N: Criminal Appeal No. 87 of 1967.

721 Appeal by special leave from the judgment and order dated January 24, 1967 of the High Court of Mysore in Criminal Appeal .No.

29 of 1965.

A. section R. Chari and R. V. Pillai, for the appellants.

Shyamala Pappu and section P. Nayar, for the respondent.

The Judgment of the Court was delivered by Hidayatullah, C.J.

, These are 14 appellants who appeal against their conviction under section 395 of the Indian Penal Code and sentences of 5 years ' rigorous imprisonment and fine of Rs. 1,000/ passed on them.

Originally 20 persons were tried and convicted for the same offence and received a like sentence.

14 alone have appealed to this Court.

The incident which took place on July 28, 1962 was theft by dacoity of certain cotton pieces from two carts within the limits of Lingsugar Police Station at about 11 30 p.m.

The facts are that two traders in cloth sent their wares in carts for sale.

The cartmen halted after the market was over on the way for food.

Thereafter six carts left for Mudgal at about 10 p.m.

When the carts reached a Nala called Heri Halla about three miles from Lingsugur at about 11 30 p.m., 20 persons are said to have approached the carts and pelted stones.

It was a dark night and the assailants were not identified.

It appears that four out of the six carts escaped, but two carts were looted.

The police investigated the case and arrested the 20 persons who were accused in the case as being the culprits involved in this incident.

It is not necessary to go into rest of the case or the evidence on which the case of dacoity was established, because dacoity as such is not challenged before us.

The accused were convicted on the sole evidence of having in their possession pieces of cloth which were later identified to belong to the traders.

Searches took place between July 30, 1962 and August 17, 1962.

In these searches cloth which was undoubtedly stolen at the time of the dacoity was found in their houses.

The High Court, and the Court below drew from this the conclusion that the appellants were themselves the dacoits, and convicted them accordingly under section 395 of the Indian Penal Code and sentenced them to ' 5 years ' rigorous imprisonment and fine of Rs. 100/ .

In this appeal, the only contention raised by Mr. A. section R. Chari is that the presumption that they were dacoits ought not to have been drawn since the circumstances do not admit the drawing of such a presumption in the case, According to Mr. Chari, the presumption to be drawn ought to have been one under section 41 1 722 of Indian Penal Code or at the most tinder section 412 of the Indian Penal Code but not of complicity in the crime of dacoity.

He contends that the circumstances under which the one presumption or the other may be drawn under section 114 of the have not been stated by law and therefore it is necessary always to start with the lesser presumption and draw the higher presumption only when there is some other evidence to show the complicity of the persons in the crime itself.

According to him there is no other evidence in the case which points, to the complicity of the 14 appellants in the crime of dacoity and therefore as they cannot be suspected to be dacoits themselves, the only presumption to be drawn is one of receivers of stolen property or as receivers of property which was stolen in a dacoity.

In our opinion, the law advocated by Mr. Chari is not correct.

If there is other evidence, to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime.

There is then no question of presumption.

The evidence strengthens the other evidence already against him.

It is only when the accused cannot be connected with the crime except by reason of possession of the fruits of crime that the presumption may be drawn.

In what circumstances the one presumption or the other may be drawn, it is not necessary to state categorically in this case.

It all depends upon the circumstances under which the discovery of the fruits of crime are made with a particular accused.

It has been stated on more than one occasion that if the gap of time is, too large, the presumption that the accused was concerned with the crime itself gets weakened.

The presumption is stronger when the discovery of the fruits of crime is made immediately after the crime is.

committed.

The reason is obvious.

Disposal of the fruits of crime requires the finding of a person ready to receive them and the shortness of time, the nature of the property which is disposed of, that is to say, its quantity and its character determine whether the person who had the goods in his possession received them from another or was himself the thief or the dacoit.

In some cases there may be other elements which may point to the way as to how the presumption may be drawn.

They need not be stated here for they differ from case to case.(In the present case, the goods stolen were a large quantity of cloth taken for sale to the market.

These goods were not sold and were being taken back to the dealers by the cartmen.) A large number of persons said to be 20 in number pelted stones at the cartmen and looted the, property.

Immediately afterwards a number of searches were made and the goods were found with various persons who were prosecuted as offenders and they have been presumed to be involved in the dacoity itself.

It may be 723 noticed that from each person a large number of goods of the same type such as 20 choli pieces or ten pieces of cloth were found.

(It is, impossible to think that within the short time available, these goods could have been easily disposed of to receivers of stolen property or could be placed in the custody of friends till such time as the original offenders could take them away.) The time gap in some cases is as short as two days and in some others it is not more than five days.

In two cases only the time gap is about 19 days.

Even then we think that the time gap is too short for original offenders to have disposed of the property to these appellants Or to have left the goods in their custody till such time as the original offenders could have taken them away.

We are, therefore, satisfied that the proper inference was drawn in this case.

It must not be forgotton that the offence was committed at night by as many as 20 persons or more.

The houses of 20 persons were searched and large quantities of the stolen goods were found in their houses.

It is impossible to think that these 20 persons were merely receivers of stolen property from some other 20 persons who were the dacoits.

It is legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves.

This presumption has been drawn and in our opinion rightly in this case The conviction was therefore correct in 'all the circumstances of the case.

As regards the sentence, the offence no doubt was serious.

But no injury beyond one appears to have been caused.

Therefore we think that a sentence of three years ' rigorous imprisonment will meet the ends of justice in this case.

The sentence is reduced to three years ' rigorous imprisonment.

The sentence of fine will stand.

The appeal is allowed to this extent.

G.C. Appeal partly allowed.

Summary: Two carts loaded with cloth returning alongwith others from a weekly village market were looted by 20 or more persons.

Summary: The houses of 20 persons including the 14 appellants were searched and the looted cloth was recovered from their Possession.

Summary: They were tried and held guilty Linder section 395 of the Indian Penal Code.

Summary: The High Court dismissed their appeals.

Summary: In appeal by special leave to this Court their only contention was that in the absence of other evidence connecting them with the dacoity, the presumption to be drawn from the possession of stolen clothes ought to have been one under section 411 of he Indian Penal Code or at the most under section 412 of the Indian Penal Code and not of complicity in the crime of dacoity.

Summary: It was urged that since section 114 of the Evidence Act did not lay down definitely the presumption to be drawn in a given set of circumstances it was necessary always to start with the lesser presumption and draw the higher presumption only when there was some other evidence to.

Summary: HELD : If there is other evidence to connect an accused with the crime itself, however small, the finding of the stolen property with him is a piece of evidence which connects him further with the crime.

Summary: There is then no question of presumption.

Summary: It is only when the accused cannot be conis stronger than if there is a large gap of time.

Summary: Disposal of the fruits of crime that the presumption may be drawn.

Summary: In what circumstances the one presumption or the other may be drawn will differ from case to case [722 D] When the discovery of the fruits of crime is made immediately after the commission of the crime the presumption of complicity in the crime nected with the crime except by reason of possession of the fruits of crime requires the finding of a person ready to receive them and the 'shortness of time, the nature of the property which is disposed of, that is to say, its quality and character determine whether the person who had the goods in his possession received them from another or was himself the thief or dacoit, [722 F] In the present case the offence was committed at night by as many as 'IO persons or more.

Summary: Shortly after the offence the houses of 20 persons were searched and large quantities of the stolen goods were found in their houses.

Summary: It was impossible that these 20 persons were merely 'receivers of stolen property from some other 20 persons who were the decoits.

Summary: It was legitimate therefore to raise the presumption in this case that the persons with whom the goods were found were the dacoits themselves.

Summary: [723 A B]


(C) No. 677 of 1988.

(Under Article 32 of the Constitution of India).

P.N. Duda, N. Safaya, P.K. Choudhary and Ms. Rekha Pandey for the Petitioners.

Kapil Sibal, Additional Solicitor General, Ms. A. Subha shini and K. Swamy for the Respondents.

The Judgment of the Court was delivered by V. RAMASWAMI, J.

In this petition under Article 32 of the Constitution, the petitioners have questioned the con stitutional validity of Section 5 of the (12 of 1919) (hereinafter called 'the Act ').

The grounds on which the vires of the provisions is attacked are that the section gives an unguided, unchanelised and arbitrary power to the State Government to include any substance as poison for the purpose of restriction to be imposed on the posses sion for sale and sale of the same.

It was further contended that the restriction imposed on possession for sale and sale were not reasonable restrictions.

The petitioner 's have also taken the plea that though the Act is a Central enactment it is possible of unjust and unjustified discriminatory appli cation as it is left to each State Government to determine what substance they would include as poison and regulated and the decision in one State to include the substance as poison is not automatically made applicable to the other States.

The object of the enactment is to regulate the posses sion for sale and the sale, whether wholesale or retail of poisons and the importation of the same.

In other words, it is intended to control over the traffic in poisons.

Though the original enactment, the Poisons Act, 1904 was restrict ed, it was applicable to white arsenic, the expanded its provisions and enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act.

In exercise of this power by the Notification No. F. 10/44/72 fin.

(G) dated 7.8.1973 the Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 (hereinafter called the Rules) by including to the list of substances included in the Rules as "Poisons" "the substance commonly known 222 as 'thinner ' containing spirit and other soluble material such as shellac in which the percentage of such soluble material does not exceed 30%" as poison and consequential amendment of rules 12 and 13 of the Rules.

It was the con tention of the petitioners before the authorities that their "unit is manufacturing only those thinners which contain only liquid substance, like as ecotone, ethyl acetate SDS etc.

and not all solubles.

" According to them, therefore, the substance manufactured by them would not come within the amended Rules.

Though in the beginning the petitioners were contending that in substance manufactured by them did not come within Rule 2(x)(2) and there were some correspondence in this regard, when the competent authority held that the substance manufactured by the petitioners would come within the definition of 'thinner ' as contained in Rule 2(x)(2) of the Rules, the petitioners did not question the finding on any material.

Before us also they had not placed any materi al to show that the finding was wrong or that the substance would not come within Rule 2(x)(2).

In fact the learned counsel argued the petition on the basis that the petition ers are a manufacturer of 'thinner ' within Rule 2(x)(2) which has been declared as poison for purposes of the Act.

Originally the Act contained a schedule in which the list of substances declared as poisons were listed.

Later when Delhi Poisons Rules, 1926 were made in exercise of the powers under the Act those list of substances were included in the list enumerated in Rule 2 thereof.

Rule 2 was amended as already stated including 'thinner ' of the description mentioned therein as poison.

Section 5 of the Act the con stitutional validity of which is questioned reads as fol lows: "5.

Presumption as to specified poisons: Any substance specified as a poison in a rule made or notification issued under this Act shall be deemed to be a poison for the purpose of this Act.

" It was a law in force in the territory of India before the commencement of the Constitution and as such continued in force.

The Act is intended to regulate the importation, possession and sale of poisons.

Some substances were includ ed in the Rules made in 1926 as poisons and that is not in dispute.

Section 5 of the Act deals with presumption and states that any substance specified as a poison in a Rule or noti fication issued under the Act shall be deemed to be a 'po ison ' for purposes of the Act.

Rules of 1926 were made in exercise of the rule making power under Section 3 of the Act.

223 That Section enables the State Government to make Rules generally to carry out the purposes and objects of the Act.

Rules were amended in 1973 and duly notified as required by the Act.

Section 2(3) of the , 1/1904 defined poison as: "Any substance which were applied to the body internally or externally, or in any way intro duced into the system, is capable, without acting mechanically, but by its own inherent qualities,.

or destroying life? When this Act 1/1904 was repealed and re enacted as Poison Act 12 of 1919 the definition was omitted and speci fied substances were included in the schedule with a power vested in the State Government to amend the same by Rules including other substances to the list of poisons.

It is not all poisonous substances that are brought within the regula tion under the Act.

It is those substances which the Govern ment consider its possession for sale or sale to be regulat ed in the interest of health and safety of the society.

This limitation is inherent in the scheme of the Act itself.

Of course no comprehensive definition can be given to the word poison.

Under this term would fall anything calcu lated to destroy life.

Substances harmless in themselves might become poison by the time or manner of their adminis tration.

Nothing is a poison unless regard be had to its administration.

A substance may be a deadly poison or a valuable medicine according to how and how much is taken.

If the resultant effect of administering into the system pro duces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison.

Section 4 of the Act impliedly sets out certain guidelines when the State can notify a substance as poison.

It states that the State Government may by rule regulate the posses sion of any specified poison in any local area in which the use of such poison for the purpose of committing murder or mischief by poisoning cattle appears to it to be of such frequent occurrence as to render restriction on the posses sion thereof desirable.

Any substance which is used for purposes mentioned therein can definitely be declared as poison.

That is what the Government have done in this case.

It has become a notorious fact, which we can even take judicial notice of, that the substance known as 'thinner ' as it is or mixing with some other substances are taken as intoxicating spirits endangering the life.

In many cases deaths have also occurred due to drinking such substance.

If the Government thought in the circumstances that the posses sion or sale of the same is to be regulated it could not be said that they have no power to regulate.

Section 2 224 also enables the Government by Rule to regulate the posses sion for sale and the sale of the specified poison.

It is in exercise of this power Rule 13 was amended by substituting the old Rule by the following Rule: "13 (1) All poisons kept for sale by any licence holder under these rules (except those kept by a chemist, druggist or compounder for the purchase of dispensing or compounding in compliance with the prescription of medical or veterinary practitioner) shall be kept in a box, almirah, room or building (according to the quantity maintained), which shall be secured by lock and key and in which no sub stance shall be placed other than poisons, possessed in accordance with a licence granted under the Act, and each poison shall .be kept within such box, almirah, room or building in a separate closed receptacle of glass, metal or earthenware.

Every such box, almirah, room or building and every receptacle shall be marked with the word 'poison ' in red charac ters both English and vernacular and in the case of receptacles containing separate 'poison ' with the name of such 'poison '.

Provided that above rule shall not apply to 'poison ' mentioned in Clause (x) of Rule 2.

(ii) All 'poisons ' mentioned in clause (x) of rule 2 shall be kept in a room or building (according to quantity maintained) which shall be secured by lock and key in a separate receptacle of glass, metal and earthenware etc.

Every such room building and every such receptacle shall be marked with the word 'poison ' in red character both English and vernacular, with the name of the 'poison '.

" We are not impressed with the argument that any require ment in this Rule is unreasonable or offends the petition ers ' right to carry on any trade or business.

The nature of trade in poison is such that nobody can be considered to have an absolute right to carry on the same.

It is a busi ness which can be termed even as inherently dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant.

A law in such circumstance can regulate the trade.

This posi tion is well settled and it would be pedantic to cite all the authorities of this Court on this point.

It is also not necessary that the same substance should be declared as poison for the entire country.

The notification and its application to any area would depend on the necessity 225 to declare the substance as poison on the particular facts and situation prevailing in that area and the need to regu late the possession and sale in that area.

No question of discrimination can arise in such circumstances.

We are of opinion that the provisions of neither Section 2 nor 5 nor the impugned notification are hit by any consti tutional limitation.

The writ petition accordingly fails and it is dismissed.

Rule nisi is discharged.

No order as to costs.

Summary: The Lt. Governor of Delhi amended the Delhi Poisons Rules, 1926 by the Notification No. F.10/44/72 fin.

Summary: (G) dated 7.8.1973 by including to the list of substances in cluded in the Rules as "Poisons", the substance commonly known as "thinner" containing spirit and other soluble material.

Summary: The petitioners in this petition under Article 32 of the Constitution questioned the constitutional validity of Section 5 of the on the grounds that the section gives an arbitrary power to the State Government to include any substance as poison for the purpose of restric tion to be imposed on the possession for sale and sale of the same; that the restriction imposed on possession for sale and sale were not reasonable restrictions; that though the Act was a Central enactment, it was possible of unjust and unjustified discriminatory application as it was left to each State Government to determine what substance they would include as poison, and that the substance, 'thinner ', manu factured by the petitioners would not come within the amend ed Rules.

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

Summary: The object of the enactment is to regulate the possession for sale and the sale, whether wholesale or retail of poisons and the importation of the same.

Summary: In other words, it is intended to control over the traffic in poi sons.

Summary: The enabled State Government to declare any substance as poison for the purposes of the Act by a notification under the Act or the rules made under the Act.

Summary: [221 G] 3.

Summary: It is not all poisonous substances that are brought within the regulation under the Act.

Summary: It is those substances which the Government consider its possession for sale or sale to be regulated in the interest of health and safety of the society.

Summary: This limitation is inherent in the scheme of the Act itself.

Summary: [223 C D] 4.

Summary: No comprehensive definition can be given to the word, "poison".

Summary: Under this term would fall anything calculated to destroy life.

Summary: Substances harmless in themselves might become poison by the time or manner of their administration.

Summary: Noth ing is a poison unless regard be had to its administration.

Summary: If the resultant effect of administering into the system produces a violent, morbid or fatal changes or which destroys living tissues, the substance can be safely called poison.

Summary: Any substance which is used for purposes mentioned therein section 4 can definitely be declared as poison.

Summary: [223 D F] 5.

Summary: It has become a notorious fact that the substance known as 'thinner ' as it is or mixing with some other sub stances are taken as intoxicating spirits endangering the life.

Summary: In many cases deaths have also occurred due to, drink ing such substance.

Summary: If the Government thought in the circum stances that the possession or sale of the same is to be regulated it could not be said that they have no power to regulate.

Summary: Section 2 also enables the Government to regulate the possession for sale and the sale of the specified poi son.

Summary: [223 G H; 224 A] 6.

Summary: It is a business which can be termed even as inherent ly dangerous to health and safety of society in view of the rampant misuse and sale to the poor, weak and helpless as an intoxicant.

Summary: A law in such circumstance can regulate the trade.

Summary: The notification and its application to any area would depend on the necessity to declare the substance as poison on the particular facts and situation prevailing in that area and the need to 221 regulate the possession and sale in that area.

Summary: No question of discrimination can arise in such circumstances.

Summary: [224 G H; 225 A]


Appeal No. 949 of 1966.

Appeal by special leave from the judgment and order dated September 11, 1964 of the Madras High Court in Tax Case No. 181 of 1962.

M. C. Chagla and B. R. Agarwala, for the appellant.

section T. Desai, R. N. Sachthey and B. D. Sharma, for the respondent.

[The appeal was originally heard by J. C. Shah, Ag.

C.J., V. Ramaswami and A. N. Grover, JJ.

The case was twice re manded to the Tribunal.

The first Order of the Court remanding the case to the Tribunal was delivered by] Shah, Ag. C. J. M/s Amarchand Sobhachand 'a firm registered under the Indian Income tax Act, 1922, carried on business at Madras in drugs, chemicals, mercury, camphor and silk yam and as money lenders.

There were two partners of the firm Mohanlal Sagmal and Seshmal Sobhachand, and Ramniklal and Lakshmichand minors were admitted to the benefits of the partnership, each with 7/32 share in the profits.

The appellants had for a long time business relations with a firm styled "Bhojaji Sobhachand" carrying on business at Bombay as importers of yam and also as agents and adathias.

Sobhachand, one of the partners of Bhojaji Sobhachand with 16% share in the profit and loss is the father of Seshmal, Ramniklal and Lakshmichand, partners of the appellants.

In the books of account of the appellants which were main tained according to the mercantile, system there was a current sarafi account in respect of their transactions with the Bombay firm in which were credited the funds transmitted from Bombay in respect of their business transactions.

Entries relating to interest were posted till the end of Samvat Year 2006 in the account on the amount due at the foot of the account.

The following is a table showing the balances at the end of the Samvat years 2003 Amount Interest At the end of the Samvat Year 2003 Cr.16,951 00 2004 Dr.1,02,188 4 5Dr.

2633 9 3 2005 Cr.27,815 0 0Dr.

483 1 9 2006 Cr.11,975 0 0Cr.

1008 7 3 2007 Dr.2,02,823 12 3 2008 Dr.2,68,385 1 3 In the assessment for income tax of the appellants for the assessment year 1952 53 relevant to the account year Samvat 417 2007 all item of Rs. 2,03,147 8 O in the, account of the, Bombay was disallowed by the Income tax Officer, but in appeal the amount was allowed.

in the return of income for the assessment year 1953 54 the appellants claimed allowance for Rs. 2,68,385/ due from the Bombay firm at the foot of their running account as a bad debt written off as irrecoverable.

The Income tax Officer disallowed their claim holding that : "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee.

" The Appellate Assistant Commissioner agreed with the Income tax Officer.

He held that the debt .

did not arise, in the course of the appellants ' business as chemists and druggists nor in the course of their money lending business.

The Income tax Appellate Tribunal accordingly confirmed the order of the Appellate Assistant Commissioner.

The assessee firm then applied to the Tribunal to refer the following question to the High Court of Madras "Whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385 is right in law ?" The Tribunal rejected the application, but pursuant to an order made by the High Court of, Madras under section 66(2) submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee ?" In the opinion of the High Court the debt of Rs. 2,68,385/ due to the appellants was not a bad and doubtful debt in its money lending business not a debt representing loss sustained in the other business.

The question referred was, therefore, answered in the affirmative and against the appellants.

Section 10(2) (xi) of the Indian Income tax Act, 1922, as in force at the relevant time provided : "(2) Such profits or gains shall be computed after making the following allowances, namely : (xi) When the assessee 's accounts in respect of any part of his business, profession or vocation are not kept on the cash basis, such sum, in respect of bad and doubtful debts, due to the assessee in 807SupCI/71 418 respect of that part of his business, profession or vocation, and in the case of an assessee carrying on a banking or money lending business, such sum in respect of loans made in the ordinary course of such business as the Income tax Officer may estimate to be irrecoverable but not exceeding the amount actually written off as irrecoverable in the books of the assessee, Provided. . . . . " Clause (xi) was in two parts.

A bad and doubtful debt due to the taxpayer, written off as irrecoverable in the books of account was properly allowable in computing the taxable profits from business, profession or vocation, where accounts were not kept on the cash basis, if the debt was in respect of a loan made in the course of the taxpayer 's business as a banker or money lender, or when the taxpayer was carrying on any other business the debt was in respect of that other business.

debt written off relying upon both the branches of section 10 (2) (xi) and by the application under section 66(1) of the Income tax Act a question covering both the branches of the section was also sought to be raised.

But the question on which the Tribunal was called upon to state the case was in form imprecise and in import somewhat vague.

A bad and doubtful debt due to an assessee in respect of banking or money lending business is allowable under section 10(2) (xi) if it is in respect of loans made in the ordinary course of such business.

A bad and doubtful debt in respect of a business other than banking or money lending is allowable even if it is not in respect of loan : but a debt due in the course of the business of a money lending is not allowable unless it is, in respect of loans made in the ordinary course of his business.

We are of the view that the question should have been referred in the form suggested by the appellants in their application under section 66(1) with appropriate variations.

In the interest of justice, we direct that the question be reframed as follows : "Whether on the facts and in the circumstances of the case the Tribunal erred in disallowing the debt of Rs. 2,68,385/ written off by the assessee in their books of account as irrecoverable.

" The two branches of the question as reframed then are (1) Whether the debt or any part thereof is in respect of loans made 419 in the ordinary course of money lending business of the appellants; and (2) whether the debt or any part thereof is in respect of the other business of the appellants.

We are of the view that before the question may be answered, it is necessary to call for a supplementary statement of the case from the Tribunal.

The Tribunal 's order is very brief : it gives no reasons in support of the conclusions.

The argument based on the first part of section 10(2) (xi) that the debts were due in respect of the business of the appellants other than money lending was not considered at all, and the Tribunal disposed of the second part of the case by merely observing that it was an "accommodation" account to enable the Bombay firm to tide over the "financial crisis" threatening it in Samvat Year 2007, and that the trans actions in the account were totally unconnected with the normal business of the appellants.

An "accommodation" advance is a neutral expression : it may be of the nature of a loan advanced in the ordinary course of business by a money lender; it may be an advance the money lending or other business of the assessee but not in the nature of a loan; or it may be wholly unrelated to the business of the tax payer.

The statement submitted by the Tribunal is also inadequate.

It contains only a summary of the business relations between.

the appellants and the Bombay firm, a statement as to the amounts due at the end of each year at the foot of the account, the interest if any charged and a summary of the orders made by the Income tax Officer, the Appellate Assistant Commissioner and the Tribunal.

The statement of the case does not analyse the evidence and throws no light upon the two branches of the argument raised before the Tribunal and which, in our view, arose out of the question on which they were required to submit a statement of the case.

Counsel for the Revenue, however, contended that there are three important circumstances which appear from the order of the Appellate Assistant Commissioner and the Income tax Officer from which it may be inferred that the advances made by the appellants to the Bombay firm were not in respect of loans in the ordinary course of the business of the appellants, nor in respect of their other business.

Counsel said that (1) Sobhagchand Amarchand partner of the Bombay firm is the father of Seshmal one of the partners of the appellants and of the minors Ramniklal and Lakshmichand who are admitted to the benefits of partnership; (2) that large amounts of money were advanced shortly before the Bombay firm closed its business; and (3) that there was a consistant practice for paying or receiving interest on the 420 amounts due at the, foot of the account, but no interest was charged by the appellants in respect of the dues at the foot of the account at the end of Samvat Years 2007 and 2008.

But the Tribunal has not raised any inference from these circumstances and has merely observed that charging of interest cannot make it a money lending account.

We, therefore, direct that the Income tax Appellate Tribunal do submit a supplementary statement of the case on the, question reframed, on both the branches of section 10(2)(xi) of the Indian Income tax Act, 1922.

The Tribunal will give opportunity to both the parties of being heard, but will restrict themselves to the ,evidence on the record.

The supplementary statement to be submitted within three months from the date the papers reach the Tribunal.

[After receipt of the supplementary statement of case from the Tribunal the appeal was heard by J. C. Shah, K. section Hegde and A. N. Grover, JJ.

The order of the Court was delivered by] Shah, J.

By our order dated July 29, 1969 we called for the light of the two branches of section 10(2) (xi) of the Indian In come tax Act, 1922.

We have now received a statement of case from the Tribunal.

The Tribunal has set out in great detail the arguments advanced before it by the assessee and by the Revenue but it has not set out the facts found by it from the evidence on the record in the light of the arguments advanced.

The statement of case is intended to be a finding on facts and not a catalogue of the arguments advanced at the Bar.

Since the Tribunal has not found the facts we are constrained to send back the case again to the Tribunal for submitting to this Court a supplementary statement on facts found by the Tribunal.

The Tribunal will submit the statement within three months from the date on which the papers reach the Tribunal.

[After receipt of the second supplementary statement of case from the Tribunal the appeal was finally heard by J. C. Shah, C.J., K. section Hegde and A. N. Grover, JJ.

The Judgment of the Court was delivered 'by] Hegde, J.

The appellant firm (which will hereinafter be referred to as the "assessee") carried on business in drugs, chemicals, mercury, camphor and art silk yam as also in money lending, over a number of years.

The accounting year with which we are concerned in this appeal is Samvat year 2008 commencing from October 31, 1951 and ending on Oct. 18, 1952.

The firm 421 consisted of two partners, Mohanlal Baginal and Sashmal Sobha Chand.

Two minors, Ramniklal Sobhachand and Lakshmichand Sobhachand were admitted to the benefits of the partnership.

The assessee had dealings for several years with a firm known as "Bhojaji Sobhachand" (to be hereinafter referred to as the Bombay firm).

Sobhachand Amarchand, a partner of the Bombay firm, is the father of Seshmal, Ramaniklal and Lakshmichand and he was having sixteen percent share in the Bombay firm.

That firm became insolvent in April 1952.

The Bombay firm owed certain amount to the assessee.

In the assessment of income tax of the appellant for the assessment year 1952 53, relevant to the account year Samvat 2008, the assessee claimed a deduction of Rs. 2,68,385/ as bad debt due from the Bombay firm, incurred by that firm in the course of business transactions.

The Incometax Officer disallowed that claim holding that "these transactions were mere accommodations which can have no bearing to the regular business carried on by the assessee.

In, appeal the Appellate Assistant Commissioner agreed with the Income tax Officer.

He held that the debt did not arise in the course of the assessee 's business as Chemists and Druggists nor in the course of their money lending business.

On a further appeal taken by, the assessee to the Income tax Appellate Tribunal, the tribunal confirmed the order of the Appellate Assistant Commissioner. 'The assessee thereafter applied to the tribunal under section 66(1) of the Indian Income tax Act, 1922 to submit a statement of the case with the question "whether on the facts and in the circumstances of the case the disallowance of the bad debt of Rs. 2,68,385/ is right in law" to the High Court of Madras for its opinion.

The tribunal rejected that application but pursuant to an order of the High Court under section 66(2), the tribunal submitted a statement of the case on the following question "Whether on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the debt of Rs. 2,68,385/ was not one incurred in the course of money lending business of the assessee." The High Court opined that the debt in question was not a bad and doubtful debt in the assessee 's money lending business nor a debt representing loss sustained in the other business.

The question referred was, therefore, answered in the affirmative and against the asses see.

Thereafter the present appeal was brought after obtaining special leave from this Court.

At the hearing of the appeal this Court found that the tribunal 's order was very brief and that it gave no reasons in support of its conclusions.

It also found that the statement submitted by the tribunal was in adequate.

This Court took the view that the question framed at 422 the instance of the High Court did not bring out the real question arising for decision.

It accordingly .

reframed the question as follows "Whether on the facts and in the circumstances of the case the Appellate Tribunal erred in disallowing a sum of Rs. 2,68,385/ written off by the assessee in their books of accounts as irrecoverable ?" By its order dated July 29, 1969 this Court called upon the Tribunal to submit a supplementary statement of case on the reframed question.

The tribunal accordingly submitted a fresh statement of the case on the question referred.

But that statement merely catalogued the arguments advanced at the bar.

The tribunal did not give any findings on the points arising for decision.

Hence by its order dated April 7, 1970, this Court directed the tribunal to submit a further statement.

The tribunal has accordingly submitted a further statement.

The facts found by the tribunal are found in paragraphs 11 ;and 12 of the statement.

They read : " 11.

We have taken into consideration the available materials and the rival submissions.

The only facts in favour of the assessee are that incidental charges are debited to the Bombay firm in respect of some of the remittances and there is a flow of moneys to the Bombay firm up to 10 3 1952 when the last of the remittances was sent to it before the firm collapsed in about April 1952.

On the other hand, the narrations in the entries, as they stand, the failure to adjust interest in the account of the Bombay firm at the stage at which it became a debtor in Samvat year 2007, the manner in which the partner of the appellant firm tried to explain the position in March, 1954 and the stand of the firm itself at all earlier stages support the case of the Department." "12.

Having considered all the circumstances of the case, we are of the opinion that the sums in question were not sent to the Bombay firm as loans made in the ordinary course of the money lending business of the assessee nor in respect of any other business of the assessee.

As this is the finding with regard to the whole of the amount of Rs. 2,68,385/ there is no question of ,#locating any portion thereof as between the business of money lending or for any other purpose as preferred to para 7 above.

" 423 It is true as contended by the learned Counsel for the asstssee that the conclusions reached by the tribunal are not supported by proper discussion of the material before it.

It is also true that the tribunal after catalogueing the arguments advanced at the bar, has come to certain abrupt conclusions, but all the tame it cannot be denied that the findings reached by the tribunal are findings of fact and those findings are supported by the evidence on record.

The tribunal has found that the monies sent by the assessee to the Bombay firm were not loans made in the ordinary course of its money lending business, nor in respect of any other business of the assessee.

This finding covers the entire amount sought to be deducted.

In view of this finding, which is binding on this Court, our answer to the question reframed has to be in the negative and in favour of the Department.

The appeal fails and is dismissed.

No costs.

G.C. Appeal dismissed.

Summary: The appellants we 're a registered partnership firm engaged in money lending business as well as business in certain chemical goods, and silk yarn.

Summary: Another firm had a current account with the appellants between the samvat years 2003 and 2008.

Summary: At the end of the latter year the said account had a debit balance of Rs. 268385 1 3.

Summary: In the return of income for the assessment year 1953 54 the appellants claimed allowance for the said sum of Rs. 268385 as a bad debt written off as irrecoverable.

Summary: The claim was disallowed by the authorities under the Income tax Act, 1922.

Summary: The Tribunal referred to the High Court under section 66(2) of the Income tax Act, 192Z the question whether on the facts and circumstances of the case the Tribunal 's finding that the sum in question did not relate to the appellants money lending business was correct.

Summary: The High Court answered the question in the affirmative against the appellants.

Summary: This Court in appeal by special leave re framed the question to be answered by the Tribunal so as to cover not only the money lending business of the appellants but also the business in chemicals etc.

Summary: The Court directed the Tribunal to submit a supplementary statement of case.

Summary: The supplementary statement of case submitted by the Tribunal was however found unsatisfactory in as much as it contained a summary of arguments on both sides but no findings on the,facts of the case.

Summary: Hence supplementary statement on 'facts was called for.

Summary: The findings given by the Tribunal were against the appellants.

Summary: On the contention that the conclusion reached by the Tribunal was not supported by proper discussion of the materials before it, HELD : The findings reached by the Tribunal were findings of fact and those findings were supported by the evidence on record.

Summary: The Tribunal had found that the loans were not made in the course of money lending business of the assessee nor in respect of any other business of the assessee.

Summary: This finding covered the entire amount sought to be deducted.

Summary: In view of this finding which was binding on this Court, the answer to the question re framed had to be in favour of the department.

Summary: [423 B] Also held : (i) The Tribunal in submitting its statement,of case must give not only the facts of the case or the arguments of parties but also its own findings on the, facts and evidence.

Summary: [410 D] (ii) When the assessee had money lending as well as other business, its claim for a bad debt under section 10 (2) (xi) of the Act must be considered in relation to both the businesses and the question submitted by the Tribunal must cover the claim in both its aspects.

Summary: [418 F 419 A] 416


Special Leave Petition Nos.

823 24 of 1990.

From the Judgement and Order dated 6.10.1989 of the Karnataka High Court W.A. Nos.

321 & 322 of 1989.

S.R. Bhat for the Petitioners.

R.N. Narasimha Murthy, K.H. Nobin Singh, M. Veerappa and S.N. Bhatt for the Respondents.

The following Order of the Court was delivered: A few facts are necessary for the disposal of these petitions.

The petitioners were the owners of certain lands which were acquired by the respondents under the provisions of Sections 17 and 19 of the Bangalore Development Act, 1976 (hereinafter referred to as "the Bangalore Act").

Under the provisions of Section 36 of the Bangalore Act, where the acquisitions, otherwise than by agreement, it will be regulated by the provisions , as far they are applicable, of the Land Acquisition Act, 1894 (hereinafter referred to as "the Land Acquisition Act").

Section 11 A of the Land Acquisition Act, which section was included in the said Act in 1984 as set out hereinafter, very briefly states, provides that the Collector must make his award within two years from the date of the publication of the declaration and that if no award is made within that period, the entire proceedings for acqui 565 sition of the land shall lapse.

Under the Explanation to the first proviso to Section 11 A,"the period during which any action or proceeding to be taken in pursuance of the said declaration is stayed by an order of a Court shall be excluded".

It was, inter alia contended by the petitioners that as the awards in these cases has not been made within two years of the notification making the declaration under Section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed.

That contention was repelled along with certain other contentions in the judgment of the High Court which is sought to be impugned before us.

The relevant dates which have to be borne in mind in this connection, are as follows: The notification making the declaration under Section 4 of the Land Acquisition Act in respect of the lands in question was made on September 20, 1977.

On September 20, 1984 Section 11 A which introduced into the Land, Acquisition Act by the Land Acquisition (Amendment) Act, 1984, was brought into force.

Under the first proviso to Section 11 A it was prescribed that where the said declaration (under Section 4 of the Land Acquisition Act) has been published before the commencement of the Land Acquisition (Amendment) Act, 1984, the award must be made within a period of two years from such commencement.

Thus, the award should have been made within two years from September 20, 1984.

On September 11, 1985, the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in Special Leave Petition No. 294 of 1985 preferred against the order of the Karnataka High Court dated August 14, 1984, with which we are not directly concerned here.

The said Special Leave Petition No.294 of 1985 was dismissed on April 29, 1987.

On December 16 17, 1987, two writ petitions were field by the respective petitioners in the Karnataka High Court challenging the acquisition on the ground that the awards were not made within the stipulated time.

In these two writ petitions, the Karnataka High Court granted interim stay of further proceedings in respect of the acquisition of the said lands.

These petitions were dismissed by a learned Single Judge of that High Court on November 29, 1988.

Appeals against the decision of a learned Single Judge were dismissed by the Karnataka High Court on October 6, 1989, by a Division Bench of that High Court.

The petitioners preferred these Special Leave Petitions, namely S.L.P. Nos. 823 and 824 of 1990 against the decision of the Devision Bench of that High Court, and obtained an interim stay of dispossession therein.

Whatever the ultimate effect of the stay orders, in view of the provisions of Section 11 A of the Land Acquisition Act, to which we have already referred 566 earlier, it is beyond dispute that the fact of the stay orders was highly material in the determination of these Special Leave Petitions.

Curiously enough, there is no reference in the Special Leave Petitions to any to the stay orders and we came to know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit.

In our view, the said interim orders have a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts.

On this ground alone, the Special Leave Petitions are liable to be rejected.

It is well settled in law that the relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts.

We accordingly dismiss the Special Leave Petitions.

There will be no order as to costs of these petitions.

R.P. SLPs dismissed.

Summary: Petitioners ' lands were acquired by the respondents under sections 17 and 19 of the Bangalore Development Act, 1976.

Summary: Section 36 of the said Act made applicable the provisions of the Land Acquisition Act, 1894, where acquisition is otherwise than by agreement.

Summary: The notification making the declaration under section 4 of the Land Acquisition Act in respect of the lands in question was made on 20.9.1977.

Summary: On 20.9.1984s.

Summary: 11 A was introduced and brought into force by the Land Acquisition (Amendment) Act, 1984 prescribing that where the declaration under section 4 of the Land Acquisition ACt was published before the commencement of the Land Acquistion (Amendment) Act, 1984, the award was to be made within two years from such commencement.

Summary: The awards should have thus been made within two years from 20.9.1984.

Summary: On 11.9.1985 the petitioners obtained an interim order from this Court directing status quo with regard to the possession of the lands in question in a special leave petition which was dismissed on 29.4.87.

Summary: on December 16 17,1987 two writ petitions were filed by the petioners in the High Court Challenging the acquisition, contending that as the awards were not made within two years of the notification making the declaration under section 4 of the Land Acquisition Act, the entire acquisition proceedings had lapsed.

Summary: The High Court granted interim stay in respect of the acquisition of the lands.

Summary: The petitions were later dismissed.

Summary: Appeals therefrom were also dismissed by a Division Bench.

Summary: The petitioners preferred these special leave petitions and obtained interim stay of dispossession.

Summary: Dismissing the special leave petitions, this Court, 564 HELD: 1.

Summary: The relief under Article 136 of the Constitution is discretionary and a petitioner who approaches this Court for such relief must come with frank and full disclosure of facts.

Summary: If he fails to do so and suppresses material facts, his application is liable to be dismissed.[566B C] 2.Whatever the ultimate effect of the stay orders, in view of the provisions of section 11 A of the Land Acquisition ACt, the Fact of the stay orders was highly material in the determination of these special leave petitions.

Summary: There was no reference in the special leave petitions to any of the stay orders and the Court could know about these orders only when the respondents appeared in response to the notice and filed their counter affidavit.

Summary: The said interim orders had a direct bearing on the question raised and the non disclosure of the same certainly amounts to suppression of material facts.

Summary: On this ground alone, the special leave petitions were liable to be rejected.

Summary: [565G H; 566A B]


Appeals Nos. 1008 and 1009 of 1965.

Appeals by special leave from the orders dated April 1, 1965 of the Central Government Labour Court, Jullundur, in cases Nos. 409 of 1963 respectively.

C. K. Daphtary, Attorney General, section V. Gupte, Solicitor General, Niren De, Addl.

Solicitor General, K. B. Mehta, V. Sagar, H. L. Anand and B. C. Das Gupta, for the appellants.

M. K. Ramamurthi, for the respondents.

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

These two appeals by special leave raise a common question as to the interpretation of paragraph 5.356 of the National Industrial Tribunal (Bank Disputes) Award of June 1962 (popularly known as the Desai award) and will be dealt with together.

It is unnecessary to set out the facts of the two appeals at this stage.

It is sufficient to say that the respondents made applications under section 33 C(2) of the Industrial Disputes Act, No. 14 of 1947, praying for determination and computation of the benefit to which they were entitled under the Desai award as they were not satisfied with the fixation of their pay by the appellant bank under para 5.356.

The Desai award dealt with the method of adjustment in the scales of pay fixed by it from para 5.329 onwards.

It divided the employees of the banks with which it was concerned in two groups.

The first group consisted of workmen who were drawing basic pay on January 1, 1962 according to scales of pay provided by the ALL India Industrial Tribunal (Bank Disputes) Award, 1953 (popularly known as the Sastry award) as modified by the Labour Appellate Tribunal Decision (Bank Disputes).

The second group 900 consisted of workmen who on January 1, 1962 were employed in banks which were not governed by the provisions of the Sastry award as modified and were not thus drawing basic pay on the footing of scales of pay provided by that award.

In the first case the Desai award provided that the workmen would be fitted in the new scales of pay from January 1, 1962 on stage to stage adjustment basis, i.e., workmen who were drawing basic pay at a particular stage in the time scale of the Sastry award as modified would draw basic pay at the same stage in the new scale applicable to them under the Desai award.

Examples of how this would be done were given in para.

5.348 of the Desai award.

As to the second group, the Desai award provided that these employees would first be fitted in the appropriate scales provided in the Sastry award as modified as on January 1, 1962 and thereafter they would be fitted in the new scales of pay provided by the Desai award as laid down in para.

Paragraph 5.356 then went on to provide how these workmen would be fitted in the Sastry award.

Here again the workmen were divided into two groups, namely, those who entered service before January 1, 1959 and those who entered service on or after January 1, 1959.

In the present appeals we are concerned with workmen who entered service before January 1, 1959, and the fitment of these workmen was dealt with in para.

5.356 of the Desai award, and it is this paragraph which calls for interpretation in the present appeals.

We may at this stage mention that a similar question of fit ment was considered by the Sastry award in para.

292 and certain provisions were made thereunder.

This paragraph was considered by the Labour Appellate Tribunal in appeal from the Sastry award and certain modifications were made thereunder by paras 164 and 166 of the Labour Appellate Tribunal decision in appeal.

Paragraph 292 as modified by the Labour Appellate Tribunal decision came up for interpretation before this Court in State Bank of India vs Prakash Chand Mehra.

(1) As the words of para 292 of the Sastry award as modified by the Labour Appellate Decision are almost the same as the words of para.

5.356 of the Desai award, we may set out the two paragraphs in parallel columns for comparison: Sastry award as modified by the Labour Appellate decision For workmen who enterd service of the bank before 31st January, 1950 1.

The workman 's basic pay as on 31st January 1960 shall not be reduced in any case.

(1) Desai award For workmen who entered service of the bank before 1st January 1959 (i) The workman 's basic pay as on January 1, 1959 shall not be reduced in any case.

Subject to rule (1) the adjusted basic pay in the new scale shall not exceed what point to point adjustment would give him or the maximum in the new scale.

3.In the matter of adjustment all efficiency bars, whether in the previously existing or in the scales fixed by us should be ignored.

4.Subject to rules (1) to (3) a workman 's basic pay in the new scales shall be fixed in the following manner (a) A workman shall first be fitted into the scale of pay fixed by our award (herein called the new scale) by placing him at the stage in the new scale equal to, or next above his basic pay as on 31st January 1950 in the pre Sen scale then in force (herein called the existing scale).

(b) To the basic pay into which he is fitted under cl.

(a) the annual increments in the new scale as from that stage onwards should be added at the rate of one increment for every completed three years of service in the same cadre as on 31st January 1950, up to a limit of 12 years ' service; hereafter one increment for every four years of service up to another 8 years service, and after that one increment for every five years of service.

(c) Such increments shall not however exceed four in number.

[NOTE : Omitted by the Labour Appellate Tribunal in view of change in cl.

(b).] 4 A.

After adjustments are made in accordance with clauses (a), (b) and (c) supra two further increments in the new scale will be added thereto for service for the two years 1951 and 1952.

In addition the workman will be entitled to draw his normal increment for 1953on 1st April 1963.

Thereafter each succeeding year 's annual increment shall take effect as and from 1st April of that year.

901 (ii) Subject to rule (i), the adjusted basic pay in the scale provided in the Sastry award as modified shall not exceed what point to point adjustment would give him or the maximum in the scale provided by the Sastry award as modified.

(iii) In the matter of adjustment, all efficiency bars, whether in the previously existing scales or in the scales provided by the Sastry award as modified should be ignored.

(iv)Subject to rules (i) to (iii) a workman 's basic pay in the scale provided by the Sastry award as modified shall be fixed in the following manner (a)A workman shall first be fitted into the scale of pay of Sastry award as modified by placing him at the stage in the Sastry award scale as modified equal to, or next above his basic pay as on 1st January, 1959 in the scale then in force in the bank concerned (hereinafter called the Bank 's scale).

(b)To the basic pay into which he is fitted under clause (a) annual increment or increment& in scale provided by the Sastry award as modified as from that stage onwards should be added at the rate of one increment for every completed three years of his service in the same cadre as on 1st January 1959.

(d) After adjustments are made in, accordance with clauses (a),(b) and (c) supra, two further annual increments.

in the scale provided by the Sastry award as modified will be added thereto for service for the two years of 1960 and 1961.

902 We are not concerned with clauses (5) and (6) of para 292 of the Sastry award or with clauses (v) and (vi) of para 5.356 of the Desai award for purposes of the dispute between the parties and have not therefore set them out.

It will be seen from the above comparison of the provisions in the two awards that the substantial provisions of the Desai award are exactly the same as the provisions of the Sastry award as modified except (i) for changes necessitated by the fact that the Desai award was being given in 1962 and (ii) the provision in the Sastry award corresponding to sub cl.

(d) of cl.

(iv) of para 5.356 of the Desai award was separated by the Labour Appellate Tribunal Decision from cl.

(4) and made clause (4 A).

"We have already referred to the fact that para.

292 of the Sastry award as modified came up for consideration before this Court in the case of Prakash Chand Mehra( ') and this Court interpreted clauses (1) to (4 A) of the Sastry Award as modified thus :"We have therefore first to fix the basic pay in accordance with rule 4(a), and then allow annual increments in accordance with rule 4 (b).

But this is subject to rules 1 and 2 above.

We are unable to accept the contention raised on behalf of the respondent that the words "subject to" have not the effect of making what would otherwise follow from the application of rules 4(a) and 4(b) subject to "both the lim its" laid down in rule 2.

Giving as we must natural meaning to the words used in rules 2 and 4, we are of opinion that in no case can the basic pay be fixed at a higher figure than what the point to point adjustment would give to the workman or the maximum in the new scale.

" The dispute between the bank and the workmen in the present ,case was this.

The bank claimed that under cl.

(ii) of the Desai award, the adjusted basic pay in the new scale was not to exceed what point to point adjustment would give an employee on January 1, 1962.

The bank further claimed that this being the maximum permissible under cl.

(ii) and cl.

(iv) being subject to cl.

(ii) the method of fitment provided in cl.

(iv) could not give to an employee more than the maximum arrived at under cl.

Thus the bank 's case was that once the maximum arrived at by point to point adjustment as on January 1, 1962, was reached under cl.

(ii), no further increments even under sub cl.

(1) 903 (d) of cl.

(iv) could be allowed.

The, workmen on the other hand claimed that they were entitled to what was provided by sub cls.

(a), (b) and (c) of cl.

(iv) and the two increments under sub cl.

(d) and that it did not matter whether what was thus arrived at exceeded the maximum provided under cl.

The labour court has partially accepted the workmen 's contention and fixed the pay of the two workmen concerned accordingly.

The bank contests the correctness of this view.

We are of opinion that neither the stand taken by the bank nor the stand taken by the workmen is correct, and that the relevant clauses in para.

5.356 of the Desai award must be interpreted in the same manner as the relevant provisions in the Sastry award as modified were interpreted in Prakash Chand Mehra 's case(1).

In this connection it is brought to our notice that in para.

5.356 of the Desai award it was stated that the award was giving directions similar to those provided under the Sastry award as modified subject to certain changes which were considered necessary having regard to the lapse of time after coming into force of the provisions of the Sastry award as modified.

It is urged on behalf of the appellant that the Desai award made certain changes and therefore need not be interpreted in the same way as was done in Prakash Chand Mehra 's case(1).

We see no force in this submission.

It is true that the Desai award said that certain changes were being made; but these changes were considered necessary having regard to the lapse of time.

However, the main intention of the Desai award was also to give directions similar to those provided in the Sastry award as modified.

It is true that there are some verbal changes in the Desai award; but these verbal changes are only due to lapse of time and do not affect the substance of what was provided by the Sastry award as modified.

We do not agree with the case of the appellant bank that in cl.

(ii) the adjusted basic pay is to be as on January 1, 1962.

We are of opinion that the adjusted basic pay in cl.

(ii) has to be taken as on January 1, 1959.

This follows from the fact that the workman 's basic pay as on January 1, 1959 cannot be reduced and therefore when cl.

(ii) speaks of adjusted basic pay it must refer to the same date as in cl.

Further cl.

(iv) which provides for actual calculations starts with the words "subject to rules (i) to (iii)" and therefore the actual calculations made under cl.

(iv) must be subject to clauses (i) and (ii).

This means in (1) L8Sup.

CI/66 11 904 effect that the actual fixation.

under sub cls.

(a), (b) and (c) of cl.

(iv) will be subject to cl.

(i) and cl.

Under sub cl.

(a) of cl.

(iv) a workman will be placed in the Sastry award as modified by placing him at the stage in the Sastry award scale equal to or next above his basic pay as on January 1, 1959, in the scale then in force in the bank concerned.

But in view of cl.

(i) this cannot be less than the actual basic pay of the workman as on January 1, 1959.

Where under cl.

(i) the actual basic pay as on January 1, 1959, is more than what point to point adjustment will give under cl.

(ii), it cannot be reduced for cl.

(ii) is subject to cl.

After this has been done the workman would be entitled to increments as provided in sub cl.

(b) read with sub cl.

(c) of cl.

(iv), but this will be subject to cls.

(i) and (ii) and the adjusted basic pay arrived at by giving the increments under sub cls.

(b) and (c) cannot exceed the adjusted basic pay as arrived at by point to point adjustment in the Sastry award as modified or the maximum of that scale or the actual basic pay as on 1st January 1959, as the case may be.

Thus sub cl.

(a) is subject to cl.

(i) and the basic pay to be fixed on January 1, 1959, has to be fixed by reading sub cls.

(a) of cl.

(iv) and cl.

(i) together.

Then increments under sub cl.

(b) read with sub cl.

(c) of cl.

(iv) have to be added, but this is again subject to the provisions of cls.

(i) and (ii).

After this has been worked out, then comes sub cl.

(d) of cl.

(iv), and the main dispute in the present case is about this subclause.

The appellant bank 's contention is that two further annual increments allowed under sub cl.

(d) cannot be permitted in view of cl.

(ii) as interpreted by the appellant.

But as we, have held that in cl.

(ii) the adjusted basic pay has to be fixed as on January 1, 1959, sub cl.

(d) of cl.

(iv) will take effect and give two annual increments for 1960 and 1961 which are beyond the date which we have accepted as the right date for purposes of cl.

It is however urged on behalf of the appellant that sub cl.

(d) is also subject to cls.

(i) to (iii) and therefore these increments if they go beyond what cl.

(ii) provides cannot be given.

This argument has arisen because the Desai award did not separate sub cl.

(d) as was done by the Labour Appellate Tribunal in its modification of the Sastry award.

But as stated by the Labour Appellate Tribunal when dealing with the Sastry award, it was inherent in the Sastry award that increments for 1951 and 1952 should be provided after the basic pay was worked out as on January 31, 1950.

The same applies to the Desai award.

Once it is held and that we hold that basic pay under cl.

(ii) has to be worked out as on January 1, 1959, the two increments provided by sub cl.

(d) of cl.

(iv) which are beyond that date must 905 be given over and above what has been worked out under sub cls.

(a), (b) and (c) of el.

(iv) of the Desai award.

The fact that by oversight sub cl.

(d) of el.

(iv) was not made a separate clause would make no difference for sub cl.

(d) provides for a period after the date up to which el.

(ii) works.

Therefore, two increments under sub cl.

(d) have to be given after adjustments have been made under sub cls.

(a), (b) and (c) of el.

(iv) in accordance with what we have interpreted these sub clauses as well as cls.

(i) and (ii) to mean.

In effect the two increments provided in sub el.

(d) must always be given.

But it may happen that increments provided in sub cl.

(b) read with sub cl.

(c) may in some cases be not available where the actual pay as on January 1, 1959 which will not be reduced under el.

(i) happened to coincide with or was more than the adjusted basic pay under el.

This interpretation is in accord with what was decided by this Court in Prakash Chand Mehra 's case(1), and that decision in our opinion would govern the interpretation of para.

5.356 of the Desai award also, which as we have indicated, is in substance the same as para.

292 of the Sastry award as modified by the Labour Appellate decision.

We now turn to the actual fixation of pay in each case.

We shall first take the case of Ram Parkash (i.e. C.A. 1008).

I le joined service on April 11, 1949.

His basic pay as on January 1,1959 was Rs. 106.

His place of posting was Phagwara in area ITT.

Point to point adjustment as on January 1, 1959, would give him Rs. 106 in the Sastry award scale as modified.

This is equal to his actual salary as on January 1, 1959.

Therefore under sub cl.

(a) of el.

(iv) his salary has to be fixed as on January 1, 1959 at Rs. 106.

He would not be entitled to any increments under sub cls.

(b) and (c), because his actual salary coincided with the adjusted basic pay in the Sastry award scale as modified as on January 1, 1959.

He would however be entitled to two increments under sub cl.

(d) for the years 1960 and 1961 and his salary therefore as on January 1, 1962 under the Sastry award would come to Rs. 119.

As Rs. 119 is the eleventh stage in the Sastry scale, Ram Parkash would be entitled to the eleventh stage in the Desai scale, which would be Rs. 170.

The bank actually fixed him at Rs. 176 on its own interpretation of the award.

In the circumstances, Ram Parkash was not entitled to any relief from the labour court.

Tek Chand Sharma respondent in C.A. 1009 was appointed on November 15, 1950.

His salary as on January 1, 1959 was Rs. 100 and his place of posting was Nakodar in area IV of the (1) 906 Sastry award.

His salary according to point to point adjustment would come to Rs. 85.

But under cl.

(i) his salary cannot be fixed below Rs. 100, which he was actually getting.

Under subcl.

(a) of cl.

(iv) his salary will be fixed at Rs. 100.

(b) and (c) of cl.

(iv) because he was getting more than what would be his adjusted basic pay under cl.

Therefore, for purposes of sub cl.

(a) of cl.

(iv) he would be fixed at Rs. 100 as on January 1, 1959, and would be entitled to increments under sub cl.

(d) which will bring his salary to Rs. 112 as on January 1, 1962.

This is the thirteenth stage in the Sastry scale.

Nakodar is now in area III in the Desai award.

The thirteenth stage in the Desai award scale is Rs. 182 for that area.

So his salary as on January 1, 1962 would be fixed at Rs. 182.

In addition he is entitled to two increments on account of being a graduate and one increment on account of his having passed the Indian Institute of Bankers ' examination.

His actual salary in the Desai scale on January 1, 1962 will be Rs. 182 plus Rs. 33, i.e., Rs. 215.

The bank fitted him on Rs. 193.

The award of the labour court therefore in the case of Tek Chand Sharma is correct.

We therefore allow C.A. 1008 and set aside the order of the labour court and dismiss the application of Ram Parkash.

We make no order as to costs in the circumstances.

C.A. 1009 is hereby dismissed.

C.A. 1008 allowed.

C.A. 1009 dismissed.

Summary: The respondent employees made applications under section 33C(2) of the Industrial Disputes Act for determination and computation of the benefit to which they were entitled under the National Industrial Tribunal (Bank Disputes) Award (Desai Award) as they were not satisfied with the fixation of their pay by the appellant bank under para 5.356 of the Desai Award.

Summary: The Bank claimed that under clause (ii) of para 5.356 of the Desai Award, the adjusted basic pay in,the new scale was not to exceed what point to point adjustment would give an employee on January 1, 1962 and that this being the maximum permissible under cl.

Summary: (ii), cl.

Summary: (iv) could not give an employee more than the maximum arrived at under cl. (ii).

Summary: The employees on the other hand claimed that they were entitled to what was provided by sub cls.

Summary: (a), (b) and (c) of cl.

Summary: (iv) and the two increments under sub cl.

Summary: (d) and that it did not matter whether what was thus arrived at exceeded the maximum provided under cl.

Summary: The Labour Court partially accepted the employees ' contention and fixed their pay accordingly.

Summary: In appeal.

Summary: HELD:The decision of this Court in Prakash Chand Mehra 's case would govern the interpretation of para 5.356 of the Desai Award also, which is in substance the same as para 292 of the Sastry Award as modified by the Labour Appellate decision.

Summary: The adjusted basic pay in cl.

Summary: (ii) has to be taken as on January 1, 1959.

Summary: This follows from the fact that the workman basic pay as on January 1, 1959 cannot be reduced and therefore when cl.

Summary: (ii) speaks of adjusted basic pay it must refer to the same date as in cl.

Summary: Further cl (iv) which provides for actual calculations starts with words "subject to rules (i) to (iii)" and therefore the actual calculations made under cl.

Summary: (iv) must be subject to cls.

Summary: (i) and (ii).

Summary: This means in effect that the actual fixation under sub cls.

Summary: (a), (b) and (c) of cl.

Summary: (iv) will be subject to cl.

Summary: (i) and cl.

Summary: Under sub cl.

Summary: (a) of cl.

Summary: (iv) a workman will be placed in the Sastry Award as modified by placing him at the stage in the Sastry Award scale equal to or next above his basic pay as on January 1, 1959 in the scale then in force in the bank concerned.

Summary: But in view of cl.

Summary: (i) this cannot be less than the actual basic pay of the workman as on January 1, 1959.

Summary: Where under cl.

Summary: (i) the actual basic pay as on January 1, 1959 is more than what point to point adjustment will give under cl.

Summary: (ii), it cannot be reduced for cl.

Summary: (ii) is subject to cl.

Summary: After this has been done the workman would be entitled to increments as provided in sub cl.

Summary: (b) read with sub cl.

Summary: (c) of cl.

Summary: (iv), but this will be subject to cl.

Summary: (i) and (ii) and the adjusted basic pay arrived at by giving the increments under sub cls.

Summary: (b) and (c) cannot exceed the adjusted basic pay as arrived at by point to point adjustment in the Sastry Award as modified or the maximum of that scale or the 899 actual basic pay as on 1st January 1959, as the case may be.

Summary: Thus sub cl.

Summary: (a) is subject to cl.

Summary: (i) and the basic pay to be fixed on January 1, 1959 hag to be fixed by reading sub cl.

Summary: (a) of cl.

Summary: (iv) and cl.

Summary: (i) together.

Summary: Then increments under sub cl.

Summary: (b) read with sub cl.

Summary: (c) of cl.

Summary: (iv) have to be added, but this is again subject to the provisions of cls.

Summary: (i) and (ii).

Summary: [903 E; 903 G 904 E] Once it is held that basic pay under cl.

Summary: (ii) has to be worked out as on January 1, 1959 the two increments provided by sub cl.

Summary: (d) of cl.

Summary: (iv) which are beyond that date must be given over and above what has been worked out under sub cls.

Summary: (a), (b) and (c) of cl.

Summary: (iv) of the Desai Award.

Summary: The fact that by oversight sub cl.

Summary: (d) of cl.

Summary: (iv) was not made a separate clause would make no difference for sub cl.

Summary: (d) provides for a period after the date up to which cl.

Summary: (i) works.

Summary: [904 H 905 B] State Bank of India Prakash Chand Mehra, [1961] 11 L.L.J. 383, relied on.