered Ex Factory godown, (b) when put on F.O.R. at Factory Station or (c) when tendered for carriage by rail at the said station, and in case of delay in accept (torn) by the Railway after such tender the said goods shall be deemed to be held by the Seller on account of the Buyer until they are put on rail.
When the goods are received by Railway, all the terms and conditions of the Railway shall be deemed to be accepted by the buyer.
Tender to the Railway for carriage shall be deemed to have been made when a (torn) carriage or a Forwarding Note has been given to the Station Master of the Station.
The seller shall not, (torn) circumstances whatsoever, be responsible for non despatch, or refusal to despatch or delay in despatch or any (torn) mistake in despatch by the Railway.
Where (after tender as aforesaid) any delay in despatch occurs, the Buyer shall (torn) delivery of the goods without any claim against the Seller on account of such delay or the consequence thereof (torn) delay in despatch is due to non supply of wagons or due to booking restrictions, the Seller, shall, if required by the (torn) obtain from the factory a letter stating the cause of the delay.
Where owing to restriction of whatsoever nature imposed by Carriers on despatches, Seller is unable to despatch according to the route requested by the Buyer, then Seller shall have the right, after giving to the Buyer 50 three days time to despatch by the cheapest available route at Seller 's sole discretion to the destination required by the original despatch instructions.
Within the period of three days above mentioned, Buyer may change the destination provided the (torn) despatching instructions are capable of immediate execution.
In the case of despatch by road, river or other transport any combination thereof, all the terms and conditions of the Carriers are be a binding on the Buyer, and tender to Carrier shall be a good delivery within the meaning of the clause.
The buyer is to give the Seller despatching instructions in accordance with the above schedule, in the case (torn) ready sales within ten days from the date hereof when the quantity is less than 1500 bags, and within fifteen days when quantity is 1500 bags or more; and in the case of forward sales, not less than fourteen days prior to the expiry of the (torn) for delivery of the goods as provided in the above Schedule.
When goods are for delivery in instalments the times (torn) clause provided shall apply to the despatching instructions for each instalment.
The sugar will be despatched at (torn) Risk unless the buyer shall give to the Seller instructions to the contrary in the Despatching Instructions.
The despatching instructions to be given as aforesaid shall be such as the Seller will then be in a position to carry (torn) having regard to restrictions on booking, availability of wagons, transshipment difficulties and other matters.
The despatch (torn) instructions once given shall not ordinarily be amended or altered and they can be altered or amended only with the consent of the seller and before the goods have left the factory, the Seller is not in any way responsible for any delays that may arise through error or mistake in the despatching instructions sent by the buyer.
If the Buyer fails to give despatching instructions within the time and in the manner aforesaid he will be deemed not to have given any despatching instructions at all.
No complaint as regards description, quality or condition of any consignment will be admitted unless the Buyer has complied with Clause 3 thereof and has paid to the Seller the full price and all overdue or other 51 charges and unless the complaint is made in writing to the Seller within three days from the arrival of such consignment at destination, the date of such arrival being deemed to be the date of arrival entered in the Books of the Railway Co., Steamer Co., Carrier or Port Authorities.
The completion of Risk Note form A as required by the Railway authorities at certain seasons of the year shall not be construed as adverse remarks as to the condition of the goods or its packing.
If any complaint, as to quality condition quantity or weight is referred to arbitration and an allowance is awarded in thereof, the Buyer shall retain the goods and such allowance shall be deducted from the price and be refunded by the Seller.
" The High Court, in view of its finding that the delivery was contracted to be made ex factory, the factory being within the State of Uttar Pradesh and the contract not containing any condition requiring the assessee to deliver the goods outside Uttar Pradesh, held that rebate was not admissible under section 5.
The High Court said that its detailed reasons were contained in its, judgment in Lord Krishna Sugar Mills vs Commissioner Sales Tax, II.P.(1) In that case Desai, C.J., held that the obligation to deliver goods outside Uttar Pradesh must arise only from a term in the contract, and in the absence of such a term it could, not be said that the goods were to be delivered outside Uttar Pradesh.
The learned Chief Justice further observed as follows A term in a contract that despatch instructions would be furnished later necessarily means that the seller undertakes to comply with them.
If under a contract itself something is to be settled later, what is settled later becomes as much binding under the contract itself as the terms already settled under the contract.
Still, I do not think that the sales in those cases in which the contracts provided for despatch instructions to be given later became sales for delivery outside Uttar Pradesh merely because the despatch instructions were that they should be despatched outside Uttar Pradesh.
All that can be said is that the sales were for "delivery in accordance with despatch instructions" and a sale for "delivery in accordance with despatch instructions" is not necessarily a sale for "delivery outside Uttar Pradesh." (1) Sales Tax Reference No. 263 of 1954 judgment delivered on, March 19, 1963. 52 He seemed to be of the view that in order to come within the expression "delivery outside Uttar Pradesh ' it must be one of the terms settled at the time of the formation of the contract itself that the goods will be delivered outside Uttar Pradesh, and if this is not so settled and all that is settled is that they will be delivered in accordance with despatch instructions, the sale would neither be a sale for delivery outside Uttar Pradesh nor a sale for delivery inside Uttar Pradesh.
He was clearly of the view that despatch instructions were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given.
Pathak, J., in a concurring judgment, was of the view that it must be in the contemplation of the parties at the time of entering into the contract that the goods which were the subject of sale must be delivered outside Uttar Pradesh.
He observed that "there is a distinction between settling and determining the terms of a contract and complying with the terms 'of that contract.
The former relates to the formation of the contract, the latter to its execution.
" The first question which arises in these appeals is whether the word "delivery" in the expression "sales of such goods for delivery outside Uttar Pradesh" occurring in section 5 of the Act means actual delivery or constructive delivery.
If it means constructive delivery then there is no doubt that on the facts as stated by the Judge (Revisions) the contract provided for constructive delivery inside Uttar Pradesh and the assessee mills would not be entitled to rebate under section 5.
The Madras High Court had occasion to consider a similar question in India Coffee and Tea Distributing Co. Ltd., vs The State of Madras.(1) It held that the word "delivery" in section 5 of the Madras General Sales Tax Act, 1939, which exempts from taxation sales of tea "if the sale is for delivery outside the State and delivery actually was made" did not include anything which the law deemed "delivery" but was restricted to physical delivery of the thing sold.
In coming to this conclusion, Subrahmanyam, J., observed : "In deciding whether the word "delivery" in section 5 (v) includes delivery in law, we have to have regard to the objects of the Legislature in enacting section 5 (v).
The object obviously was the promotion of the export of tea.
The Legislature intended that where tea was (1) 10 S.T.C. 359.
53 exported from the State for being delivered outside the State, the sale which resulted in such export should be exempt from taxation. 'Mat object would not be wholly achieved if we hold that delivery of documents of title in the State of Madras would make the sale liable to taxation.
" We agree with the view expressed by the Madras High Court.
It seems to us that the object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5.
The course of trade adopted by the Indian Sugar Syndicate Ltd. and the assessee mills shows that if the word "delivery" is interpreted to mean 'constructive delivery ' very few 'export sales ', if we may use the expression, would enjoy rebate under section 5.
As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the Legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled.
It seems to us that in the context of section 5 the word 'delivery ' occurring in section 5 means 'actual delivery '.
The next question that arises is whether the sales by the assessee mills were for actual delivery outside Uttar Pradesh.
The answer to this problem depends on the answer to the question whether despatch instructions contemplated by clause 2 and clause 3 of the contract were part of the contract entered into by the assessee mills.
It seems to us that they were.
The contract by the assessee mills was to actually deliver at a place to be communicated.
This view is reinforced by what is contained in clause 11 of the contract.
This clause contemplated a destination in spite of constructive delivery having been contracted to be made at Rohana Kalan Station.
Further, the contract was not to actually deliver at some place to be chosen or assented to by the assessee mills but at any place without restrictions.
The contract required nothing more for completion than a mention of the place.
When the despatch instructions were given, it was not a case of performing the contract but specifying a term of the contract.
If the place of actual delivery had been specified and it was a question merely of communicating the route by which the goods were to be delivered this would perhaps related the mode of performance of the contract.
But communication of the place where actual delivery is to be given does not relate to the mode of performance but formation of the contract.
It seems to us, with respect, that the High Court reared in relating despatch instructions to the mode of performance of the contract.
54 In the result we hold that the assessee mills is entitled to rebate under section 5.
We set aside the judgment of the High Court and answer the question as follows : "The revising authority was not right in holding that the sales in dispute were not for delivery outside Uttar Pradesh.
Further, the applicant was entitled to rebate under section 5 of the Act.
" The appellant will have his costs incurred in the High Court and here.
One hearing fee.
Appeal allowed.
[/INST]The assessee sugar mill sold sugar to parties who carried on business inside the State of Uttar Pradesh, but the sugar was despatched to stations outside the State of Uttar Pradesh and delivered to another party in compliance with the instructions issued by the buyers.
Under the contract entered between the assessee and the buyer, the assessee was to deliver the sugar at places to be communicated by the buyer.
The assessee mill claimed rebate on these sales under section 5 of the Uttar Pradesh Sales Tax Act, 1948.
The Sales Tax authorities rejected the claim. 'Me High Court held that the rebate was not admissible under section 5 because the contract did not contain any condition requiring the assessee to deliver goods outside Uttar Pradesh and because the despatch instructions.were not a part of the contract when it was formed and did not get incorporated into it or become a part of it when given.
In appeal to this Court.
HELD : (i) In.
the context of section 5 of the Act the word 'delivery ' occurring therein means 'actual delivery '.
The object underlying section 5 is to encourage export of goods manufactured in Uttar Pradesh and notified under section 5.
The course of trade adopted by the buyers and the assessee shows that if the word 'delivery ' is interpreted to mean 'constructive delivery ' very few 'export sales ' would enjoy rebate under section 5.
As long as the contract evinces an intention to export and actual delivery is given to effectuate that intention the object of the legislature to ensure that only real 'export sales ' enjoy the rebate would be fulfilled.
[53 B D] Lord Krishna Sugar Mills vs Commissioner of Sales Tax, U.P. S.T. reference No. 263/54 dated March 19, 1963, disapproved.
India Coffee and Tea distributing Co. Ltd. vs The State of Madras 10 S.T.C. 359, approved.
(ii)The sales by the assessee were for actual delivery outside Uttar Pradesh.
The despatch instructions contemplated by the contract entered into by the assessee, were part of the contract.
The contract contemplated a destination in spite of constructive delivery having been contracted to be made at the station where the assessee mill was situated.
Further the contract was not to actually deliver at some place to be chosen or assented to by the assessee mill but at any place without restrictions.
The contract required nothing more for completion than a mention of the place.
when the despatch instructions were given, it was not a case of performing the contract but specifying a term of contract.
[53 EG] 4 6
</s> |
<s>[INST] Summarize the judgemento. 15 of 1972.
Appeal by Special Leave from the, _judgment and order dated December 16, 1971 of the Assam and Nagaland High Court in Civil Rule No. 431 of 1970.
C. K. Daphtary and D. N. Mukherjee, for the appellant.
section N. Chowdhury, for respondent Nos. 1 to 4.
M. C. Setalvad and K. P. Gupta, for respondent No. 5.
The Judgment of the Court was delivered by Hegde, J.
In this appeal by special leave the appellant challenges the decision of the High Court of Assam and Nagaland in refusing to set aside the order of the Assam Government dated June 16, 1970 granting a contract to Respondent No. 5 for wholesale supply of country spirit to Tinsukia and North Lakhimpur warehouses for three years from July 1, 1970 to June 30, 1973.
The appellant is a Public Limited Company.
Under a contract entered into between it and the Government of Assam, it had the exclusive privilege of supplying country spirit to the two warehouses in the District of Lakhimpur for the period from July 1, 1967 to March 3, 1970.
Sometime before that contract came to an end, the Commissioner of Excise, Assam invited tenders in sealed covers for the privilege of supplying the, country spirit to, retail vendors in the Upper Assam area comprising of the District of Lakhimpur and Sibsagar including Mikir Sub Division of the United Mikir and North Cachar Hills for the period of three years commencing from April 1, 1970.
In the notification issued by the Commissioner, it was stated that preference will be given to the manufacturers, of the spirit.
In pursuance of the tender notice, )the appellant, the 5th respondent and several others submitted tenders for the grant of the contract in question followed up by necessary licences.
The appellant offered to supply the spirit at 74 P. per London proof litre.
Respondent No. 5 quoted the 203 price at 95 P. per London proof litre.
Another tenderer namely Rampur Distillery and Chemicals Company Ltd. offered the lowest rate of 60 P. per London proof litre.
The tender of Rampur Distillery and Chemicals Co. Ltd., was found to be defective and therefore it was rejected.
The Government was not satisfied with any of the tenders.
Thereafter by a _letter dated February 28, 1970, it called upon all the tenderers to intimate to the Government whether they were willing to reduce their rate and if so, to what extent.
They were required to send their replies by March 10, 1970.
None of the tenderers excepting the 5th respondent was willing to reduce the rate quoted by them.
The Managing Director of Respondent No. 5, by his letter dated March 4, 1970 informed the Government that his concern was willing to reduce the rate and he left it to the Government to fix any rate which it considered reasonable.
He agreed to accept the rate fixed by the Government.
The Government reduced the rate fixed by Respondent No. 5 to 74 P. per London proof litre and accepted its tender.
Aggrieved by this decision, the appellant moved the High Court of Assam and Nagaland under article 226 of the Constitution to quash the Government Order granting the contract to the 5th respondent and for issuing a direction to the concerned respondents not to give effect to the impugned order.
The High Court rejected that application.
Hence this appeal.
At the very outset, it is necessary to mention that no allegation of mala fides is made against the Government.
The only question that we have to consider in this appeal is whether the impugned order was made in violation of any statutory provisions.
It was urged on behalf of the appellant that the impugned order violates Rule 93 of the Rules framed under the Eastern Bengal and Assam Act No. 1 of 1910 (Eastern Bengal and Assam Excise Act, 1910) (to be hereinafter referred to as the Act).
Before reading Rule 93, it is necessary first to refer to the relevant provisions in the Act i.e. section 19.
That section reads : "The Provincial Government may grant to any person, on such conditions and for such period as it may think fit, the exclusive privilege of manufacturing or of supplying to licensed vendors or of manufacturing and supply to licensed vendors any country liquor or intoxi cating drug within any specified local area.
No grantee of any exclusive privilege under this section shall exercise the same until he has received a license in that behalf from the Excise Commissioner.
" The validity of this provision was not challenged before us.
This provision undoubtedly confers on the Government very wide powers in the matter of granting exclusive privilege of manufacturing or of supplying to licensed vendors or of manufacturing 204 and supplying to licensed vendors any country liquor or intoxicating drug within any specified local area.
In the absence of any rule, the Government could have exercised that power in the manner most advantageous to the State so long as it did not infringe any of the constitutional guarantees.
In understanding the nature of the power under Rule 93, we have to bear in mind the fact that rules were framed by the Government itself in the exercise of the powers conferred on it under section 36 of the Act.
Having said that much we may now proceed to consider the rules relating to contract for supplying the country spirit to warehouses.
The rules relevant for our present purpose are Rules 91 to 93.
We may now read those rules.
Tenders for a contract for the exclusive privilege of supplying country spirit from a distillery to licensed vendors within a specified area for a specified period will be called for by the Excise Commissioner 1 8 months before the date from which the contract will take effect.
Provided that the Provincial Government may, if circumstances so require, direct that tenders be called for by the Excise Commissioner within a lesser period than 18 months specified above.
Any person tendering for a license specified in rule 91 shall apply in writing to the Excise Commissioner furnishing the following particulars: (1) The name or names of the person or persons applying, if a firm, the name of every partner of the firm, and, if a company, the registered name thereof (2) The applicant (if he is other than the existing contractor) shall also state in his tender that he is willing to take over under the provisions of rule 102 of these rules the existing vats and other permanent apparatuses in the warehouses within the area to be supplied and shall furnish a list of these in his application.
The Excise Commissioner shall forward the tenders with his recommendations to the Provincial Government which reserves to itself the right to accept any tender.
If none of the tenders are accepted by the Provincial Government on the ground that none of them, on due consideration, appear to be satisfactory, they reserve also the right to grant the licence to any person who has not tendered and is considered suitable in all respects; Provided that when a license is cancelled or suspended during the currency of the license the Provincial Government further reserves the right to grant the license to any one without calling for tenders.
" 205 It was urged on behalf of the appellant that the impugned order cannot be sustained firstly because the Government has nowhere stated that the tenders made were not acceptable to it "on the ground that none of them on due consideration, appear to be satisfactory".
Secondly under Rule 93, they could not have entered into negotiations with any of the tenderers.
Neither of these contentions are sound.
From the facts stated earlier, it is clear that the Government considered the tenders to be unsatisfactory and hence unacceptable.
That is clear from its letter to the tenderers asking them to reduce the price quoted.
It is true that ultimately it granted the contract to the 5th respondent at the very rate quoted by the appellant.
In the very notification calling for tenders, it had been mentioned that preference will be given to the manufacturers.
Prima facie there is nothing wrong in giving preference to the manufacturers.
It must be borne in mind that the Government is the purchaser.
On good grounds, it can prefer one seller to another.
It is true that being a Government, it cannot show any undue favour to any party; but for good reasons it may prefer one party to another.
There was justification in preferring a manufacturer to others.
Evidently the idea was that there should be reasonable guarantee in the matter of supply of country liquor.
It was not said that this preference was given for any collateral reason.
The Govern ment does not require any special power for preferring one class of sellers to others so long as the classification made by it is based on rational grounds.
It is true that no rule confers on the Government power to prefer one set of suppliers to others.
But what is important is that no rule prohibits it.
In the absence of any such rule, section 19 of the Act confers on the Government such a power.
It was next said that Rule 93 prohibits the Government to negotiate with any of the tenderers.
We are unable to read that rule in that way.
That rule does not prohibit any negotiations with the tenderers.
But on the other hand, it authorises the Government to negotiate with persons who have not tendered.
Here again in the absence of any rule prohibiting the Government to negotiate with the tenderers, the Government can fall back on its powers under section 19.
We are unable to find out any rational basis for prohibiting the Government from negotiating with the tenderers.
All that the Government is interested is to get country spirit at the cheapest possible rates and to have regular supplies.
For achieving those purposes, it can negotiate either with the tenderers or with others.
It was faintly argued that before concluding its contract with the 5th respondent, the Government should have given opportunity to the other tenderers to reduce the rates quoted by them.
This contention is clearly a misunderstanding of the principles of natural 206 justice.
No one has a fundamental right to get a Government contract.
The appellant was not deprived of any of its rights.
It was given an adequate opportunity to submit its tender.
Its offer was considered.
The same was not rejected on irrational grounds.
In matters like the one before us, no question of hearing the interested parties arises.
All that is required is fair play.
In the result we are unable to accept any of the contentions advanced on behalf of the appellant.
Hence this appeal fails and the same is dismissed.
But in the circumstances of the case we make no order as to costs.
V.P.S. Appeal dismissed.
[/INST]Held, (i) that the ordinary and primary jurisdiction of the Labour Appellate Tribunal constituted under the Industrial Disputes (Appellate Tribunal) Act, 1950 is appellate; (ii) that section 22 of the Act confers on the appellate tribunal a special jurisdiction which is in the nature of original jurisdiction; (iii) that section 23 also vests in the tribunal an additional jurisdiction to decide the complaint as if it were an appeal pending before it; and (iv) that section 23 confers on the 1242 workmen an additional remedy which they did not have under the .
The two now sections 33 and 33 A inserted in the Industrial Di putes Act 1947 (XIV of 1947) by Act XLVIII of 1950 confer distinct benefits on the workmen and give some additional jurisdiction and power to the authorities mentioned therein.
Section 33 A enjoins the Tribunal to decide the complaint "as if it were a dispute referred to or pending before it" and to submit its award to the appropriate Government and provides that the provisions of the Act shall apply to the award.
The provisions of these two new sections 33 and 33 A of the 1947 Act correspond to and are in pari materia with the provisions of sections 22 and 23 of the 1950 Act and are more or less in similar terms.
A ban has been put by section 22 of 1950 Act and section 33 of the 1947 Act upon the ordinary right, which the employer has under the ordinary law governing a contract of employment with a view to protect the workmen against victimisation by the employer and to ensure the termination.of the proceedings in connection with industrial disputes in a peaceful atmosphere and the only thing that the authority is called upon to do is to grant or withhold the permission i.e. to lift or maintain the ban.
These sections do not confer any power on the authorities to adjudicate upon any other dispute.
Under section 22 of the Industrial Disputes (Appellate Tribunal) Act, 1950 (XLVIII of 1950) the Labour Appellate Tribunal has no jurisdiction to impose conditions as a pre requisite for granting permission to the employer to retrench its workmen.
Under section 33 A of the and section 23 of the 1950 Act the jurisdiction of the authority is not only to decide whether there has been a failure on the part of the employer to obtain the permission of the authority before taking action but also to give a decision on the merits of an industrial dispute and grant appropriate relief which when published by the appropriate Government will become enforceable under the respective Acts.
Serampore Belting Mazdoor Union vs Serampore Belting Co., Ltd. ([1951] , Batuk K. Vyas vs Surat Borough Municipality ([1952] , Raj Narain vs Employer s ' Association of Northern India ([1952] 1 Lab.
L.J. 381), The Queen vs County Council of West Riding of Yorkshire ([1896] 1 Q.B. 386), Carlsbad Mineral Works Co., Ltd. vs Their Workmen ([1953] , Atherton West & Co., Ltd. vs Suti Mill Mazdoor Union ([1953] S.C.R. 780) and Bhattacharji vs Parry & Co., Ltd., Calcutta ([1954] , referred to.
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<s>[INST] Summarize the judgementminal Appeal No. 138 of 1968.
Appeal by special leave from the judgment and order dated the June 10, 1968, of the Bombay High Court in Criminal Appeal No. 667 of 1967.
V. section Desai, P. section Nadkarni and Vineet Kumar, for the appellants.
section K. Dholakia and B. D. Sharma, for the respondent.
The Judgment of the Court was delivered by Ray, J.
This is an appeal by special leave from judgment dated 10 June, 1968 of the High Court at Bombay setting aside the order of acquittal of the appellants and convicting them under section 325 read with section 34 of the Indian Penal Code for having assaulted and injured Choharjasing and sentencing each of the appellants to four years rigorous imprisonment and a fine of Rs. 1000 each and six months rigorous imprisonment in default of payment of fine and further convicting the appellants under section 323 read with section 34 of the Indian Penal Code for having assaulted and injured Ramkeshwarsing and sentencing each of the appellant 's to three months rigorous imprisonment.
The sentences were to run concurrently.
The appellants and another accused were charged under sec tions 143, 147, 307 read with section 149 of the Indian Penal Code.
The four appellants were also charged under section 148 of the Indian Penal Code.
In the alternative the appellants were charged under section 307 read with section 34 of the Indian Penal Code.
The appellants and the other accused were further charged under section 326 read with section 149 of the Indian Penal Code.
In the alternative they were charged under section 324 read with section 34 of the Indian Penal Code.
The appellants and the other accused were further charged under section 324 read with section 149 of the Indian Penal Code.
In the alter native they were charged under section 324 read with section 34 of the Indian Penal Code.
The complainant Choharjasing and Nandlal are brothers.
They resided in room No. 5 of Vidya Bhuvan Kurla along with their cousin Ramkeshwarsing and Gayitrising brother in law of Choharjasing.
Chollarjasing.
Nandlal and Ramkeshwarsing were employed at Premier Automobiles at Kurla.
The, prosecution witness Awadh Narayan who resided at Moturam Chawl was also employed at Premier Automobiles.
Another prosecution witness 624 Dinanath was a shopkeeper residing at Halav Pool, Kurla.
The first appellant dealt in milk and resided at Maulana Chawl, Halav Pool, Kurla.
Appellant No. 2 is the brother of appellant No. 1 and resided at a nearby Chawl at Halav Pool and was employed at Premier Automobiles at Kurla.
Appellant No. 3 also resided at Halav Pool Chawl, Kurla and was employed at Premier Automobiles, Kurla.
Appellant No. 4 resided at another Chawl at Kurla and was also employed at Premier Automobiles, Kurla.
Accused No. 5 worked as a Mehtaji of one Jairaj Pandye and resided at Bhagwat Bhuvan, Halav Pool, Kurla.
The prosecution case was this.
The relation between Cho harjasing and his brother Nandlal on the one hand and appellants No. 1 and 2 on the other were strained for some time.
On the morning of 15 October, 1964 Nandlal brought a truck load of earth and spread the same in front on their room.
On that account there was some altercation between him and appellants No. 1, 2 and 3.
On the morning of 16 October, 1964 Choharjasing left his room and went to Podar Hospital at Worli for undergoing an operation for fistula.
He returned to his room at about 11 or 12 noon.
On his return he was told by his brother Nandlal about the quarrel and that the appellants and another accused had given a threat and enquired as to where Choharjasing was.
Nandlal further told Choharjasing that the appellants and the other accused had threatened that they would break Choharjasing 's hands .and feet.
Choharjasing went to the Police Station and filed a non cognizable complaint.
The police directed Choharjasing to approach the proper criminal court.
Choharjasing went to prosecution witness Dinanath and told him about the threats.
Choharjasing then returned to his room and launched with his brother Nandlal, cousin Ramkeshwarsing and brother in law Gaitrising.
Choharjasing was not feeling comfortable after the ,operation.
He sat on a charpoy (cot) outside his room.
Nandlal was with Choharjasing.
Ramkeshwarsing was inside the room.
At about 5 or 5.30 p.m. the appellants came there.
Appellant No. 1 was armed with a lathi.
Appellants No. 2, 3 and 4 had also lathis or something like iron bars.
Accused No. 5 was standing at some distance.
Accused No. 5 instigated the appellants by shouting the words 'Dekhte kya ho, Mar Dalo ' (what are you looking at, assault them).
Appellant No. 1 also shouted to assault.
The appellants surrounded Choharjasing and Nandlal and started assaulting them with weapons.
Appellants No. 1 and 4 hit Choharjasing.
Appellants No. 2 and 3 hit Nandlal.
Choharjasing fell down.
The assault continued.
Appellant No. 2 thrust his stick in the mouth of Choharjasing and he lost four of his teeth.
Choharjasing and Nandlal both fell unconscious.
Ramkeshwar sing received a blow on left hand.
625 The Sub Inspector of Police, on getting a telephone message came to the spot.
On the way the Sub Inspector met appellants No. 1 and 4 each of whom had injuries on their person.
They were put in the police van.
The van was taken to the place of incident.
Choharjasing and Nandlal were lying unconscious.
Witnesses Awadh Narayan and Dinanath were present there.
Choharjsing.
and Nandlal were put into the van and removed to the hospital.
At the time of admission to the hospital Choharjasing had 12 injuries.
Nandlal had 5 injuries.
Appellant No. 4 had 3 injuries.
Choharjasing and Nandlal were detained in the hospital as indoor patients from 16 October 1964 to 12 November, 1964.
Appellant No. 4 in spite of medical advice left the hospital on 17 October, 1964.
The trial Court acquitted all the 5 accused.
The trial Court gave these reasons.
Choharjasing and Ramkeshwarsing, did not mention accused No. 5.
Witness Award Narayan did not mention accused No. 5.
Ramkeshwarsing did not mention accused No. 2, 3 and 5.
Witness Awadh Narayan did not mention accused No. 3.
Choharjasing and Nandlal were all thin and of weak build.
The accused were hefty in build.
It is difficult to say why so many persons would engage in the assault on two weak persons, particularly when Choharjasing had just returned after operation from the hospital.
The injuries on appellants No. 1 and 4 were not satisfactorily explained.
The possibility of persons from the crowd feeling enraged at the assault on accused No. 1 to 5 who were holding important offices in the local Congress organisation and then rushing forward and inflicting injuries on the assaulters of Choharjasing and Nandlal two well known persons of the locality cannot be ruled out as contended for by the defence.
Iron bars and sticks were not recovered.
Ramkeshwarsing had failed to go to the police station of his own accord.
He and Choharjasing did not implicate accused No. 5 in their earlier statements.
The presence of accused No. 2 and 3 is not free from doubt.
Ramkeshwarsing and Awadh Narayan did not mention accused No. 2 in their earlier statements.
Ramkeshwarsing did ;not mention the name of accused No. in his statement to the police.
Choharjasing and Nandlal could not explain how accused No. 1 and 4 came to receive the injuries.
Though the injuries on Choharjasing and Nandlal are no doubt serious, the evidence does not satisfactorily establish that they were caused by the accused in furtherance of their common intention and that they formed an unlawful assembly and used force or violence and they rioted with deadly weapons in prosecution of their common intention.
The defence that accused No. 1 was assaulted and seeing 626 this accused No. 4 came there and he was assaulted cannot in the circumstances be overlooked.
With these reasons the trial Court acquitted all the five accused.
The High Court set aside the order of acquittal.
The High Court arrived at these conclusions.
The evidence established that the grievous injury inflicted on Choharjasing and Nandlal and the simple injury inflicted on Ramkeshwarsing were inflicted by the appellants.
The trouble arose on account of dispute over the open space adjoining the room of Choharjasing.
The appellants could not be convicted under section 307 of the Indian Penal Code The appellants were guilty of causing grievous hurt.
The High Court, therefore, convicted the appellants for injuries sustained by Choharjasing, Nandlal and Ramkeshwarsing.
Counsel for the appellants made these submissions.
The High Court interfered with the acquittal without giving any reasons The first information report about the cognizance of the offence was wrongly admitted in evidence.
The incident on the morning of 16 October, 1964 could not be believed and therefore the entire prosecution would fail.
As to the incident on the morning of 16 October, 1964 the trial Court said that the time of recording the complaint on 16 October, 1964 was 11.05 am.
where as the complainant 's version in court was that he returned from the hospital at about 11 a.m. or 12 noon, when he received information from Nandlal.
Further in the complaint Choharjasing did not mention about any of the accused and Nandlal also did not mention accused No. 5.
The land on which earth was spread belonged to one Khot and therefore appellant No. 1 could not have interest in that land.
Or these grounds the trial Court did not accept the version that there was any occurrence on the morning of 16 October, 1964.
The High Court, however, accepted the version that there was an incident on the morning of 16 October, 1964 and said that Chohajasing would not have taken the trouble of going to the police and lodging a complaint.
The High Court gave two broad reasons for accepting the prosecution version about the incident on the morning of 16 October, 1964.
First, there was the complaint by Choharjasing.
Secondly, Choharjasing had gone to the hospital on the morning of 16 October, 1964 and on his return from the hospital he went to lodge the complaint.
Choharjasing would not have done so, if there had been no incident in the morning.
The High Court referred to the first information report about the commission of the offence and said that once the statement was admitted in evidence it afforded a very strong corroboration 627 to the testimony of Choharjasing so far as the complicity of accused No. 1 to 4 in the crime was concerned and the first information report was admissible under section 157 of the Evidence Act.
The first information report is not substantive evidence.
It can be used for one of the limited purposes of corroborating or contradicting the makers thereof.
Another purpose for which the first information report can be used is to show the implication of the accused to be not an afterthought or that the information is a piece of evidence res gestao.
In certain cases, the first infor mation report can be used under section 32(1) of the Evidence Act or under section 8 of the Evidence Act as to the cause of the informant 's death or as part of the informer 's conduct.
The High Court was wrong in holding that the first information report would be admissible under section 157 of the Evidence Act.
When the maker of the first information report was examined in court the report was not tendered by the prosecution in accordance with the provisions of the Evidence Act.
The appellants were denied the opportunity of cross examination on the first information report.
The first information report was therefore wrongly relied upon in evidence for the purposes suggested by the High Court.
It is therefore to @ seen as to whether the High Court was justified in convicting the appellants on the evidence and the grounds mentioned in the judgment.
The evidence of the complainant is that in the afternoon of 16 October, 1964 all the appellants came armed with lathis or something like iron bars and all the four appellants assaulted Choharjasing and Nandlal with what the appellants had in their hands.
The further evidence is that appellant No. 2 thrust the lathi into Choharjasing 's mouth and be lost four of his teeth as a result of that.
Nandlal in his evidence stated that appellant No. 2 gave a blow with a stick on his head.
Nandlal and Choharjasing were attempting to run away when appellant No. 3 assaulted Nandlal on his head with what looked like an iron bar and appellant ,No. 4 also assaulted him with what he was holding and which also looked like an iron bar.
Nandlal further said that appellant No. 2 assaulted him before he fell down and after he bad fallen down all the appellants assaulted him.
Witness Ramkeshwarsing said that he saw all the appellants and when Choharjasing and Nandlal had fallen on the ground they were assaulted by all the appellants with sticks and iron bars.
Ramkeshwarsing further said that in the statement to the police he mentioned that he saw appellant No. 1, 2 and two others.
628 Witness Awadh Narayan said that he knew all the appellants and he saw sticks in their hands.
He corroborated Nandlal 's evidence that appellant No. 2 assaulted with a stick Choharjasing on the mouth.
He also said that all the appellants continued assaulting Choharjasing and Nandlal.
He said that in his statement to the police he mentioned the names of appellants No. 1 and 2.
Witness Dinanath said that he knew Choharjasing and Nandlal for a few years and he also know the appellants.
He said that appellant No. 2 had a stick in his hand and appellant No. 2 assaulted Nandlal on his head.
His further evidence was that appellant No. 2 gave a straight and perpendicular blow with a stick on the mouth of Choharjasing.
The Sessions Court was wrong in holding that Ramkeshwarsing did not mention the name of appellant No. 2.
He not only stated in his oral evidence that he had mentioned the name of appellant No. 2 to the police but this was also not challenged in cross examination.
The other witnesses Choharjasing, Nandlal, Awadh Narayan and Dinanath all spoke about the appellants who assaulted Choharjasing and Nandlal.
As to appellant No. 3 Choharjasing said that appellants No. 3 and 4 carried something like iron bars of a black colour.
As far as appellant No. 3 is concerned there is no contradictory police statement on the part of Choharjasing.
The oral evidence of Nandlal in relation to appellant No. 3 was that he assaulted Nandlal.
Nandlal in his statement to the police also mentioned about appellant No. 3.
There is no contradictory police statement on the part of Nandlal as far as appellant No. 3 was concerned.
Nor was any such contradiction put to Nandlal.
The medical evidence about the injuries to Choharjasing was that the injuries could be caused by hard and blunt substance like iron bars and lathis and were likely to cause death if not medically attended to.
The medical evidence about the injuries to Nandlal was that those injuries could be caused by coining in contact with hard and blunt substance such as lathi, bamboo, stones, iron bars etc.
and were serious injuries and were likely to cause death if not medically attended to.
Ramkeshwarsing 'in his oral evidence said that the appellants assaulted Choharjasing and Nandlal, He said that he did not mention appellants No. 3 and 4 in the police statement because he did not know them.
There is no contradictory police statement as far as witness Ramkeshwarsing is concerned in relation to appellant No. 3.
In his police statement he mentioned appellants No., 1 and 2 and he said that two others assaulted Choharjasing and Nandlal.
Ramakeshwarsing thus spoke of four persons 629 assaulting Chohajasing and Nandlal.
That was not challenged in cross examination.
Witness Awadh Narayan spoke of appel lant No. 3.
There is no contradictory police statement of Awadh Narayan in relation to appellant No. 3.
Witness Dinanath spoke about appellant No. 3 assaulting Choharjasing and Nandlal.
There is no cross examination of Dinanath that appellant No. 3 gave a blow with a stick to Nandlal.
On behalf of the appellants it was contended that appellants, No. 2 and 3 did not receive any injuries and therefore it was improbable that they would be involved in the assault.
That contention is unacceptable because of the clear and convincing evidence of several witnesses about appellants No. 2 and 3 assaulting Choharjasing and Nandlal.
The trial Court was wrong in holding that the names of appellants No. 2 and 3 were not mentioned by the witnesses to the police.
The names of appellants No. 2 and 3 were mentioned by the witnesses to the police.
The oral evidence of the witnesses was to that effect.
That evidence was not challenged.
The High Court was therefore justified in coming to the con clusion that the acquittal of appellants No. 2 and 3 by the trial Court was to be set aside.
The evidence of the several witnesses that appellants No. 2 and 3 assaulted Choharjasing and Nandlal cannot be discarded on the statement that the appellants No. 2 and 3 did not receive injuries.
It does not follow that appellants ,No. 2 and 3 were not at the scene of occurrence and did not commit the acts of assault just because there was no injury on them.
As far as appellants No. 1 and 4 are concerned the High Court was correct in holding that they were wrongly acquitted by the trial Court.
12 injuries on Choharjasing and 5 injuries on Nandlal were all serious in nature.
The oral evidence was rightly accepted by the High Court that all the appellants were guilty of assaulting Choharjasing, Nandlal and Ramkeshwarsing.
Counsel for the appellants relied on the decisions of this Court in Harbans Singh and Anr.
vs State of Punjab [1962]Suppl.
(1) S.C.R. 1041 and Khedu Mohton & Ors.
vs State of Bihar ; in support of the proposition that the High Court should not have interfered with the acquittal by the trial Court and if on the ruling of this Court in Khedu Mohton & Ors.
vs State of Bihar (supra) two reasonable conclusions can be reached on the basis of the evidence on record then the acquittal of the accused should be preferred.
The observations in Khedu Mohton 's case mean this: If two conclusions can be reached with a plausible appearance of reason the court should can in favour of that which leads to acquittal and not to that 630 which leads to t conviction.
Two views and conclusions cannot both be right and one must be preferred over the other because our criminal jurisdiction demands that the benefit of doubt must prevail.
As to powers of the appellate court this Court in Sanwat Singh & Ors.
vs State of Rajasthan ; laid down three principles.
First, the appellate court had power to review the evidence upon which the order of acquittal is founded.
Second, the principles laid down by the Judicial Committee in Sheo Swarup vs King Emperor 61 I.A. 398 are a correct guide for the approach by an appellate court.
These principles are that the views of the trial Judge as to the credibility of the witnesses, the presumption of innocence in favour of the accused, the right of the accused to the benefit of doubt and the slowness ,of an appellate court in disturbing the finding of fact arrived at by a Judge who had the advantage, of seeing the witnesses are the 'rules and principles ' in the administration of justice.
Thirdly, the appellate court in coming to its own conclusion should not only consider every matter on record having a hearing on the questions of fact and the reasons given by the trial court in support of the order of acquittal, but should also express reasons to hold that the acquittal was not justified.
in the light of the rulings of this Court to which reference has been made, we are satisfied that the High Court kept in view the rules and principles of appreciation of evidence and the right of the accused to the benefit of doubt and the, High Court gave reasons as to why the occurrence on the morning of 16 October, 1964 was proved and also why the appellants were found on the evidence on record to be guilty of having committed an offence.
Benefit of doubt was not sustainable in the present case inasmuch as the materials on record.
did not exclude the guilt of the appellants.
This Court in Khedu Mohton & Ors.
vs State of Bihar (supra) set aside the judgment of the High Court and restored that of the Sessions Judge by acquitting the appellants because the High ,Court did not deal with finding of the first appellate court that it was unsafe to place reliance on the evidence of four prosecution witnesses who were interested witnesses.
Another feature which vitiated the approach of the High Court in that case was that there was a delay of 8 days in filing the complaint and the first appellate, court said that it threw a great deal of doubt on the prosecution story.
The High Court made reference to some information lead before the Police and did not properly assess the delay in the filing of the complaint.
This Court found there that the information before the police prior to the complaint was 631 an application that there was an apprehension of breach of peace.
It is in this context of facts that this Court said that the High Court was wrong in setting aside the acquittal.
Once the appellate court came to the conclusion that the view of the trial court was unreasonable that itself would provide a reason for interference.
Again if it was found that the High Court applied the correct principles in setting aside the order of acquittal this Court would not ordinarily interfere with the order of conviction passed by the High Court in an appeal against acquittal or review the entire evidence where the High Court was right in its view of evidence.
Therefore, if the High Court has kept in view the rules and principles of appreciation of the entire evidence and has given reasons for setting aside the order of acquittal this Court would not interfere with the order of the High Court [See Harbans Singh vs State of Punjab (supra).
This Court in Nihal Singh & Ors.
vs State of Punjab ; said that there were two ways of dealing with an appeal by this Court from an order of conviction setting aside an acquittal.
One of the modes was to go through the evidence and find out whether the High Court had infringed the principles laid down in Sanwat Singh vs State of Rajasthan (supra) or whether the appeal was an exceptional one within the ruling of this Court in State of Bombay vs Rusy Mistry A.I.R. 1960 S.C. 391 where the finding was such that 'it shocks the conscience of the court or that it disregarded the forms of legal process or substantial and grave injustice had been done.
In dealing with an appeal against an acquittal the High Court can go into the questions of law and fact and reach its own conclusion on evidence provided it pays due regard to the fact that the matter had been before the Court of Sessions and the Sessions Judge had the chance and opportunity of seeing the witnesses depose to the facts See Laxman Kalu Nikalie vs The State of Maharashtra (1968) 3 S.C.R. [685].
The High Court was correct in setting aside the order of acquittal and convicting the appellants.
The appeal therefore fails and is dismissed.
If the appellants are on bail their bail bonds are cancelled.
They will surrender and serve out the sentence.
V.P.S. Appeal dismissed.
[/INST]This Court does not normally reappraise evidence in an appeal under article 136 of the Constitution but that fact would not prevent interference with an order of conviction, if, on consideration of the vital prosecution evidence in the case the Court finds it to be afflicted with ex facie infirmity.
The appellant was sentenced to death under section 302 Indian Penal Code.
The trial Court and the High Court based the conviction of the appellant primarily upon the testimony of two witnesses one of whom according to the prosecution case was present when the accused made murderous assault on the deceased and the other arrived soon after.
Neither of them nor anyone else who was told about the occurrence by the two witnesses made any report at the police station for more than 20 hours after the occurrence even though the police station was only two miles from the place of occurrence.
Setting aside the conviction, HELD : That the delay in lodging the report would raise considerable doubt regarding the varacity of the evidence of two witnesses and point to an infirmity in that evidence and would render it unsafe to base the conviction of the apPellant.
The first information report in a criminal case is an extremely vital and valuable piece of evidence for the purpose of corroborating the oral evidence adduced a ' the trial The object of insisting upon prompt lodging of the report to the police in respect of commission of an offence is to obtain early information regarding the circumstances in which the crime was committed, the names of the actual culprits and the part played by them as well as, the names of eye witnesses present at there scene of occurrence.
Delay in lodging the first information report quite often results in embellishment which is a Creature of after thought.
It is therefore essential that the delay in lodging the report should be satisfactorily explained.
[626 H]
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<s>[INST] Summarize the judgementvil Appeal Nos. 4 125 28 of 1986.
From the Judgment and Order dated 3.1.
1986 of the Allahabad High Court in Writ Petition No. 422 of 1981, 5900, 4207 and 5899 of 1985.
With Special Leave Petition (Civil) No. 3371 of 1982.
From the Judgment and Order dated 22.4.1981 of the High Court of Delhi in Civil Writ Petition No. 823 of 1981.
S.S. Sharma for the Appellants in C.A. Nos. 4 125 28 of 1986.
Soli J. Sorabjee and Mrs. Madhu Sikri for the Petition ers in S.L.P No. 3371 of 1982.
S.N. Kacker and R.B. Mehrotra for Respondent No. 1 in C.A. No. 4 125 of 1986.
S.P. Gupta and R.B. Mehrotra for Respondent Nos. 2 to 26 in C.A. No. 4 125 of 1986.
Shanti Bhushan and R.P. Kapur for the Respondents in S.L.P. No. 337 1 of 1982.
The Judgment of the Court was delivered by DUTT, J.
In these appeals by special leave and in the Special Leave Petition the dispute relates to the seniority of erstwhile Officers Grade II and the Probationary/Trainee Officers in the Grade I of the State Bank of India.
In the lower level, the State Bank of India had two categories of officers, namely, Officers Grade I and Offi cers Grade II; the function of the former was managerial and that of the latter supervisory.
The conditions of service of these two categories of officers were, admit 121 tedly, governed by the State Bank of India (Supervising Staff) Service Rules, hereinafter referred to as 'the 1975 Rules '.
The 1975 Rules were not framed under the rule making power of the Government, as conferred by section 49 of the , but under section 43 of the Act, sub section(1) of which provides that the State Bank may appoint such number of officers, advisers and employees as it considers necessary or desirable for the efficient per formance of its functions, and determine the terms and conditions of their appointment and service.
Sub section (2) of section 43 provides that the officers, advisers and employees of the State Bank shall exercise such powers and perform such duties as may, by general special order, be entrusted or delegated to them by the Central Board.
Although the Officers Grade I were superior in 'rank to the Officers Grade II, there was little difference in the pay scales of these two categories of officers.
The duties, which were to be performed by Officers Grade I and Officers Grade II, were also similar in nature.
Indeed, with the expansion of the: banking activities, a large number of Officers Grade II were required, to perform managerial duties which normally were performed by Officers Grade I. The Officers ' Federation of the State Bank of India compris ing both Officers Grade I and Grade II had been demanding the abolition of the distinction between these two Grades.
The Bank, however, had been successfully resisting the demand made by the Officers ' Federation from time to time.
The Federation had, at one time started taking resort to agitational method in order to force the Bank to abolish the theoretical distinction between Officers Grade I and Offi cers Grade II.
In the mean time, another external factor had crept into the situation.
The Government had appointed a Committee, known as Pillai Committee, for considering a question of standardisation of pay and allowances of the officers staff in the nationalised Banks.
After the Pillai Committee had submitted its report, the Government declared its intention to apply the recommendations of the Pillai Committee to the State Bank of India as well.
According to the recommenda tions of the Pillai Committee, there should not be any distinction between Officers Grade I and Grade II.
The Committee recommended four Grades for officers and had provided for only one scale at the junior management level.
Four Grades of officers are as follows: 1.
Top Executive Grade.
122 2.
Senior Management Grade.
Middle Management Grade.
Junior Management Grade.
After proposals and counter proposals between the Executive Committee of the Central Board of the State Bank of India and the Officers ' Federation, the Committee agreed to do away with the distinction between Officers Grade I and Grade II, who would be placed in a new cadre, called Junior Management Grade, having a scale of pay being Scale I Rs.
700 40 900 50 1100 EB 1200 60 1800.
It was further agreed that the Officers Grade II would be junior to the existing Officers Grade I and the seniority list would be prepared accordingly.
After the said agreement was reached between the Execu tive Committee of the Central Board of the State Bank of India and the Officers ' Federation, the Central Board, in exercise of the powers conferred by sub section (1) of section 43 of the , passed an order, called State Bank of India Officers (Determination of Terms and Conditions of Service) Order, 1979, for short 'the Order ', determining certain terms and conditions of service of officers in the Bank.
Some of the provisions of the Order which are relevant for our purpose are extracted below: "1.(1)This order may be called State Bank of India Officers (Determination of Terms and Conditions of Service) Order, 1979.
(2) This order shall come into force on the 1st day of October 1979.
(1) This order shall apply to the existing officers of the Bank and 'to the officers of the Bank who are appointed or promoted to any of the grades mentioned in paragraph 4 and to such other employees of the Bank to whom it may be made applicable by the Central Board or the Executive Committee or the competent authority to the extent and subject to such conditions as it may decide.
(2) It shall not apply, except to the extent specified by the Central Board or the Executive Committee or the 123 competent authority, to an officer during his tenure of service outside India or to employ ees engaged in any country outside India and serving there.
In this order, unless there is anything repugnant to the subject or context (a) "Appointed Date" means the 1st October 1979; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (h) "Existing Officers" means all officers in the service of the Bank immediately prior to the appointed date and to whom any of the following sets of Rules as amended or as deemed to have been amended by appropriate resolutions of the Central Board or the Execu tive Committee are applicable, namely: (i) Rules governing the service of Officers in the Imperial Bank of India; (ii) Rules governing the service of Assistants in the Imperial Bank of India; and (iii) State Bank of India (Supervising Staff) Service Rules; 4.
(1) There shall be the following four grades for officers with the scales of pay specified against each of the grades: (A) Top Executive Grade: Special Scale Rs.3500 (fixed) Scale VII Rs. 3250 125 3500 Scale VI Rs.3000 125 3250 124 (B) Senior Management Grade: Scale V Rs .2500 100 3000 Scale IV A Rs.2300 100 2600 Scale IV Rs. 2000 100 2400 (C) Middle Management Grade: Scale III Rs. 1800 75 2250 Scale II Rs. 1200 70 1550 75 2000 (D) Junior Management Grade: Scale Rs.700 40 900 50 1100 EB 1200 60 1800 (2) Notwithstanding anything con tained in subparagraph (1), a Probationary Officer and a Trainee Officer shall, on ap pointment, be placed at the stage of Rs.860 in Scale I in the Junior Management Grade.
. . . . . . . . . . . . . . . . . 7.
Subject to the provisions of paragraph 6, existing officers serving in the grades and scales of pay mentioned in column 1 of the table given in Schedule I to this order shall be placed as on the appointed date in the grade and scale specified there against in column 2 of the said schedule.
Provided that any difficulties or anomalies arising out of the above placement shall be referred to a committee of such persons as the Chairman of the Bank may ap point and the decision of that committee in this regard shall be final.
(1) Every existing officer placed in any of the new grades and scales of pay in accordance with paragraph 7, shall be fitted at such stage in the new scale of pay corre sponding to the existing grade and scale as specified in Schedule II to this order.
125 (2) Subject to sub paragraph (3), on being so fitted in the new scale of pay, such officer shall be eligible to draw the next increment , if any, in such new scale on the first day of the month in which he would have been eligible to draw increment in terms of the provisions in this behalf prior to the appointed date.
(3) Where two or more officers having different seniority in the scales of pay immediately before the appointed date are fitted at the same stage in the new scale of pay, different months may be fixed for the eligibility of such officers for the next increment in the new scale of pay.
(4) The mere fact that on the ap pointed date an officer happens to be posted in a post categorised as that of a grade or scale higher than the one in which he is placed in accordance with the provision of paragraph 7 will not by itself entitle that officer to any higher placement or fitment.
" The Order was actually made and published on 19th Decem ber, 1979.
but in view of paragraph 1(2) it came into force on the first day of October, 1979.
Under paragraph 2(1), it is inter alia provided that the Order shall apply to the existing officers of the Bank and to such employees of the Bank to whom it may be made applicable.
Under paragraph 3(h), the expression "existing officers" has been defined as meaning all officers in the service of the Bank, immediately prior to the appointed date, that is to say, October 1, 1979.
Thus, it follows prima facie that the Order will apply only to the existing officers, that is, the officers who were in the service of the Bank immediately prior to the appointed date, which is October 1, 1979.
It is not disputed that no Order has been passed by the Central Board or the Executive Committee or the competent authority directing the application of the Order to employees of the Bank other than the existing officers, as provided in paragraph 2(1).
Before the Order was made and published on December 19, 1979, certain Probationary Officers and Trainee Officers were appointed by the Bank in Grade I on October 30 and October 31, 1979.
These Probationary/Trainee Officers, being Officers in Grade I were, on the dates they were appointed, superior in rank to the Officers Grade II.
These Probation ary/Trainee Officers were fitted to the Junior Management Grade: Scale I, after the Order was passed ereat 126 ing such a Grade at Rs.960 p.m. with effect from 30/31 10 1979.
These Probationary/Trainee Officers, however, claimed that they were seniors to the erstwhile Officers Grade II and that they should be placed above such Officers Grade II in the seniority list.
As the Bank had refused the claim of these Probationary/Trainee Officers, to seniority over the erstwhile Officers Grade II in the Junior Management Grade, some of them filed writ petitions before the Allahabad High Court and some before the Delhi High Court.
The Bank, howev er, opposed the writ petitions and contended that as they were not the existing officers, that is to say, employees of the Bank on October 1, 1979, which is the appointed date, they could not be given the seniority over the erstwhile Grade II Officers, who were the existing officers within the meaning of the expression under paragraph 3(h) of the Order.
The Allahabad High Court has taken the view that the expression "existing officers" has to be read as including the Probationary Officers and Trainee Officers, otherwise a repugnancy between the definition of "existing officers" and the provisions of paragraphs 7 and 8 of the Order will arise.
Further, it has been held that the notional date of the coming into force of the Order, namely, 1 10 1979, is only to protect the emoluments of the officers and nothing else.
In that view of the matter, the Allahabad High Court directed the Bank to prepare the seniority list of its officers in the light of the observations made in the judg ment.
Although it was not specifically directed that the Probationary/Trainee Officers should be placed above the officers in the erstwhile Grade II in the seniority list, yet that would follow from the findings made by the High Court.
On the other hand, the Delhi High Court took a contrary view and dismissed the writ petitions.
Though according to the Allahabad High Court, the Probationary/Trainee Officers should be placed above the erstwhile officers in the Grade II, according to the Delhi High Court they would be placed below the Officers in the Grade II.
Hence, these Appeals by the State Bank of India and the Special Leave Petition by the Probationary/Trainee Officers.
Mr. Kacker, learned counsel appearing on behalf of the Probationary/Trainee Officers, has urged that the Allahabad High Court was justified in holding that the writ petition ers appointed as Probationary/Trainee Officers on 30/31 10 1979, should be considered as the existing officers within the meaning of paragraph 3(h) of the Order.
It is submitted by him that the Bank itself had treated them as 127 existing officers.
In support of that contention, the learned counsel has drawn our attention to the fact that the Bank had fitted the Probationary/Trainee Officers appointed on 30/31 10 1979 to the Junior Management Grade: Scale I at Rs.960 p.m.
Such fitment, according to the learned counsel, was made under paragraphs 7 and 8 of the Order.
Paragraph 7 provides for the placement of existing officers on the appointed date in the corresponding grades and scales.
It lays down, inter alia, that the existing officers shall be placed as on the appointed date in the grade and scale specified in column 2 of Schedule I. Item No. 9 of column 2 specifies the Junior Management Grade: Scale I. Paragraph 8(1) provides that every existing officer placed in any of the new grades and scales of pay in accord ance with paragraph 7, shall be fitted at such stage in the new scale of pay corresponding to the existing grade and scale as specified in Schedule II to the Order.
It appears that by a circular dated June 24, 1980, the following direc tions were given by the Chief General Manager, State Bank of India: "Officers who were promoted on or after the 1st October 1979 but upto 31st December 1979, should be first fitted in the old scale in terms of the then existing formula and there after their basic pay should be refixed in the new scale for Junior Management Grade Scale I in accordance with the table given below: Basic pay in the Basic pay in the Basic pay in the old clerical scale old officer 's scale junior manageme nt G.S.I on the date of promotion Upto 350 500 950 370 540 1000 390 540 1000 420 580 1200 450 620 1200 480 665 1260 515 710 1320 550 755 1380 The basic pay of Probationary Officers and Trainee Officers who were appointed during the period 1st October 1979 to 3 1st December 1979, will also be fixed on the same basis.
" 128 It is submitted on behalf of the Probationary/Trainee Officers that it is clear from the said circular that they were also treated as existing officers, otherwise they could not be given the same benefit as the other existing officers of the Bank.
The existing officers, as defined in paragraph 3(h), means all officers in the service of the Bank immediately prior to the appointed date.
Admittedly, the Probationary/Trainee Officers were not in the service of the Bank immediately prior to the appointed date, that is, October 1, 1979.
They cannot, therefore, be held to be the existing officers in the face of the definition of the expression in paragraph 3(h) of the Order.
It is difficult to accept the contention of the Proba tionary/ Trainee Officers that they were treated by the Bank as existing officers merely because they were fitted to the Junior Management Grade: Scale I and given a higher start at Rs.960 p.m.
It is incorrect to say that when an employee is fitted to a particular scale of pay of another cadre, he does not become a member of that cadre.
In the instant case, the Probationary/Trainee Officers were placed in the corre sponding scales of pay in the Junior Management Grade for the purpose of fitment in the new scales of pay.
Indeed, as stated already, they were fitted to the Junior Management Grade: Scale I at Rs.960 p.m.
It may be that such fitment has been made by the Bank following the principles as laid down in paragraphs 7 and 8 of the Order, presumably with a view to removing any disparity between Officers Grade I and Officers Grade II in the Junior Management Grade, but it will be difficult to accept the contention made on behalf of the Probationary/Trainee Officers that they were treated as existing officers and such fitment was made under paragraphs 7 'and 8 of the Order.
The Probationary/Trainee Officers appointed on 30/31 10 1979, that is, after 1 10 1979, the appointed date, are not existing officers within the meaning of paragraph 3(h) of the Order and the Bank could not treat them as such for the purpose of fitment or giving a higher scale of pay.
We are unable to subscribe to the view of the Allahabad High Court that unless the expression "existing officers" is read as including the Probationary/Trainee Officers, there will be a repugnancy between the definition of existing officers, as contained in paragraph 3(h), and the provisions of paragraphs 7 and 8 of the Order.
This view of the Allaha bad High Court proceeds on the assumption that the Proba tionary/Trainee Officers having been given the benefit of extra emoluments by fitting them in the Junior Management Grade: Scale I, 129 they were treated as existing officers.
In our opinion, if the Probationary/Trainee Officers are treated as existing officers.
it will be doing violence to the provisions of paragraph 3(h).
We do not think that the definition of the expression "existing officers", as given in paragraph 3(h) is, in any way, repugnant to the provisions of paragraphs 7 and 8 of the Order.
On the contrary, it is quite in harmony with the said provisions and also the other provisions of the Order.
There is no ambiguity in the definition of "existing officers" and in regard to paragraphs 7 and 8 of the Order there is no repugnancy of the definition to the subject or context.
Repugnancy of the definition of any term may arise only if such definition does not agree with the subject or context of a particular provision.
But, surely, any action not in conformity with the provision of the definition clause will not render the definition of a term repugnant to the subject or context of any provision of the statute containing the term.
We are also unable to accept the convention of Mr. Kacker that the definition of "exist ing officers" is only illustrative and not exhaustive and that such narrow definition does not fit in everywhere.
The definition does not give any illustration whatsoever, and it is wrong to submit that the definition is illustrative.
On the contrary, the definition trader paragraph 3(h) is quite specific and points to only one class of officers, that is, the officers who were in the service of the Bank immediately prior to the appointed date and to whom any of the rules, as mentioned in that paragraph, are applicable.
In our view, therefore, the Probationary/ Trainee Officers appointed on 30/31 10 1979, that is, after the appointed date, are not existing officers.
In this connection, we may notice the argument of Mr. Gupta, learned counsel appearing on behalf of some of the Probationary/ Trainee Officers, that the merger of Officers Grade II and Grade I into the Junior Management Grade was only for the purpose of fitment in the higher scale of pay and not for the purpose of seniority.
It has been already stated that it was the demand of the Officers ' Federation, representing both Officers Grade I and Officers Grade II, that the distinction between these two Grades should be abolished in every.
respect and, ultimately, it was agreed that they would be placed in one grade, that is, the Junior Management Grade, having a higher scale of pay, subject to this that the Officers Grade I will be above the Officers Grade II in the seniority list.
It appears from the Circular No. 9 issued by the Officers ' Federation, that the Pillai Committee 's recommendations would be implemented in the State Bank Group from October 1, 1979.
Thus, it was agreed by the Officers ' Federation that a scheme, namely, the merger of Officers Grade I and Officers Grade II into 130 Junior Management Grade would take place with effect from October 1, 1979 and that has been exactly given effect to by the Order under which the existing Officers, that is, the officers who were in the employment of the Bank immediately prior to October 1, 1979, would be placed in the new Junior Management Grade and to Scale I, as contained in Schedule I to the Order.
In paragraph 2(1) of the Order, provision has been made for the application of the Order to other offi cers.
Thus, it is clear that all the officers of the Bank in the lower level before the Probationary or Trainee Officers were appointed on 30/31 10 1979 agreed that they would merge into a new Grade and Officers Grade I would be senior to the Officers Grade II.
This was the result of the recommenda tions of the Pillai Committee suggesting that there should be one grade for the Officers Grade I and II in the lower level.
It may be that Pillai Committee did not make any recommendation with regard to seniority, but when two grades of officers are merged into a new grade, the question of inter se seniority will automatically arise and it will be the duty of the employer to fix the seniority.
Indeed, paragraph 18 of the Order lays down the principles for computing the seniority of the officers of the Bank.
But, under paragraph 18(5) of the Order, the seniority among the existing officers will remain the same.
In other words, the Officers Grade I will remain seniors to Officers Grade II.
Another contention that has been made by Mr. Gupta for the Probationary Trainee Officers is that these officers have to undergo tests which are more stringent than the tests to be undergone by the Grade II Officers and, as such, the Probationary/Trainee Officers, though they were appoint ed on 30/31 10 1979, should not be placed under the Officers Grade II in the seniority list.
This, in our opinion, is an argument in despair.
The question is not whether the Proba tionary/ Trainee Officers have to undergo more stringent tests than the tests to be undergone by the Grade II Offi cers, but the question is whether the Probationary Trainee Officers are existing officers or not, that is to say, whether they were in the employment of the Bank immediately prior to October I, 1979.
As the Probationary/Trainee Offi cers are not existing officers, they cannot claim seniority over the Officers Grade II, who are existing officers.
It is next contended that the Bank had no authority to give retrospective operation to the Order with effect from October 1, 1979, inasmuch as section 43 of the under which the Order has been passed, does not authorise the Bank to pass any such Order with retrospective effect.
It is now well settled that unless the 131 statute, under which the rules are flamed by the rule making authority, does not specifically authorise the making of rules with retrospective effect, such authority cannot frame any rule with retrospective effect.
(See Cannanore Spinning and Weaving Mills Ltd. vs Collector of Customs and Central Excise, Cochin & Ors., ; ; Income Tax Officer, Alleppey vs
M.C. Ponnoose & Ors., ; ; Hukam Chand etc.
vs Union of India & Ors.
, ; and Regional Transport Officer, Chittoor, & Ors.
vs Associated Transport Madras (P) Ltd. & Ors., ; Mr. Shanti Bhushan, learned counsel appearing on behalf of the State Bank of India, however, submits that the im pugned Order has not been made retrospective, as contended on behalf of the Probationary/Trainee Officers.
All that has been done by the Order is that the Officers Grade I and Grade II have been merged into one category, namely, Junior Management Grade with effect from October 1, 1979.
These Officers were already employees of the Bank before October 1, 1979 and, as such, they are existing officers within the meaning of paragraph 3(h) of the Order.
Further, it is submitted by him that the Bank after considering the injus tice done 'to the Officers Grade II numbering about 15,000, sought to remove the same by abolishing the distinction between Officers Grade I and Officers Grade II in terms of the recommendations of the Pillai Committee by the impugned Order with effect from October 1, 1979.
It may be that there was some delay in publishing the decision of the Bank, that is, the Order, but it cannot be said that the Order is retrospective in operation.
Mr. Shanti Bhushan points out that in V.T. Khanzode & Ors.
vs Reserve Bank of India & Anr., this Court upheld the decision of the Reserve Bank of India as regards the introduction of common seniority, inter group and mobility amongst different grades of officers belonging to Group I, Group II and Group III with retrospective effect from May 22, 1974.
In that case, officers belonging to Group I urged that the scheme should be brought into effect from January 1, 1976, while those belonging to Groups II and III wanted the scheme to be brought into effect from January 1, 1970.
The Central Board of the Reserve Bank struck a balance by choosing the date May 22, 1974.
Chandrachud, C.J. delivering the judgment of the Court held that it was the best solution in the peculiar circumstances of the case and that in order to rectify the imbalances and anomalies caused by the compartmental wise and group wise seniority, it was necessary to give retrospective effect to the combined seniority list.
Further, it has been 132 observed by the learned Chief Justice that no scheme govern ing service matter can be fool proof and some section or the other of employees is bound to feel aggrieved on the score of its expectations being falsified or remaining to be fulfilled.
Mr. Shanti Bhushan has also placed reliance upon the observation of Sabyasachi Mukharji, J., in Reserve Bank of India vs C.N. Sahasranaman, [1986] Suppl.
SCC 143.
It has been observed by Mukharji, J that whether there has been denial of equality or any constitutional right infringed or not cannot be published where interests of large number of people are concerned, in judged the abstract.
Further, it has been observed that in service jurisprudence there cannot be any service rule which would satisfy each and every employee and its constitutionality has to be judged by considering whether it is fair, reasonable and does justice to the majority of the employees.
Relying upon the above two decisions of this Court, it is submitted on behalf of the State Bank of India that in the instant case also a large number of employees, particu larly the Officers Grade II numbering about 15,000, have been benefitted.
Indeed, justice has been done to these 15,000 employees as agreed to by the Officers ' Federation of the Bank comprising both Officers Grade I and Officers Grade II.
Counsel submits that existing officers have been given the benefit of the Junior Management Grade: Scale I with effect from 1.10.1979.
So, the Order was also given effect to from that date, which is the appointed date.
It is sub mitted that the Order has been given effect to from 1 10 1979 in the interest of a large number of employees of the Bank.
The Probationary/Trainee Officers, who are only 900 in number and appointed on 30/31 10 1979, have no locus standi to challenge the Order or the merger of Officers Grade I and Officers Grade II in one cadre, namely, Junior Management Grade, as per the recommendations of the Pillai Committee.
It is not disputed that negotiations had been going on between the Bank and the Officers ' Federation as to how and in what manner the recommendations of the Pillai Committee accepted by the Government would be given effect to.
Ulti mately, it was decided that the recommendations would be given effect to from 1 10 1979 by merging the two categories of officers who were in the employment of the Bank, immedi ately prior to 1 10 1979 into one category, namely, the Junior Management Grade.
Although the Order was actually published on December 19, 1979, the officers of the Bank, who were there on or before October 1, 1979, were aware of the fact that the Order would be given effect to from Octo ber 1, 1979, as agreed to between 133 the Bank and the Officer 's Federation.
The appointed date is relevant for the purpose of applicability of the Order to the officers, who had been there in the service of the Bank immediately prior to the appointed date.
Mr. Soli Sorabjee, learned counsel appearing on behalf of the petitioners in the Special Leave Petition No. 337 1 of 1982, has drawn our attention to a telex message which has been communicated to all the petitioners instructing them to complete their formalities and to join the duty well before October 31, 1979 in their own interest.
Telegrams were also sent to the petitioners to the following effect: "Reference to your selection as Probationary Officer and our communications to you for immediate completion of necessary formalities.
We reiterate that the Pillai Committee 's recommendations are likely to be implemented shortly.
If you join after implementation thereof, you shall be governed by the revised terms of service and salary scales.
You are advised in your own interest to complete the remaining formalities viz., (1) acceptance of our offer by 20th October, 1979 and be ready to join duty around 25th idem at the place to be intimated to you after completion of for malities, failing which the risk of change in the salary structure and other conditions will be yours.
" From the telex and telegraph messages, it is contended that they show that the Bank had decided to give effect to the Order with effect from 30/31 10 1979.
We are unable to accept this contention.
There is no indication in the telex or telegram that the Order will be given effect to from October 30/31, 1979.
The telegram really mentions that if the petitioners join after implementation of the recommenda tions of the Pillai Committee, they will be governed by the revised terms of service and salary scales.
Indeed, it has been already noticed that after the appointment of the Probationary/Trainee Officers on 30/31 10 1979, they were fitted to the Junior Management Grade: Scale I and given a higher start at Rs.960 p.m.
The telex and the telegram to which our attention has been drawn, do not seem to be of any consequence to the Probationary/Trainee Officers and does not at all support their contention that the Order was intended to be given effect to from 30/31 10 1979.
It is next contended by the learned counsel.
appearing on behalf of the Probationary/Trainee Officers, that the impugned Order takes 134 away the vested fight of seniority of the Probationary/Trainee Officers with retrospective effect.
In elaboration of the contention, it is pointed out that on the day these Probationary/Trainee Officers were appointed, namely, on October 30/31 10 1979, they were admittedly seniors to the Officers Grade II.
This seniority of the Probationary/Trainee Officers has been taken away by giving retrospective operation to the Order.
It is submitted that the Bank has no authority to take away the vested right of seniority of the Probationary/Trainee Officers with retro spective effect.
On the other hand, it is contended by Mr. Shanti Bhushan, learned counsel appearing on behalf of the State Bank of India, that there is no question of vested right to seniority.
Seniority is relevant only for the purpose of promotion.
A right to be considered for promotion is a vested right, but a mere chance of promotion is not such a right.
It is submitted that the right of the Proba tionary/Trainee Officers to be considered for promotion has not been affected in the least by the Order, nor have their chances of promotion been affected.
Moreover, no order has been passed under paragraph 2(1) of the Order applying the same to the Probationary/Trainee Officers.
These Officers are outside the purview of the Junior Management Grade and, as such, they are precluded from challenging the seniority of the erstwhile Officers Grade II, now placed in a com pletely different category.
In other words, it is the con tention of the State Bank of India that the Probationary/Trainee Officers, who have been appointed on 30/31 10 1979 as Officers Grade I, cannot challenge any benefit that is conferred on the officers of a different cadre, namely, the Junior Management Grade.
It is not necessary for us to decide whether there is any vested right to seniority or not.
The Probationary/Trainee Officers have not been brought within the purview of the new cadre, that is, the Junior Management Grade.
Indeed, it is the complaint of the learned counsel, appearing on behalf of these Officers, that they have been totally ignored by the Order inasmuch as no provision has been made about them in the Order.
We have already noticed that it was the contention of the Officers ' Federation that there should not be any distinction in the status of Offi cers Grade I and Officers Grade II.
It was urged that such distinction should be abolished and both these categories of officers should be placed in one category so that they have the same status and position.
The State Bank of India ac cepted the demand of the Officers ' Federation and the dis tinction has been removed.
In these circumstances, it is apparent that the Probationary/ Trainee Officers being Officers Grade I, are of the same status and position as the Officers Grade II.
Admittedly, the erstwhile Officers 135 Grade II were appointed much earlier than the Probationary/Trainee Officers, who were the writ petitioners in the High Courts.
Although they had to perform almost the same duty and there was no difference between their posi tions, they had to suffer an artificial distinction and placed below the Officers Grade I, who were considered to be superior in rank to the Officers Grade II.
After the Bank had decided that both these two categories of officers were same in status and position and such decision having been implemented, we are afraid, it is difficult to accept the contention made on behalf of the Probationary/Trainee Offi cers that they should be considered senior to the erstwhile Officers Grade II.
Moreover, there is some force in the contention made on behalf of the Bank that as the Probationary/Trainee Officers are not in the Junior Management Grade which is a different cadre, they have no locus standi to challenge any benefit conferred on the officers of the Junior Management Grade comprising erstwhile Officers Grade I and Officers Grade II, as were in the employment of the Bank prior to October 1, 1979.
It is submitted by Mr. Shanti Bhushan that the Proba tionary/ Trainee Officers, with whom we are concerned, have not been prejudiced in the least by the Order having come into force on and from October 1, 1979.
The learned counsel has categorically stated before us that all these officers will be included in the Junior Management Grade and an order in that regard will be passed under paragraph 2(1) of the Order.
It is pointed out by him that everybody will be considered for promotion from the Junior Management Grade to the Middle Management Grade.
Thus, even though the Proba tionary/Trainee Officers are placed below the erstwhile Officers Grade II, they will be allowed to appear at the written test, one of the modes prescribed for promotion, along with others including the erstwhile Officers Grade II, provided they complete six years of service in Grade I. Apart from this, the Probationary/Trainee Officers have been fitted to the higher scale of pay in the Scale I of the Junior Management Grade, although they have not been formal ly included in that Grade.
In these circumstances, it cannot be said that the Probationary/Trainee Officers have been prejudiced by the Order.
We are sure that the Bank will take immediate steps for applying the order to the Probationary/Trainee Officers.
No other point has been urged on behalf of the parties.
For the reasons aforesaid, the judgment of the Allahabad High Court is set aside and the Civil Appeals are allowed.
The judgment of 136 the Delhi High Court is affirmed and the Special Leave Petition is dismissed.
All the Writ Petitions filed by the Probationary/Trainee Officers are also dismissed.
There will, however, be no order as to costs in any of these Appeals or in the Special Leave Petition.
P.S.S. Appeals allowed & Petition dismissed.
[/INST]The respondents, manufacturers of P.V.C. Conveyor Belt ing, contended before the Customs, Excise and Gold (Control) Tribunal that for purposes of excise duty under the Central Excise Tariff this item fell under Item 68.
The Revenue submitted that the commodity was governed by Item 22.
The Tribunal recorded a finding of fact that P.V.C. compounding was done simultaneously with the weaving of the fabric from yarn and held that this item should be governed by the residuary Entry 68 for the purposes of excise duty.
Dismissing the appeals by the Revenue, the Court, HELD: It is accepted that yarn is woven into fabric.
Item 19 deals with cotton fabrics while Item 22 deals with man made fabrics.
The Tribunal recorded a finding that P.V.C. compounding was done simultaneously with the weaving of the fabric from yarn, which clearly indicated that the process of manufacture was conversion from yarn to fabric as also the application of the P.V.C. Compound carried on at the same point.
[1228F; 1227FG] In view of the higher percentage of P.V.C. Compound in the commodity, it becomes difficult to treat the ultimate goods as manmade fabrics for holding that it is covered by Item 22.
Upon this analysis, the Tribunal was correct in holding that the goods were not covered by Item 22 and, therefore, the residuary Item 68 applied.
[ 1228G ]
</s> |
<s>[INST] Summarize the judgementivil Appeal Nos.
2263 to 2268 of 1984.
From the Judgment and Order dated 2nd April , 1982, of the High Court of Karnatka in Writ Appeal Nos. 662 to 667 of 1982.
663 Writ Petition Nos.
394 405 of 1984.
(under Article 32 of the constitution).
K. Srinivasan , Raghvendra Rao , V. Kumar for the Appellants.
in the C.A. Nos.
2263 68 of 1984.
R.P. Bhatt , Swaraj Kaushal for the Respondents in C.A. Nos.
2263 68 of 1984.
B Krishnamani , Lalit Kumar Gupta , Subash Dutt , K.K Pargal and Pankaj Kalra , for the Petitioner in W.P. No. 391 405/84.
K.L. Sharma , S.L. Benadikar and M. Veerappa for the Respondents in W.P. No. 394 405/84.
C The Judgment of the Court was delivered by KHALID , J.
The above appeals , by special leave, are directed against the common Judgment rendered by a Division Bench of the Karnataka High Court in writ appeal Nos.
662 668 of 1982.
In the writ petitions , the prayer is to strike down Section 7 of Karnataka Act No. 13 of 1982, Sections 2 and 3 of Karnataka Act No. 10 of 1984 and for a writ of mandamus to restrain the State of Karnataka from enforcing the said provisions against the Petitioners in the writ petitions.
This Judgment will dispose of the appeals and the writ petitions.
The facts , in brief , necessary to understand the genesis of the cases are as follows: Consequent upon the abolition of octroi by the State of Karnataka , which was the main source of revenue for the local bodies , the said State enacted the Karnataka Tax on Entry of Goods into local areas for Consumption , use or salt therein Act , 1979 (for short the 1979 Act) in order to augment the resources of the local bodies.
This Act came into force with effect from 1.6.1979 on which date it was gazetted.
3.A batch of 1590 writ petitions were field in the Karnataka High Court by a large number of traders challenging the constitutional validity of this Act.
Writ Petition No , 7039 of 1979 was one of them which was by Messrs Hansa Corporation , Bangalore.
These writ petitions, on reference by a learned Single Judge , were heard by a Division Bench , which by a common 664 Judgment dated 24.8.1979(T) struck down the Act , allowed the writ petition and issued writs of mandamus against the State Government forbearing it from taking any proceeding under the Act.
The State took the matter in appeal to this Court.
However only one appeal was filed , numbered as 3049 of 1979 against writ petition No. 7039 of 1979 filed by Messrs Hansa Corporation , in , pleading this Corporation alone as respondent , This Court by its Judgment dated 25.9.1980 allowed the appeal , set aside the Judgment of the Karnataka High Court and upheld the validity of the Act.
This decision is reported in ; 4.
While Civil appeal No. 3049 of 1979 was pending before this Court , the Governor of Karnataka promulgated the Karnataka Tax on Entry of Goods into a Local Area for Consumption , use or Sale therein Ordinance of 1980 (Karnataka Ordinance No. 5 of 1980) on 8.6.1980 providing for levy of entry tax on registered dealers , removing the infirmities in the 1979 Act , that were pointed out by the High Court in its Judgment while striking down the Act.
This ordinance was replaced by Act No. 21 of 1980 giving it retrospective effect from 8 6.1980 , the date of the ordinance .
After this Court rendered its Judgment in the Hansa Corporation case , the Governor of Karnataka promulgated another ordinance , Ordinance No. 11 of 1980 on 25.10.l980 re pealing the Entry Tax Act , 1980 , from its inception with certain other directions regarding adjustment of tax if any paid.
This was followed by Karnataka Tax on Entry of Goods into Local Areas , Use or Sale therein (repeal) Act, of 1981 , and Karnataka Act No. 10 of 1981 , repealing the 1980 Act.
This Act , however , did not repeal ordinance No. 11 of 1980.
In the meantime , Karnataka Ordinance No. 3 of 1981 , came into force which was followed by Karnataka Act 12 of 1981 which repealed Ordinance No. 11 of 1980.
As a result of the combined operation of ordinance No. 3 of 1981 and Act No. 12 of 1981.
the 1979 Act was made to be operative but only from 1 10.1980 and not from 1.6.1979 a originally enacted.
6 After the Judgment of this Court in the Hansa Corporation ease , upholding the validity of the 1979 Act, the authorities appointed under the Act , issued notices under the Act (1) I.T.R. 1980 (1) Karnataka 165 665 to all the dealers including those who had filed writ petitions earlier , calling upon them to register themselves under the Act , to file returns and to pay the amounts of tax due by them under the original Act of 1979.
Aggrieved by the said notices , the original writ petitioners again filed writ petitions before the High Court of Karnataka contending that the notices issued to them were bad inasmuch as the writ of mandamus issued in their favour by the High Court in the earlier Judgment survived and Was effective since the State had not filed appeals against them , and that the Judgment of this Court could rescue the State from taking proceedings only against the Hansa Corporation and not against them.
The State met this contention with the plea that the Judgment of this Court was binding on all and no one could escape from it.
The writ petitions were heard by a learned Single Judge.
He dismissed them holding , among other things , that Section 3 of the Act No. 10 of 1981 revived the 1979 Act and that action taken against the petitioners in the writ petitions , was therefore , valid.
Appeals were filed against this Judgment.
A Division Bench of the Karnataka High Court dismissed the appeals holding that Section 3 of the repealing Act of 1981 re enacted the 1979 Act and that , therefore , the appellants were not well founded in their challenge against the action taken by the State.
The learned Single Judge and the Division Bench had to consider the effect of the two decisions of this Court for deciding the questions argued before them.
The decisions are the State of Punjab vs Joginder Sinnh(1) and Makhanlal Waza vs J & K ' State.(2) Strong reliance was placed by the petitioners on Joginder Singh , s case and equally strong reliance by the State on Makhanlal 's case.
The learned Single Judge and the Division Bench understood the principle enunciated in the two decisions differently.
They were under the impression that the action taken by the State would have been invalid , but for the saving provision contained in the repealing Act , notwithstanding the Judgment in Hansa Corporation ' case.
What falls for decision in these appeals is the resolution of the conflict between the approach made by the learned Single (l) ; (2) [l971] 3 S.C.R. 832.
666 Judge and the Division Bench to the two cases referred to above and to examine the ratio of the two decisions , since , in our opinion , these appeals can be disposed of on the short ground whether the Hansa Corporation Judgment validated the action taken by the State We will now briefly set out the facts of the two cases: In Juginder Singh 's case , four employees who were absorbed in Government service filed four separate writ petitions before the High Court of Punjab challenging certain executive powers and rules as being violative of Article 14 of the Constitution.
All the four petitions were allowed by the High Court by a common order by which the rules challenged were struck down.
The State of Punjab filed only one appeal before this Court against this common order and that against Joginder Singh.
At the hearing of the appeal , a preliminary objection was raised on his behalf that the appeal was incompetent since the State had not filed appeals against the three other petitioners and that, therefore , any variation by this Court of the Judgment in the appeal would result in inconsistent decisions in respect of the same matter.
In Makhanlal 's case , an order made by the Government of Jammu and Kashmir providing for reservation of posts for certain communities was challenged before this Court as violative of Article 16 of the Constitution.
This Court accepted the challenge and invalidated the promotions of respondents 3 to 83 in that case.
By its Judgment , this Court directed the State Government to devise a scheme consistent with the constitutional guarantee for reservation of appointment to posts and to pass appropriate orders.
The State Government instead of complying with the directions given by this Court , attempted to circumvent the same by continuing those whose promotions were invalidated , giving the posts a different name.
The same petitioners again moved this Court under Article 32 of the Constitution questioning the action of the State Government.
The State Government justified its action contending that there were many persons who were not parties to the earlier writ petitions and who had been promoted prior to and/or subsequent to this Court 's decision and that they were not bound by the earlier Judgment.
This contention was repelled by this Court.
It was held that the law declared by this Court was binding on the respondent State and its 667 Officers irrespective of the fact whether those who would be affected by its pronouncement were parties to the Judgment A or not.
Now we will see how the learned Single Judge and the Division Bench understood the two Judgments of this Court.
The learned Single Judge extracted the relevant portions from Joginder Singh 's case and observed that the said Judgment , according to him , settled two firm propositions which in his words are as follows: "(i) An appeal filed against only one person, though his writ petition was disposed of by common order along with other cases filed by others notwithstanding the fact that appeals arc not filed against some cases , would be competent: and (ii) an order made by the Supreme Court in such an a appeal would bind the parties to appeal and would not affect the validity of the order made in the other cases.
" He , then , distinguished that case from the case before him by R stating thus: "But that is not the position in these cases.
The precise question that arises for determination in these cases is whether an Act of Legislature struck down by the High Court on certain grounds is reversed by the Supreme Court and the Act declared to be constitutionally valid , thereafter a validation Act is also passed rendering the Judgment of the High Court in the other cases as ineffective , (sic).
On that , the enunciation made in Joginder Singh 's case does not bear on the point and assist the Petitioner. " , 11.
After considering the facts of the Makhan Lal 's case , the learned Single Judge observed thus "This later enunciation by a larger Bench however, without noticing the earlier decision in Joginder Singh 's 668 case , in unmistakable terms , has ruled that the declaration made by it or enunciation made by it , is binding on all authorities courts and persons whether they are parties or not.
Shri Srinivasan urged that the above enunciation in Makhanlal Waza 's case was made by the Supreme Court in the context of a binding order made against Government and not against those who were not parties to its earlier order and, therefore , the principles stated in that case has no principles stated in that case has no application to the question that arises for determination.
In my view the attempt made by Shri Srinivasan to distinguish the enunciation made in Makhanlal Waza 's case is without a d difference and has no merit at all.
The enunciation made is not based on any such distinction and difference.
On the application of the principles enunciated in Makhanlal Waza 'section case it follows that the declaration made by the Supreme Court in Messrs Hansa Carporation 's case upholding the validity of the Act is binding on all Courts, authorities and persons in the State of Karnataka notwithstanding the fact that the State had filed only one appeal and had not filed appeals in the other cases. " From the above discussion , it would appear that the learned Single Judge felt that Joginder Singh 's case indicated a different view.
Now we will see how the Division Bench understood the above propositions.
After considering the facts of the case and extracting the relevant portions of this Court`s Judgments , the Division Bench observed as follows: "In our opinion , there is no conflict between the aforesaid two decisions of the Supreme Court.
As rightly pointed out by Shri Srinivasan , in Makhanlal Waza 's case, the decision.
turned on the fact that the direction in the earlier Judgment of the 669 Supreme Court was made against the State Government and not against promotees who were not parties in the earlier writ petition.
The State Government which was a party in the earlier writ petition , was bound by the Judgment of the Supreme Court therein and could not disregard the direction of the Supreme Court on the ground that the promotees were not parties in the earlier writ petition.
Thus , the decision of the Supreme Court in Makhanlal Waza 's case is distinguishable on facts.
As the material facts of the present cases are similar to those in Joginder Singh 's case, the law laid down by the Supreme Court in that case , is squarely applicable to these cases.
" From the above conclusion , it appears that the Division Bench felt that the law laid down in Joginder Singh 's case applied to the appeals before it and that the decision of the Supreme Court in Makhanlal 's case was distinguishable on facts.
As indicated above , the appeals were dismissed relying upon 1 Section 3 of the repealing Act of 1981.
We will now consider the submissions made before us with reference to the above two decisions of this Court and examine the correctness of the findings entered by the learned Single Judge and the Division Bench.
The main thrust of the submission made by the learned counsel for appellants in these appeals is that the writ of mandamus issued by the High Court in their favour was effective since the Judgment in their favour was not challenged by filing appeals before this court.
It is submitted that the law laid down by this Court would apply only against the Hansa Corporation , against whom alone the State had filed an appeal In support of this contention the following passage at page 177 in Joginder Singh 's case was relied upon: "All the four petitions were delt with together and were disposed of by a common Judgment so that relief according to Joginder Singh , the respondent before us , in Writ application No. 1559 of 1960 was also granted to the other three petitioners.
The State , however , has preferred no appeal against the orders in the other three 670 petitions , and Mr. Agarwal , learned counsel for the respondent , raises the contention that as the orders in the other three petitions have become final , any order passed in this appeal at variance with the relief granted in the other three petitions would create inconsistent degree in respect of the same matter and so we should dismiss the present appeal as incompetent.
We , however , consider that this would not be the legal effect of any order passed by this Court in this appeal and that there is no merit in this objection as a bar to the hearing of the appeal.
In our opinion , the true position arising , if the present appeal by the State Government should succeed , would be that the finality of the orders passed in the other three writ petitions by the Punjab High Court would not be disturbed and that those three successful petitioners would be entitled to retain the advantages which they had secured by the decisions in their favour , not being challenged by an appeal being filed.
That however , would not help the present respondent , The respondent would be bound by our Judgment in this appeal and besides , so far as the general law is concerned as applicable to everyone other than the three writ petitioners (who would be entitled to the benefit of the decisions in their favour having attained finality), the law will be as laid down by this Court.
We , therefore, overrule the preliminary objection.
In our opinion , reliance on this passage by the appellants in support of their contention is not justified.
The only question that fell to be decided in Joginder Singh 's case was whether the appeal filed by the State was competent in the adsence of appeals against the other petitioners.
This was answered by the Court in the affirmative as follows: ".
We , however , consider that this would not be the legal effect of any order passed by the Court in this appeal and that there is no merit in this objection as a bar to the hearing of the appeal.
" It is this observation that disposes of the preliminary objec 671 tion and the finding of the Court on this objection is contained in the above passage.
The sentences that followed , relating to the effect of the orders passed by the High Court in the other three writ petitions can only be treated as obiter and therefore cannot be relied upon by the appellants to press a case that the law declared by this Court in Hansa Corporation 's case did not bind them.
The same principle is laid down in Makhanlal Waza 's case.
In that case , the State of Jammu and Kashmir attempted to circumvent the law declared by this Court in Trilok Nath and another vs State of Jammu Kashmir and others(1) by which the State policy of reservation to certain communities was declared bad by this Court with the plea that the vice of that Judgment operated only so far as the parties to the Judgment was concerned and not against those who were not parties thereto.
This Court repelled the contention and held as follows: ".
As regards the other respondent teachers who did not figure in the earlier petition , they were all promoted to the gazetted cadre prior and subsequent to the previous decision in complete defiance of the law laid down by this Court.
Such a course has been sought to be justified on the tenuous ground that they were not parties to the previous petition and therefore their cases would not be governed by the decision given in that petition.
It may be observed immediately that such a position is wholly untenable and misconceived.
The Judgment which was delivered did not merely declare the promotions granted to the respondents in the petition filed at the previous Stage as unconstitutional but also laid down in clear and unequivocal terms that the distribution of appointments , posts or promotions made in implementation of the communal policy was contrary to the constitutional guarantee of Articie 16.
The law so declared by this Court was binding on the respondent State and its officers and they were bound to follow it whether a majority of the present respondents were parties or not to the previous petition.
In our opinion , both these decisions lay down identical (1) [1969] I S.C.R. 103.
672 principles and there is nothing to distinguish between the two.
In the earlier case , this Court , on its facts , overruled the preliminary objection that absence of appeals against the three petitioners left out , would not render the appeal before this Court incompetent , holding thereby that the effect of the decision in that appeal would be binding on the appellant therein.
In the latter case , this Court in unmistakable terms laid down that the law laid down in the earlier case , namely , Triloknath 's case , applied even to those who were not parties to the case.
These two decision were given by two Constitution Benches of this Court.
We find that Joginder Singh 's case was not noted by the Bench that decided Makhanlal Waza 's case.
This does not create any difficulty.
As we have already held , the two decisions , on the principles laid down by them , speak the same voice , i.e. that the law laid down by the Supreme Court is binding on all , notwithstanding the fact that it is against the State or a private party and that it is binding on even those who were not parties before the Court.
Since it is necessary to make the position of law clear and free from ambiguity , we would set out our reasons for our conclusion clearly.
Though a large number of writ petitions were filed challenging the Act , all those writ petitions were grouped together , heard together and were disposed of by the High Court by a common Judgment.
No petitioner advanced any contention peculiar or individual to his petition , not common to others.
To be precise , the dispute in the cause or controversy between the State and each petitioner had no personal or individual element in it or anything personal on peculiar to each petitioner.
The challenge to the constitutional validity of 1979 Act proceeded on identical grounds common to all petitioners.
This challenge was accepted by the High Court by a common Judgment and it was this common Judgment that was the subject matter of appeal before this Court in Hansa Corporation 's case.
When the Supreme Court repelled the challenge and held the Act constitutionally valid , it in terms disposed of not the appeal in Hansa Corporation 's case alone , but all petitions in which the High Court issued mandamus on the none existent ground that the 1979 Act was constitutionally invalid.
It is , therefore , idle to contend that the law laid down by this Court in that Judgment would bind only the Hansa Corporation and not the other petitioners against whom the State of Karnataka had not filed any appeal.
To do so is to ignore the binding nature of a Judgment of this Court under Article 141 of the Constitution.
673 Article 141 reads as follows: A "The law declared by the Supreme Court shall be binding on all courts within the territory of India " A mere reading of this Article brings into sharp focus its expanse and its all pervasive nature.
In cases like this , where numerous petitions are disposed of by a common Judgment and only one appeal is filed , the parties to the common Judgment could very well have and should have intervened and could have requested the Court to hear them also.
They cannot be heard to say that the decision was taken by this Court behind their back or profess a ignorance of the fact that an appeal had been filed by the State against the common Judgment.
We would like to observe that , in the fitness of things , it would be desirable that the State Government also took out publication in such cases to alert parties bound by the Judgment , of the fact that an appeal had been preferred before this Court by them.
We do not find fault with the State for having filed only one appeal.
It is , of course , an economizing procedure.
The Judgment in the Hansa Corporation case rendered by one of us (Desai , J.) concludes as follows "As we are not able to uphold l the contentions which found favour with the High Court in striking down the impugned Act and the notification issued thereunder and as we find no merit in other contentions canvassed on behalf of the respondent for sustaining the Judgment of the High Court , this appeal must succeed.
Accordingly , this appeal is allowed and the Judgment of the High Court is quashed and set aside and the petition filed by the respondent in the High Court is dismissed with costs throughout.
" To contend that this conclusion applies only to the party before this Court is to destroy the efficacy and integrity of the Judgment and to make the mandate of Article 141 illusory.
By setting aside the common Judgment of the High Court , the mandamus issued by the High Court is rendered ineffective not only in one case but in all cases.
674 19.A writ or an order in the nature of mandamus has always been understood to mean a command issuing from the Court , competent to do the same , to a public servant amongst others , to perform a duty attaching to the office , failure to perform which leads to the initiation of action.
In this case , the petitioners appellants assert that the mandamus in their case was issued by the High Court commanding the authority to desist or forbear from enforcing the provisions of an Act which was not validly enacted.
In other words , a writ of mandamus was predicated upon the view that the High Court took that the 1979 Act was constitutionally invalid.
Consequently the court directed the authorities under the said Act to forbear from enforcing the provisions of the Act qua the petitioners.
The Act was subsequently declared constitutionally valid by this Court.
The Act , therefore , was under an eclipse , for a short duration; but with the declaration of the law by this Court , the temporary shadow cast on it by the mandamus disappeared and the Act revived with its full figure , the constitutional invalidity held by the High Court having been removed by the Judgment of this Court.
If the law so declared invalid is held constitutionally valid , effective and binding by the Supreme Court , the mandamus for bearing the authorities from enforcing its provisions would become ineffective and the authorities cannot be compelled to perform a negative duty.
The declaration of the law is binding on everyone and it is therefore , futile to contend that the mandamus would survive in favour of those parties against whom appeals were not filed.
The fallacy of the argument can be better illustrated by looking at the submissions made from a slightly different angle.
Assume for arguments sake that the mandamus in favour of the appellants survived notwithstanding the Judgment of this Court.
How do they enforce the mandamus ? The normal procedure is to move the Court in contempt when the parties against whom man damus is issued disrespect it.
Supposing contempt petitions are filed and notices are issued to the State.
The State 's answer to the Court will be: "Can I be punished for disrespecting the mandamus , when the law of the land has been laid down by the Supreme Court against the mandamus issued , which law is equally binding on me and on you ?".
Which Court can punish a party for contempt under these circumstances ? The answer can be only in the negative because the mandamus issued by the High Court becomes ineffective 675 and unenforceable when the basis on which it was issued falls , by the declaration by the Supreme Court , of the validity of 1979 Act.
In view of this conclusion of ours , we do not think it necessary to refer to the other arguments raised before the High Court and which the learned counsel for the appellants attempted to raise before us also.
The appeals can be disposed of on this short point stated above.
The Judgment of this Court in the Hansa Corporation 's case is binding on all concerned whether they were parties to the Judgment or not.
We would like to make it clear that there is no inconsistency in the finding of this Court in Joginder Singh 's case and Makhanlal Waza 's case.
The ratio is the same and the appellants cannot take advantage of certain observations made by this Court in Joginder Singh 's case for the reasons indicated above.
In the writ petitions the challenge is against Section 7 of Act No. 10 of 1981 and they contain certain other prayers also.
We do not think it necessary to deal with the contentions raised in them since it would be an unnecessary exercise , in view of the revival of the parent Act of 1979 by the Judgment of this Court.
In the result , the appeals and the writ petitions are dismissed with costs; cost quantified at Rs. 2,000 in each case.
S.R. Appeals & Petitions dismissed.
[/INST]Under Section 12(2) of the Uttar Pradesh Urban Buildings (Regulation of Letting, Rent and Eviction) Act, 1972 (for short, the Act), a tenant of a non residential building carrying on business in the said building is deemed to have ceased to occupy the premises on his admitting as a partner or a new partner a person who was not a member of his family.
The definition of "family" given in clause (g) of Section 3 of the Act does not expressly include a son in law or a daughter in law.
In each of the two appeals, the appellant/tenant admitted into his partnership firm his son in law and 'or daughter in law, as the case may be.
There upon, the landlord respondent in each appeal filed an application for release of his non residential building in his favour on the ground that there was a deemed vacancy under Section 12(2) of the Act.
The Rent controller held that there were deemed vacancies in respect of the two premises and ordered such deemed vacancies to be notified.
The appellants/tenants filed applications to set aside the said orders directing notification of deemed vacancy and for permission to urge their objections and to contest the said applications for release.
The Rent Controller negatived the contentions of the appellants and ordered such vacancies to be notified.
The appellants/tenants filed writ petitions in the High Court under Article 226 of the Constitution challenging the two orders notifying deemed vacancies under sub Section (2) of Section 12 of the Act.
The High Court, relying upon a judgment of a two Judge Bench of the Supreme 385 Court in Trilok Singh & Co. vs District Magistrate, Lucknow, the amendment of the Act by Uttar Pradesh Urban Buildings (regulation of Letting, Rent and Eviction) Amendment Act 1976 (for short, the 1976 Amendment Act), dismissed both the petitions as pre mature holding that where a release of a building is sought, the matter lies only between the District Magistrate and the landlord and no other person has a right to object to the release of the premises to the landlord.
Hence these appeals.
Allowing the appeals and directing the High Court to `rehear on merits the writ petitions filed by the appellants.
the Court.
^ HELD: 1(i) Under the proviso to Section 16(1), in the case of a vacancy referred to in Section 12(4), the District Magistrate is to give an opportunity to the landlord or the tenant, as the case may be, of showing that the said Section is not attracted to his case before making an order under clause (a) of Section 16(1), that is, before making an allotment order; This proviso was inserted by the 1976 amendment Act.
Strangely enough, in the case of release of the premises to the landlord, the proviso does not require any such opportunity to be given to the tenant who would be the person affected by that order.
Sub section (2) of Section 16 sets out the circumstances in which a building or any part thereof may be released to the landlord.
Under Sub section (7) every order made under that Section, subject to any order made under Section 18, is to be final.
Under Section 18 as substituted by the 1976 Amendment Act, no appeal lies against any order of allotment, re allotment or release but any person aggrieved by a final order of allotment, re allotment or release may, within fifteen days from the date of such order, prefer a revision to the District Judge.
On such application being made, the revising authority may confirm or rescind the final order of allotment, re allotment or release or may remand the case to the District Magistrate for rehearing and, pending revision, may stay the operation of such order on such terms as he thinks lit Prior to the substitution of Section 18 by the 1976 Amendment Act, that Section provided for an appeal to the District Judge by a person aggrieved by an order of allotment, re allotment or release and where such order was varied or rescinded in appeal, the District Magistrate had the power, on p an application made to him in that behalf, to place the parties back in the position which they would have occupied but for such order or such part thereof as was varied or rescinded and to use or cause to be used for that purpose such force as may be necessary.
[393H; 394A B; H; 395A; D P] 1(ii).
The Uttar Pradesh Urban Buildings.
(Regulation of Letting, Rent and Eviction) Rules, 1972, prescribe the procedure for ascertainment of vacancy and for allotment or release of premises.
Under Rule 8, before he makes any order of allotment or release in respect of any building which is alleged to be vacant under S.12 or to be otherwise vacant or to be likely to fall vacant, the District Magistrate is required to get the building inspected.
The facts mentioned in the inspection report are, wherever practicable, to be elicited from at least two respectable persons in the locality and the conclusion of the inspection report is to be posted on the notice board of the office of the District Magistrate for the information of the general public, and an order of allotment is not to 386 be passed before the expiration of three days from the date of such posting, and if in the meantime any objection is received, not before the disposal of suck objection.
Any objection received is to be decided after consideration of any evidence which the objector or any other person concerned may adduce [396A D] 2(i) The position under the Act as amended in 1976 is greatly changed and the right of appeal which was granted by S.18 has been substituted by a right of revision on the grounds set out in the substituted Section 18 and which are the same as those on which a revision lies to the High Court under Section 115 of the Code of Civil Procedure, 1908.
While in an appeal, findings of fact can also be challenged on the ground that the evidence was not properly appreciated, in revision the only question would be whether the District Magistrate had exercised a jurisdiction not vested in him by law or had failed to exercise a jurisdiction vested in him by law or had acted in the exercise of his jurisdiction illegally or with material irregularity.
The scope of revision under Section 18 is.
therefore.
much narrower than in the case of an appeal [400E F] 2(ii).
Under the proviso to Section 16(1), which was inserted by the 1976 Amendment Act, the District Magistrate is required in the case of a vacancy referred to in sub Section (4) which includes a deemed vacancy under Section 12(2) to give an opportunity to the landlord or the tenant, as the case may be, of showing that Section 12(4) is not attracted to his case before he makes an order of allotment under clause (a) of Section 16(1).
Thus, this proviso gives a right of hearing to the tenant before an order of allotment is made.
The proviso, however, does not apply in the case of an order of release made under clause (b) of Section 16(1).
Even in the case of an application for allotment, it is doubtful whether a tenant whose objections to notification of a deemed vacancy have been negatived and thereafter the vacancy has been ordered to be notified could be permitted to reagitate the same contentions because such contentions would be barred by principles analogous to res judicata.
In such an event, it would be difficult to say that he can exercise his right of review on the ground that there was no p vacancy.
This would apply equally where an order of release is made.
Further, the revision which is provided for under Section 18 is against an order of allotment or release and not against a notification of vacancy and an issue, which was concluded earlier and on the basis of the finding on which the District Magistrate had proceeded to allot or release the premises, cannot be reagitated in revision.
Thus, the scheme of the Act would show that a tenant of premises in whose case it is found that there is a deemed vacancy has no efficacious or adequate remedy under the Act to challenge that finding.
A petition under article 226 or 227 of the constitution of India filed by such a tenant in order to challenge that finding cannot, therefore, be said to be pre mature.
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