ivil Appeal Nos.

4339 41/86 & 4176 77 of 1984.

From the Judgment and Order dated 4.7.85 & 21.6.84 of the Customs Excise and Gold (Control) Appellate Tribunal, New Delhi in Appeal Nos.

ED(SB)(T) A. Nos. 513 514, & 544 of 1985(A) & ED(SB) 329 & 324/84 A in Order Nos.

450 452/85 A, 473 & 474/84 A. Harish Salve, Ravinder Narain, P.K. Ram and D.N. Mishra for the Appellant.

K. Parasaran, Attorney General, A.K. Ganguli, and P. Parmeshwaran for the Respondents.

The Judgment of the Court was delivered by SABYASACHI MUKHARJI, J.

These appeals under Section 35L(b) of the Central Excises & Salt Act, 1944 (hereinafter called 'the 979 Act ') are against the order Nos.

450 452 of 1985A dated 4th July, 1985, 473/184A and 474/84A both dated 21st June, 1984 passed by the Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred to as 'the Tribunal ').

The appellant is a division of McDowell & Co. Ltd. It has its factory at, inter alia, Visakhapatnam.

There it manufactures and sells fusel oil/Styrene Monomer falling under Tariff Item No. 68 of the Ist Schedule to the Act.

The case of the appellant is that the said fusel oil is a com pletely manufactured article and after completion of its manufacture, it is stored in storage tanks duly approved for this purpose.

It is at this stage that the quantity of fusel oil/Styrene Monomer manufactured, according to the appel lant, is entered in the RG 1 Register maintained for goods manufactured by the appellant.

It is also the case of the appellant that the said fusel oil/Styrene Monomer manufac tured by it is sold in bulk and delivered to the customers at the appellant 's factory.

The fusel oil/Styrene Monomer is also capable of being supplied in road tankers to customers.

The appellant had filed its price lists in respect of the same.

In the said price lists, which were duly approved by the Asstt.

Collector, the appellant had shown the value of fusel oil/Styrene Monomer at the rate at which those were sold in wholesale as "naked Ex Works and in bulk".

According to the appellant, the manufacture of fusel oil is complete and it is the fully manufactured fusel oil/Styrene Monomer which is stored in the storage tank.

On 2nd July, 1983, a notice in respect of a consignment was issued to show cause as to why value of the drums should not be included in the value of the goods.

There the drums had been supplied by the buyer.

Another show cause notice as to why value of the drums should not be included in the assessable value of the goods, was issued to the appellant on the 5th April, 1983 pertaining to Gate Pass No. 773 whereunder the appellant had cleared 2.4 KI of fusel oil in drums supplied by the buyer.

Replies were duly filed to the said show cause notices by the appellant contending, inter alia, that as the drums were supplied by the buyer, value thereof could not be included in the assessable value.

On the 11th August, 1983, two orders were passed by the Assist ant Collector one in relation to each of the aforesaid show cause notices.

The Assistant Collector included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer.

Appeals were filed by the assessee.

The same were allowed by the Collector (Appeals).

He held that the appellant had not collected any amount in excess of the amount indicated in the price lists.

Therefore, in addition 980 to this amount, according to the Collector (Appeals), it was not open to the Asstt.

Collector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice.

There was a further appeal to the Tribunal.

The Tribunal held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, there fore, the value had to be included in the assessable value.

The Tribunal, therefore, accepted the revenue 's contention and restored the order of the Asst.

Collector.

Aggrieved therefrom, the appellant has come up in these appeals to this Court.

On behalf of the appellant, Shri Salve contended that the Tribunal had failed to appreciate the admitted factual position that the fusel oil/Styrene Monomer manufactured by the appellant is sold in bulk and is capable of being so sold.

Hence, according to the appellant, it is not necessary for the said fusel oil/Styrene Monomer to be supplied to the customers in drums in the aforesaid situation.

The Tribunal, therefore, it was urged, ought to have held that the value could not be included in the assessable value of the fusel oil/Styrene Monomer.

It was contended that in any event under the Act and the Rules, the duty of excise is payable by the manufacturer on the manufactured goods.

The appellant was not a manufacturer of drums.

The said drums were sup plied by the customers for the purpose of filling the fusel oil/Styrene Monomer.

No duty of excise, therefore, could be collected from the appellant on such drums which were nei ther manufactured nor purchased by the appellant.

It was further urged that on a correct and true interpretation of Section 4(4)(d)(i) of the Act, the cost of packing could be included in the assessable value only when the packing is either manufactured by the assessee or is purchased by the assessee.

The said sub section does not contemplate, accord ing to the appellant, the inclusion of the cost of packing in the value of goods when the packing is supplied by a customer to a manufacturer on its own cost.

It was contended by Shri Salve, appearing on behalf of the appellant, that on a correct analysis of section 4(4)(d), the duty being on the activity of manufacture whatever is necessary to bring the goods into existence alone can be taken into account for duty purposes.

Reliance was placed by Shri Salve as well as by the learned Attorney General, appearing on behalf of the revenue, on the relevant provisions of the Act and the position as explained by this Court in Union of India & Ors.

vs Bombay Tyre International Ltd., ; 981 Shri Salve has, however, contended that so far as this Court is concerned, this question is concluded by the deci sion of this Court in Collector of Central Excise vs Indian Oxygen Ltd., Learned Attorney General, however, contended that this decision did not deal with the present controversy.

The said decision, according to learned Attorney General, was concerned with the rentals of certain oxygen gas cylinders supplied by the assessee.

Reference was made to the decision of this Court in K. Radha Krishaiah vs Inspector of Central Excise, Gooty & Ors., Shri Salve referred to and relied on the decision of tile High Court of Bombay in the case of Govind Pay Oxygen Ltd. vs Asstt.

Collector of Central Excise, Panaji & Ors., as also the decision of the Karnataka High Court in Alembic Glass Industries Ltd. vs Union of India & Ors., Learned Attorney General urged before us that the question whether for determining the assessable value of the excisable goods sold by the assessee in drums or containers provided by its customers (the asses see itself provided such drums/containers on payment of price in Civil Appeals Nos.

4339 41 of 1986) the value of such drums/containers would also have to be included on a correct interpretation of charging sections, namely, sec tions 3 and 4 of the Act.

It was submitted that while deter mining the scope and nature of levy, as contemplated under section 3 of the Act, of central excise and the measure of such levy as provided in section 4 of the Act the principles laid .down in Union of India vs Bombay Tyre International Ltd., (supra), should be followed and reliance was placed on the several decisions of this Court which we will refer to later.

Learned Attorney General emphasised that it is a well settled principle of construction that in taxing statutes one has only to look merely at what is clearly stated.

There is no room, he contended, for any intendment.

There is no equity about a tax, it was submitted.

There is no presump tion as to tax.

Reliance was placed for this proposition by the learned Attorney General on the observations of this Court in Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; at 898.

Learned Attorney General also drew attention to the decision of this Court in A.K. Roy vs Voltas Ltd., and also to Atic Industries Ltd. vs H.H. Dave, Assistant Collector of Central Excise, ; at 568 to emphasise the point that percentages of sales do not in any manner affect determination of the assessable value of the excisable goods.

In this connection, it may be rele vant to mention that in C.A. 4339 41/86, in respect of which show notice was issued as to why value of drums should not be included in the assessable value of fusel oil and Styrene Monomer, 90% of Styrene Mono 982 mer had been sold directly in tanks and only 10% of Styrene Monomer had been sold in drums and the show cause notice on 20th October, 1983 had been issued relating to clearance of fusel oil in 45 drums but the said drums had been supplied by the buyer.

The Asstt.

Collector in those appeals had included the costs of such drums in the value of styrene monomer.

Relying on the two decisions referred to hereinbe fore, learned Attorney General emphasised that percentages of sales would not in any manner affect determination of the assessable value of the excisable goods.

In A.K. Roy 's case (supra), it was held by this Court that though in that case that the fact that the assessee had effected sales to whole sale dealers only to the extent of 5 to 10% of its produc tion and that 90 95% of its production were only retail sales would not affect the question of determination of the assessable value of the excisable goods with reference to its value in the wholesale market.

Therefore, the learned Attorney General submitted, the mere fact that the assessee in C.A. No. 4339 of 1986 sold only 10% of the excisable goods to its buyer where drums were supplied by the buyers themselves and that 90% of the sales were through tankers belonging to the customers would not in any manner affect the question or determination of the assessable value of the excisable goods inasmuch as the 10% of its sales to whole sale buyers were in drums supplied by the buyers at the time of removal.

According to the learned Attorney General, the fact that 90% of the goods were supplied in tankers and not in containers had no relevance at all and the 10% represent ed the entire quantity of excisable goods delivered in packed condition.

Learned Attorney General contended that the decision of Indian Oxygen Ltd. 's case (supra) cannot be relied on in view of the facts of this case.

In that case, the learned Attorney General contended the only question which arose was whether the rental charges received by the assessee for the gas cylinders lent by it to its customers could be included in the assessable value and whether inter est earned on deposits made by the customers for the securi ty of the cylinders supplied by the assessee could also be included in the assessable value of the excisable goods.

This Court clarified in the said decision that the said charges could not be included in the value of the goods since these were only ancillary and not incidental to the activities for the manufacture of gases.

Learned Attorney General submitted that this Court had no occasion in that decision to consider the question which arises in the present case, namely whether the cost of packing materials would have to be included in the assessable value of the goods when goods are delivered in packed conditions.

Learned Attorney General submitted that the decisions of the Bombay and Karnataka High Courts were wrong as they are contrary to the decision of this 983 Court in Bombay Tyre International 's case (supra).

Reference was made both by the learned Attorney General and Shri Salve to the observations of this Court in Union of India vs Godfrey Phillips India Ltd., [1985] Supp.

3 SCR 123.

In order to appreciate the controversy in this case, it is necessary to refer to the relevant provisions.

Section 2(f) of the Act provides the definition of the term "manufacture".

It states, inter alia, that manufacture includes any process incidental or ancillary to the comple tion of manufactured product.

It is, therefore, necessary to bear in mind that a process which is ancillary or incidental to the completion of the manufactured product, that is to say, to make the manufacture complete would be "manufacture".

It is relevant and important to bear this aspect in mind.

Section 3 of the Act provides that there shall be levied and collected in such manner as maybe pre scribed duties of excise on all excisable goods other than salt which are produced or manufactured in India. "Excisable goods", under section 2(d) of the Act, means goods specified in the Schedule to the as being subject to duty of excise and includes salt.

Section 4 of the Act provides for the valuation of excisable goods for purposes of charging of duty of excise.

The relevant provi sion of section 4 of the Act deals with the manner as to how the value is to be computed and section 4(4)(d) stipulates as follows: ""value" in relation to any excisable goods, (i) where the goods are delivered at the time of removal in a packed condition, includes the cost of such packing except the cost of the packing which is of a durable nature and is returnable by the buyer to the assessee.

Explanation.

In this sub clause "packing" means the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound; (ii) does not include the amount of the duty of excise, sales tax and other taxes, if any, payable on such goods and, subject t9 such rules as may be made, the trade discount (such discount not being refundable on any account whatsoever) allowed in accordance with the normal practice of 984 the wholesale trade at the time of removal in respect of such goods sold or contracted for sale; (Explanation.

For the purposes of this sub clause, the amount of the duty of excise payable on any excisable goods shall be the sum total of (a) the effective duty of excise payable on such goods under this Act; and (b) the aggregate of the effective duties of excise payable under other Central Acts, if any, providing for the levy of duties of excise on such goods , and the effective duty of excise on such goods under each Act referred to in clause (a) or clause (b) shall be, (i) in a case where a notification or order providing for any exemption (not being an exemption for giving credit with respect to, for reduction or duty of excise under such Act on such goods equal to, any duty of excise under such Act, or the additional duty under Section 3 of the (51 of 1975), already paid] on the raw material or component parts used in the production or manufacture of such goods) from the duty of excise under such Act is for the time being in force, the duty of excise computed with refer ence to the rate specified in such Act in respect of such goods as reduced so as to give full and complete effect to such exemption; and (ii) in any other case, the duty of excise computed with reference to the rate specified in such Act in respect of such goods.

" The expression "place of removal" has been defined under section 4(4)(b) of the Act to mean a factory or any other place or premises of production or manufacture of the excisable goods; or a warehouse or any other place or prem ises wherein the excisable goods have been permitted to be deposited without payment of duty, from where such goods are removed.

It is in relation to Section 4(4)(d) that it is contended that except the cost of packing which is of a durable nature and is returnable by the buyer to the asses see to the buyer, in respect of all other costs of packing, the costs should be included in the value of the 985 excisable goods.

The explanation to the said sub section defines the expression "packing" as the wrapper, container, bobbin, pirn, spool, reel or warp beam or any other thing in which or on which the excisable goods are wrapped, contained or wound.

The provisions of these two sections must be judged in the light of the principles laid down by this Court in Union of India vs Bombay Tyre International, (supra).

In that decision, it has been recognized that the measure employed for assessing a tax must not be confused with the nature of the tax, while the measure of the tax may be assessed by its own standard to serve as a standard for assessing the levy the Legislature need not contonour it along lines which spell out the character of the levy it self.

Reliance may be placed to the observations of this Court at pp.

365 367 of the Report.

This Court rejected the contention of the assessee in that case that because the levy of excise is a levy on goods manufactured or produced, the value of an excisable article must be limited to the manufacturing cost plus manufacturing profit.

This Court reiterated that section 4 of the Act provides the measure by reference to which the charge is to be levied.

Therefore, the charge is to be determined by the terms of section 4 of the Act.

But it has to be borne in mind that the duty of excise is chargeable with reference to the value of the excisable goods and the value is defined in express terms in that section.

Though the learned Attorney General referred to the fact that in taxing statutes, one must look merely at what is clearly stated, yet such a construction must be made in the context of the entire scheme of the Act.

Learned Attorney General emphasised that the language of clause (d) of sub section (4) of section 4 of the Act made it clear beyond doubt that in cases where the Act provides for excise duty with reference to value of the excisable goods, while determining the value of such goods, the cost of packing where the excisable goods are delivered at the time of removal in packed condition, would have to be included in the assessable value of the excisable goods.

According to the learned Attorney General, since the Act provides for only one exception to this measure, namely, non inclusion of the cost of such packing where the packing is durable in nature and is returnable by the buyer to the assessee, in all other cases the cost of the packing would have to be included in the assessable value of the excisable goods where such goods are delivered at the time of removal in packed condition.

According to him, the plain language of the Statute does not permit of any further exceptions being read into the Act.

To hold otherwise, it was contended, would make the provision of the measure of the levy unworka ble inasmuch as in every case the measure would have to differ in the light of the contentions as may be raised by the assessees depending upon the business arrangement of each assessee.

986 It was contended that it is not correct to equate the meas ure of tax with the levy itself which is the basis of the contentions of the appellant.

In my opinion, however, the correct position must be found out bearing in mind the essential nature of excise duty.

Excise duty, as has been reiterated and explained, is a duty on the act of manufacture.

Manufacture under the excise law, is the process or activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such.

It is then and then only that manufacture takes place attracting duty.

In order to be goods, it was essential that as a result of the activ ity, goods must come into existence.

For articles to be goods, these must be known in the market as such and these must be capable of being sold or being sold in the market as such.

See the observations of this Court in Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc.

vs Union of India & Ors., ; and Bhor Industries Ltd., Bombay vs Collec tor of Central Excise, Bombay; , In order, therefore, to be manufacture, there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market.

If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the Section.

The question, there fore, that has to be examined in this case is whether these drums, containers or packing, by whatever name they are called, are necessary to make fusel oil or styrene monomer marketable as such or can these goods be sold without the containers or drums or packing? In my opinion, the facts established that these could be.

The fact that 90% of the goods in C.A. No. 4339 of 1986 were delivered in tankers belonging to the assessee and only 10% of the goods were in packed condition at the time of removal clearly establish that the goods were marketable without being packed or contained in drums or containers.

These were in the storage tanks of the assessee and were as such marketable.

In this connection, it is necessary to refer to the observations of this Court in Collector of Central Excise vs Indian Oxygen Ltd., (supra).

In that case, as mentioned hereinbefore, the respondent Indian Oxygen Ltd. was manufacturer of dissolved acetylene gas and compressed oxygen gas, called therein 'the gases '.

The respondent supplied these gases in cylinders at their factory gate.

987 For taking delivery of these gases, some consumers/customers used to bring their own cylinders and take the delivery, while others used to have the delivery in the cylinders supplied by the respondent.

For the purpose of such supply of cylinders, certain rentals were charged by the respondent and also to ensure that these cylinders were returned prop erly, certain amounts of deposit used to be taken from the customers.

On these deposits, notional interest @ 18% p.a. was calculated.

The two amounts with which this Court was concerned were rentals of the cylinders and the notional interest earned on the deposit of cylinders whether these two amounts were includible in the value under section 4 of the Act was the question.

The revenue 's case was that the no tional value of deposit was rental and hence should be included in computing the assessable value.

The respondent, however, disputed this.

Analysing the scope of section 4 of the Act, it was held by this Court that supply of gas cylinders might be ancillary activity to the supply of gases but this was not ancillary or incidental to the manufacture of gases.

The goods were manufactured without these cylinders.

There fore, the rental of the same though income of ancillary activity, was not the value incidental to the manufacture and could not be included in the assessable value.

Similar ly, in my opinion, drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer; the cost of such drums cannot, therefore, be included in the assessable value thereof.

Furthermore, no cost was, in fact, incurred by the assessee.

Drums had been supplied by the buyers.

This position, in my opinion, was correctly approached in the decision of the Bombay High Court in Govind Pay Oxygen Ltd. vs Assistant Collector of Central Excise, Panaji & Ors., (supra), where it was held that section 4(4)(d)(i) of the Act does not make any provision for including the cost of packing which was supplied by the buyer to the assessee for the obvious reason that the assessee did not spend for such packing.

It was for this simple reason that the legislature had not thought it fit to exempt such pack ing from the value of excisable goods.

In my opinion, that is the correct approach to the problem.

Similarly, Karnataka High Court in Alembic Glass Industries vs Union of India & Ors., (supra) held that the term "value" defined in section 4(4)(d)(i) provides for exclusion of cost of packing materi al which was of durable nature and was returnable by the buyer to the assessee.

Hence, there was no logic or reason for not excluding the value of packing material supplied by the buyer himself which is of durable nature and is return able by the assessee to the buyer.

Furthermore, in my opin ion, in 988 terms of section, it is not includible.

The contention that the value of packing materials including those supplied by the buyer, has to be included in the value of the goods, is repugnant to the very scheme of section 4.

It overlooks the use of the expression "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act.

The word "cost" has a definite connotation, and is used generally in contra distinction of the expression "value".

Thus, the clear implication of the use of the word "cost" is that only packing cost of which is incurred by the assessee, i.e., the seller, is to be included.

The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer.

It has to be borne in mind that such a provision would make the provision really unworkable, since in making the assessment of the seller, there is no machinery for ascertaining the "cost" of the packing which might be supplied by the buyer.

Such a contention further overlooks the scheme of clause (i) where under durable packing returnable by the buyer has to be excluded.

It would create an absurd situation if durable packing supplied by the assessee and returnable to the assessee is not to be included in the assessable value but a durable packing supplied by the buyer to the assessee and returnable to the buyer is made a part of the assessable value.

One has to bear in mind the scheme of clause (d) of section 4(4) of the Act.

The two sub clauses of this clause deal with abatements or deductions in respect of actual burdens, either by way of an expenditure or discount, borne by the assessee.

Clause (ii) deals with duties of excise, sales tax and other taxes, if any, payable on such goods.

Here also obviously, the reference is not generally to the taxes payable on such goods by either the assessee or the buyer but is obviously to the taxes payable by the assessee.

The trade discount is referable to that allowed by the assessee.

Therefore, in the same sense, clause (i) would only be referable to the packing in respect to which "cost" is incurred by the assessee.

It has to be borne in mind that the scheme of old section 4 of the Act and new section 4 is the same as was held by this Court in the case of Bombay Tyre International, (supra) at pages 376 E F, 377 H and 378 A B, H of the Report.

The scheme of the old section 4 is indisputedly to determine the assessable value of the goods on the basis of the price charged by the assessee, less certain abatements.

There was no question of making any additions to the price charged by the assessee.

The essen tial basis of the "assessable value" of old section 4 was the wholesale cash price charged by the assessee.

To con strue new section 4 as now suggested would amount to depart ing from this concept and replacing it with the concept of a notional value comprising of the wholesale cash price plus certain notional charges.

This would be a radical departure from old section 4 and cannot be said to be on the 989 same basis.

It has to be borne in mind that the measure of excise duty is price and not value.

It has been so held by this Court in Bombay Tyre International 's case (supra).

See in this connection, the observations of this Court in Bombay Tyre 's case at pages 368,377,379,382 and 383, where this Court emphasised that in both the old section 4 and the new section 4, the price charged by the manufacturer on a sale by him represents the measure.

Price and sale are related concepts and price has a definite connotation.

Therefore, it was held that the "value" of the excisable article has to be computed with reference to the price charged by the manufacturer, the computation being made in accordance with the terms of section 4.

This Court rejected the contention on behalf of the assessee in that case, that section 4 also levied excise on the basis of a conceptual value which must exclude post manufacturing expenses and post manufacturing profit by observing that the contention proceeded on the assumption that a conceptual value governed the assessment of the levy.

It was reiterated that the old section 4 and new section 4 determine the value on the basis of price charged or chargeable by the particular assessee.

See in this connection, the observations of this Court at p. 388 F & G of the report.

It has also to be borne in mind that in any event in so far as Styrene Monomer Oil is concerned, the value of the drums in which it is packed is not includible in the assess able value of the goods.

It is not all packing which is liable to be included under clause 4(4)(d)(i) in the assess able value of the goods.

It is only that degree of secondary packing which is necessary for assessable articles to be in the condition in which it is generally sold in the wholesale market which can be included at the factory gate which should be included in the value of the article.

See the observations of this Court in Bombay Tyre International 's case (supra) at page 393 D & E.

In the case of Union of India vs Godfrey Phillips Ltd., , this position was clarified by the majority judgment.

In that case, the respondent therein manufactured cigarettes in their factories.

The cigarettes so manufactured were packed initially in paper/cardboard packets of 10 and 20 and these packets were then packed together in paper/cardboard car tons/outers.

These cartons/outers were then placed in corru gated fibreboard containers and delivered by the respondents to the wholesale dealers at the factory gate.

There was no dispute that the cost of primary packing into packets of 10 and 20 and the cost of secondary packing in cartons/ outers must be included in determining the value of the cigarettes for the purpose of assessment of excise duty, since such packing would fall under section 4(4)(d)(i) of the Act.

The question that arose was whether the cost of final packing in corrugated fibreboard containers 990 would be liable to be included in the value of the ciga rettes for the purpose of assessment to excise duty.

The question was answered in negative by a majority of 2:1 of this Court.

Chief Justice Bhagwati dissented.

It was held by Pathak, J. (as the learned Chief Justice then was) that such cost of corrugated fibreboard containers could not be in cluded in the determination of "value" in section 4(4)(d)(i) of the Act for the purposes of excise duty.

For the purpose of measure of levy on cigarettes, the statute has given an extended meaning to the expression "value in section 4(4)(d) of the Act.

Plainly, the extension must be strictly con strued, for what is being included in the value now is something beyond the value of the manufactured commodity itself.

The corrugated fibreboard containers could be re garded as secondary packing.

These were not necessary, it was emphasised by the majority of the Judges, for selling the cigarettes in the wholesale market at the factory gate.

These were only employed, it was emphasised by the majority of the Judges, for the purpose of avoiding damage or injury during transit.

It was perfectly conceivable that the whole sale dealer who took delivery might have his depot at a very short distance only from the factory gate or might have such transport arrangements available that damage or injury to the cigarettes could be avoided.

A.N. Sen, J., who agreed with Pathak, J., observed that on a proper construction of section 4(4)(d)(i), it was clear that any secondary packing done for the purpose of facilitating transport and smooth transit of the goods to be delivered to the buyer in the wholesale trade could not be included in the value for the purpose of assessment of excise duty.

Chief Justice Bhag wati, on the other hand, held that corrugated fibreboard containers in which the cigarettes were contained fell within the definition of 'packing ' in the Explanation to section 4(4)(d)(i) and if these formed part of the packing in which the goods were packed when delivered at the time of removal, then under section 4(4)(d)(i) read with the Expla nation, the cost of such corrugated fibreboard containers would be liable to be included in the value of cigarettes.

It is apparent from the wide language, according to the learned Chief Justice, of Explanation to section 4(4)(d)(i) that every kind of container in which it can be said that the excisable goods are contained would be 'packing ' within the meaning of the Explanation.

Even secondary packing would be within the terms of the Explanation, because such second ary packing would also constitute a wrapper or a container in which the excisable goods are wrapped or contained.

But the test to determine whether the cost of any particular kind of secondary packing is liable to be included in the value of the article is whether a particular kind of packing is done in order to put the goods in the condition in which they are generally sold in the wholesale 991 market at the factory gate.

If they are generally sold in the wholesale market at the factory gate in a certain packed condition, whatever may be the reason for such packing, the cost of such packing would be includible in the value of the goods for assessment to excise duty.

According to learned Chief Justice, it makes no difference to the applicability of the definition in section 4(4)(d)(i) read with Explana tion that the packing of the goods ordinarily sold by the manufacturer in the wholesale trade is packing for the purpose of protecting the goods against damage during trans portation or in the warehouse.

However, if any special secondary packing is provided by the assessee at the in stance of a wholesale buyer which is not generally provided as a normal feature of the wholesale trade, the cost of such special packing would not be includible in the value of the goods.

It may be necessary in this connection to refer to the observations of this Court in Union of India & Ors.

vs Bombay Tyre International Ltd., (supra) dealing with the aspect of secondary packing, where this Court reiterated that the degree of secondary packing which is necessary for putting the excisable article in which it is sold in the wholesale market at the factory was the degree of packing where the cost would be included in the value of the goods for the purpose of excise duty.

Pathak, J., as the Hon 'ble Chief Justice was then, observed whether it is necessary for putting the cigarettes in the conditions in which they were sold in the wholesale market or at the factory gate.

He answered that it is not.

It was found that these corrugated fibreboard containers are employed for the purpose of avoid ing damage or injury during the transit.

It was conceivable that the wholesale dealer who takes delivery might have its depot at a very short distance only from the factory gate or may have such transport arrangements available that damage or injury to the cigarettes could be avoided.

In those cases, the corrugated fibreboard containers, according to Pathak, J., were not necessary for selling the cigarettes in the wholesale market.

I am of the opinion that the views expressed by the majority of the learned Judges were correct and it appears, with respect, that the observations of Chief Justice Bhag wati were not consistent with the judgment of this Court in Bombay Tyre International (supra) at p. 379.

The learned Attorney General sought to suggest that the decision of this Court in Union of India vs Godfrey Phillips Ltd. (supra) perhaps might require reconsideration.

I am unable to accept this suggestion.

The ratio of the decision in Godfrey Phil lips ' case (supra) is in consonance with the decision of Union of India vs Bombay Tyre International (supra) and further in consonance with the true basis of excise as explained in several decisions mentioned before.

In the premises, on 992 the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade.

There was evidence that 90% of the goods were deliv ered at the time of removal without being put in drums.

There was no evidence that there was any necessity of pack ing or putting these in drums prior to their sale.

It was not necessary that the articles were to be placed in drums for these to be able to generally to enter the stream of wholesale trade or to be marketable.

On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such.

But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities.

The manufac ture of the goods was complete before these were placed in drums.

The completely manufactured product was stored in tanks.

From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and 10% of the sales, the vehicle of removals was drums.

In the premises, the value of the drums with regard to the fusel oil/styrene monomer irrespective of whether these were supplied by the assessee or not, are not includible in the assessable value of the Styrene Monomer.

In the aforesaid view of the matter, I am of the opinion that these appeals have to be allowed and the orders of the Tribunal set aside.

The Tribunal was in error in holding that as at the time of removal, goods were delivered from the factory in packed condition and the containers were not returnable to by the buyer, the value of the drums is to be included.

It is reiterated that in order to be deliverable, it is not necessary that the goods should be delivered in packed condition and that the containers were not necessary to make the goods marketable.

In the aforesaid view of the matter, the appeals are allowed and the orders of the Tribunal are set aside.

The value of the aforesaid drums should, therefore, be excluded from the assessable value for the purpose of excise duty.

In the facts and the circumstances, however, there will be no order as to costs.

RANGANATHAN, J I have perused the judgment proposed to be delivered by my learned brother Sabyasachi Mukharji, J. I agree with the conclusion arrived at by him but I would like to rest it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act, 1944, without going into the larger questions raised by counsel and dealt with by my learned brother.

The assessee company is manufacturing and selling fusel oil.

993 It also manufactures and sells another liquid known as styrene monomer.

The fusel oil and monomer are supplied generally in tankers brought by the customers Sometimes it is supplied in drums provided by the customers who are not charged anything for those drums.

In the case of styrene monomer, the finding is that the supply is in tankers to the extent of 90% and only 10% of the sales were made in drums.

The issue before us is whether the costoat of the drums supplied by the customer for which he is not charged should be included in the assessable value of the goods in ques tion: in other words, whether a notional amount representing the cost of the drums should be added to the sale price charged by the assessee to its constituents.

Shri Harish Salve, arguing for the appellants, con tended that the cost of packing referred to in section 4(4)(d)(i) is such cost incurred by a manufacturer and not the cost of packing borne by the buyer.

In the alternative, he contended that atleast so far as styrene monomer sales are concerned, the cost of drums cannot enter into the picture.

Citing several previous authorities of this Court he contended on the following lines: "It is not all packing that is liable to be included under section 4(4)(d)(i).

It is only that degree of secondary packing which is necessary for the assessable article to be placed in the condition in which it is sold in the wholesale market at the factory gate which can be in cluded in the assessable value of the article.

On the facts of this case, there is evidence that 90% of the monomer was delivered at the time of removal without being put in drums.

There was no evidence that there was any necessity of packing or putting them in drums prior to their sale.

Delivery in drums was only to facilitate their transport in small quantities.

The manufacture of the monomer was complete when it was stored in tanks.

From these tanks, the goods were, to the extent of 90%, removed directly and placed in tankers.

In 10% of the sales, the "vehicle" of removal was drums.

In the premises, the value of the drums irrespective of whether these where supplied by the assessee or not, is not inclu dible in the assessable value of the goods.

The learned Attorney General, on the other hand, contended that the terms of section 4(4)(d)(i) are very clear and specific.

He pointed out though "manufacture" is the taxable event, the measure of the levy need not be and is not to be restricted to the cost of 994 manufacture.

So it is open to Parliament to prescribe any measure by reference to which the charge is to be levied and this is what is done under section 4.

In construing section 4(4)(d)(i), all that has to be seen is whether the goods are delivered in packed condition.

If this question is answered in the affirmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, has to be automatically included in the assessable value if necessary, by addition to the sale price, except only where the packing is of durable nature and returnable to the manufacturer.

He reminded us of the oft quoted truism that, in tax matters, one has to look at what is said and that there is no question of any intend ment, implication, equity or liberality in construing the taxing provision.

I agree with Mukharji, J. that this con tention cannot be accepted.

The principle referred to by the learned Attorney General is unexceptionable but the words of a statute have to be read in the context and setting in which they occur.

The proper interpretation to be placed on the words of section 4(4)(d)(i) has been explained in the judg ment of my learned brother and I am in full agreement with him on this point.

There is ample internal indication in the statute to show that the cost of packing referred to in the above clause is the cost of packing incurred by the manufac turer and recovered by him from the purchaser whether as part of the sale price or separately.

The object and purpose of the levy, the meaning of the expression 'assessable value ' as interpreted in section before its amendment cou pled with the now well established position that the amend ment intended to make no change in this position, the use of the word "cost" rather than "value", the nature of the other payments referred to in sub clause (ii) all these show beyond doubt that, while generally the normal price for which the goods are sold at the factory gate is to be taken as the assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market.

It will indeed be anomalous if the cost of an item of pack ing charged for from the customer is to be excluded from the assessable value where the packing, though durable, is returnable to the manufacturer but the cost of an item of durable packing supplied by the customer and taken back by him is liable to be included in the assessable value.

This conclusion, in my opinion, is sufficient to dispose of the present appeals.

In this view of the matter, I consider it unnecessary to discuss wider questions as to the circumstances in which the cost of packing (primary or secondary) can at all enter into the determination of the 995 assessable value under section 4(4)(d)(i) canvassed by the counsel for the assessee or as to the correctness or other wise of the decision of this Court in Union of India vs Godfrey Phillips, by the learned Attorney General.

My conclusion is that the answer to the question whether the cost of the container should be includ ed in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not.

If the answer is yes, three kinds of situation may arise.

Where the manufacturer supplies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the con tainer.

There will be no question of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the con tainer is a durable one and is returnable to the manufactur er.

If the manufacturer supplies the drums and charges the customers separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer.

If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufacturer.

VERMA, J. I have the benefit of perusing the judgments prepared separately by my learned Brothers Mukharji, J. and Ranganathan, J. both of whom have arrived at the same con clusion.

My conclusion also is the same.

However, I append this short note only to emphasize that in my opinion also the view taken by all of us on the construction of section 4(4)(d)(i) of the (here inafter referred to as "the Act") is alone sufficient, in the present matters, to support the conclusion we have reached and it does not appear necessary to consider the wider propositions canvassed by the two sides.

I agree that the cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in rela tion to any excisable goods is only the "cost of such pack ing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer.

The "cost of such packing" referred in section 4(4)(d)(i) does not in clude within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer.

This construction of the expres sion "cost of such packing" in section 996 4(4)(d)(i) of the Act clearly excludes in these matters the question of its addition to the price of goods recovered by the manufacturer from the buyer for determining the "value" in relation to the excisable goods for computing the duty payable on it.

In my opinion also, the above conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals.

For this reason, I agree with Rangana than, J. that the wider propositions canvassed by the two sides including the question of correctness of the view relating to secondary packing taken in Union of India vs Godfrey Phillips India Ltd., raised by the learned Attorney General need not be considered and decided in these matters.

I agree with my learned Brothers that both these appeals be allowed.

R.S.S. Appeals allowed.

Summary: The appellant company/assessee manufactures and sells fusel oil/ styrene Monomer falling under Tariff Item No. 68 of the 1st Schedule to the .

Summary: The said fusel oil/styrene Monomer is sold in bulk and generally delivered to the customers at the appellant 's factory in road tankers.

Summary: Some times it is supplied in drums brought by the customers who are not charged anything for those drums.

Summary: In the case of Styrene Monomer, the finding is that the supply was in tankers to the extent of 90% and only 10% of the sales were made in drums.

Summary: Two notices were issued to the appellant to show cause as to why the value of the drums should not be included in the assessable value of the goods.

Summary: In reply, the appellant contended that as the drums were supplied by the buyer the value thereof could not be included in the assessable value.

Summary: The Assistant Collector however included the value of the drums in the assessable value of the said fusel oil/Styrene Monomer.

Summary: The Collector (Appeals) allowed the appellant 's appeal and held that it was not open to the Assistant Col lector to inflate the assessable value without establishing the receipt of the additional consideration by the appellant apart from what had been shown in the invoice.

Summary: The Customs, Excise and Gold (Control) Appellate Tribunal allowed the further appeal filed by the Revenue and held that at the time of removal the goods were delivered from the factory in packed condition and the containers were not returnable by the buyer, therefore, the value had to be included in the assessable value.

Summary: Before this Court it was contended on behalf of the appellant that it was not all packing that was liable to be included under section 4(4)(d)(i) of the Customs and Central Excises Act, it was only that degree of secon 975 dary packing which was necessary for the assessable article to be placed in the condition in which it was sold in the wholesale market at the factory.

Summary: gate which could be includ ed in the assessable value of the article; fusel oil/Styrene Monomer was sold in bulk and was capable of being so sold, hence it was not necessary for the said fusel oil/Styrene Monomer to be supplied to the customer in drums; the duty of excise was payable on manufactured goods and no duty of excise could be collected from the appellant on such drums which were neither manufactured nor purchased by the appel lant; the duty being on the activity of manufacture whatever was necessary to bring the goods into existence alone could be taken into account for duty purposes; and the sub section did not contemplate the inclusion of the cost of packing in the value of goods when the packing was supplied by a cus tomer to a manufacturer on its own cost.

Summary: On behalf of the Revenue the learned Attorney General contended that the value of drums/containers would also have to be included on a correct interpretation of charging sections, namely, sections 3 and 4 of the Act; the terms of section 4(4)(d)(i) were very clear and specific; it was a well settled principle of construction that in taxing stat utes one had only to look at what was clearly stated, and there was no room for any intendment; percentages of sales did not in any manner affect determination of the assessable value of the excisable goods; though "manufacture" was the taxable event, the measure of the levy need not be and was not to be restricted to the cost of manufacture; it is open to Parliament to prescribe any measure by reference to which the charge was to be levied and this is what was done under section 4; and in construing section 4(4)(d)(i).

Summary: all that had to be seen was whether the goods were delivered in packed conditions and if this question was answerable in the af firmative, then, in respect of the goods so sold, the cost of packing, whether incurred by the manufacturer or by the supplier, had to be automatically included in the assessable value, if necessary, by addition to the sale price, except only where the packing was of durable nature and returnable to the manufacturer.

Summary: Allowing the appeals, this Court, HELD: (1) The correct position must be found out bearing in mind the essential nature of excise duty.

Summary: Excise duty is a duty on the act of manufacture.

Summary: Manufacture under the excise law is the process of activity which brings into being articles which are known in the market as goods and to be goods these must be different, identifiable and distinct articles known to the market as such.

Summary: It is then and then only that 976 manufacture takes place attracting duty.

Summary: [986B] (2) Section 2(f) of the Central Excises & Salt Act provides the definition of the term "manufacture".

Summary: It states, inter alia, that manufacture includes any process incidental or ancillary to the completion of manufactured product.

Summary: In the instant case, the drums even though these were ancillary or incidental to the supply of fusel oil and styrene monomer, these were not necessary to complete the manufacture of fusel oil or styrene monomer.

Summary: [983B C, 987D] (3) In order to be 'manufacture ', there must be activity which brings transformation to the article in such a manner that different and distinct article comes into being which is known as such in the market. 'If in order to be able to put it on the market, a certain amount of packing or user of containers or wrappers or putting them either in drums or containers, are required, then the value or the cost of such wrapper or container or drum must be included in the assess able value and if the price at which the goods are sold does not include that value then it must be so included by the very force of the terms of the section.

Summary: [986C E] (4) The clear implication of the use of the word "cost" in relation to packing in the clause (i) of section 4(4)(d) of the Act is that only packing cost of which is incurred by the assessee, i.e. the seller, is to be included.

Summary: The use of the expression "cost" could not obviously be by way of reference to packing for which the cost is incurred by the buyer.

Summary: [988B] Union of India & Ors.

Summary: vs Bombay Tyre International Ltd., ; ; Collector of Central Excise vs Indian Oxygen Ltd., ; K. Radha Krishaiah vs In spector of Central Excise, Gooty & Ors., ; Govind Pay Oxygen Ltd. vs Asstt.

Summary: Collector of Central Ex cise, Panaji & Ors., ; Alembic Glass Indus tries Ltd. vs Union of India & Ors., ; Gur Sahai Sehgal vs Commissioner of Income Tax, Punjab, ; ; A.K. Roy vs Voltas Ltd., ; Atic Industries Ltd. vs H.H. Dave Assistant Collector of Central Excise, ; Union of India vs Godfrey Phillips India Ltd., [1985] Supp. 3 SCR 123; Union of India vs Delhi Cloth & General Mills Ltd., [1963] Supp. 1 SCR 586; South Bihar Sugar Mills Ltd., etc.

Summary: vs Union of India & Ors.

Summary: , ; ; Bhor Industries Ltd., Bombay vs Collector of Central Excise, Bombay, ; and Union of India vs Godfrey Phillips Ltd., , referred to.

Summary: 977 (5) On the facts of this case, it is clear that the goods were not sold in drums generally in the course of the wholesale trade.

Summary: There was no evidence that there was any necessity of packing or putting these in drums prior to their sale, or to be able to generally to enter the stream of wholesale trade or to be marketable.

Summary: On the other hand, there was evidence that in the wholesale trade, these goods were delivered directly in tankers and deliverable as such.

Summary: But as a matter of fact, delivery in drums was only to facilitate their transport in small quantities.

Summary: The manufac ture of the goods was complete before these were placed in drums.

Summary: The completely manufactured product was stored in tanks.

Summary: From these tanks the goods were removed directly and placed in vehicles for their movement for 90% of the sales, the vehicle of removal was tankers and for 10% of the sales, the vehicle or removal was drums.

Summary: In the premises, the value of the drums with regard to the fusel oil/ styrene monomer irrespective of whether these were supplied by the assessee or not.

Summary: are not includible in the assessable value of the Styrene Monomer.

Summary: [992A D] Per section Ranganathan, J. (agreeing with the conclusion but resting it entirely on the language of section 4(4)(d)(i) of the Central Excises & Salt Act) (1) There is ample internal indication in the statute to show that the cost of packing referred to in section 4(4)(d)(i) of the Central Excises & Salt Act, 1944 is the cost of packing incurred by the manufacturer and recovered by him from the purchaser whether as part of the said price or separately.

Summary: [994D] (2) While generally the normal price for which the goods are sold at the factory gate is to be taken as assessable value, an addition thereto has to be made where, in addition to the price, the manufacturer levies a charge for the packing which is intrinsically and inevitably incidental to placing the manufactured goods on the market.

Summary: [994F] (3) The answer to the question whether the cost of the container should be included in the assessable value or not would depend upon whether the goods in question are supplied in a packed condition or not.

Summary: If the answer is yes, three kinds of situation may arise.

Summary: Where the manufacturer sup plies his own container or drum but does not charge the customer therefore, then the price of the goods will also include the cost of the ' container.

Summary: There will be no ques tion of separate addition to the sale price nor can the assessee claim a deduction of the cost of packing from the sale price except where the container is a durable one 978 and is returnable to the manufacturer.

Summary: If the manufacturer supplies the drums and charges the customer separately therefore, then, under section 4(4)(d)(i), the cost of the drums to the buyer has to be added to the price except where the packing is of durable nature and is to be returned to the manufacturer.

Summary: If on the other hand, the manufacturer asks the customer to bring his own container and does not charge anything therefore then the cost (or value) of the packing cannot be "notionally" added to, or subtracted from, the price at which the goods have been sold by the manufac turer.

Summary: [995B D] Per J.S. Verma, J. (agreeing with Ranganathan, J. that the conclusion reached on the language of section 4(4)(d)(i) of the Act is sufficient to allow these appeals).

Summary: (1) The cost of packing envisaged in section 4(4)(d)(i) of the Act for determining the "value" in relation to any excisable goods is only the "cost of such packing" incurred by the manufacturer and recovered from the buyer except where the packing is of a durable nature and is returnable by the buyer to the manufacturer.

Summary: [995G] (2) The "cost of such packing" referred to in section 4(4)(d)(i) does not include within its ambit the cost of packing not incurred by the manufacturer when the packing is supplied by the buyer and not the manufacturer.


: Criminal Appeal No. 8 18 of 1979.

From the Judgment & Order dated the 27.10.1979 of the Madras High Court in Crl.

A. No. 4 of 1977.

A.S. Nambiar and K.R. Nambiar for the Appellant.

V. Krishnamurthy for the Respondent.

The Judgment of the Court was delivered by FATHIMA BEEVI, J.

This appeal is directed against the judgment dated 27.10.1979 of the High Court of Madras con firming the conviction of the appellant under section 161, I .P.C. and under section 336 5(2) read with section 5(1)(d) of the Prevention of Corrup tion Act.

The appellant had been sentenced to undergo R.I. for 15 months under section 5(2) read with section 5(1)(d) of the Prevention of Corruption Act with no separate sen tence under section 161 I.P.C.

The brief facts of the case are as under.

The appellant, Sunderamoorthy was an Accountant cum Headclerk in the Tamil Nadu Forest Training School at Vaigai Dam.

He took charge of the office on 6.10.1975 and had been residing in a house opposite the training school.

PW 3, the Principal of the training school issued exhibit P 2 show cause notice to the PW 1, Venkataswamy, the canteen contractor, as to why his licence for running the canteen should not be cancelled.

This was on the basis of a complaint made by the appellant that the food served in the canteen was substand ard.

The appellant had taken food in the canteen for two days and being dissatisfied discontinued the practice before the notice was issued.

The prosecution case is that the accused thereafter sent for PW 1, informed him that he would help him in restoring the licence and demanded a bribe of Rs. 100.

On 21.10.1975, the appellant is stated to have pressed the demand to PW 1.

The latter made a complaint to PW 6 who thereupon arranged a trap.

As instructed, PW 1 was ready with ten rupees currency notes.

PW 6 after drawing up a mahazar in the presence of PW 2, Jaganathan, Assistant of the Office of the Special Tehsildar, Usilampatti directed PW 1 to give the notes to the appellant.

PW 1 handed over the money to the appellant who received the same.

When PW 1 emerged, PW 6 along with PW 2 confronted the appellant.

The appellant produced the currency notes.

PW 6 conducted the phenolphthalein test with reference to the fingers of the appellant.

The test was positive, the currency notes were seized and the appellant arrested.

PW 3, the Principal produced the concerned file relating to show cause notice, from the house of the appellant on the same day.

Finally, the appellant was chargesheeted.

At the trial, the prosecution witnesses supported the case.

PW 1 affirmed the fact that the appellant made the demand and had also received the amount on 22.10.

The recovery of the currency notes from the appellant was not challenged.

The plea of the appellant was that PW 1 had returned the amount due to him and there had been no demand for a bribe as there had been no occasion for doing so.

The Trial Court accepted the prosecution evidence, rejected the plea of the appellant and recorded the conviction.

Before the High Court, the .contentions of the appellant were that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the 337 behest of the appellant had not been examined, the solitary evidence of PW 1 is insufficient, the explanation offered by the appellant was probable and there is no conclusive evi dence to hold that the appellant.

was guilty.

It was also urged that the appellant being new in the office could exert little influence on the Principal and the whole story is, therefore improbable.

These contentions did not find favour with the High Court.

It took the view that the evidence of PW 1 find corroboration in the testimony of PW 2 and 6 and the contemporary records.

The recovery of the currency notes from the appellant proves the guilty conduct of the appel lant in view of the presumption arising under section 4(1) of the Prevention of Corruption Act which has not been rebutted.

The decisions of the Court in State of Rajasthan vs Mohamed Habeeb, ; C.I. Ernden vs State of Uttar Pradesh; , and Lohana Kantilal vs State, AIR 1954 Saurashtra 12 1 were referred to.

The High Court thought that though the conviction under section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act is to be maintained, no separate sentence need be award ed under section 161 I.P.C.

The appellant has reiterated the contentions before us.

The learned counsel appearing for the appellant, however, maintained that the appellant had a consistent case even from the earliest opportunity that the currency notes found in his possession was the money returned by PW 1, the cir cumstances of the case would probabalise this case of the appellant and the presumption, if any, arising under section 4 is rebutted and the conviction cannot therefore be sus tained.

PW 6 has stated at the time of the seizure the explanation offered by the appellant was that PW 1 had returned the loan and that he had given the money for the Dipawali.

The case that has been developed in the course of the trial is not that of a loan transaction but payment of an advance of Rs. 125 in the canteen when the appellant started to take food there.

The case of Dipawali gift or return of a loan given to PW 1 has not been even suggested.

It cannot, therefore, be said that there had been consistent explanation for the appellant.

PW 3, the Principal has averred in unequivocal terms that Ex.

P 2 memo had been issued on the basis of the complaint received from the appellant that on getting the explanation from PW 1 he on 18.10.1975 itself passed orders and closed the file.

The order made was not disclosed to PW 1 and till 22.10.1975, the file itself was kept by the appellant in his personal custody.

He had thereafter received the amount of Rs. 100 from PW 1.

This conduct of the appellant is clearly incon sistent with the transaction of loan or return of money by PW 1. 338 This Court observed in Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575 as under: "Where any gratification (other than legal gratification) or any valuable thing is proved to have been received by an accused person the court is required to draw a presumption that the person received that thing as a motive of reward such as is mentioned in section 161, I.P.C. Therefore, the Court has no choice in the matter, once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration.

Of course, it is open to that person to show that though that money was not due to him as legal remuneration it was legally due to him in some other manner or that he had received it under a transaction or an arrangement which was lawful.

The burden resting on the accused person in such a case would not be as light as it is where a presumption is raised under section 114 of Evidence Act and cannot be held to be discharged merely by reason of the fact that the explanation offered by the accused is reasonable and probable.

it must further be shown that the explanation is a true one.

The words 'unless the contrary is proved ' which occur in this provision make it clear that the presumption has to be rebutted by 'proof ' and not by a bare explanation which is merely plausible.

A fact is said to be proved when its existence is directly established or when upon the material before it the Court finds its existence to be so probable that a reasonable man would act on the supposition that it exists.

Unless, there fore, the explanation is supported by proof, the presumption created by the provision cannot be said to be rebutted.

" On a careful consideration of the facts and circum stances, we are not satisfied that the appellant had even by preponderance of probability succeeded in rebutting the presumption.

The argument that clause (d) of section 5(1) of the Prevention of Corruption Act is not attracted on the proved facts is also not impressive.

We find no merit in the appeal.

It is accordingly dismissed.

N.V.K. Appeal dismissed.

Summary: The appellant was an Accountant cum Headclerk in the Forest Training School, PW 3 the Principal of the training school, and PW I the canteen contractor.

Summary: The prosecution alleged that on the basis of a complaint made by the appel lant that the food served in the canteen was substandard, PW 3 issued a show cause notice to PW I, as to why the licence for the canteen should not be cancelled and that thereafter the appellant sent for PW I and demanded a bribe of Rs. I00.

Summary: As the appellant pressed the demand from PW 1, the latter made a complaint to PW 6, the inspector, who arranged a trap.

Summary: The trap was arranged.

Summary: PW I handed over the money to the appellant, who received the same.

Summary: PW 6 conducted the phe nolphthalein test with reference to the fingers of the appellant.

Summary: The test was positive.

Summary: The currency notes were seized, and the appellant arrested chargesheeted.

Summary: The Trial Judge accepted the prosecution evidence, rejected the pleas of the appellant that PW 1 had returned the amount of Rs. 100 due to him, that there had been no demand for a bribe as there had been no occasion for doing so, and recorded conviction.

Summary: The appellant appealed to the High Court and contended that there was no independent evidence regarding the demand, the messenger who had contacted PW 1 at the behest of the appellant had not been examined, the solitary evidence of PW I is insufficient and that the explanation offered by the appellant was probable and that there is no conclusive evidence to hold that the appellant was guilty.

Summary: The High Court took the view that the recovery of the currency notes from the appellant prove his guilty conduct, in view of the presumption arising under section 4(1) 01 ' the Prevention of Corruption Act and that the same has not been rebutted and held that though the conviction under 335 section 161 I.P.C. and section 5(2) of the Prevention of Corruption Act, 1947 is to be maintained, no separate sen tence need be awarded under section 161 I.P.C. It, accord ingly, confirmed the conviction of the appellant and sen tenced him to undergo rigorous imprisonment for 15 months.

Summary: In the appeal to this court, it was contended that the appellant had a consistent case even from the earliest opportunity, that the currency notes found in his possession was the money returned by PW I, and that the presumption, if any, arising under section 4 was rebutted, and the convic tion cannot therefore be sustained.

Summary: Dismissing the appeal, this Court HELD: 1.

Summary: The appellant has not even by preponderance of probability succeeded in rebutting the presumption under section 4(1) of the Prevention of Corruption Act.

Summary: [338C] 2.

Summary: The Court has no choice once it is established that the accused person has received a sum of money which was not due to him as a legal remuneration, but to draw a presump tion that the person received the money as a motive of reward.

Summary: However, it is open to that person to show that though that money was not due to him as legal remuneration, it was legally due to him in some other manner or that he received it under a transaction or an arrangement which was lawful.

Summary: The explanation offered by the person should be a true one and not one which is merely plausible.

Summary: [339B C; F] Dhanvantrai Balwantrai Desai vs State of Maharashtra, AIR 1964 SC 575, referred to.


ION: Special Leave A Petition (CRL. ) No. 1765 of 1987 From the Judgment and order dated 8/9.7.1987 of the Bombay High Court in W.P. No. 332 of 1987.

V.N. Ganpule for the Petitioner.

Soli J. Sorabjee, K.J. John and A.K. Desai for the Respondents.

The Judgment of the Court was delivered by SEN, J.

The by section 630, enacts: "630.

Penalty for wrongful withholding of property (1) If any officer or employee of a company (a) wrongfully obtains possession of any property of a company; or D (b) having any such property in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorised by this Act; he shall, on the complaint of the company or any creditor or contributory thereof, be punishable with fine which may extend to one thousand rupees.

(2) The Court trying the offence may also order such officer or employee to deliver up or refund, within a time F to be fixed by the Court, any such property wrongfully obtained or wrongfully withheld or knowingly misapplied, or in default, to suffer imprisonment for a term which may extend to two years.

" The only question involved in this special leave petition is as to the scope and effect of sub section

(1) of section 630 of the Act.

The controversy is as to the meaning of the term 'officer or employee ' used in sub s(1) of section 630 and as to the meaning of the words 'any such property ' in cl.

(b) thereof and there is a conflict of opinion between the High Courts of Calcutta and Bombay on the question.

On a literal construction of the term 'officer or employee ' occurring in sub section

(1) of section 630 of H 172 the Act, the High Court of Calcutta in Amritlal Chum vs Devi Ranjan Jha & Anr., held that it refers only to the existing officers and employees of a company.

It also held that the words 'any such property ' in section 630(l)(b) relate to property specified in cl.

(a) viz. property of a company wrongfully taken possession of by a present officer or employee of the company.

The High Court of Bombay, on the other hand, has placed a beneficent construction on the provisions contained in section 630 and according to it, the term 'officer or employee ' in sub section

(1) of section 630 must be interpreted to mean not only the present officers and employees of a company but also to include past officers and employees of the company.

It is also of the view that the words 'any such property ' in ck (b) qualify the words 'any property of a company ' appearing in cl.

That has been the consistent view taken by the High Court of Bombay in a series of cases.

See: Harkishan Lakhimal Gidwani vs Achyut Kashinath Wagh & Anr., , Govind T. Jagtiani vs Sirajuddin section Kazi & Anr., [ which have since been followed in a series of cases referred to by the learned Single Judge (Ashok Agarwal, J.).

The issues involved in the special leave petition are of considerable importance to the corporate sector as many of the business organisations, both in the public as well as the private sector, are required to provide residential accommodation to their officers and employees as a condition of their service to attract better talent and have of necessity to purchase residential flats in multi storeyed buildings in large cities and towns for the use of such officers and employees during the course of their employment, and the question is whether the provisions contained in sub section

(1) of section 630 which provide for the launching of a prosecution against an officer or employee of a company for wrongful possession of such property under cls.

(a) and (b) of sub section

(1) of section 630 and for the recovery of such property by the issue of process under sub section (2), also extends to past officers and employees of the company and whether the Court trying the offence has the power to issue a process under sub section

(2) against such officer or employee.

At the conclusion of the hearing we had by a short order dismissed the special leave petition and held that the view expressed by the learned Single Judge following the earlier decisions of the High Court in Harkishan Lakhimal Gidwani and reiterated in Govind T. Jagtiani was to be preferred to the view to the contrary expressed by the High Court of Calcutta in Amritlal Chum.

As the respondent Shipping Corporation of India, a public sector undertakings, was in dire need of the flat in question which is situate in a posh locality like the Cuffe Parade in 173 Bombay, for the use of its senior executive, we could not accede to the request of the learned counsel for the petitioner to refer the case to a bench of three judges and heard learned counsel for the parties at quit some length on August 27,1987 and dismissed the special leave petition.

The reasons therefor follow.

At the very threshold it is necessary to set out a few facts.

The petitioner Baldev Krishan Sahi was an Under Secretary to the Government of India in the Ministry of Shipping & Transport and on May 21, 1974 accepted employment as Joint Manager in the Mogul Line Limited, a Government of India undertaking, after obtaining release from government service.

He was first allotted a service quarter.

In 1975 the company purchased a spacious flat being flat No. 151 in Jolly Maker Apartment III at 119, Cuffe Parade and the petitioner being the senior most executive was allotted the flat for his residence.

The petitioner retired from the service of the company on or about September 30, 1984.

Prior to that i.e. On September 26, 1984 he addressed a letter requesting the company to permit him to continue to live in the company 's premises during the period of his accumulated leave after his retirement i.e. for a period of six months, undertaking to vacate the flat as early as possible.

It appears that the company on humanitarian grounds acceded to this request and permitted the petitioner to stay on in the company 's flat for six months after his retirement and in accordance with the company 's rules, he was required to pay compensation for the use of the premises.

After the expiry of the said period of six months, the company addressed a letter dated April 26, 1985 requesting the petitioner to vacate the premises stating that if he failed to do so, he would be liable to pay higher compensation as per the company 's rules.

Since the petitioner failed to vacate the flat, the company initiated proceedings for his eviction under the Public Premises (Eviction of Unauthorised occupants) Act, 1971.

The Estate officer by order dated December 2, 1985 directed the eviction of the petitioner.

The petitioner carried an appeal to the City Civil & Sessions Court, Bombay but the same was dismissed by the Principal Judge, City Civil Court by his order dated January 16, 1986.

He then preferred a revision to the High Court and the High Court by its order dated January 28, 1986 allowed the same, set aside the eviction order and directed the Estate officer to give a personal hearing to the petitioner.

Instead of availing of that opportunity, the petitioner on March 3, 1986 moved the High Court by a petition under article 226 of the Constitution and obtained ad interim stay of the proceedings before the Estate officer.

A few days thereafter i.e. On March 7, 1986 the petitioner instituted a suit being Civil Suit No. 174 1382/86 in Small Causes Court, Bombay seeking a declaration that he was a tenant of the disputed flat, which is now pending.

In view of this, the company was constrained to lodge a complaint against the petitioner under section 630 of the Act in the Court of the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay alleging that he was wrongfully withholding the flat in question which had been given to him for his residence during the period of his employment and and thereby committed an offence punishable under section 630.

The learned Magistrate by his order dated May 22, 1986 took cognizance of the complaint against the petitioner and directed issue of process.

On June 30, 1986 the company merged with the Shipping Corporation of India and all its assets and liabilities were taken over by the Corporation.

The Corporation in the counter affidavit interalia has pleaded that there is acute shortage of housing accommodation in the Metropolitan City of Bombay and it becomes necessary for the Corporation with a view to attract good talent to provide suitable housing accommodation to its officers and employees, and that due to acute financial liquidity it is not possible for the Corporation to buy property in Bombay for this purpose.

It is further pleaded that the petitioner was given the flat for his residence during the period of his employment and that he was bound to vacate the same after his retirement.

It is asserted that the petitioner with a dishonest intention is wrongfully with holding the flat and has instituted false and frivolous proceedings with the ulterior object of protracting and delaying the eviction proceedings.

We are informed that the petitioner has been deliberately and dishonestly withholding the flat covering an area of 1750 square feet in Cuffe Parade which is a posh area, valued at approximately Rs.30 lakhs and putting it to his own use contrary to the terms of his employment.

The first and foremost argument of learned counsel for the petitioner is that the provision contained in section 630 of the Act is a penal provision and therefore must be subject to a strict construction and there is no room for intendment.

It is submitted that on a true construction, the scope and effect of the section was limited to such property of the company which was wrongfully obtained by an officer or employee of the company.

Emphasis was placed upon the words any such property ' in cl.

(b) of sub section

(1) for the contention that cl.

(b) does not stand by itself but is inter connected with cl.

(a) and therefore both clauses (a) and (b) must be read together.

In essence, the submission is that sub section

(1) of section 630 of the Act makes it an offence where any officer or employee of a company wrongfully withholds possession of 175 such property of the company.

Secondly, it is contended that the legislature never intended to include past officers and employees of a company within the ambit of section 630 of the Act which provides for prosecution of an officer or employee of a company for wrongfully withholding the property of the company inasmuch as it has used different languages where it was so intended, namely, in sections 538 and 545.

The entire argument of the learned counsel is based upon the judgment of the High Court of Calcutta in Amritlal Chum 's case.

We are afraid, we find it difficult to subscribe to the narrow construction placed by the High Court of Calcutta on the provision contained in sub section

(I) of section 630 of the Act which defeats the very purpose and object with which it had been introduced.

The beneficent provision contained in section 630 no doubt penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company (a) where an officer or employee of a company wrongfully obtains possession of property of the company, or (b) where having been placed in possession of any such property during the course of his employment.

wrongfully withholds possession of it after the termination of his employment.

It is the duty of the Court to place a broad and liberal construction on the provision in furtherance of the object and purpose of the legislation which would suppress the mischief and advance the remedy.

Section 630 of the Act which makes the wrongful withholding of any property of a company by an officer or employee of the company a penal offence, is typical of the economy of language which is characteristic of the draughtsman of the Act.

The section is in two parts.

Sub section

(1) by clauses (a) and (b) creates two distinct and separate offences.

First of these is the one contemplated by cl.

(a), namely, where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled.

Normally, it is only the present officers and employees who can secure possession of any property of a company.

It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property.

This is the function of cl.

(a) and although it primarily refers to the existing officers and employees, it may also take in past officers and employees.

In contrast, cl.

(b) contemplates a case where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the 176 articles and authorised by the Act.

It may well be that an officer or employee may have lawfully obtained possession of any such property during the course of his employment but wrongfully withholds it after the termination of his employment.

That appears to be one of the functions of cl.

It would be noticed that cl.

(b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorised by the Act.

That would primarily apply to the present officers and employees and may also include past officers and employees.

There is therefore no warrant to give a restrictive meaning to the term 'officer or employee ' appearing in sub section

(1) of section 630 of the Act.

It is quite evident that clauses (a) and (b) are separated by the word 'or ' and therefore are clearly disjunctive.

The High Court of Calcutta in Amritlal Chum 's case obviously fell into an error in seeking to curtail the ambit of section 630(l)(b) by giving a restrictive meaning to the terms 'officer or employee ' which must take its colour from the context in which it appears.

The whole object of enacting sub section

(1) of section 630 is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and (b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting cl.

(a) into cl.

There is also no warrant for the construction placed by the High Court of Calcutta on the words 'any such property ' occurring in cl.

(b) as applicable to such property of a company, possession of which is wrongfully obtained by an officer or employee of the company i.e. refers to the whole of cl.

According to the plain construction, the words 'any such property ' in cl.

(b) relate to any property of a company as mentioned in cl.

Section 630 of the Act plainly makes it an offence if an officer or employee of the company who was permitted to use any property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment.

By a curious process of reasoning, the High Court of Calcutta in Amritlal Chum 's case held that section 630 of the Act applies only to the existing officers and employees and not to those whose employment has been terminated.

In somewhat similar facts, an officer of Messrs Jardine Hendersons Limited who had been placed in possession of a furnished flat in premises No. 27, Ballygunj Park, Calcutta as a condition of his service, wrongfully retained possession thereof after ceasing to be an officer of the company.

The question was whether he had thereby committed an 177 Offence punishable under section 630 of the Act.

N.G. Chaudhuri, J. speaking for himself and G.C. Chatterjee, J. held that the opening words of sub section

(1) of section 630, namely, 'if any officer or employee of a company ' qualify 'the acts of delinquency ' specified in clauses (a) and (b) thereof.

He further held that the High Court of Bombay was in error in laying down in Govind T. Jagtiani 's case that for purposes of prosecution, cl.

(a) of section 630(1) was referable to existing officer or employee of a company, while cl.

(b) was wide enough to include former or past officer or employee of the company inasmuch as on a plain reading of the section the two clauses do not permit different interpretations, as suggested.

Further, whenever the framers of the law in their wisdom thought it proper to bring within the mischief of the provisions of the Act former officers or employees of a company, they did not hesitate to do so and they expressly legislated.

In particular, the learned judge referred to section 538 which provides for prosecution for offences by officers of companies in liquidation and uses the expression 'a past or present officer of a company etc. ', as also section 545 which provides for prosecution of delinquent officers and members of a company during the course of winding up and uses the words 'any past or present officer etc. ' Upon that basis, he observed that there was no reason to give a twisted and laboured interpretation to the provisions of section 630 of the Act which its plain reading does not permit.

The learned Judge also referred to the words 'any such property ' in cl.

(b) as taking in the property mentioned in cl.

(a) i.e. property wrongfully obtained.

The reasoning of the learned Judges does not bear scrutiny and renders cl.

(b) of section 630( l) wholly redundant.

It is the wrongful withholding of such property, meaning the property of the company after termination of the employment.

which is an offence under section 630(l)(b) of the Act, as rightly pointed out by V.S. Kotwal, J. in Harkishan Lakhimal Gidwani vs Achyut Kashinath Wagh (supra).

The facts were also identical as here.

The petitioner there was the General Manager of a company known as the English Electrical Company of India Limited, a company incorporated under the having its registered office at Calcutta.

He had been allotted the premises of a flat, approximately 3,500 square feet in area, located at Mayfair Gardens, Little Gibbs Road, Bombay.

He had been inducted into the flat only by virtue of his capacity as the General Manager of the company 's branch office at Bombay but the company allowed him to retain the same on humanitarian grounds for a short period after his retirement to enable him to find alternative accommodation.

This humanitarian and charitable consideration shown by the company was reciprocated by the petitioner by adopting H 178 an adamant attitude and he declined to vacate the same on one pretext or another.

The question was whether such wrongful retention of the flat amounted to an offence under section 63() of the Act.

The Court repelled the contention that section 630 of the Act applies only to the existing officers and employees of the company and not to former officers and employees, and that the phrase 'any such property ' used in cl.

(b), even though cls.

(a) and (b) are separated by the word 'or ' which must in the context in which it appears be read as 'and ' and so construed, must mean withholding of property wrongfully obtained by an existing officer or employee.

Kotwal, J.

On a careful analysis of section 630 held that the provisions of the section apply not only to the present officers and employees of the company but also to past officers and employees, and observed: "It is held that the features and deductions which flow logically and inescapably on an analysis of section 630 are that: (i) Clause (a) of the section is self contained and independent of cl.

(b) with the capacity of creating penal liability 4 embracing the case of an existing employee or officer of the company.

(ii) Clause (b) is equally independent and distinct from cl.

(a) as regards penal consequences squarely covering the case of a past employee or officer.

(iii) The entitlement of an officer to the property of the company is contingent on the right and capacity of the officer by virtue of his employment which is transformed into the actual possession of the property and the duration of such right would be co terminus with the terms of employment.

" In Govind T. Jagtiani vs Sirajuddin section Kazi, (supra), Kanade, J. fol lowed the critical analysis of section 630 made by Kotwal, J. as above, and observed that the entitlement of an officer to the property of the company and the duration of such right would be co terminus with the terms of employment and the right would stand extinguished with the termination to the employment giving rise to an obligation to hand over the property back to the company, and observed: "If the property is held back, the retained possession would amount to wrongful withholding of the property of the company.

While the existence of the capacity, right and possession would be during employment, the withholding may be even after the termination of the employment and though the possession as it precedes the act of retention or withholding may be rightful in the past affording an 179 Opportunity to withhold, the withholding may be wrongful as in the present case.

" The learned Judge (Ashok Agarwal, J.) observes that that has been the consistent view of the High Court and has referred to the subsequent decisions of Khatri j J. and Kurdukar, J.

In our considered opinion, the construction placed by the High Court on the provisions contained in s.630(1) is the only construction possible.

We accordingly uphold the view of the High Court of Bombay that the terms 'officer or employee ' of a company applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment.

The decision to the contrary of the High Court of Calcutta in Amritlal Chum 's case does not lay down good law and is overruled.

In the result, the special leave petition must fail and is dismissed with costs.

The petitioner is given one month 's time to vacate the premises failing which the respondents will be at liberty to take such proceedings as the law provides.

We direct the Additional Chief Metropolitan Magistrate, 37th Court, Esplanade, Bombay to proceed with the trial of Crl.

Case No. 76/S/1986 and dispose it of as expeditiously as possible and in any event, not later than four months from today.

P.S.S. Petition dismissed.

Summary: Sub section ( l ) of section 630 of the provides for launching of prosecution against an officer or employee of a company, who (a) wrongfully obtains possession of any property of a company, or (b) having any such property in his possession wrongfully withholds or knowingly misapplies the same.

Summary: The petitioner who was given a flat by the company for his residence during the period of his employment did not vacate it on his retirement.

Summary: He was granted six months time on humanitarian grounds upon his undertaking to comply with.

Summary: Upon his failure to vacate the premises the company lodged a complaint against him under section 630 of the Act for wrongful withholding of its property.

Summary: The Magistrate took congnizance of the complaint and directed issue of process.

Summary: Dismissing the writ petition filed by him under article 227 of the Constitution read with section 482 Cr.

Summary: P.C. seeking to quash the proceedings, the High Court following its consistent view in a series of cases that the term 'officer or employee ' in sub section

Summary: (1) of section 630 must be interpreted to mean not only the present officer or employee of company but also to include past officers and employees of the company and that the words 'any such property ' in cl.

Summary: (b) qualify the words 'any property of a company ' appearing in cl.

Summary: (a), held that the case does not call for interference.

Summary: 169 In the special leave petition it was contended for the petitioner that the provision contained in section 630 of the Act is a penal provision and, therefore, must be subject to a strict construction and there is no room for intendment, that the term 'officer or employee ' occurring in sub section

Summary: (1) of section 630 refers only to the existing officers and employees of a company, and not the past officers, and that cl.

Summary: (b) of sub section

Summary: (I) does not stand by itself but is interconnected with cl.

Summary: (a) thereof and therefore cl.

Summary: (a) and cl.

Summary: (b) must be read together and when so read the words 'any such property ' in cl.

Summary: (b) do not qualify the words 'any property of a company ' in cl.

Summary: (a) and only relate to the property of company wrongfully taken possession of by a present officer.

Summary: Dismissing the special leave petition, ^ HELD: 1.

Summary: Section 630 of the plainly makes it an offence if an officer or employee of the company who was permitted to use any property of the company during his employment, wrongfully retains or occupies the same after the termination of his employment.

Summary: [176F G] 2.1 The term 'officer or employee ' of a company in section 630(1) applies not only to existing officers or employees but also to past officers or employees if such officer or employee either (a) wrongfully obtains possession of any property, or (b) having obtained such property during the course of his employment, withholds the same after the termination of his employment.

Summary: [179B C] 2.2 The beneficent provision contained in section 630 of the though penal, has been purposely enacted by the legislature with the object of providing a summary procedure for retrieving the property of the company.

Summary: [175C E] 2.3 Sub section

Summary: (1) of section 630 of the Act by clauses (a) and (b) creates two distinct and separate offences: (1) Where an officer or employee of a company wrongfully obtains possession of any property of the company during the course of his employment, to which he is not entitled.

Summary: Normally, it is only the present officers and employees who can secure possession of any property of a company.

Summary: It is also possible for such an officer or employee after termination of his employment to wrongfully take away possession of any such property.

Summary: This is the function of cl.

Summary: (a) 170 and although it primarily refers to the existing officers and employees, it may also take in past officers and employees.

Summary: (2) Where an officer or employee of a company having any property of a company in his possession wrongfully withholds it or knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act.

Summary: That appears to be one of the functions of cl.

Summary: Clause (b) also makes it an offence if any officer or employee of a company having any property of the company in his possession knowingly applies it to purposes other than those expressed or directed in the articles and authorized by the Act.

Summary: That would primarily apply to the present officers and employees and may also include past officers and employees.

Summary: There is therefore no warrant to give a restrictive meaning to the term 'officer or employee ' appearing in sub section

Summary: (1) of section 630 of the Act.

Summary: [175F H; 176A C] 3.

Summary: It is quite evident that clauses (a) and (b) are separated by the word 'or ' and therefore are clearly disjunctive.

Summary: The whole object of enacting the provision is the preservation of the property of a company by the creation of two distinct offences by clauses (a) and.(b) which arise under different sets of circumstances, and it would be rendered nugatory by projecting cl.

Summary: (a) into cl.

Summary: 1176C, D E] 4.

Summary: According to the plain construction, the words 'any such property ' in cl.

Summary: (b) relate to 'any property of a company ' as mentioned in cl.

Summary: It is wrongful with holding of such property meaning the property of the company after termination of the employment, which is an offence under section 630(l)(b) of the Act.

Summary: [176F; 177E F] 5.

Summary: The petitioner given one month 's time to vacate the premises failing which the respondents to take such proceedings as the law provides.

Summary: The Additional Chief Metropolitan Magistrate to proceed with the trial and dispose it of expeditiously.

Summary: [179D E] Harkishan Lakhimal Gidwani vs Achyat Kashinath Wagh & Anr., , and Govind T. Jagtiani vs Sirajuddin section Kazi & Anr., , approved.

Summary: Amritlal Chum vs Devi Ranjan Jha & Anr., , overruled. 171