JUDGMENT <NAME>, J.

1. In this reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Commissioner of Income-tax, the following two questions have been referred to this court for the assessment year 1973-74 :

"1. Whether, on the facts and in the circumstances of the case, the loss arising out of exchange fluctuation in respect of the payment of the instalments of loan in Japanese yen obtained for the purchase of machineries on deferred payment basis was capital or revenue expenditure ?

2. Whether, on the facts and in the circumstances of the case, the assessee can claim as deduction the provision for payment of leave salary in the year under consideration ?"

2. At the suggestion of the learned advocates, we have reframed the first question as follows to bring out the real controversy :

"Whether, on the facts and in the circumstances of this case, the additional expenditure incurred by reason of exchange fluctuation in respect of the payment of the instalments of loan in Japanese yen obtained for the purchase of machinery on deferred payment basis was capital or revenue expenditure ?"

3. The facts relating to the first question are stated hereafter.

4. The assessee had borrowed certain capital in Japanese yen for the setting up of a capital asset. The said loan was also repayable in instalments in Japanese yen. For the instalments in Japanese yen payable towards the purchase price of the machinery purchased on deferred payment, basis, the assessee, over and above the amount of those instalments in Indian rupees, had to pay Rs. 8,939 more in view of the day to day fluctuations in the exchange rate. The claim of the assessee for the deduction of the said amount under Section 43A of the Act has been negatived by the Income-tax Officer on the ground that the said loss was capital and not revenue in nature because the loss arose in making instalment payments of the purchase price of the machineries which were capital assets of the assessee.

5. Aggrieved by the said disallowance, the assessee brought the matter by way of appeal before the Appellate Assistant Commissioner who, following the decision of the <ORG> in the case of <ORG>, in ITA No. 5304 (Cal) of 1974-75, held that the said loss was capital and not revenue in nature.

6. In the appeal by the assessee before the <ORG>, it was conceded that if the loss in the present case was loss due to devaluation in relation to a capital asset, it would not be allowed but since in this case the loss is on account of fluctuations in the rates of foreign exchange in terms of Section 43A of the Act, such loss should be allowed. The <ORG> merely followed its earlier order and held that the loss in question was allowable as revenue loss.

7. The <ORG> in the case of <ORG> held as follows :

"In our opinion, Mr. <NAME> is right. There is no dispute that the loss relates to capital, in the sense that in respect of certain loans which were to be repaid by the assessee, they were incurred in acquiring capital assets and the loss arose. So far as the loss on account of fluctuations in foreign exchange rate is concerned, the decisions of the <ORG> are uniform in Calcutta and Bombay to which reference has been made already. The decision in <ORG> has no application as it is a case of loss on devaluation. The matter was fully discussed by the Calcutta and Bombay <ORG> and we are in full agreement with the views expressed therein. Consequently, the loss is allowable."

8. One of the orders relied on by the <ORG> is in the case of <ORG>. In that case, the <ORG> has taken the view that foreign loans were obtained by the assessee in the course of business which were ultimately utilised for the purchase of plant and machinery. The ultimate object and purpose of those foreign loans are immaterial for deciding the question whether the additional liability for fluctuation in the rate of foreign exchange is a business loss or not. Accordingly, it was held that the loss in such a case was allowable as revenue loss or revenue expenditure, as the case may be, in view of the decision of <ORG> in the case of <CITATION>  60 ITR 52.

9. Mr. <NAME>, learned advocate for the assessee, has mainly reiterated his submissions made before the <ORG>. It is his submission that a distinction has to be drawn between a case where the loss is on account of devaluation and a case where the loss arises due to day to day fluctuation in the rate of currency. In a case of loss or liability arising because of fluctuations in the rate of exchange, it must be treated as incidental to the carrying on of the business. It is his contention that in the instant case whatever extra payment in terms of rupees was made by the assessee must be taken to be an unavoidable expenditure in connection with the loan. He has relied on the decision of this court in <CITATION>  130 ITR 351.

10. On the other hand, Mr. <NAME>, learned advocate for the <ORG>, has contended that there cannot be any difference in principle so far as the nature of the liability is concerned, one arising on devaluation and the other by reason of fluctuation. He has relied on various decisions in support of his contention. The respective contentions have to be considered in the light of the decisions cited before us.

11. Mr. <NAME> has cited before us a decision of <ORG> in <CITATION> ,  60 ITR 405, where <ORG> observed as follows (p. 410):

"A number of cases have been cited before us, but it seems to us that the answer to the question depends on whether the act of keeping the money, i.e., $36,123.02, for capital purposes after obtaining the sanction of <ORG> was part of or a trading transaction. If it was part of or a trading transaction then any profit that would accrue would be revenue receipt ; if it was not part of or a trading transaction, then the profit made would be a capital profit and not taxable. There is no doubt that the amount of $36,123.02 was a revenue receipt in the assessee's business of commission agency. Instead of repatriating it immediately, the assessee obtained the sanction of <ORG> to utilise the commission in its business of manufacture of locomotive boilers and locomotives for buying capital goods. That was quite an independent transaction, and it is the nature of this transaction which has to be determined. In our view, it was not a trading transaction in the business of manufacture of locomotive boilers and locomotives ; it was clearly a transaction of accumulating dollars to pay for capital goods, the first step in the acquisition of capital goods. If the assessee had repatriated $36,123.02 and then after obtaining the sanction of <ORG> remitted $36,123.02 to the U.S.A., Mr. <NAME> does not contest that any profit made on devaluation would have been a capital profit. But, in our opinion, the fact that the assessee kept the money there does not make any difference especially, as we have pointed out, when it was a new transaction which the assessee entered into, the transaction being the first step in the acquisition of capital goods."

12. The next decision cited by Mr. <NAME> is also of <ORG> in the case of <CITATION>  116 ITR i. There, <ORG> observed as follows (p. 13) :

"The law may, therefore, now be taken to be well settled that where profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency held by it, on conversion into another currency, such profit or loss would ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business. But, if on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature. Now, in the present case, no finding appears to have been given by the <ORG> as to whether the sums of Rs. 25 lakhs and Rs. 12,50,000 were held by the assessee in West Pakistan on capital account or revenue account and whether they were part of fixed capital or of circulating capital embarked and adventured in the business in West Pakistan. If these two amounts were employed in the business in West Pakistan and formed part of the circulating capital of that business, the loss of Rs. 11 lakhs and Rs. 5,50,000 resulting to the assessee on the remittance of those two amounts to India, on account of alteration in the rate of exchange, would be a trading loss, but if, instead, these two amounts were held on capital account and were part of fixed capital, the loss would plainly be a capital loss. The question whether the loss suffered by the assessee was a trading loss or a capital loss cannot, therefore, be answered unless it is first determined whether these two amounts were held by the- assessee on capital account or on revenue account or, to put it differently, as part of fixed capital or of circulating capital."

13. The next decision cited by Mr. <NAME> is the decision of this court in the case of <CITATION>  117 ITR 789. This court observed as follows (p. 802) :

"The question which in our view is of real importance in the instant case is whether the loss or expenditure of the assessee as a result of the devaluation is of a capital nature or of a revenue nature. Mr. <NAME>, for the assessee, has contended in the course of his submissions that a loss has to be considered in a different way from a gain in computing business profits. There may be cases where a loss dehors the business is allowed as a business loss, whereas a gain arising in similar circumstances will never be a business gain. In our view, this distinction again is of little significance as the gain or the loss, as the case may be, has to be connected with the business before the same can enter into the computation of profits.

On a scrutiny of the facts of the instant case, it appears to us that as a result of the devaluation which befell the assessee, it became immediately liable to an extra liability in terms of its rupee assets for repayment of its debts. This extra expenditure, deemed or otherwise, or this loss, is inextricably connected with the assessee's indebtedness and did not arise dehors the indebtedness nor was it incurred for the purposes of the loan and it was, as if, from the date of the devaluation, the dues from the assessee to its creditors in rupees were increased. We are unable to accept the contentions of Mr. <NAME> that the extra amount which the assessee had to provide for as a result of the devaluation is to be considered as extra expenditure to be incurred for meeting the debt just as postal expenses or bank charges or this extra expenditure which would result in a business loss of a revenue nature."

14. Mr. <NAME> then relied on the decision of <ORG> in the case of <CITATION> .  120 ITR 451. In that case, the assessee entered into an agreement on December 3, 1958, with an Italian company for the purchase of machinery at the total value working out to Rs. 2,93,25,000-39 in Indian currency at the then prevailing rate of exchange. The agreement further provided that the Italian company should draw bills of exchange on the assessee which were to be accepted by the assessee and payments of which were to be guaranteed by <ORG>. The agreement also provided for payment in terms of British sterling calculated at the prevalent exchange rate between sterling and the U.S. dollar and if there should be variation in the exchange rate, the same should be separately settled with credit notes in rupees or in lire in favour respectively of the Italian company or the assessee, as the case may be. In pursuance of the above agreement, during the accounting years fending on December 31, 1961, and December 31, 1962, the Italian company drew four bills of exchange on the assessee, the total amount payable according to the then prevailing rate of exchange being Rs. 2,95,35,020.38. However, due to the fluctuations in the rate of exchange, the assessee had to pay Rs. 2,98,15,915.41. Similarly, the assessee had to pay a larger amount on account of fluctuations in exchange rate in respect of other instalments in 1964. Consequently, the assessee had to pay during the period relevant to the assessment years 1963-64 and 1965-66, Rs. 1,93,509 and Rs. 1,08,302 respectively in excess of the amount that would have been payable if the exchange rates were stationary as at the time the agreement was entered into. In its returns for these two assessment years 1963-64 and 1965-66, the assessee claimed deduction of these two amounts. The claim; was negatived by the <ORG> but upheld by the Appellate Assistant Commissioner and the <ORG>.

15. On the aforesaid facts, <ORG> held that as the price fixed under the agreement was only a tentative price which had to be discharged at the prevailing rates of exchange at the time of the respective payments, the payments related only to the purchase price of the machinery and the difference was on capital account and not allowable as business expenditure.

16. <ORG> also observed that the fact, that <ORG>, provided for the fluctuation in the exchange rates being taken into account in arriving at the cost of assets by inserting Section 43A in the Income-tax Act , 1961, by Section 17 of the Finance (No. 2) Act, 1967, with effect from April 1, 1967, would not in any way affect the point in issue which, has to be considered in the light of the actual nature of the payment that had to be made and in the light of the provisions in force.

17. The next decision relied on by the learned advocates for the parties is in the case of <CITATION>  130 ITR 351. There, this court, after considering the judgment of <ORG> in the case of <CITATION>  116 ITR 1, held at page 370, as follows:

"The aforesaid passage was emphasised on behalf of the <ORG> re-presenting the settled law that when profit or loss arises to an assessee on account of appreciation or depreciation in the value of foreign currency-held by it, such profit or loss would ordinarily be trading profit or loss if the foreign currency is held by the assessee on revenue account or as a trading asset or as part of circulating capital embarked in the business. But if, on the other hand, the foreign currency is held as a capital asset or as fixed capital, such profit or loss would be of capital nature. It was, in this connection, emphasised that whether it was sustenance money or borrowed money, after borrowing it becomes its own money. The learned advocate for the assessee also emphasised that there <ORG> was dealing essentially with the assessee's own money. Therefore, according to him, <ORG> had no occasion to advert to this aspect of the matter, where, in a case, the assessee was dealing with borrowed money.

Perhaps, in this light, <ORG> of this court decided this question in the case of <NAME> ( <CITATION> ."

18. Then, this court considered the scope of Section 43A of the Act. At page 374, the court referred to the object of the Finance Bill which introduced Section 43A .

"In the Finance (No. 2) Bill, 1967, which introduced Section 43A , Clause 17 of the Notes on Clauses sought to explain the purpose of such insertion, which reads as follows ( 64 ITR (St.) 109, 169):

'Clause 17 seeks to insert a new Section 43A in the Income-tax Act . The proposed Section 43A , in substance, secures that where an assessee had acquired any capital asset from a country outside India for the purposes of his business or profession on deferred payment terms or against a foreign loan, before the date of devaluation of the rupee, the additional rupee liability incurred by him in meeting the instalments of the cost of the asset or of the foreign loan, as the case may be, falling due for payment after the date of devaluation, will be allowed to be added to the original actual cost of the asset for the purpose of calculating the allowance on account of depreciation in computing the profits for the assessment year 1967-68 and subsequent assessment years. Similar increase in the original actual cost will be allowed to be made in respect of the capital assets acquired by the assessee to be used in scientific research related to the class of business carried on by him or patent rights or copyrights acquired from abroad or any capital asset acquired by a company for the purpose of promoting family planning amongst its employees. Further, in computing the capital gains arising to the assessee on the sale or transfer of a capital asset acquired by him from abroad on deferred payment terms or against a foreign loan, the additional rupee liability incurred by him in repaying the instalments of the cost or the foreign loan, as the case may be, after the date of devaluation of the rupee, will be added to the original actual cost of the asset. The proposed section also secures that where there is a decrease in the rupee liability of the assessee in respect of assets acquired by him from abroad due to a change in the exchange value of the rupee, the original actual cost of the asset will be correspondingly reduced.

The additional rupee liability incurred on imported capital assets or, as the case may be, any decrease in such liability, in the circumstances stated in the earlier paragraph, will not, however, be taken into account in computing the actual cost of the asset for the purpose of deduction on account of development rebate.' Basing on the aforesaid notes, on behalf of the <ORG>, it was contended mainly that the purpose of Section 43A was to deal with all devaluation cases. Therefore, any appreciation or depreciation in value of assets, as a result of devaluation in profit or loss arising therefrom, must be governed by the special provisions of Section 43A . A special provision has been made and this is the only provision to guide the matter. Before we deal with that aspect of the matter, we must refer to Section 43(1) which uses a non obstante clause. <ORG> had observed in the case of <ORG> (P.) <CITATION> , explaining the purpose of such a clause at page 215 dealing with Article 372 of the Constitution of India (p. 89 of 15 STC) :

' That apart, even if Article 372 continues the pre-Constitution laws of taxation, that provision is expressly made subject to the other provisions of the Constitution. The expression "subject to" conveys the idea of a provision yielding place to another provision or other provisions to which it is made subject. Further, Article 278 opens out with a non obstante clause. The phrase "notwithstanding anything in the Constitution" is equivalent to saying that in spite of the other articles of the Constitution, or that the other articles shall not be an impediment to the operation of Article 278. While Article 372 is subject to Article 278 , Article 278 operates in its own sphere in spite of Article 372. The result is that Article 278 overrides Article 372 ; that is to say, notwithstanding the fact that a pre-Constitution taxation law continues in force under Article 372 , the <ORG> and the State Governments can enter into an agreement in terms of Article 278 in respect of Part B States depriving the State law of its efficacy. In one view, Article 277 excludes the operation of Article 372 , and in the other view, an agreement in terms of Article 278 overrides Article 372. In either view, the result is the same, namely, that at any rate during the period covered by the agreement, the States ceased to have any power to impose the tax in respect of "works contracts".'

19. It states in essence that in spite of what is contained previously, this clause would be operative. Another significant fact has to be borne in mind that Sub-section (1) of Section 43A deals with the expression 'acquisition' which deals with the situation where there is a change in the valuation of foreign currency after acquisition. But in the case of development rebate, it has to be emphasised that acquisition is not relevant on the material date, but the date of installation is the most material date."

20. At page 377, the court observed as follows :

"In the instant case before us, the contract stipulated repayment in dollars. Therefore, the actual cost of the assessee must be computed on the dollar value. Therefore, anything which went into that repayment, that is to say, any cost which actually went in repaying the debt, must be, in our opinion, on the principle of computation of the actual cost, which, irrespective of Section 43A , would be entitled to development rebate under Section 33A and inasmuch as Sub-section (2) of Section 43A only excludes the portion of Sub-section (1) of Section 43A , in our opinion, this position would not be inadmissible that the assessee would be entitled to obtain the development rebate. In the instant case, we are concerned with the question whether Section 43 was at all meant for dealing with the case where there is no question of installation involved, but only acquisition was the relevant fact. We are unable to find any support for the argument on behalf of the <ORG> that in all devaluation cases, whether of increase or decrease, the result of devaluation must be guided by Section 43A and under Section 43A alone. The same view was reiterated by <ORG> in the case of <CITATION>  112 ITR 64."

21. This court thereafter considered the judgment of <ORG> in the case of <CITATION> . CIT  116 ITR 819 and at page 379, observed as follows :

"In so far as the decision took the view that in respect of all devaluation cases irrespective of whether the stipulated payment in the matter of foreign currency should be made under Section 43A alone, with great respect we are unable to agree and we prefer to adhere to the former view of <ORG> and the other view of <ORG> as mentioned hereinbefore. On behalf of the assessee, it was contended that Section 43A has been introduced to meet with the situation of computing depreciation year after year where the price in terms of Indian rupee fluctuates on account of change in the rate of exchange. But since no such situation arises in the cases of development rebate which is granted once and for all, the said provision has not been made applicable to the computation of development rebate. The development rebate continues to be computed on the basis of the provisions of Section 33 as before. It was linked with the actual cost of the machinery or plant to the assessee. The actual cost of the machinery or plant should be the cost on the relevant date. Therefore, on the relevant date when the contract was entered into, it was entered into with the direction to pay back in dollars and whatever was necessary to pay back must be treated as actual cost to the assessee."

22. Having regard to the principles laid down by the aforesaid decisions, we are unable to accept the contention of Mr. <NAME>. There is no qualitative difference in the additional expenditure incurred due to the devaluation or fluctuation in the rate of exchange. In both the cases, an additional liability is imposed. But whether the expenditure involving this additional liability will be allowable or not in computing the profit will depend on whether the expenditure is on capital account or on revenue account. It is the nature and character of the expenditure which would determine the question. It is not an expenditure as contended by Mr. <NAME> for meeting "the debt just as postal expenses or bank charges " or an extra expenditure in connection with obtaining any loan like "stamp duty, registration fees, etc." This court held in <ORG> case [1979] 117 ITR 789, that an additional expenditure incurred due to the devaluation for repaying (in foreign exchange) a loan is a capital expenditure. Although in that case the court was concerned with a case of devaluation, the principles laid down therein will equally apply to a case like this where the additional liability arises because, of fluctuation in the rate of exchange. As laid down in <ORG> , " this extra expenditure, deemed or otherwise, or this loss, is inextricably connected with the assessee's indebtedness and did not arise dehors the indebtedness nor was it incurred for the purpose of the loan and it was, as if, from the date of the devaluation, the dues from the the assessee to its creditors in rupees were increased ". The reasoning of the <ORG> is based on the decision of <ORG> in <ORG>'s case [1966] 60 ITR 52. This case has no application to the facts of this case as the extra expenditure was not incurred to obtain the loan. The loan had already been obtained. It is at the point of repayment of the loan that the assessee has to provide an extra amount in rupees by reason of the fluctuation in the rate of exchange. Further, the assessee purchased a capital asset and the purchase price was converted into loan which was repayable by instalments. Thus, the expenditure is on capital account. <ORG> in the case of <ORG> [1979] 120 ITR 451 also held that additional expenditure incurred for paying the instalments of purchase of a capital asset due to fluctuation in the rate of exchange is on capital account.

23. The decision relied on by Mr. <NAME> in the case of <ORG> also does not assist him. There, the assessee had taken a loan from <ORG> of Washington for making payment in the U.S.A. of the price of capital plant and machinery purchased for its project. The loan was taken and was repayable in dollars. One of the questions was whether the increase in liability of the assessee for repayment of loan due to devaluation was allowable deduction in computing the business income of the assessee. There, the court considered various decisions including the decision in the case of <ORG> . This court considered in detail the judgment in <ORG>'s case [1979] 117 ITR 789 and took note of what was said in <ORG> as follows (p. 372) :

"Conversely, as a result of the exchange rate going against the asses-see, the loss which the assessee incurred cannot be held to be a revenue loss."

24. This court held that "in view of the consistent view of <ORG> and in view of the decision in <ORG>" , the increased liability in terms of rupees for repayment of loan was not an allowable deduction as the said loss was on capital account. Thus whether there is devaluation or whether there is fluctuation in the rate of exchange, the fact remains that the exchange rate goes against the assessee resulting in increase in the liability and there cannot be any difference in principle in deciding the question. In <ORG> , the alternative argument of the assessee that development rebate should have been allowed on the increased liability arising out of devaluation attributable to plant and machinery was accepted. Even the observation of this court in that context also does not support the contention of Mr. <NAME>. The principle which has been laid down in <ORG> , by this court is that if the contract stipulates repayment in foreign currency, the actual cost of the asset must be computed on the value of the foreign currency. Anything which went into the repayment was part of the actual cost of the capital asset. Thus in the instant case also the extra expenditure incurred by the assessee would be towards the cost of plant and machinery and accordingly it will be on capital account. In either view of the matter, the contention of Mr. <NAME> must fail. We, therefore, answer the first question by saying that the additional expenditure incurred by reason of exchange fluctuation was capital expenditure.

25. Now we shall take up the second question. The facts relating to the second question are stated hereunder :

According to the leave rules of the assessee, one of the leaves to which the employees of the assessee are entitled is known as "privilege leave". Para. 1 of the said leave rules pertains to privilege leave. It lays down that every permanent employee of the assessee was entitled to privilege leave at the rate of 30 days for every completed period of twelve months. The said privilege leave has to be credited in the account of each individual employee at the end of each financial year of the assessee-company or calendar year as may be applicable. The said privilege leave can be accumulated up to 120 days only. Ordinarily, the privilege leave can be granted only twice a year at the discretion of the management, but in exceptional circumstances like marriage, death of near relatives, sickness, etc., it may be granted even beyond the schedule at the sole discretion of the management. It is further provided that if privilege leave is offered by the assessee-company and the offer is not accepted by the employee, the employee shall forfeit his leave to the extent of the period offered. Rule 6 of the said leave rules further provides the method for encashment of leave by different categories of employees. Rule 6A further provides that without prejudice to the aforesaid general provisions for encashment of leave, the management shall have the right, at its sole discretion, to permit encashment of any number of days of accumulated privilege leave not exceeding 120 days in cases like marriage/sickness/accident or other special circumstances beyond reasonable control of the person concerned like refusal of leave by the management, etc., but no staff member shall be entitled to claim it as a matter of right.

26. It is also an admitted position that prior to the year under consideration, the assessee was claiming the deduction in the matter of payment on account of privilege leave when the same was encashed on retirement or on the termination of the services of the employees in a particular year. Though this was the practice in the past, the assessee in the accounts for the year made a provision in respect of its accrued liability for payment of accumulated leave earned by the employee amounting to Rs. 2,19,982. The claim of the assessee for the deduction of the said amount had been negatived by the Income-tax Officer on the ground that the liability is a contingent liability.

27. Aggrieved by the said disallowances, the assessee brought the matter by way of appeal before the Appellate Assistant Commissioner who upheld the aforesaid view of the Income-tax Officer by agreeing with him that the said liability was not a present liability but a contingent liability on the happening of some events.

28. The Tribunal upheld the contention of the assessee and, inter alia, observed as follows :

"No doubt in the past the assessee was claiming the deduction only to the extent to which the said privilege leave was encashed by an employee on retirement or on termination of his service, yet that is not conclusive on the subject. The position in the present case is that the employee is entitled under the rules to the privilege leave and he can accumulate the privilege leave for a period of 120 days. Once the privilege leave is earned by an employee, it gets credited to his account. The same can, under the circumstances stated in the leave rules, be encashed. Though the payment may be deferred, the liability of the assessee to pay for the accumulated leave stands accrued. The said liability is a liability in praesenti and not a contingent liability. As such, on the ratio of the decision of <ORG> in <ORG> [1969] 73 ITR 53, the asses-see can claim the deduction in respect of the said accrued liability in its assessment for the year under consideration. We hold likewise. "

29. It has been contended by Mr. <NAME> with reference to the leave rules that the liability accrues to the assessee for payment of leave wages as soon as leave, under the rules, has become due to the employees. He has particularly referred to the following rules in support of his contention.

30. Privilege leave :

(i) Every permanent employee shall be entitled to privilege leave at the rate of 30 (thirty) days for every completed period of twelve months :

(ii) Privilege leave will be credited to the account of each individual at the end of each financial year of the company, or calendar year, as may be applicable (hereinafter referred to as " the year ") ;

(iii) Privilege leave will accumulate up to 120 days only.

31. Rule 6 has provided for encashment of leave. The management shall have the right, at its sole discretion, to permit encashment of any number of days of accumulated privilege leave not exceeding 120 days. Mr. <NAME> has also drawn our attention to Rule 6C, which is in the following terms :

"For the purpose of leave encashment, the leave record will be completed immediately after the end of every calendar year or financial year of the company and the benefit of unavailed or accumulated leave, if any, shall be given as per these Rules in the succeeding calendar year or financial year, as the case may be."

32. The question before us is whether provision for leave salary is an allowable deduction. The contention of Mr. <NAME> is that leave salary payable to an employee can be ascertained at the end of the accounting year depending on the accumulated leave to the credit of an employee. It is his contention that it is not a contingent liability but a liability in praesenti. He has also submitted that out of the provision made, leave salary would be paid to the employees. He has also submitted that the leave encashment benefit is ascertainable at the end of the year in terms of Rule 6 of the leave rules.

33. Mr. <NAME> on the other hand contended that the question of payment of leave salary only arises when a person goes on leave and for that particular period leave salary is payable. Similarly a person is entitled to avail of the leave encashment benefit under the rules. This will depend on whether he actually avails himself of the leave or not. If leave is due to a person, he has the option either to accumulate the leave or he may avail of the leave. If he avails of the leave, he would be entitled to the leave salary. If he does not, he will be entitled to the benefit of encashment of the leave. These events according to the learned advocate are uncertain events and are contingent. He has relied on several decisions in support of his contention.

34. In the case of <CITATION>  62 ITR 274, the question before <ORG> was whether provision for earned leave wages was allowable as a deduction. The assessee in that case claimed that in the computation of its profits, it was entitled to a deduction of Rs. 75,000 being the amount set apart as a reserve fund in its balance-sheet for the payments it may have to make to its workers in the next year on account of holiday wages under Section 79 of the Factories Act, 1948. <ORG> held that the liability of the assessee for holiday wages under the Factories Act is a contingent liability. It was held that the liability that rests on the employer to pay a worker wages in accordance with Section 79 for leave period remains a contingent liability which the employer may or may not be called upon to discharge. That being so, any sum set apart by an employer in any year for meeting the contingency of some of his workers going on leave the next year cannot be regarded as a permissible expenditure under Section 10(2)(xv) of the Indian Income-tax Act, 1922. As a matter of fact, <ORG> followed the decision of this court in the case of <CITATION>  2 Cal 13. There, this court held that holiday waives, payable under the Factories Act , not actually spent in the accounting year but entered in the books of account as a reserve fund for payment in the next year, are not allowable as an item of expenditure although the accounts may be kept according to the mercantile system. The liability under Section 49B of the Factories Act to pay holiday wages depends on the arising of circumstances specified therein and since they may or may not arise, the liability is only a contingent and uncertain liability which may or may not have to be discharged. <ORG>, observed as follows (p. 278 of 62 ITR) :

"It should be clear from what I have stated above that such statutory liability for holiday wages as the Factories Act creates is only a contingent liability which may or may not have to be discharged ; and, secondly, the measure of that liability can never be known in advance. It cannot be so known, because it cannot be known in advance how many employees will avail themselves of how many holidays and when and, necessarily, at what rate, holiday wages would be payable. In those circumstances, it is perfectly clear that not only is the amount claimed not allowable as an item of expenditure, because, in fact, no expenditure had been incurred and not a pica had gone out of the funds of the company, but also that the amount does not even represent a certain liability which will have to be discharged in any event. It may be that although a particular amount is not actually expended during the currency of a particular accounting year, the assessee will still be entitled to a deduction if a certain liability for its payment has arisen so that it may be said that the expenditure is as good as made. The amount claimed in the present case is certainly not even of that character and, as I have already pointed out, it is not an amount which was actually spent."

35. A similar view was taken by <ORG> in the case of <CITATION> .  80 ITR 244. There the assessee-company set apart in its accounts a sum of Rs. 75,000 for payments it may have to make to its workers in the next year on account of holiday wages under Section 79 of the Factories Act and claimed deduction in respect of that amount on the footing that it had incurred a liability to pay leave wages to its employees in the year of account. <ORG> held that the assessee-company has not incurred the liability for leave wages in the accounting year and the claim for deduction was not allowable.

36. It is true that this court as well as the Madhya Pradesh and Bombay High Courts considered the scope of the provisions of the Factories Act regarding the payment of holiday wages and upon the consideration of the relevant provisions, the courts held that the liability was contingent. The principles which have been laid down in those cases, in our opinion, would equally apply to the facts of this case. Leave wages are payable only when a person goes on leave and during the period of leave, the wages paid to him are known as leave wages. It cannot be ascertained with any certainty whether in a particular year the employees would go on leave or the leave would be granted to them. After all, privilege leave cannot be claimed as a matter of right. It will depend on the exigencies of the circumstances. The rules also provide that the leave may be refused on certain circumstances. Unless an employee goes on leave, the assessee is not required to pay the leave wages. The liability will only arise when a person goes on leave and it is only for that particular month or months he is on leave, the leave wages are payable.

37. Having regard to the facts and circumstances of this case, we are unable to accept the contention of Mr. <NAME> that at the end of the accounting year it is known what is the quantum of leave due to a particular employee and on that basis a calculation can be made with accuracy. No one makes a provision for salary because salary is only payable after the employee renders the service and then only it will accrue to him. Similarly in the case of wages which are paid during the leave period, the employee becomes entitled to such leave wages only when he goes on leave. Accumulated leave to the extent of 120 days can only be encashed at the time of retirement or termination or determination of service. This is, therefore, a contingent liability and not a certain liability.

38. Inspired by a decision of <ORG> under the Wealth-tax Act in the case of CWT v. Prema Lakshman  150 ITR 170, Mr. <NAME> sought to contend that the liability to pay the leave wages is not a contingent liability. There the assessees were partners of a firm which was engaged in the business of processing and exporting cashew kernels. For the assessment year 1974-75 relevant to the valuation date, December 31, 1973, the assessees claimed deduction in respect of the amounts payable by the firm by way of leave with wages, in calculating their interest in the firm for purposes of wealth-tax. The Wealth-tax Officer disallowed the claim. The <ORG> found that subsequent to the decision of <ORG> in <ORG> v. <ORG>, , a practice came to be crystallised in the cashew industry in Kerala making it obligatory for the management to pay the workers leave with wages contemplated under Section 79 of the Factories Act, 1948, irrespective of the number of days they worked. The <ORG> examined the relevant records and the books of account and, after satisfying itself as to the correctness of the claims, held that provision made for leave with wages had to be deducted while ascertaining the interest of the assessees in the firm. On a reference, <ORG> held that the amounts in question did not relate to a contingent or future liability but to an existing liability, liability which had already been incurred as a result of the practice which had, as found by the <ORG>, come to be crystallised in the cashew industry following an earlier decision of the court. This liability could be arithmetically worked out as on the valuation day. Hence, these were amounts in the nature of debts which could be taken into account for computation under the Wealth-tax Act , 1957.

39. The decision, however, does not assist the assessee. In the present case, leave rules provide that, ordinarily, the privilege leave shall be granted only twice a year at the discretion of the management, in exceptional circumstances like marriage, death of near relatives, sickness, etc. Such leave may be granted even beyond the schedule at the sole discretion of the management. Further, if privilege leave is offered by the assessee-company, whether applied for or not, and the offer is not accepted by the employee, the employee shall forfeit his leave to the extent of the period offered. That apart, leave shall be granted at the convenience of the management and nothing would limit the free discretion of the management to refuse, evoke and/or cut short the leave period and ask the staff member to report immediately as the exigencies of the company's work may require. It is, therefore, clear that there is no obligation on the employer to pay the leave wages irrespective of the number of days worked by the employee as in the Kerala case. The decision of <ORG> in the case of <CITATION>  73 ITR 53, cannot have any application in this case. <ORG> in that case was concerned, inter alia, with the question whether it is legitimate in a scheme of gratuity to estimate the liability on actuarial valuation and deduct such estimated liability in the profit and loss account while working out the net profit. <ORG> held that if the liability is properly ascertainable and if it is possible to arrive at its discounted present value, even if the liability is a contingent liability, it can be taken into account. That question does not arise here. There cannot be actuarial valuation regarding the liability for payment of leave wages. It cannot be equated with the gratuity liability under the Gratuity Act . The rate of leave salary will depend on the salary a person draws at the time when he goes on leave and not when the leave is accumulated. So far as the leave encashment is concerned, the employees are entitled to encashment of their privilege leave to the extent of 120 days. Such encashment can be made only at the time of retirement or termination or determination of the services of an employee. If any employee avails of the leave, he will be entitled to the leave salary. If he does not avail of the entire leave, he will be entitled to accumulate to the extent permissible. He will only be entitled to encash such accumulated leave when he retires or his services are terminated or determined. Therefore, neither the leave salary nor the leave encashment benefit payable to the employees can be said to be a present liability. The contention of Mr. <NAME> has no substance and must fail. The second question is, therefore, answered in the negative and in favour of the <ORG>.

40. There will be no order as to costs.

<NAME>, J.

41. I agree.


JUDGMENT <NAME>, J.

1. This Second Appeal coming on for bearing on Thursday, sixteenth day and tuesday, the twenty first day of July, 98 upon perusing the Grounds of Appeal, the judgment and Decrees of <ORG> and <ORG> and the material papers in the suit and upon hearing the arguments of Mr. Sarvabhauman Senior Counsel for M/s. Sarvabhauman Associates for the Appellant and the respondents not appearing in person or by Advocate, and having stood over for consideration till this day, the Court delivered the following judgment:

The appellant is the 1st defendant and the respondents are the plaintiffs and the 2nd defendant before the lower Court.

2. The respondents 1 to 7, who are the plaintiffs before the lower <ORG>, filed the suit in O.S. No. 815/80 on the file of Principal District Munsif's <ORG> at Karur for declaration of their exclusive title to the suit property and for a consequential permanent injunction or in the alternative for the relief of possession in case if it is found that the defendants trespassed into the suit property.

3. It is the case of the respondents 1 to 7, who are the plaintiffs before the lower Court, that the suit property is the northern half share measuring 1.89 1/2 cents in the total extent of 3.79 acres in S.F. No. 1430/C of Sanapatti Village in Karur Taluk and one <NAME> purchased the suit property from one <NAME> as early as on 16-2-1927 and the said <NAME> conveyed the suit property to one <NAME> under a registered sale deed dated 12-3-1928, and the said <NAME> died in the year 1941 survey by his wife by name <NAME>, and <NAME> is the grandmother of the plaintiffs and the <NAME> executed a registered settlement deed dated 11-7-1961 in favour of the plaintiffs and ever since then the plaintiffs are in possession of the suit property, and the defendants attempted to trespass into the suit property, and so the present suit was filed.

4. The appellant/1st defendant filed a written statement, which was adopted by the 2nd defendant, stating that it is not correct to state that the suit property originally belonged to <NAME>, and she was in exclusive possession of the same, and the plaintiffs are put to strict proof of the execution and attestation of the settlement deed dated 11-7-1961 in their favour, and the plaint is silent as to how <NAME> got title in the suit property, and neither the plaintiffs nor their predecessor-in-title had any title or possession to the suit property at any time, and the 1st defendant purchased the suit property from one <NAME> under a registered sale deed dated 21 -8-1975 and the 1st defendant was in possession of the suit property, and the 1st defendant sold a portion of the suit property to the 2nd defendant on 26-10-1977, and the defendants are in possession of the suit property on the date of suit, and the allegation that they attempted to trespass into the suit property is denied, and so the suit deserves dismissed with costs.

5. On the above pleading and considering the oral and documentary evidence placed, the learned Principal District Munsif at Karur came to the conclusion that the plaintiffs have failed to prove their title to the suit property and they were in possession of the suit property on the date of suit as claimed by them, and the defendants are in possession of the suit property, and so the plaintiffs are not entitled to the reliefs of declaration of their title to the suit property and for the consequential relief of permanent injunction or in the alternative for the relief of possession and so the learned Principal District Munsif at Karur dismissed the suit with costs.

6. Aggrieved against the said findings of the trial Court, the plaintiffs preferred an appeal in A.S. No. 74/83 before the Sub-Court at Karur and the learned Subordinate Judge at Karur came to the conclusion that the plaintiffs have proved their title beyond reasonable doubt (language (Tamil version) Omitted--Ed.) and the defendants attempted to interfere with the possession of the plaintiffs, and so the plaintiffs are entitled to the reliefs of declaration of their title and for the consequential permanent injunction and so the learned Subordinate Judge at Karur set aside the judgment and decree of the trial Court and allowed the appeal, and decreed the suit as prayed for with costs.

7. Not satisfied with the findings of the learned Subordinate Judge at Karur, the 1st defendant has preferred this second appeal. On the above pleadings and after hearing the learned counsel for the appellant, the substantial questions of law that arise for consideration in this second appeal are as follows :--

(1) Whether the plaintiffs, who are the respondents 1 to 7 in this second appeal, have title to the suit property and whether they were in possession of the suit property on the date of suit?

(2) Whether the recitals as to the boundaries in the documents marked as Exs. A9 to A11 not inter partes are admissible in evidence without examining the executants?

(3) Whether the plaintiffs, who are the respondents 1 to 7 in this second appeal, are estopped from denying the correctness of the description of the suit property even in their own document marked as Ex. 81 in this case?

8. Point No. 1:--The description of the suit property as set out in the plaint schedule by the plaintiffs is as follows :--

(Language (Tamil version) Omitted--Ed.) Therefore the plaintiffs are claiming title to the northern half share with an east west ridge measuring an extent of 1.89 1/2 cents out of the total extent of 3-79 acres of land in S.F. No. 1430/C of Sanapatti Village.

9. The relevant documents of title in support of the plaintiffs case are marked as Exs. B.18, B.19, A1, A2 and A5. Let us consider the title of the plaintiffs from these documents of title.

10. It is the specific case of the plaintiffs in para 9 of the plaint that originally the suit property belonged to one <NAME>, who purchased it from one <NAME> on 16-9-1927, and the aforesaid Nachiyar Animal conveyed the same under the registered sale deed dated 12-3-1978 in favour of Krishnaswamy Naidu the husband of <NAME>, who in turn executed a registered settlement deed dated 11-7-1961 in favour of the plaintiffs. So according to the allegations in the plaint the original owner of the suit property is <NAME>. The plaint is silent as to how <NAME> acquired title to the suit property. However the defendants have produced the registration copy of the sale deed dated 14-2-1923 executed by <NAME> and others in favour of <NAME> and the same is marked as Ex. B. 18 in this case. The description of property as set out in this sale deed of the year 1923 marked as Ex. B.18 runs in Tamil as follows :--

(Language (Tamil version) Omitted--Ed.) Thus the earliest document to prove the title of the plaintiffs to the suit property mentions an undivided 1-89 1/2 acres out of the total extent of 3.79 acres in S.F. No. 1430/C, and not the northern half share with an east west ridge as mentioned in the description of property in the plaint schedule.

11. The next document in the chronological order in the sale deed dated 16-9-1927 executed by <NAME> in favour of <NAME> and it is marked as Ex. B. 19 in this case. The description of property in this document of the year 1927 marked as Ex. B.19 leads a follows :--

(Language (Tamil version) Omitted--Ed.) Thus the tide deed of the year 1927 in favour of the plaintiffs also states an undivided 1.89 1/2 acres in total extent of 3.79 acres of land in S.E. No. 1430/C.

12. Within one year i.e. on 12-3-1928 the very same <NAME> executed the sale deed dated 12-3-1928 under Ex. A.1 in favour of Krishnaswamy Naidu, wherein, we find the description of the suit property in the following words in Tamil :--

(Language (Tamil version) Omitted--Ed.) So in the document of the year 1928 marked as Ex. Al also we find that the common undivided 1.89 1/2 cents of land in the total extent of 3.79 acres of land in S.F. No. 1430/C was sold by <NAME> in favour of <NAME>.

13. In para 5 of the plaint it is stated by the plaintiffs that Krishnasv/amy, Naidu, who is the purchaser under Ex. A1 died in the year 1941 leaving behind him his widow <NAME> as his only heir and after the death of <NAME> his wife <NAME> executed the settlement deed dated 11-7-1961 marked as Ex. A2 in favour of the plaintiffs. The description of property as set out in the document of title of the plaintiffs in the year 1961 marked as Ex. A2 states in Tamil as follows :--

(Language (Tamil version) Omitted--Ed.) So far the first time we get the reference to the northern half share measuring 1.89 1/2 cents out of the total extent of 3.79 acres of land in suit S. F. No. 1430/C in this document of the year 1961 marked as Ex. A.2 in favour of the plaintiffs. It is not known at what point of time this northern half share was allotted to Andalammal in a partition by metes and bounds in respect of the total extent of 3.79 acres of land in suit S.F. No. 1430/C.

14. Then the next document on the side of the plaintiffs is the surrender of lease deed dated 12-2-1978 marked as Ex. A5 and it is executed by one <NAME> in favour of the 1st plaintiff by name <NAME> examined as P. W. 1 in this case. The same description that was found in Ex. A2 is repeated in this surrender deed of the lease in the year 1978 marked as Ex. A5.

15. P.W. 1 <NAME>, who is the 1st plaintiff in the suit, did not say anything about the alleged partition of the entire extent of the suit S.F. No. 1430/C into two-half shares, one as the northern half share and another as the southern half share measuring 1.89 1/2 cents. He speaks to the execution of the settlement deed executed by his grandmother <NAME> under Ex. A2. He speaks to the possession of northern half share of 1.89 1/2 cents by the plaintiffs and the lease of the same. He did not say as to how the northern half share of 1.89 1/2 cents was allotted to <NAME> before the execution of the settlement deed dated 11-7-1961 under Ex. A.2. Therefore the testimony of P.W. 1 <NAME> will not be of any help to establish that the northern half share of 1.89 1/2 cents with an east west ridge out of the total extent of 3.79 cents in S.F. No. 1430/C was allotted to the share of <NAME> after the execution of the sale deed by <ORG> in favour of <NAME> on 12-3-1928 under Ex.A.1.

16. <NAME> is one of the attestors to the settlement deed dated 14-7-1961 marked as Ex A3 executed by <ORG> in favour of the plaintiffs. He speaks to the attestation of the settlement deed marked as Ex. A.2 and nothing else. Therefore, the testimony of <NAME>, who is one of the attestors of the settlement deed marked as Ex. A.2 is also not useful to prove the case of the plaintiffs that <ORG> was allotted the northern half share of 1.891/2 cents with an east west ridge out of the total extent of 3.79 acres of land in S.F. No. 1430/C.

17. P.W. 3 is one Natarayan. He attested the sale deed dated 14-12-1971 executed by <NAME> and <NAME> in favour of one <NAME> marked as Ex. A.9 in this case. He also purchased 5 cents of land from <NAME> Gounder and <NAME> on 13-12-1971 under the registered sale deed marked as Ex. A. 11 in this case. He did not whisper a word as to how <NAME> got the northern half share of 1.891/2 cents of land out of the total extent of 3.79 acres of land in suit S.F. No. 1430/C. He went to the extent of staling in Tamil in the chief examination as follows :

(Language (Tamil version) Omitted--Ed.) Therefore it is the testimony of <ORG> that the southern half share belongs to the plaintiffs whereas the case of <ORG> plaintiffs is that they are entitled to the northern half share of 1.89 1/2 cents. So the testimony of <ORG> instead of proving the case of the plaintiffs, will only destroy the contention of the plaintiffs.

18. A careful scrutiny of the oral and documentary evidence placed in this case I am of the view that the plaintiffs, who are respondents 1 to 7 in this second appeal, have not satisfactorily proved their title to the northern half share of 1.891/2 cents of land with an east west ridge out of the total extent of 3.79 acres of land in S.F. No. 1430/C as described in the plaint schedule.

19. The plaintiffs have come forward with a specific case in their plaint that the northern half share of 1.89 1/2 cents of land with an east-west ridge out of the total extent of 3.79 acres of land in S.F. No. 1430/C belongs to them exclusively, and on that basis they prayed for declaration of their title. Having come forward with the suit for declaration of title, it is the bounden duty of the plaintiffs to prove their title, and it is not necessary to consider the title of the defendants. If the title of the defendants is not acceptable for one reason of the other even, then the plaintiffs must fail because they have not proved their exclusive title to the northern half share in the suit S.F. No. 1430/C. In other words the plaintiffs must succeed on the strength of their own title and that could be done by adducing satisfactory evidence to discharge the onus which is on them, irrespective of the question whether the defendants have proved their case or not. I am fortified with this view by two decisions of our <ORG>.

20. In the decision reported in <CITATION> , it was held as follows :--

'The plaintiff is asserting that he is the. . . owner and it is for him to establish his title."

21. In the other decision reported in <NAME> v. <NAME>, (1982) 95 Mad Law Weekly 708 a Division Bench of our Madras High Court laid down as follows :---

"It is the duty of the plaintiff to establish his claim on the basis of the averments made in the plaint. The plaintiff cannot pick holes in the title of the defendants and try to succeed on the weakness in the defence presented."

22. In the light of the above decisions even assuming and without admitting that the defendants have not proved their case or their title to the suit property, even then the plaintiffs cannot succeed because their title deeds did not prove that they are the exclusive owners of the northern half share of 1.89 1/2 cents of land with an east west ridge out of the extent of 3.79 acres of land in suit S.F. No. 1430/C. Even then let us consider the title of the defendants in this case.

23. It is not in dispute between the parties in the suit that the total extent of the suit S.F. No. 1430/C is S. 3.79 acres of land out of which the defendants are entitled to 94 1/2 cents and the family of one <NAME> is entitled to another 94 1/2 cents and the balance of 1.89 1/2 cents of land belong to the plaintiffs. But the dispute is whether the plaintiffs are entitled to the northern half share of 1.89 1/2 cents in the total extent of 3.79 acres of land in S.F. No. 1430/C. The defendants have produced Bxs. B.15 to B.17 in support of their contention. Ex. B.15 is the printed copy of the judgment in O.S. No. 569 of 1949 on the file of District <ORG> at Karur wherein one <NAME> is the plaintiff and one <NAME>, <NAME>, <NAME>, <NAME> and <NAME> are the defendants. The said suit in O.S. No. 369 of 1949 on the file of District <NAME>'s Court at Karur was filed for recovery of possession of the plaint A Schedule properties or in the alternative for partition and separate possession of half share in the plaint B schedule properties, and the learned District <NAME> at Karur decreed the suit in U.S. No. 369 of 1949 by stating that the plaintiff <NAME> will be entitled to a decree for partition and separate possession of half share in the plaint B schedule properties. Ex. B.16 as the certified copy of the decree in A. S. No. 492 of 1950 on the file of <ORG> at Tiruchirapalli, which is the appeal filed by the defendants 2 and 3 in O.S. No. 369 of 1949 by name <NAME> and <NAME> and the decree of the lower Court was modified in so far as it related to the suit costs, and thereby the judgment and decree of the lower Court in O.S. No. 369 of 1949 in other respect was confirmed Ex. B.17 is the certified copy of the delivery receipt in E.P. No. 485 of 1951 in O.S. No. 369 of 1949 on the file of District <NAME>f Court at Karur. The delivery receipt under Ex. B.17, which is dated 24-12-1951, states in as follows :--

(Language (Tamil version) Omitted--Ed.) Thus an extent of 95 cents of land in the western half of 1.89 1/2 cents out of the total extent of 3.79 acres in S.F. No. 1430/C was allotted to the plaintiff/decree holder by name <NAME> in the suit in O.S. No. 369 of 1949 on the file of <ORG> at Karur. These documents marked as Exs. B.15 to B.17 came into existence at a time when there was no dispute among the parties to the suit. Therefore it is satisfactorily established by the defendants that their predecessors-in-title became entitled to 95 cents on the western side in S.F. No. 1430/C. The documents marked as Exs. B.5 to B.8 and Ex. B.12 are the subsequent sale deeds in respect of the property of <NAME> allotted to him earlier in the partition suit in U.S. No. 369/49. Under Ex.B.8 which is dated 21-8-1975, the 1st defendant gets title in the western 94 1/2 cents of land in S.F. No. 1430/C. Thus Exs. B.15 to B.17 will satisfactorily establish the contention of the defendants that the extent of 941/2 cents on the western side in S.F. No. 1430/C was delivered by <ORG> to his predecessor-in-title of by name <NAME>, and the 1st defendant purchased an extent of 94 1/2 cents on the western side in the suit S.F. No. 1430/C under the registered sale deed dated 21-8-1975 marked as Ex. B.8 in this case.

24. There is one clinching circumstance in this case to destroy the case of the plaintiffs and to lend support to the contention of the defendants herein and it is the Commissioner's report and plan marked as Exs. B. 13 and B. 1.4 in another earlier suit in O.S. No. 557 of 1980. That was a suit filed by <NAME> as the plaintiff as against the defendant <NAME> herein. The learned Commissioner in para 5 of his report marked as Ex. B. 13 categorically stated as follows :--

"<NAME>, Advocate for the petitioner, asked me to note whether there is any east-west demarcating feature to divide the property on the north of the suit property, the Survey Number of which is 1430/C so as to show northern and southern portions in it. There is no east-west demarcating feature in S.F. No. 1430/C to divide it in the northern half and southern half. In S .F. No. 1430-C on the western side I found some stones planted showing as house sites."

Therefore the Commissioner's report and plan marked an Exs. B.13 and B.14 will not disclose any east-west ridge as mentioned in the plaint schedule in the present suit in O.S. No. 815/80 and there is no east-west boundary to show that the entire extent of 3.79 acres of land was divided into southern half share and northern half share.

25. The plaintiffs in this case relied on Exs. A8 to A12 which are subsequent sale deeds. But the earlier documents under Exs. B.18, B-15, A1 and B.1 will show that only an undivided half share was purchased by the plaintiffs predecessors-in-title. In particular Ex. B.1 which is dated 19-12-1929 and which is a lease deed executed by <NAME> and another in favour of <NAME>, who is the predecessor-in-title, will show that <NAME> leased out only the western half share in the suit S.F. No. 1430/C. Therefore the subsequent documents covered under EX. A.8 to Ext. A.12.will not help the plaintiffs to contend that they are entitled to the northern half share of 1.891/2 cents of land in the total extent of 3.79 acres of land in the suit S.F. No. 1430/C.

26. Considering the above facts and circumstances of the case I hold that the plaintiffs, who are the respondents 1 to 7 in this second appeal, have no title to the northern half share of 1.89 1/2 cents of land out of the total extent of 3.79 acres of land in S.F. 1430/C, which is stated to have been divided by east-west ridge, and they were not in possession of the suit property as described in the plaint schedule on the date of suit and consequently I answer this point in favour of the appellant/1st defendant and against the respondents 1 to 7/plaintiffs.

27. Point No. 2 : the documents marked as Exs. A.9 to A.11 are documents of 3rd parties, and they are not inter se between the parties to the present suit or their predecessors-in-title. <NAME> is the attestor of the sale deeds marked as Ex. A.9 and A. 10 and he is the purchaser under Ex.A.11. But the executants of these sale deeds market as Exs. A.9 to A.11 were not examined in this case. In the absence of the evidence of the executants of these documents the boundary recitals found in these documents will not be admissible in evidence. This was the view expressed by our <ORG> in the decision .

28. In the decision reported in <CITATION> , it was laid down as follows:--

"Recitals as to boundaries in documents not inter partes are inadmissible in evidence under Sections 11, 13(a), 32(3) and 32(7) of the Act. The only method by which recitals in a document not inter partes could be admitted in evidence is by examination of the executant of the document in which such recitals as to boundaries are found."

In the present case the executants of Exs. A9 to A11 were not examined. Hence I hold that the recitals as to the boundaries in the documents marked as Exs. A9 to A11 not inter parties to the present suit are not admissible in evidence without examining the executants of the sale deeds marked as Exs. A9 to A11, and I answer this point also in favour of the appellant/1st defendant and as against the respondent 1 to 7/plaintiffs.

29. Point No. 3 :--Ex. B.1 is a registered sale deed executed by <NAME> and another in favour of <NAME>, who is the husband of <NAME> and who is the grandfather of the plaintiffs in this suit. In Ex. B1 which is dated 19-12-1929, we find the following descriptions:

(Language (Tamil version) Omitted--Ed.) Thus the eastern 1-89 1/2 cents out of the total extent of 3.79 acres of land in S.F. No. 1430/C was leased out by none other than the grand father of the plaintiffs by name <NAME>. <NAME> to <NAME> and another. The plaintiffs derived title through <NAME>, who is the wife of the said <NAME> <NAME>, and therefore they cannot resile back or deny the correctness of the description of property in this lease deed of the year 1929 marked as Ex. B.1. Hence I hold that the respondents 1 to 7, who are plaintiffs in the suit, are estopped from denying the correctness of the description of the suit property even in their own document marked as Ex.B 1 in this case, and I answer this point also in favour of the appellant/1st defendant and as against the respondents 1 to 7/plaintiffs.

30. Consistent with my findings on the earlier points I am to hold that this second appeal has to be allowed as prayed for with costs, and the judgment and decree of <ORG> at Karur in A. S. No. 74/83 dated 17-4-1985 are to be set aside, and the judgment and decree of <ORG> at Karur in O.S. No. 815/80 dated 28-8-1982 are to be restored, and the suit in O.S. No. 815/80 on the file of Principal District Munsiff's Court at Karur has to be dismissed with costs throughout, and I answer this point in favour of the appellant/1st defendant and as against the respondents 1 to 7/plaintiffs.

31. In the result the second appeal is allowed as prayed for with costs. The judgment and decree of <ORG> at Karur in A.S. No. 74/83 dated 17-4-1985 are set aside. The judgment and decree of <ORG> at Karur in O. S. No. 815/80 dated 28-8-1982 are restored. The suit in O. S. No. 815/ 80 on the file of Principal District Munsif's Court at Karur shall stand dismissed with costs throughout.